NML: Raise TP to PkR209/sh; move into Autos can be another trigger
​We upgrade NML from Neutral to Buy and revise our TP up 23% to PkR209/sh (total return: 15%), incorporating the expected benefits of the Textile package (+PkR27/sh) alongside moderate adjustment to portfolio value (+PkR11/sh). The next trigger for NML can be move into Auto OEM space, which may play out over the medium-term.
By utilizing additional Garment capacity, followed by growth in Home Textile, NML can potentially fetch exports rebate of PkR2.6/sh and PkR5.0/sh for 2HFY17 and FY18, respectively. This lifts our FY17/18F EPS to PkR18.98/PkR24.57.
For 1HFY17, we expect NML to post EPS of PkR8.30, up 14%YoY, on higher ‘other income’. Revenues are expected to remain dull (down 2%YoY) coupled with slightly lower GMs (down 50bps to 12.5%) led by higher cotton and FO prices.
Nishat Mills is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth, and to generate, accumulated, distribute and supply electricity.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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