NML: Well-positioned amid Textile positives; reiterate Buy
We reiterate our Buy stance on Nishat Mills Limited (NML) with Jun’18 TP of PRs187/sh (15% upside). Our new TP comprises of PRs48/sh for the textile business and PRs139/sh for the portfolio after 30% discount. The scrip offers a unique blend of superior exposure to the Textile sector and a diversified portfolio of bellwether stocks.
We preview Nishat Mills Limited (NML) to post earnings of PRs3.04/sh in 4QFY17, up 99%QoQ. We also expect a final cash dividend of PRs4.0/sh. The sequential jump in earnings is attributable to 2.86xQoQ higher dividend income and 3%QoQ Euro appreciation. However, super tax will trim earnings by PRs0.7/sh.
Potential triggers in price performance can emanate from (i) clarity regarding Nishat Hyundai Motors, (ii) higher than expected currency weakness in election year and (iii) increased utilization of newly commenced denim facility.
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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