We have factored in impact of lower volumes and higher working capital in our estimates. Based on FY20E/21E revised EPS of 4.6/4.7, the stock is trading at PE of 8.7x/8.4x, respectively. Despite improved headline numbers in Q1FY20, we do not see any major turnaround in the margin and returns ratios profile in medium term. Hence, we discontinue our coverage on the stock with Sell rating(Vs Reduce) and revised target price of Rs 38 (Vs Rs 42 earlier), valuing the stock at 8x FY21E EPS.
We have factored in higher raw material prices, increased incentives and volume guidance in our estimates for FY20E. We have revised FY20E EPS to Rs 4.6 (Vs Rs 4.9) and introduced estimates for FY21E at Rs 5.2, Based on FY20E/21E EPS, the stock is trading at PE of 9.3x/8.2x, respectively. We maintain Reduce on the stock with revised target price of Rs 42 (vs Rs 39 earlier), valuing the stock at 8x FY21E EPS (as we roll forward to FY21E).