Profit was 15% ahead of expectations mainly due to higher-than-expected surcharge income in Q4, higher income in PFS and profits on sale of investment (stake in the Meenakshi power project). We forecast volumes to grow by about 17 bn units to 52 bn in FY17 from FY14 (14% CAGR from the earlier 9.6%), driven by long-term sales.
We expect 6-7% growth to continue during the 13th Plan (FY18-22e), and accordingly raise our long-term forecasts. Raise estimates for FY15-16e, introduce FY17e: We raise our volume estimates by 8-12% for FY15-16e to factor higher demand and, accordingly, net profit may rise 6-8%. We introduce FY17 estimates with this note. We expect earnings to grow at 14.5% CAGR in FY16-17e after a decline in FY15 (due to one-time surcharge income in FY14). Reiterate OW with target price of R105 (from R82) as we raise earnings forecasts for FY15-16 and long-term earnings growth to 6% and terminal growth to 3% to factor in improvement in demand. Our TP implies PB of 0.9x and PE of 9.7x on FY16e earnings, compared to the stock currently trading at 0.8x PB and 8.4x PE.