We believe the worst of decline in margins in consumer-facing businesses is behind and with favourable exchange rate environment and recovery in demand, margins will bounce back. Over last three years, E&P divisionís dismal performance clouded BJEís underlying consumer franchise. With its expected turnaround, we believe BJE will continue to get re-rated, reducing the valuation gap with peers. We cut earnings estimate for FY15E and FY16E by 13% and 7% to factor in lower margins. We value BJE at 16x FY16E EPS of R23 and arrive at a target price of R370. Maintain buy.
Motilal Oswal Fin Services