CRISIL maintains fair value of Rs 378 to Gandhimathi Appl

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CRISIL maintains fair value of Rs 378 to Gandhimathi Appl

CRISIL Research has come out with its report on Butterfly Gandhimathi Appliances. The research firm has maintained the fundamental grade of 3/5 to the company in its March 1, 2012 report.

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CRISIL Research has come out with its report on Butterfly Gandhimathi Appliances . The research firm has maintained the fundamental grade of 3/5 to the company in its March 1, 2012 report.

Butterfly Gandhimathi Appliances Ltd's (Gandhimathi's) Q3FY12 revenue is in line with CRISIL Research's expectations. Revenue grew ~160% y-o-y to Rs 2,275 mn driven by orders from the Tamil Nadu (TN) government and retail distribution. EBITDA margin improved to 12.1% and was better than our expectations. This was due to the benefits from operating leverage as the ramp up in sales was higher than our expectations. PAT grew by ~97% y-o-y and ~44% q-o-q in line with our estimates, and would have been higher if not for higher interest costs, depreciation and taxes. We maintain the fundamental grade of 3/5.

Q3FY12 result analysis (standalone)
• Revenue grew by ~160% y-o-y and ~100% q-o-q to Rs 2.3 bn driven by strong consumer demand for branded kitchen appliances. Of the total, Rs 1.2 bn came from the TN government's order worth Rs 2.85 bn. The non-government sales grew by 18% y-o-y to ~Rs 1.0 bn.

• EBITDA margin improved by ~81 bps y-o-y and ~150 bps q-o-q to 12.1%. This was better than our expectations driven by higher operating leverage benefit. EBITDA grew by ~178% y-o-y to Rs 275 mn.

• Adjusted PAT grew by ~97% y-o-y and ~44% q-o-q to Rs 119 mn largely in line with our estimates. However, PAT margin of 5.2% was lower than our expectations because of higher depreciation and interest costs. Interest costs increased because of incremental debt availed to fund its working capital requirements. In addition, the company has started paying interests on dealers' deposit which it was not paying earlier.

Revised our FY12 and FY13 estimates updates
We revise our FY12 revenue estimates upwards from Rs 5.8 bn to Rs 5.9 bn. This is on account of better than expected ramp up in sales to TN government. We have raised our FY12 and FY13 EBITDA margin estimate by ~100 bps to 11.4% each from 10.5% earlier. However, because of higher depreciation and interest costs, our FY12 and FY13 EPS estimates remain largely the same.

Valuations: Current market price is aligned
We continue to value Gandhimathi based on the discounted cash flow method and maintain our fair value at Rs 378 per share. At the current market price of Rs 368, the valuation grade is 3/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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