Buy Siyaram Silk Mills; target of Rs 1150: ICICIdirect

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ICICIdirect.com's report on Siyaram Silk Mills

"Siyaram Silk Mills’ (Siyaram) Q2FY15 revenues increased 17.6% YoY to Rs 398 crore. This is the sixth consecutive quarter that Siyaram has reported double digit revenue growth. Revenue growth has been driven by realisation growth in the suiting segment and both volume and realisation growth for J Hampstead and cotton brands. The operating margin expanded 58 bps YoY to 12.3% on the back of gross margin expansion and lower employee cost Owing to higher depreciation due to the changes in the Companies Act, PAT growth remained subdued at 19% to Rs 22 crore."

"Siyaram has traded at relatively inexpensive valuations in the past. Hence, we have always said it is a re-rating candidate. Considering that the company is tapping newer opportunities for growth and is spending aggressively on the promotion of its brands, we remain optimistic on its future prospects. Some of its peers in the branded apparel space (with similar fundamentals) are trading at significantly high multiples. We reiterate our BUY rating with a target price of Rs 1150 (based on 8.0x FY17E EPS of Rs 143.6). However, we advise caution while buying owing to low liquidity in such stocks", says ICICIdirect.com research report.

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