By Amarjeet Maurya Sr. Equity Research Analyst, Mid-Caps at Angel Broking
HSIL Limited (HSIL) offers sanitaryware products, faucets, and glass bottles. The company’s 46 percent revenue comes from building products division, 43 percent from Packaging products division and balance from others division.
The market is expected to grow at 10 percent CAGR going forward on the back of increasing disposable income, urbanization, evolving preferences and government initiatives (Swachh Bharat, Housing for All, Smart cities, etc).
HSIL has expected to launch security caps and closures in 1QFY19, which would be able to generate revenue around Rs 130 crore on the full operating basis (EBIT is around 20-25 percent).
Moreover, HSIL is also entering the PVC Pipe segment, which is expected to start commercial production around in FY19 (will be able to generate revenue ~Rs 400 crore on peak utilization).
The company has entered into new segments like consumer, pipes and caps and closures which will drive the further growth. We expect HSIL to report net revenue CAGR of 12 percent to Rs 2,905 crore over FY2017-20E.
HSIL Ltd: Rating: Buy | Target: Rs 510 | Return: 37%
On the bottom-line front, the house expects CAGR of 15 percent to Rs 154 crore over FY 2017-20E owing to improvement in operating margins. The firm recommends a Buy with a target price of Rs 510.
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