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Brokerage sees 67% upside in this innerwear maker; is it the right fit for you?

Stewart & Mackertich Research has initiated coverage on Dollar Industries with a strong buy rating and a price target of Rs 656.

May 23, 2018 / 01:47 PM IST
 
 
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Betting on a healthy growth rate of 15-20 percent a year over the next five years, and on strong operational performance due to aggressive brand building, Stewart & Mackertich Research sees Dollar Industries rising by up to 67 percent.

The research firm has initiated coverage on the stock with a strong buy rating and a price target of Rs 656. It highlighted how 66 percent of the the company's sales comes from the premium and super premium segments, while economy products bring in 34 percent of the revenue.

"It has been given the status of an 'export house' by the government of India. From just being a men's innerwear company, it has made a foray into women's innerwear and outerwear, kids' innerwear and other categories such as thermals," Stewart & Mackertich Research said in its report.

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The company could also look to cash in on better internet penetration and urbanisation to carve out a better market share in premium and super-premium segments, using e-commerce, modern outlets and exclusive brand outlets.

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The research firm listed volatile raw material prices, a mismatch in offerings and consumer behaviour, competitive risks and unavailability of skilled labour as some of the key risks to Dollar Industries.

The stock is currently trading at 36.10 times its estimated earnings per share (EPS) for FY20. In the past year, during which it also went through a stock split, it has fallen around 75 percent.
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first published: May 23, 2018 01:47 pm
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