Buy Dollar Industries; target of Rs 560: Kotak Securities

Kotak Securities' research report on Dollar Industries

Dollar Industries Ltd (DIL) Q2FY18 results were inline with our estimates. The Net revenue for the quarter was at Rs 2.13 bn which was up by 8% yoy and was below our estimates due to GST impacting volumes in the quarter. EBITDA for the quarter grew by 19% yoy to Rs 291 mn with EBITDA margin ahead of estimates at 13.7% (vs our estimates of 12%). This is due to improved efficiency, better product mix, input tax credit and increase in selling price. PAT grew by 27% yoy on strong margin and reduction in term loan resulting in decline in interest expenses. The management has maintained positive outlook for H2FY18 and guided for ~30% yoy growth in revenue with better margins.

Outlook

We maintain BUY rating on the stock with revised target price of Rs 560 (Vs Rs 550 earlier), based on average of all multiples (PE, EV/EBITDA, EV/Sales). At our target price, the stock would be trading at steep discount to Page Industries. For all recommendations report, click here

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