Buy GM Breweries; target of Rs 1,318: KRChoksey
KRChoksey is bullish on GM Breweries and has recommended buy rating on the stock with a target price of Rs 1,318 in its research report dated January 12, 2016.
January 13, 2016 / 12:49 IST
KRChoksey’s Research report on GM BreweriesGM Breweries Ltd. reported strong Q3FY16 results with Net revenue of INR 928.7 Mn, growth of 17.95% YoY basis which is in line with our estimates of INR 935 Mn. The EBITDA stood at INR 238.2 Mn with margin increased to 25.6% from 10.6% YoY and 19.3% on QoQ basis which is slightly lower than our estimates of INR 247 Mn, an increase of 1499bps YoY and 632bps QoQ. The PAT remained at INR 155.7 Mn with margins at 16.8% in Q3FY16 as against 7.7% YoY and 10.1% QoQ, an increase of 907bps YoY and 670bps QoQ.Valuation & Outlook: We believe the shift from illicit to branded players provides huge opportunity to grow. The industry has strong entry barriers in the form of licensing and ban on advertisement, in which GMBL enjoys strong brand value in Maharashtra leading to customer loyalty supported by strong distribution network. The incremental revenue with negligible capex, better cost management and margin focus, will lead to better profitability and improve return ratios going forward. We remain positive on GMBL’s business scalability and strong financial health. At CMP of INR 1,031, the company trades at P/E of 15.6x its FY17E EPS of INR 65.9. We maintain a “BUY” rating on the stock with a target price of INR 1,318.For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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