Buy Himatsingka Seide; target Rs 54: Nirmal Bang
Nirmal Bang is bullish on Himatsingka Seide (HSL) and has recommended buy rating on the stock with a target price of Rs 54 in its August 29, 2013 research report.
August 30, 2013 / 12:52 PM IST
Nirmal Bang's report on Himatsingka Seide (HSL)
"Himatsingka Seide (HSL) has reported 24.9 percent YoY increase in net sales to Rs. 468.4 cr and by 21.4 percent QoQ. It was mainly driven by jump in North America business by 21 percent YoY and manufacturing business by 31.5 percent YoY, though the growth was restricted due to fall in Atmosphere business by 18.7 percent YoY and European business by 8.3 percent YoY. The EBITDA improved by 35.6 percent YoY and by 46.5 percent QoQ to Rs. 49.6 cr. The EBITDA margin improved by 80bps YoY to 10.4 percent in Q1FY14 and by 180bps QoQ. EBITDA margin improved due to the decline in employee expenses and Other expenses as a percent of sales. Gross margin declined by 280bps YoY to 32.4 percent in Q1FY14 and by 410bps QoQ."
"At CMP of Rs. 32, the stock is trading at a PE of 4.8x FY14E and 3.4x FY15E. We feel with revival of US economy, improvement in US retail and home sale and HSL strong presence through both licensed brand and private labels, company will be able to improve its sales in US, though pressure on Europe is a matter of concern. Management has revised the guidance for FY14E of 25 percent sales growth in FY14E; where major benefit is attributed to rupee depreciation. We have incorporated the same in our estimates; however we expect revenue growth to be 19.2 percent in FY14E. We feel that the improvement in drapery and upholstery capacity utilization and improvement in distribution business will be the key driver of sales growth going forward. We maintain our target price of Rs 54 per share (FY14E) and recommend to BUY the stock," says Nirmal Bang research report.
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