Edelweiss's research report on Himatsingka Seide
Himatsingka Seide’s (HSL) Q4FY16 revenue at INR 4.5bn came 6% above estimate driven by strong performance in retail & distribution division (R&D), which clocked INR 4.0bn revenue. Key highlight was uptick in the segment’s margin, which catapulted 110bps QoQ to 3.9%, a testimony to the success of the restructuring exercise. Robust performance of the standalone entity (manufacturing) sustained-revenue jumped 12% YoY to INR 2.5bn. Going forward, we expect growth to be driven by bed sheet capacity (to be commissioned in Q1FY17) and backward integration to boost margin. We maintain our EV/EBITDA at 8.0x. Maintain ‘BUY’ with revised target price of INR307 (INR293 earlier).
HSS’ expansion remains on track and we estimate the company to clock revenue, EBITDA and PAT CAGR of 11%, 27% and 16%, respectively, over FY16-18 driven by the new bed sheet capacity and increased backward integration (spindles addition). We maintain our blended EV/EBITDA at 8.0x with revised target price of INR 307 (INR 293 earlier). We maintain ‘BUY’.For all recommendations, click here Disclaimer:
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