Emkay's research report on HSIL
HSIL's Q4FY16 results missed on all counts, with both topline and profitability below expectation. Key highlights: (1) Standalone revenues at Rs 5.9bn, up 6.6% YoY; Building products grew 9% YoY and packaging products grew 4.1% YoY. (2) EBITDA at Rs 992mn, down 6.3% YoY with EBITDA margin at 16.6% down 230bps YoY impacted by higher other expenses (+28.4% YoY towards consumer appliances segment – FY16 Rs 160mn). (3) APAT at Rs 381mn, down 4.3% YoY with interest outgo lower than expected.
Weak performance in both segments and cost allocation towards consumer appliances segment has led to 3%/4%revenue, 10%/11% cut in EBITDA and 14%/11% in PAT estimates. While faucets and consumer appliances are growth drivers, growth has been relatively weak vs expectation. We still await improvement in the growth profile of building products and uptick in this segment would hold the key. We would also keenly watch the performance of pipes and caps/closures in next 2 years. Retain BUY with revised price target of Rs 340/share.
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