Buy HSIL; target of Rs 400: Emkay Global Financial

Emkay Global Financial's report on HSILSteady quarter - Revenues up 1.3% at Rs 4.3bn, EBITDA grew 1.1% yoy to Rs 756mn and APAT at Rs 243mn, up 27.6% yoyBuilding products grew by 8.9% challenged by weak real estate demand; packaging products reports revenue decline due to weak user industry demand. Expanding reach in consumer electrical to aid revenuesEBITDA margins flat as lower fuel cost benefit channelized towards higher A&P spends and increase employee cost. Hereon, margin expansion would depend on revenue uptick Cut revenue guidance by 4%/5% considering weak interim demand, but there is positive change in earnings by 6%/4% owing to shift of capex in new segments to H2FY16. Retain BUY with price target of Rs 400/shareCut revenue by 4%/5% on near-term weak demand outlook; Retain BUYWeak outlook on demand in both segments in the near-term has led to 4%/5% cut in revenue estimates. Against our earlier assumption of capex from Q2FY16, the initial round of capex for new segments (pipes & closures) will start in H2FY16; thus there is positive change in our earnings estimates by 6%/4% for FY16/17E. Gradual uptick in demand should drive growth in building products segment. We maintain BUY with SOTP target price of Rs 400/share, says Emkay Global Financial research report.For all recommendations, click here Disclaimer: 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.

Read More