Emkay's research report on HSIL
Drivers like low sanitation, housing demand, shift to organized & rising replacement market, along with HSIL’s rising distribution, brand strength, premiumisation & growthfrom faucets to ensure 17% revenue CAGR and EBIT margin of 20% over FY14-17E
Improving operational metrics has led to positive EBIT for packaging products segment in an unfavorable industry scenario. Revival in user industry demand will drive next leg of growth. We expect 11% revenue growth, assuming marginal volume growth
Expect balance sheet de-leveraging to play out over the next 2-3 years, led by debt repayment from building products cash flows and capital raised through QIP
Demand revival in glassware users & debt de-leveraging to drive next leg of valuation uptick. We initiate coverage on HSIL with BUY rating assigning 20x to building products and 0.5x to packaging products on FY17E with SOTP price target of Rs 530/share.
"Improving operating metrics in packaging products business led 1st leg of stock price performance. We believe next leg of valuation upside would be led by revival in glass user industry demand & debt de-leveraging. We expect 3-year revenue CAGR of 14% and PAT CAGR of 86% over FY14-17E. Valuing HSIL on SOTP, we have assigned 20x to building products and 0.5x to packaging products on FY17, arriving at price target of Rs 530/share", says Emkay Global Financial Services research report.
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