Buy Indo Count Industries; target of Rs 1160: Firstcall

Firstcall's reserach report on Indo Count IndustriesIndo Count Industries Limited (ICIL) is one India’s leading integrated home textile Company with quality products and prestigious international customers. This integration has made it possible for the Company to enhance quality and maximise value-addition. The result is that the Company possesses the highest margins within the country’s integrated textiles sector and also reports one of the highest asset-turnover ratios. The Company markets its products in 49 countries with nearly 65% of revenues being derived from the US, the Company’s largest market. Its other prominent markets comprise the UK, Canada, Europe, MENA and Australia. The Company enjoys long-term relationships with large global retailers. This has translated into large and growing offtake, marked by a larger share of the customer’s wallet. The Company is the second largest supplier of bed linen products from India and the fourth largest bed sheet supplier to the US. It is the thirteenth largest global home textiles supplier to the US (Source: Home & Textiles Today, February 2015). The Company received an ‘A’ rating from ICRA for long-term debt exposure and an ‘A1+’ rating for short-term exposure. The Company received the Export Excellence Award in the 1st set for the Top Exporter - Non MSME – Trading House category conferred by FIEO (Western Region). The Company reported consolidated revenues of Rs. 1,781.80 crore and a profit after tax of Rs. 145.87 crore in FY15.Revenues for the first half of FY16 stood at Rs. 10431.2 mn, 31.2% higher than the Rs. 7952.1 mn reported during the corresponding period of the previous financial year. The revenue outperformance was derived from a growing client base and enhanced customer wallet share, a result of the Company’s ability to provide a distinctive business-strengthening value proposition. The Company also reported its highest-ever EBIDTA margins at 21.9%. This represented a 530 bps improvement over the EBIDTA margin reported in the corresponding period of FY15, which stood at 16.6%. The Company’s profit growth was substantially higher than the percentage increase in revenues, signifying a strong profitable growth. We expect that the company surplus scenario is likely to continue for the next two to three years, will keep its growth story in the coming quarters also. Hence, we recommend ‘BUY’ in this particular scrip with a target price of Rs. 1160.00 for Medium to Long term investment. 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.

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