Buy Liberty Shoes; target of Rs 242: Karvy

Karvy's reserach report on Liberty ShoesLiberty Shoes Ltd. engages in the manufacture and sale of leather footwear in India and internationally. The company’s products for men include unisex sandals and slip-ons, formal footwear, sportswear, beachwear, casuals and formal footwear in leather and non-leather material. It also offers heels and strappy styles in slip-ons, sandals and belles for women; sandals, sports shoes, lycra uppers with no laces, and school shoes for kids; and safety footwear for the workforce in the construction, engineering, oil and healthcare sectors, as well as for company executives. The company is amongst the top 5 manufacturers of leather footwear in the world. The company has its presence in more than 25 countries, which includes major international fashion destinations like France, Italy and Germany. The company is spread worldwide having a distribution network of 150 distributors, 550 exclusive showrooms and more than 6000 multi brand outlets.Liberty has been undergoing restructuring; synergies are expected to be beneficial and improve the margins of the company. With good brand name in the footwear industry, we expect the brand pull to continue and revenues are likely to grow at CAGR of 10.5% during FY15-17E and EBITDA margins to improve from 8.1% in FY15 to 8.6% in FY17E. PAT is likely to grow at CAGR of 25.4% during FY15-17E. Liberty is currently trading at 12.7x FY17E EPS and we assign 15.5x PE and arriveat target of Rs. 242 with “BUY” rating for the period of 9-12 months. 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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