Buy Mirza International; target of Rs 113: Anand Rathi
Anand Rathi is bullish on Mirza International has recommended buy rating on the stock with a target price of Rs 113 in its research report dated November 20, 2018.
November 23, 2018 / 01:55 PM IST
Anand Rathi's research report on Mirza International
Driven by ~41% y/y growth in its branded business, Mirza?s H1 FY19 revenue rose 13% to `5,576m. The gross margin shrank 406bps resulting in the EBITDA margin contracting 220bps to 15.4%. As management lowered its growth guidance and as margins would continue under pressure in the near future, we cut FY19e/FY20e EBITDA 13%/11% and PAT 27%/23%. Due to a steep fall in the stock price, we maintain our Buy rating on the stock, with a new, `113, target price (earlier `148).
We introduce FY21e and roll forward our valuation to FY21. The lower growth guidance, higher input cost and rising debt lead us to cut FY19e EBITDA/PAT 13%/27% and 11%/23% for FY20 and reduce our target multiple to 15x from 18x earlier. On the sharp fall in the stock price, we retain our Buy rating, valuing the stock at 15x FY21e EPS to arrive at a target of `113 (earlier `148).
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