Buy Nilkamal; target of Rs 2694: Anand Rathi

Anand Rathi's research report on Nilkamal

Nilkamal’s Q3 revenue grew 6.3% y/ay to Rs8.5bn. Input-cost tailwinds helped the gross margin expand 126bps y/y to 43.3%. Higher employee expenses and other operating expenses pulled EBITDA down 12.9% y/y to Rs634m. PAT was down a significant 26.4%.

Outlook

We anticipate 8%/14% revenue/earnings CAGRs over FY24-27. At the CMP, the stock trades at 26.2x/20.1x/14.4x FY25e/26e/27e earnings. We arrive at a lower 12-mth TP of Rs2,694, 22.5x FY27e earnings (earlier Rs2,759, 22.5x FY27e earnings).