We have buy recommendation on Nilkamal with a target of Rs 2,317 based on 22.21x FY19E EPS of Rs 104.30.
Nilkamal is one of the leading plastic molded furniture, fixtures, industrial and material handling products manufacturing company.
The company currently operates its businesses through three key divisions namely Plastics division (87% revenue), Mattress division (2%) and Lifestyle division (11%).
The India’s furniture market constitutes almost 85% of un-organized players and out of organized share the major component is of imported furniture market; signifying very large opportunity for incumbent players. Implementation of GST will play key role in this shift.
On marketing front, company has established its footprint through conventional dealer networks as well as by opening its own branded stores like @Home (26 stores), Nilkamal Home Ideas (33 Stores) and DoDo Stores(Dealer owned and Dealer operated).
We expect Nilkamal to grow its revenues at 8.2% CAGR in FY19. The company’s profitability is also expected to increase owing to better mix in sales, improvement in operating leverage.
Nilkamal has reported a growth of 17.3% in its standalone revenues at Rs 571 crore in Q1-FY19 as against Rs 487 crore in Q1-FY18.
On profitability front, the company’s operating margins stood 9.6% at Rs 54 crore in Q1FY19 as against 8.8% at Rs 43 crore in Q1FY18 while PAT margins stood at 5.4% in Q1FY19 at Rs 30 crore against 4.6% at Rs 22 crore.
We have buy recommendation on Nilkamal with a target of Rs 2,317 based on 22.21x FY19E EPS of Rs 104.30.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.