Buy Nirlon; target of Rs 400: ICICI Direct

ICICI Direct's research report on Nirlon

Nirlon’s FY21 performance was muted. Revenues in FY21 grew 2.2% YoY to Rs 316.9 crore. For Q4FY21, it was Rs 77.1 crore, down 6% YoY. Occupancy, which was at 95.2%, was lower QoQ vs. 97.5% in Q3, as one large licensee moved out post expiry of their license. EBITDA for FY21 at Rs 237.2 crore was up 2.7% YoY. PAT at Rs 127.4 crore for FY21 was up 16.4% YoY, also aided by lower interest, due to capitalisation.

Outlook

We maintain BUY rating on the stock with an NAV-based target price of Rs 400/share (earlier Rs 355/share). In our valuations, we conservatively consider a 9% cap rate and 15% discount rate. We see deep value in the stock as the planned expansion is not factored in the CMP.

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