February 21, 2017 / 15:28 IST
Rupa & Company’s Q3FY17 results were above our estimates on the EBITDA and net profit front though revenues were below our estimate. An improvement in EBITDA margin and lower interest expense boosted net profit growth. Revenues for Q3FY17 declined 7.5% YoY to Rs 209.6 crore vs. estimated Rs 227.5 crore.
Outlook
The stock currently trades at a market cap/sales multiple of 1.8x and 1.6x of FY18E and FY19E, respectively. Rupa’s gradual shift from mass segment products to premium segment products leads us to re-rate the stock with a BUY recommendation and target price of Rs 310 (2.0X FY19E market cap/sales).
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