ICICIdirect.com's report on Siyaram Silk Mills
"Siyaram Silk Mills’ (Siyaram) Q3FY15 revenues increased 7.2% YoY to Rs 330.3 crore. After six consecutive quarters of double digit revenue growth, Siyaram has reported single digit revenue growth. Revenue growth has been muted on account of fabric, which was reporting handsome double digit growth over last few quarters has increased marginally by 3.7% YoY.
The operating margin expanded 40 bps YoY to 10.6% on the back of reduction in other expense to sales ratio from 20.6% in Q3FY14 to 18.7% in Q3FY15
Owing to higher depreciation due to the changes in the Companies Act and higher tax rate , PAT declined by 7.8% to Rs 13 crore
"Siyaram has traded at relatively inexpensive valuations in the past. Hence, we have always said it is a re-rating candidate. Considering that the company is tapping newer opportunities for growth and is spending aggressively on the promotion of its brands, we remain optimistic on its future prospects. Some of its peers in the branded apparel space (with similar fundamentals) are trading at significantly high multiples. We reiterate our BUY rating with a target price of Rs 1150 (based on 8.0x FY17E EPS of Rs 143.6). However, we advise caution while buying owing to low liquidity in such stocks", says ICICIdirect.com research report.
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