ICICIDirect's research report on Siyaram SilkSiyaram Silk Mills (Siyaram) reported strong growth in revenue and profitability for Q3FY16. Revenues increased owing to ~20% YoY growth in the fabric segment, mainly driven by growth in volumes with realisation remaining flattish The operating margin improved 80 bps YoY to 11.3% due to lower raw material cost as a percentage of sales with EBITDA registering growth of 35% YoY to | 46.8 crore Consequently, PAT improved 60% YoY at | 20.9 crore Siyaram has traded at relatively inexpensive valuations in the past and is a likely re-rating candidate. Considering that the company is tapping newer opportunities for growth and is spending on the brand promotion, 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 revised target price of | 1385 (based on 10x FY18E EPS of | 138.5). However, we advise caution while buying owing to low liquidity in such stocks. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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