Buy Skipper; target of Rs 55: East India Securities

East India Securitie's report on Skipper

Skipper Ltd’s Q1FY21 revenue de-grew by 35% YoY to Rs2207mn, better than our estimate of Rs1856mn. The revenue decline is majorly due to lockdown impact which hurt the volumes majorly in the engineering segment. Gross margins contracted by 502bps to 32.8% in Q1FY21. EBITDA margin reported a contraction of 850bps to 4.1% YoY (vs our estimate of 5.8%) in Q1FY21 led by sharp gross margin contraction. Overall, EBITDA de-grew by 79% YoY to 90mn in Q1FY21. Lower than expected operating profit led to a net loss of Rs116mn in Q1FY21 as compared to profit of Rs79mn in Q1FY20.

Outlook

We value the stock on 11x FY22E EPS of Rs 5.0 to arrive at a target price of Rs 55 per share, an upside of about 28% from the current levels. Hence, we maintain BUY rating on the stock.