VBL’s Q4CY20 operating performance was largely in line with our expectations but better than consensus estimates (39% beat), driven by better margin performance. EBITDA margins improved 350bps to ~13% (vs. our/Street expectations of 13.4%/9.6%). EBITDA margins continued to improve with 350bps YoY expansion in Q4, aided by benign RM costs, unprofitable plant closures and strong improvement in profitability of global operations (refer exhibit-2). VBL expects to retain partial cost savings in CY21E. VBL maintained its CY21E capex guidance (at <50% of depreciation) and indicated focus on debt reduction in CY21E. With strong cash generation in the business (refer exhibit-7), we expect VBL to reduce its debt by Rs7.5bn/Rs7.5bn/Rs8.5bn in CY21/22/23E.
OutlookWe maintain our CY21/22E estimates, forecasting 14%/28% EBITDA/EPS CAGR over CY19-22E. We raise the TP to Rs1,030, rolling over to Mar’23E EBITDA and raising multiple to its mean 1-Yr forward multiple (14.5x vs. 13.0x earlier). Multiple revision is on faster-than-expected recovery and improved earnings growth visibility. Retain Buy.
For all recommendations report, click hereDisclaimer: 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.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
Read More
