ICICI Securities research report on Visaka Industries
Visaka Industries (VSKI) has reported better-than-expected EBITDA margin in Q4FY20 at 9% (I-Sec: 7.3%), down 240bps YoY due to higher gross margin of 430bps YoY. Vnext and Synthetic yarn segments reported improvement in EBITDA margin by 180bps & 320bps YoY, respectively. However, ACS segment has reported a sharp decline in EBITDA margin by 560bps led by ACS revenue declining 35% YoY due to the lockdown. Vnext segment has reported only 2.5% YoY decline in revenue despite lockdown with incremental volume from new Jhajjar plant.
We expect ACS being rural centric & need-based product to have lesser impact on revenue than other two segments in the near term. With stock price correcting significantly amid Covid-19 crisis, we believe valuations are compelling at 5.3x FY20. Maintain BUY.
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