February 01, 2017 / 14:24 IST
Consolidated sales grew 3% with 3% volume growth in India decorative. Gross margin improvement slowed to 70bps (from >200bps improvement for the past eight quarters) due to rising pressure from higher crude prices.EBITDA declined 1% YoY as EBITDA margin declined 70bps YoY to 20%. Translation loss from Egyptian subsidiary and higher tax rate (up 380bps) led to 11% adj. PAT decline.
OutlookWe see volumes recovering in FY18 but expect marginpressure given rising commodity prices. India decorative margin at >20% is at an all-time high. We reduce FY17/ 18 EPS by 8%/ 11%. However, given the 17% correction in the stock in past three months, we upgrade to HOLD with revised TP of Rs 920, based on 35x forwardP/E (Rs 980 earlier).
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