Hold Butterfly Gandhimathi; target of Rs 165: ICICI Direct

ICICI Direct's research report on Butterfly Gandhimathi

Revenues for the quarter grew 22% YoY to Rs 152 crore driven by strong growth across all segments. Kitchen appliances grew 16% YoY to Rs 111 crore whereas cooker/cookware segment grew 40% to Rs 26.0 crore. Gross margins improved marginally by 30 bps YoY to 41.7%. EBITDA grew 27% YoY to Rs 11.7 crore as higher other expenses (up 31% YoY to Rs 33 crore) curtailed EBITDA growth to a certain extent. EBITDA margins expanded 30 bps YoY to 7.7%. In spite of higher depreciation and interest expense, which were up 13% and 18% YoY to Rs 5.9 crore and Rs 3.8 crore respectively, PAT came in at Rs 2.2 crore vs. Rs 1.3 crore in Q1FY19.

Outlook

The key monitorable would be sustaining the growth and managing the working capital. We value the company on EV/sales and assign a multiple of 0.5x with a HOLD rating with a target price of Rs 165.