ICICI Direct recommended hold rating on Butterfly Gandhimathi with a target price of Rs 285 in its research report dated November 09, 2018.
ICICI Direct's research report on Butterfly Gandhimathi
Revenues for Q2 grew 8.2% YoY to Rs 217.3 crore. The tepid topline growth was probably on account of weak Onam sales due to floods in Kerala and shift of festival season to Q3FY19. On the segmental front, kitchen appliances grew 7% YoY to Rs 175.1 crore whereas cooker/cookware segment grew robustly by 10% YoY to Rs 33 crore Gross margins for the quarter fell 86 bps YoY to 39.4%. Employee expense increased 26% YoY to Rs 19.3 crore. Lower other expense as a percentage to sales (down 155 bps YoY 22.7%) curtailed the decline in EBITDA margin. Subsequently, EBITDA margins declined 56 bps YoY to 7.8%. Absolute EBITDA came in flattish at Rs 17.0 crore Higher finance cost (up 58% YoY to Rs 5.6 crore) and lower other income (down 86% to 0.14 crore) further impacted the profitability. Hence, PAT for the quarter declined 45% YoY to Rs 6.3 crore.
We value the company on EV/sales and assign a multiple of 1.0x, with a revised target price of Rs 285.
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