ICICI Direct recommended hold rating on Butterfly Gandhimathi with a target price of Rs 390 in its research report dated November 13, 2020.
ICICI Direct's research report on Butterfly Gandhimathi
Butterfly Gandhimathi (BGAL) reported healthy revenue growth of 20% YoY to Rs 288.9 crore in Q2FY21. The strong growth was on the back of channel filling owing to lower trade inventory levels and renewed customer interest in in kitchen appliances as majority of people preferred home cooked food. EBITDA margins expanded 310 bps YoY to 11.9% owing to positive operating leverage and better gross margins (up 240 bps YoY). On the back of a strong operational performance, PAT doubled YoY to Rs 17.2 crore.
We expect a gradual improvement in margin profile (operating leverage and decline in lower margin OMC business) and expect EBITDA margins to increase to 8.1% by FY23E. We value the company on EV/sales and assign a multiple of 0.8x. We maintain HOLD rating with a revised target price of Rs 390.
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