CD Equisearch is bullish on Huhtamaki PPL has recommended hold rating on the stock with a target price of Rs 304 in its research report dated January 25, 2018.
CD Equisearch's research report on Huhtamaki PPL
Income from operations grew by 7% q-o-q in Q3CY17 suggesting rebound in sales after offtake was marred by impact of demonetization and GST in first two quarters of current fiscal; partial impact also felt in Q3CY17. However, HPPL’s revenue witnessed degrowth of 2.1% in Q3CY17 (y-o-y). For the same period, other income fell by 49.6% q-o-q- and 62% y-o-y. The sales volume growth in Q3 was in sync with its value growth. HPPL’s raw material to sales ratio reduced by 128 bps q-o-q and 227 bps yo- y to 66% owing to lower raw material prices that prevailed in Q3CY17. During the same period, other expenses were kept under reasonable control which led to a reduction in other expenses (including forex gain/loss) to sales ratio by 210 bps q-o-q and 38bps y-o-y to 12%. OPM as a result, rose to the highest in at least three quarters to 11.7% compared to 9.9% in the same quarter a year ago.
We cut our expected CY18 EPS by 26.6%. As the current valuation leaves little margin for error, we assign ‘hold’ rating on the stock and retain our target of Rs 304 based on 23x FY19e earnings (peg ratio: ~1) over a period of 9-12 months.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.