ICICI Direct recommended hold rating on Saregama India with a target price of Rs 510 in its research report dated August 04, 2020.
ICICI Direct's research report on Saregama India
Saregama India's revenues for Q1FY21 fell 39.2% YoY to Rs 76.5 crore due to Carvaan sales declining to 15,000 units vs. 219,000 in Q1FY20 as retail stores were shut during lockdown. EBITDA came in at Rs 18.9 crore, up ~16x YoY, due to lower promotion costs (high marketing expense in base quarter) and reduced production costs and contract manufacturing charges with EBITDA margins at 24.7%. Consequently, PAT was at Rs 15.8 crore.
However, subdued Carvaan sales and delay in its pickup, in the interim, is likely to remain an overhang. Therefore, we maintain HOLD rating on the stock with a revised target price of Rs 510/share at 13x FY22 P/E.
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