ICICI Direct recommended hold rating on Vardhman Textiles with a target price of Rs 1230 in its research report dated May 14, 2019.
ICICI Direct's research report on Vardhman Textiles
Revenues grew 17% YoY to Rs 1763 crore driven by 17% growth in the Textiles segment to Rs1703 crore. Acrylic segment declined by 3% YoY to Rs 79 crore. On account of spike in raw material price (cotton), gross margins declined by 392 bps YoY to 45.1%. However lower other expenses as a percentage to sales (down 190 bps YoY), aided EBITDA to a certain extent. Subsequently, EBITDA margins declined by 223 bps YoY to 14.9% (I-direct estimate: 16.7%). Absolute EBITDA grew 2% YoY to Rs 263.5 crore (I direct estimate: Rs 274.1 crore). On the segmental front, EBIT margins for textile segment and acrylic segment contracted by 51 bps and 127 bps YoY to 14.9% and 9.8%, respectively. Higher other income aided PAT growth which grew by 9.6% YoY to Rs 179.4 crore (I direct estimate: Rs 173.5 crore).
We expect the EBITDA margin to be range bound at 17-18% for FY20E, FY21E. We have a HOLD rating on the stock with a target price of Rs 1230 (PE of 8x FY21 EPS).
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 Lok Sabha 2019 Live Election Results, constituency-wise tally, news, views and analysis
Follow our Lok Sabha Election Result Live Blog here.