Accumulate Shaily Engineering Plastics; target of Rs 533: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Shaily Engineering Plastics

Shaily reported Q1 results. While revenues and EBITDA de-grew 42.2% and 74.5% YoY, the company continued to remain EBITDA positive. EBITDAM was down 920bps YoY and 1170bps QoQ to 7.3%. Fall in revenues led to loss of Rs 30m v/s profit of Rs 47m in Q1FY20 and Rs 70m in previous quarter. Non healthcare operations were resumed at end of April. Total volumes stood at 1,815 MT, down 41% YoY and utilisation of 34% v/s 59% in Q1FY20. EBITDA/kg stood at Rs 18.8 down 57% YoY and 59.5% QoQ on back of lower utilisation and lower absorption of fixed cost.

Outlook

We feel this justifies a higher target multiple of 12x (7x previously) thereby arriving at a revised TP of Rs 533. Maintain Accumulate.

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