Buy Vardhman Textiles; target of Rs 1200: ICICI Direct

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Buy Vardhman Textiles; target of Rs 1200: ICICI Direct

ICICI Direct’s research report on Vardhman Textiles

Revenues for the quarter grew 5% YoY to Rs 1729 crore (I-direct estimate: Rs 1699 crore). Revenues from the textile segment grew 5% YoY to Rs 1658 crore while acrylic fibre reported revenue growth of 11% YoY to Rs 96 crore Gross margins for the quarter improved 516 bps YoY to 48.4% (I direct estimate: 50.5%). Subsequently, EBITDA margins improved 400 bps YoY to 17.8% (I-direct estimate: 18.3%). Absolute EBITDA grew 36% YoY to Rs 307 crore (I-direct estimate: Rs 310.0 crore). On the segmental front, EBIT margins for the textile segment expanded 710 bps to 18.1% whereas the acrylic segment registered an EBIT loss of Rs 7.5 crore in Q3FY19 compared to profit of Rs 17.41 crore in Q3FY18 Higher other income (up 61% YoY to Rs 60.4 crore) aided PAT growth. Resultant PAT grew 44.4% YoY to Rs 195.8 crore (I-direct estimate: Rs 180.9 crore).

Outlook

We expect the EBITDA margin to be range bound at 17-18% for FY19E, FY20E. We have a BUY rating on the stock with a target price of Rs 1200 (PE of 9x FY20 EPS).

For all recommendations report, click here

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Images are for reference only.Images gathered automatic from google.All rights on the images are with their original owners.

2019-02-27 17:59:49

Images are for reference only.Images gathered automatic from google.All rights on the images are with their original owners.

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