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BSE   27 Jun 19 | 09:45 AM

302.30 -5.2 (-1.69%)
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Code: 503811
Face Value: N.A.

NSE   27 Jun 19 | 09:34 AM

303.00 -3.6 (-1.17%)
Mkt Price (Rs)   Chg Rs (Chg %)
Code: SIYSIL
Performance
1 Week : Rs 295.65 (2.25%)
1 Month : Rs 358.10 (-15.58%)
1 Year : Rs 533.30 (-43.32%)
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Fundamental View: Siyaram Silk Mills

Karvy Research / Mumbai 25 Jul 13 | 08:21 AM

Revenue Growth: The company’s top-line grew 22.1% YoY to Rs. 2,511 mn (our expectations Rs. 2,450 mn) during Q1FY14. Revenue growth is largely attributable to volume growth with approx. 4-5% realizations improvement on enhanced product (linen) mix. However, due to challenging consumer sentiments, SSML refrained from direct price hikes; in-line with broader industry practice.

Operating margins under pressure: The Company’s EBITDA grew 12.4% YoY to Rs. 258 mn (our expectations Rs. 263 mn) during Q1FY14 on account of higher staff and direct input costs. EBITDA margins for the quarter slipped 88bps YoY to 10.3%. Net Income for Q1FY14 grew 4.1% YoY to Rs. 107 mn (our expectations Rs. 117 mn).

SSML is looking to expand its retail stores under franchisee model with ~90 stores additions in FY14 while aiming ~500 stores in the next 4-5 years from the existing network of ~165 stores.

Expansion Plans: The Company added 129 Looms & 101 stitching machines out of planned 286 Looms & 400 stitching machines.  Therefore, on total capex plan of 20 MMPA fabrics and 7.2 lac pcs per annum of readymade garments, ~10MMPA and ~1.8 lac pcs capacity have been installed during FY13 while remaining expansion is slowed down keeping in view of the subdued consumer demand.

We keep our sales estimates intact while revised down EBITDA marginally by 3.0% and 1.7% for FY14E and FY15E respectively. Expected net income has been revised down by 4.1% and 2.1% for FY14E and FY15E respectively.

Outlook & Valuation:

SSML’s revenue and net income are expected to grow at a CAGR of 18% and 20%, respectively over FY13-15E. At CMP of Rs. 237, the stock trades attractively at 2.8x and 3.2x FY15E EPS and EV/EBITDA respectively. We reiterate our “BUY" recommendation and revised down our target by 2.1% to Rs. 382, valuing at 4.5x FY15E EPS and 4.0x FY15E EV/EBITDA, which has a potential upside of 61%.



Source: Karvy Research

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