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Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Posted On: 2020-11-22 08:50:15 (Time Zone: Arizona, USA)

Shankara Building Products' (Shankara) H1FY21 has been about balance sheet repair and cost rationalisation amid the Covid-19 shock. For H1FY21, the topline de-grew 34% YoY to Rs. 834 crore (decline of ~23% YoY for Q2, with a sharp sequential improvement) impacted by Covid-19. The EBITDA margin for H1FY21 declined 350 bps YoY to 1% (down 20 bps to 3.8% in Q2) mainly on account of negative operating leverage. Reported loss was at Rs. 19 crore for H1 while PAT for Q2 was at Rs. 6.3 crore, down 39% YoY.

Valuation & Outlook

With continued focus on the balance sheet, Shankara has been able to reduce its debtors by Rs. 172 crore and inventory by Rs. 108 crore in H1FY20. It was at Rs. 257 crore and Rs. 292 crore, respectively, as on September 2020-end. Also, its overall net debt + acceptances has reduced by 14% in H1FY20 and was at Rs. 292 crore as on September 2020-end. We believe Shankara steadily aligning its business towards its core competency is positive in the long term. Growth, however, is elusive. We would wait for the same before turning constructive. Hence, we maintain HOLD with a target price of Rs. 320/share. We value its retail business at Rs. 310/share (6x FY22E EV/EBIT).

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Shares of Shankara Building Products Ltd was last trading in BSE at Rs.318.5 as compared to the previous close of Rs. 322. The total number of shares traded during the day was 12348 in over 1478 trades.

The stock hit an intraday high of Rs. 333 and intraday low of 316. The net turnover during the day was Rs. 3993699.

Source: Equity Bulls

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