Siyaram Silk Mills - 2QFY2016 Result Update - Angel Broking

For 2QFY2016, Siyaram Silk Mills (SSML)' results have come in slightly below our estimates. The company has reported a flattish top-line and bottom-line growth.

Flattish top-line growth: The top-line for the quarter came in flat; ie it declined marginally by 0.02% yoy to Rs. 398cr.

Underperformance at the EBITDA level: The EBITDA for the quarter grew by ~2% yoy to Rs. 50cr and the EBITDA margin expanded by 20bp yoy to 12.5%. The raw material cost as a percentage of sales declined by 226bp yoy to 48.6% but there was a 99bp yoy and 107bp yoy increase in employee and other expense, respectively, resulting in an almost flat EBITDA margin for the quarter.

Flattish PAT growth: During the quarter, the net profit came in flat at Rs. 23cr (as against Rs. 22cr in 2QFY2015) due to lower sales growth.

Outlook and Valuation: Going forward, we expect SSML to report a net sales CAGR of ~10% to ~Rs. 1,815cr and adj.net profit CAGR of ~12% to Rs. 98cr over FY2015-17E on back of market leadership in blended fabrics, strong branding, wide distribution channel, strong presence in tier II and tier III cities and emphasis on latest designs and affordable pricing points. At the current market price, SSML trades at an inexpensive valuation (at a P/E of 9.0x its FY2017E earnings). We have a Buy rating on the stock and target price of Rs. 1,145 (11x FY2017E EPS).

Shares of SIYARAM SILK MILLS LTD.-$ was last trading in BSE at Rs.920 as compared to the previous close of Rs. 934. The total number of shares traded during the day was 683 in over 85 trades.

The stock hit an intraday high of Rs. 980.5 and intraday low of 920. The net turnover during the day was Rs. 647143.

Source : Equity Bulls

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