Q3FY21 Company Update - Hawkins Cookers - ICICI Direct

Owing to renewed customer interest in cooking appliances (as people preferred home cooked food) Hawkins reported healthy topline growth of 20% YoY to Rs. 231 crore in Q3FY21. The company successfully launched a new range of pressure cookers and products like Tri-Ply stainless steel cookware. Further, Hawkins has enhanced its presence in online segment coupled with improved distribution and dealer reach. Gross margins for Q3FY21 declined 210 bps YoY to 56.8% owing to a change in channel mix and steady increase in raw material prices. We believe Hawkins has perked up its marketing spends during the quarter, which has led to other expenses increasing materially by 21% YoY to Rs. 70 crore. Employee expenses increased 16% YoY to Rs. 28.6 crore. Hence, EBITDA margins fell 216 bps YoY to 14.1%, with absolute EBITDA up 4% YoY to Rs. 32.6 crore. Due to higher cash & bank balance, other income was at Rs. 2.6 crore vs. Rs. 0.9 crore in Q3FY20. Ensuing PAT grew 8% YoY to Rs. 24.2 crore. Hawkins through its brand patronage (second largest player in pressure cooker segment) and healthy b/s is well placed to further consolidate its market positioning.

Valuation & Outlook

Before the pandemic struck, Hawkins was on a healthy growth trajectory with sales increasing 18%, 13% in FY19, 9MFY20, respectively. With improved demand scenario for cooking appliances, we expect momentum to sustain going forward and exit FY21E with positive revenue growth rate of 6% YoY and build in revenue CAGR of 12% in FY21-23E. Given fixed cost nature of the business (operating leverage) and ability to pass on increase in raw material prices, we expect earnings to grow at 16% CAGR in FY21-23E. We continue to remain structurally positive on Hawkins owing to its robust b/s and good promoter pedigree. Over the years, the company has maintained b/s prudence with controlled working capital cycle (20% of sales), non-leverage balance sheet and generating healthy RoCE of 55%+. The company has consistently maintained healthy dividend payouts with average ratio of ~75%. We reiterate our BUY rating on the stock with a revised target price of Rs. 6800 (33x FY23E EPS of Rs. 206, previous TP: Rs. 4900).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Hawkins_CoUpdate_Feb21.pdf

Shares of HAWKINS COOKERS LTD. was last trading in BSE at Rs.5680.2 as compared to the previous close of Rs. 5729.25. The total number of shares traded during the day was 1915 in over 410 trades.

The stock hit an intraday high of Rs. 5819.95 and intraday low of 5650. The net turnover during the day was Rs. 10896635.

Source : Equity Bulls

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