* Q4 results were quite weak due to loss of sales in March (~Rs2bn) and slower offtake from real estate
* Electrical cables revenue plunged 24% yoy largely due to miss of year‐end sales. In this segment, power cable sales grew at 18% yoy.
* Decline in margins was lower than expected. We believe product mix towards housing wires cushioned the impact of lower sales
* Communication cables revenue was flat on a yoy basis aided by increase in demand of OFC and LAN cables. However, margins remained under pressure due to lower utilization
* Revenue growth in FMEG products was quite strong in Jan and Feb, however loss of sales in March restricted revenue growth to 8.8% yoy. Growth was led by new product introduction and improvement in distribution reach.
* Recovery in business during Q1 has been subdued due to labor issues at customer sites
* We have cut our FY21/FY22 estimates by 42%/37% factoring slower recovery in demand and accounting for revenue loss during lockdown
* We downgrade the stock to ADD from Buy as we expect earnings recovery to be sluggish on weak offtake from real estate sector. We revise our target price using SOTP method to Rs337 (Prev TP 483).
* Adjusting for cash and cash equivalents, valuations are attractive at 11x FY22E standalone P/E. Re‐rating would depend on recovery in real estate and telecommunications spending.
Risk to our call
* Faster recovery in demand from real estate and telecommunication sector
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