Highlights from the Quarter (Q1FY21)
* Denim volumes have recovered to around 70% in July – Export volumes fully recovered, Domestic still lagging; Woven volumes recovered to 64% in July, expect ramp-up in Q3.
* Monthly garment volumes recovered to ~60% by June. Advanced Materials monthly revenues and margins have fully recovered to pre-Covid levels.
* EBITDA margins have recovered to pre-Covid levels, and even higher in few businesses. Cash accruals followed above trends, and became positive starting June.
* Multi-pronged program resulted in long term fixed cost reduction of 15%.
* Net Borrowing went up from Rs 2,371 Cr as of 31st Mar 2020 to Rs 2,702 Cr as of 30th Jun 2020 and is expected to return to Mar 2020 levels by end of Q2.
Outllook and Valuation
We have revised our estimates for FY21 and FY22 and expect the company to report sales of Rs. 7,039.5 Cr in FY22 with PAT & EPS of Rs. 182.5 Cr and Rs 7.06 respectively. We have assigned a PE of ~8X and have arrived with a target price of Rs. 57 (+~72%) from CMP within an investment horizon of 16-20 months
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