Published on 18/09/2020 12:33:13 PM | Source: Sushil Finance Ltd

Buy Indian Hume Pipes Co Ltd For Target Rs.257 - Sushil Finance

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Highlightes From The Quarter (Q1FY21):

* The Indian Hume Pipe Company Ltd (IHP) reported a total Revenue from Operations of Rs. 217.7 Crore in Q1FY21 as against Rs. 463.2 Crore in Q1FY20.

* In the quarter the Company has reported an EBIDTA of Rs. 15.3 Crore as against Rs. 51.3 Crore in Q1FY20.

* The Company's net loss for the current quarter of Rs. 5.5 Crore as against net profit Rs. 20.9 Crore and Rs. 25.3 Crore reported in Q1FY20 and Q4FY20 respectively.

* The nationwide lockdown imposed to control COVID-19 pandemic resulted in disruption in supply chain and availability of manpower, leading to stoppage of factories and project execution, in major part of this quarter. Though gross margins were stable, net profit impaired due to non-absorption of fixed cost on 52.7% lower volume of turnover.

* The estimated balance value of work as at 18th August, 2020 is Rs. 4,445 Crore as against Rs. 4,354 Crore as at 9 th August, 2019.

* The Company is L1 in one project having value of Rs. 134.82 Crore as at 18th August, 2020.


Outlook and Valuation

We estimate the company to post revenue of ~Rs. 1,824 Cr in FY22E showing a 3 year CAGR of ~6% with an EBITDA margin of 11.80%. Additionally, we estimate the company’s PAT to be ~Rs. 83 Cr with an EPS of ~Rs. 17.14. We have assigned a PE multiple of 15X to FY22E EPS and arrived at a target price of ~Rs. 257 which gives us an upside of ~38% within an investment horizon of 24 Months.


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