Buy Indo Count Industries Ltd For Target Rs. 523 By Sushil Finance
Highlights from the Quarter (Q1FY26):
Indo Count Industries Ltd (ICIL) reported subdued revenue performance in Q1FY26 at Rs. 958.7 cr., up 1.8% YoY but down 6.2% QoQ. Sales volumes stood at 23.6 mn meters, compared with 25.3 mn meters in Q1FY25, reflecting a decline in volume but an improvement in realization per meter by ~9%. The volume drop was primarily attributable to the prevailing tariff uncertainty between the US and India, which has impacted order flows.
EBITDA for the quarter came in at Rs. 110 cr., down 24% YoY (Rs. 145.1 cr. in Q1FY25), but up 34.3% QoQ (Rs. 81.9 cr. in Q4FY25). EBITDA margin stood at 11.5%, compared with 15.4% in the same quarter last year and 8.0% in the preceding quarter. The margin contraction on a YoY basis was mainly due to an unfavourable product mix and incubation costs of new businesses, which management expects to continue until year-end. Net profit for the quarter was reported at Rs. 37.8 cr., translating into a net margin of 3.9%. Importantly, ICIL continued its balance sheet discipline, reducing debt by Rs. 60 cr. during Q1FY26.
Since the US accounts for nearly 70% of ICIL’s revenues, management has highlighted near-term uncertainty stemming from recent tariff escalations between the US and India. Effective end-August 2025, tariffs have been raised from 10–25% to 50%, which could impact demand and customer ordering patterns over the coming quarters. The company remains in active dialogue with its US clients as they adapt to the evolving trade environment. While Indo Count may derive some benefit from Free Trade Agreements (FTAs) with other countries, any material shift in export mix away from the US could take a few quarters to play out. Despite these challenges, management has reiterated its long-term guidance of doubling revenues over the medium term and sustaining EBITDA margins in the 16–18% range.
OUTLOOK AND VALUATION
We are revising our target price to Rs. 523 from Rs. 555 due to prevailing tariff uncertainty between the US and India coupled with impact on operating margins led by unfavorable product mix and incubation costs of new businesses. However, We expect FY28E revenue at Rs.5,764.7 cr, EBITDA of Rs.954.1 cr at an EBITDA margin of 16.6% and PAT of Rs.608.8 cr. We estimate FY27E EPS at Rs.30.7, and assign a PE multiple of 17x, reducing the target price to Rs.523 (upside ~83.4%) from the current market price of Rs.285. We keep our BUY Rating for ICIL over an investment horizon of 24-30 months.
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