Buy Indo Count Industries Ltd For Target Rs. 555 - Sushil Finance
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Multiple acquitisions to unlock immense potential in the domestic & international markets
Indo Count Industries Limited (ICIL) has a strong brand presence of over 3 decades in the domestic and international markets. ICIL is a vertically integrated company and is one of the largest manufacturers and exporters of bed sheets, bed linen, and quilts from India and is recognised among the top three global bed sheet suppliers to the US. The company’s operations are spread across more than 50+ countries across 5 continents, including those in North America, the United Kingdom, the Middle East, and Asia Pacific. The company has recently acquired IP rights and trademarks for the brand ‘Wamsutta’, and licensing agreements for ‘Fieldcrest’ and ‘Waverly’. The acquisitions will unlock new opportunities for the company with broader product offerings and higher presence in the international markets. Thus the company’s revenues are likely to grow by 15%/18%/20% in FY25/FY26/FY27.
Healthy Financial profile enables the company to strong arm any adverse market tailwinds
The company’s revenues have grown at a CAGR of 14.4% from FY20 to FY24 and were at Rs.3,557 crore in FY24 from Rs.2080 crore in FY20. The EBITDA margins have significantly improved to 15.7% in FY24 as compared to 8.8% in FY20. Subsequently, the net profit margins and EPS have improved to 9.5% in FY24 and Rs.17.1 respectively as against 8.2% and Rs.8.7 in FY20.
OUTLOOK & VALUATION
The increasing demand for Indian bed linens in the international market coupled with multiple acquisitions enables the company to increase its product offerings and product reach in the international market. Hence, we have forecasted annual sales growth of 15%, 18% and 20% in FY25E, FY26E and FY27E derived a revenue of Rs. 5,792 crore for FY27E. We expect the PAT margins to remain in the range of 9%-11% through FY25E to FY27E and EPS of Rs. 32.7 in FY27E. As we assign a P/E multiple of 17x we arrive at a price target of Rs. 555 which gives us an upside of ~32% from CMP of Rs. 422. Hence, we initiate coverage on Indo Count Industries Limited with a BUY rating over an investment horizon of 24-30 months.
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