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Bombay Rayon Fashions - Evident input cost pressures…
Bombay Rayon Fashions (BRFL) reported its Q3FY11 numbers that were
marginally lower than our estimates. On a sequential basis, revenues
improved marginally (up 4% QoQ). While revenues from the garments
division remained flat, the fabric segment grew 7% QoQ led by 6%
volume growth to 23.07 million metre. Despite 3.3% increase in
garments’ volumes, lower realisation dampened growth. EBITDA
margin improved YoY (up 143 bps) but came in lower than our
estimates (27%) at 25.7% as BRFL was unable to pass on input price
hikes to customers. Higher interest and depreciation outgo further
weighed on the bottomline leading to a mere 12.6% YoY PAT growth.
Though revenues improved YoY…
BRFL’s Q3FY11 revenues increased 30.2% YoY to | 544.2 crore (up
4.0% QoQ) against our estimated | 561.1 crore. While we
anticipated a marginal dip in the EBITDA margin, the company’s
EBITDA margin dipped 271 bps QoQ to 25.7%. However, on a YoY
basis, the EBITDA margin improved 143 bps.
….higher interest and depreciation costs subdue profitability
Depreciation and interest costs increased substantially during
Q3FY11. Therefore, PAT growth was lower at 12.6% and the
company reported a PAT of | 53.2 crore.
In Q2FY11, BRFL had acquired a 70% stake in STI India Ltd for a
consideration of | 70 crore. The open offer to buy another 20% stake
opened on January 29, 2011 and will close on February 17, 2011.
Valuation
BRFL is trading at 9.2x FY12E earnings. We expect BRFL’s revenues and
net profit to register a CAGR of 25% and 27%, respectively, over FY10-
FY12E. The stock has outperformed the broader indices in the last quarter
and has appreciated ~7% from our last update. We have valued the stock
at 10x FY12E earnings of | 25.3 and arrived at a target price of | 253. We
have an ADD rating on the stock.
Valuation
BRFL is trading at 9.2x FY12E earnings. We expect BRFL’s revenues and
net profit to register a CAGR of 25% and 27%, respectively, over FY10-
FY12E. The stock has outperformed the broader indices in the last quarter
and has appreciated ~7% from our last update. We have valued the stock
at 10x FY12E earnings of | 25.3 and arrived at a target price of | 253. We
have an ADD rating on the stock.
Exhibit 9: Revenues and profitability to see uptrend
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bombay Rayon Fashions - Evident input cost pressures…
Bombay Rayon Fashions (BRFL) reported its Q3FY11 numbers that were
marginally lower than our estimates. On a sequential basis, revenues
improved marginally (up 4% QoQ). While revenues from the garments
division remained flat, the fabric segment grew 7% QoQ led by 6%
volume growth to 23.07 million metre. Despite 3.3% increase in
garments’ volumes, lower realisation dampened growth. EBITDA
margin improved YoY (up 143 bps) but came in lower than our
estimates (27%) at 25.7% as BRFL was unable to pass on input price
hikes to customers. Higher interest and depreciation outgo further
weighed on the bottomline leading to a mere 12.6% YoY PAT growth.
Though revenues improved YoY…
BRFL’s Q3FY11 revenues increased 30.2% YoY to | 544.2 crore (up
4.0% QoQ) against our estimated | 561.1 crore. While we
anticipated a marginal dip in the EBITDA margin, the company’s
EBITDA margin dipped 271 bps QoQ to 25.7%. However, on a YoY
basis, the EBITDA margin improved 143 bps.
….higher interest and depreciation costs subdue profitability
Depreciation and interest costs increased substantially during
Q3FY11. Therefore, PAT growth was lower at 12.6% and the
company reported a PAT of | 53.2 crore.
In Q2FY11, BRFL had acquired a 70% stake in STI India Ltd for a
consideration of | 70 crore. The open offer to buy another 20% stake
opened on January 29, 2011 and will close on February 17, 2011.
Valuation
BRFL is trading at 9.2x FY12E earnings. We expect BRFL’s revenues and
net profit to register a CAGR of 25% and 27%, respectively, over FY10-
FY12E. The stock has outperformed the broader indices in the last quarter
and has appreciated ~7% from our last update. We have valued the stock
at 10x FY12E earnings of | 25.3 and arrived at a target price of | 253. We
have an ADD rating on the stock.
Valuation
BRFL is trading at 9.2x FY12E earnings. We expect BRFL’s revenues and
net profit to register a CAGR of 25% and 27%, respectively, over FY10-
FY12E. The stock has outperformed the broader indices in the last quarter
and has appreciated ~7% from our last update. We have valued the stock
at 10x FY12E earnings of | 25.3 and arrived at a target price of | 253. We
have an ADD rating on the stock.
Exhibit 9: Revenues and profitability to see uptrend
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