Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shri Lakshmi Cotsyn Ltd -Q2FY11 Result Update
Shri Lakshmi Cotsyn Ltd
Going steady
Fundamental Grade 2/5 (Moderate fundamentals)
Valuation Grade 5/5 (CMP has strong upside)
Industry Textiles, Apparels & Luxury Goods
Fair Value Rs 150
CMP Rs 90
Shri Lakshmi Cotsyn Ltd’s (Lakshmi Cotsyn’s) Q2FY11 (year-ended June)
revenues were in line with CRISIL Equities’ expectations. The five-fold increase
in the terry towel capacity came on stream this quarter. We believe that the
benefit of incremental revenues through the expanded capacity will be seen in
the subsequent quarters as expected and, hence, maintain the revenue
estimates for FY11 and FY12. However, since surging cotton prices are
expected to impact the company’s profitability, we have lowered our EBITDA
margin estimates for FY11 and FY12, and maintain the fundamental grade of
‘2/5’.
Q2FY11 (June-ending) result analysis
• Lakshmi Cotsyn’s Q2FY11 revenues grew by 16.0% y-o-y to Rs 4.3 bn
driven by the home furnishing segment, which grew by ~43.2% y-o-y .
• EBITDA margin contracted by 163 bps y-o-y to 14.4% in Q2FY11. The
company has been able to pass on the rise in cotton yarn (major raw
material) prices to its international customers such as IKEA. However,
majority of the sales are in the domestic market, where the company has
been able to pass on cotton yarn price hike only partially. Consequently,
EBITDA margin declined by 136 bps y-o-y to 14.4% in Q2FY11.
• PAT margin remained flat at 5.9% y-o-y. EPS was lower by 15.4% at Rs
12.3.
Key Developments
• The company had outstanding FCCBs worth US$7.2mn as of Q1FY11.
FCCBs worth US$ 2 mn were converted at the revised conversion price of
Rs 108.41 in Q2FY11.
• The capacity expansion in the denim, technical textiles and sheeting
segments is expected to commence as per schedule in December 2011.
Valuations: Current market price has strong upside
We continue to use the discounted cash flow method to value Lakshmi Cotsyn.
Due to downward revision in earnings estimates, the fair value of Lakshmi
Cotsyn is revised to Rs 150 per share. At the current market price, our
valuation grade is ‘5/5’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shri Lakshmi Cotsyn Ltd -Q2FY11 Result Update
Shri Lakshmi Cotsyn Ltd
Going steady
Fundamental Grade 2/5 (Moderate fundamentals)
Valuation Grade 5/5 (CMP has strong upside)
Industry Textiles, Apparels & Luxury Goods
Fair Value Rs 150
CMP Rs 90
Shri Lakshmi Cotsyn Ltd’s (Lakshmi Cotsyn’s) Q2FY11 (year-ended June)
revenues were in line with CRISIL Equities’ expectations. The five-fold increase
in the terry towel capacity came on stream this quarter. We believe that the
benefit of incremental revenues through the expanded capacity will be seen in
the subsequent quarters as expected and, hence, maintain the revenue
estimates for FY11 and FY12. However, since surging cotton prices are
expected to impact the company’s profitability, we have lowered our EBITDA
margin estimates for FY11 and FY12, and maintain the fundamental grade of
‘2/5’.
Q2FY11 (June-ending) result analysis
• Lakshmi Cotsyn’s Q2FY11 revenues grew by 16.0% y-o-y to Rs 4.3 bn
driven by the home furnishing segment, which grew by ~43.2% y-o-y .
• EBITDA margin contracted by 163 bps y-o-y to 14.4% in Q2FY11. The
company has been able to pass on the rise in cotton yarn (major raw
material) prices to its international customers such as IKEA. However,
majority of the sales are in the domestic market, where the company has
been able to pass on cotton yarn price hike only partially. Consequently,
EBITDA margin declined by 136 bps y-o-y to 14.4% in Q2FY11.
• PAT margin remained flat at 5.9% y-o-y. EPS was lower by 15.4% at Rs
12.3.
Key Developments
• The company had outstanding FCCBs worth US$7.2mn as of Q1FY11.
FCCBs worth US$ 2 mn were converted at the revised conversion price of
Rs 108.41 in Q2FY11.
• The capacity expansion in the denim, technical textiles and sheeting
segments is expected to commence as per schedule in December 2011.
Valuations: Current market price has strong upside
We continue to use the discounted cash flow method to value Lakshmi Cotsyn.
Due to downward revision in earnings estimates, the fair value of Lakshmi
Cotsyn is revised to Rs 150 per share. At the current market price, our
valuation grade is ‘5/5’.
No comments:
Post a Comment