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Hitachi Home & Life Science Solutions (HHLS) reported disappointing 2QFY2012
results. The company’s revenue declined marginally by 2.1% yoy to `128cr in
2QFY2012. On the profitability front, the company reported a loss of `7cr
(includes forex loss of `7.8cr) in 2QFY2012 as compared to a profit of `5cr in
2QFY2011. We maintain our FY2013E earnings estimates at `41cr while EBITDA
margins are expected to improve from 7.4% in FY2011 to 7.8% in FY2013E due
to better operating leverage. We maintain our Buy recommendation on the stock.
Below-expectation performance: Net sales declined by 2.1% yoy to `128cr.
EBITDA margin came in at 1.6% in 2QFY2012, down 705bp yoy from 8.7% in
2QFY2011, on the back of higher other expenses and employee expenses.
On the bottom-line front, the company reported a loss of `7cr mainly due to forex
loss of `7.8cr on ECB.
Outlook and valuation: We expect HHLS to post a 15% CAGR growth over
FY2011-13E, aided by a 14.7% CAGR volume growth for the same period due to
increasing per capita income. Copper prices have seen a decline of ~20% in the
past six months, which will lead to increased margins going ahead. PAT is
expected to grow at a CAGR of 17.6% over FY2011-13E to `41cr in FY2013E. At
`165, HHLS is trading at 9.3x FY2013E earnings and P/B of 1.7x for FY2013E.
We maintain our Buy recommendation on the stock with a target price of `212,
based on a target PE of 12x for FY2013E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hitachi Home & Life Science Solutions (HHLS) reported disappointing 2QFY2012
results. The company’s revenue declined marginally by 2.1% yoy to `128cr in
2QFY2012. On the profitability front, the company reported a loss of `7cr
(includes forex loss of `7.8cr) in 2QFY2012 as compared to a profit of `5cr in
2QFY2011. We maintain our FY2013E earnings estimates at `41cr while EBITDA
margins are expected to improve from 7.4% in FY2011 to 7.8% in FY2013E due
to better operating leverage. We maintain our Buy recommendation on the stock.
Below-expectation performance: Net sales declined by 2.1% yoy to `128cr.
EBITDA margin came in at 1.6% in 2QFY2012, down 705bp yoy from 8.7% in
2QFY2011, on the back of higher other expenses and employee expenses.
On the bottom-line front, the company reported a loss of `7cr mainly due to forex
loss of `7.8cr on ECB.
Outlook and valuation: We expect HHLS to post a 15% CAGR growth over
FY2011-13E, aided by a 14.7% CAGR volume growth for the same period due to
increasing per capita income. Copper prices have seen a decline of ~20% in the
past six months, which will lead to increased margins going ahead. PAT is
expected to grow at a CAGR of 17.6% over FY2011-13E to `41cr in FY2013E. At
`165, HHLS is trading at 9.3x FY2013E earnings and P/B of 1.7x for FY2013E.
We maintain our Buy recommendation on the stock with a target price of `212,
based on a target PE of 12x for FY2013E.
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