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For 2QFY2012, Siyaram Silk Mills (SSM) reported a strong performance.
The company’s net sales grew by 34.9% qoq and 13.5% yoy to `244cr. OPM
expanded by 68bp yoy to 13.4%. Net profit witnessed 16.9% yoy growth to `17cr.
We continue to maintain our Buy view on the stock.
Strong top-line growth, margin expands: SSM’s top line grew by 34.9% qoq and
13.5% yoy to `244cr, led by higher realization and volumes. EBITDA increased by
19.5% yoy to `33cr on the back of higher revenue and margin expansion during
the quarter. EBITDA margin expanded by 68bp yoy to 13.4% due to lower rawmaterial
cost, which declined by 212bp yoy to 41.7% (43.8%) of sales. The
decline in raw-material cost was partially offset by a 110bp yoy increase in
employee cost to 6.7% (5.6%) of sales. For 2QFY2012, SSM witnessed 16.9% yoy
growth in PAT to `17cr on the back of higher revenue and margin expansion.
Outlook and valuation: SSM is in a strong expansion mode. The company plans
to add 286 looms (479 current looms) in a phased manner over FY2011-13 in
the fabric segment and will be adding 400 machines in its readymade garment
(RMG) segment by September 2011. Moreover, timely capacity expansion will
help the company to take full advantage of the growing demand in India, which
will drive its revenue at a 16% CAGR over FY2011-13E. The stock is currently
trading at reasonable valuation of 3.9x FY2013E earnings (as against its
historical median of 6x one-year forward EPS). We continue to maintain our Buy
recommendation on the stock with a revised target price of `426, valuing the
stock at 6x FY2013E earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Siyaram Silk Mills (SSM) reported a strong performance.
The company’s net sales grew by 34.9% qoq and 13.5% yoy to `244cr. OPM
expanded by 68bp yoy to 13.4%. Net profit witnessed 16.9% yoy growth to `17cr.
We continue to maintain our Buy view on the stock.
Strong top-line growth, margin expands: SSM’s top line grew by 34.9% qoq and
13.5% yoy to `244cr, led by higher realization and volumes. EBITDA increased by
19.5% yoy to `33cr on the back of higher revenue and margin expansion during
the quarter. EBITDA margin expanded by 68bp yoy to 13.4% due to lower rawmaterial
cost, which declined by 212bp yoy to 41.7% (43.8%) of sales. The
decline in raw-material cost was partially offset by a 110bp yoy increase in
employee cost to 6.7% (5.6%) of sales. For 2QFY2012, SSM witnessed 16.9% yoy
growth in PAT to `17cr on the back of higher revenue and margin expansion.
Outlook and valuation: SSM is in a strong expansion mode. The company plans
to add 286 looms (479 current looms) in a phased manner over FY2011-13 in
the fabric segment and will be adding 400 machines in its readymade garment
(RMG) segment by September 2011. Moreover, timely capacity expansion will
help the company to take full advantage of the growing demand in India, which
will drive its revenue at a 16% CAGR over FY2011-13E. The stock is currently
trading at reasonable valuation of 3.9x FY2013E earnings (as against its
historical median of 6x one-year forward EPS). We continue to maintain our Buy
recommendation on the stock with a revised target price of `426, valuing the
stock at 6x FY2013E earnings.
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