Dear All,
Forwarding you the Result Update on Siyaram Silk Mills for 4QFY2011 with an Accumulate recommendation and a Target Price of `422 (12 months).
For 4QFY2011, Siyaram Silk Mills (SSM) registered strong performance with 30.2% yoy growth in net sales to `245cr. OPM contracted by 94bp yoy to 13.0%. Net profit witnessed 21.8% yoy growth to `19cr. We continue to maintain our Accumulate rating on the stock.
Strong overall performance yoy: SSM’s top line grew by 30.2% yoy for 4QFY2011 as well as for FY2011 to `245cr and `859cr, respectively, led by higher realisation and volumes. EBITDA increased by 21.4% yoy in 4QFY2011 to `32cr on the back of higher revenue during the quarter. However, the margin declined by 94bp to 13% due to higher other expenditure, which increased by 471bp to 19.6% (14.9%). This increase in other expenses was partially offset by a 300bp yoy decrease in raw-material prices to 37% (40%). For 4QFY2011, the company witnessed a 22.6% increase in PAT to `187cr on the back of higher revenue and margin expansion during the quarter.
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 5.3x FY2013E earnings (as against its historical median of 6x one-year forward EPS). We continue to maintain our Accumulate rating on the stock with a revised target price of `422 (`414), valuing the stock at 6x FY2013E earnings.
Kindly click on the following link to view the Report.
Siyaram Silk Mills - RU4QFY2011
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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