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Vardhman Textiles - Revenue growth visibility amid stable margins - Karvy
Posted On : 2013-02-12 10:39:41( TIMEZONE : IST )
Vardhman Textiles sales, EBITDA and net income grew 11%, 33% and 39% YoY respectively during Q3FY13
The Company's top-line grew 11.1% YoY to Rs. 10,927 mn (our expectations Rs. 11,100 mn) during Q3FY13, while sequential growth was registered at 7.1%. Yarn sales grew 9.4% YoY to Rs. 9,055 mn, while revenue from fabric grew 12.0% YoY to Rs. 3,581 mn during the quarter.
Vardhman's EBITDA registered a growth of 32.9% YoY to Rs. 2,258 mn (our expectations Rs. 1,853 mn), with sequential growth of 11.2%. EBITDA margins for the quarter expanded by 340 bps over a corresponding quarter to 20.7% on the back of better spread on yarn and fabric. India was benefitted due to cotton price disparity vis-Ã -vis China; where spinners are procuring cotton around 10%-15% expensive than India.
Net Income grew 38.7% YoY to Rs. 836 mn, while sequentially growth was registered at 19.5%.
The Company has not disclosed quantitative data as yet, in the view of new compliance guidelines and is in the process to finalize disclosure norms, to file data on the stock exchanges.
During the Quarter, the Company's Budhni plant has started commercial production with capacity of 190 Looms, 30 MMPA of fabric processing and 1440 rotors. Capex of another 120,000 spindles and 240 Looms are in process, which is expected to start commercial production in phases from June'13 onwards and expect to complete by Dec'13. Thus FY15 is likely to witness full benefits of ongoing capex.
Outlook & Valuations
We expect Vardhman's revenue and net income to grow at a CAGR of 10% and 40%, respectively over FY12-15E. We revised our FY13E & FY14E EPS estimates upwards by 17.3% & 4.7% while introducing FY15E EPS. At CMP of Rs. 287, the stock trades at the multiple of 4.7x and 4.0x FY15E earnings and EV/EBITDA respectively. We maintain our "BUY" recommendation with revised target price of Rs. 335 (Rs. 297) per share, valuing at 5.5x FY15E EPS (4.5x FY15E EV/EBITDA), which represents an upside potential of 17%.
