Siyaram Silk Mills - 3QFY2013 Result Review - Angel Broking

Siyaram Silk Mills (CMP: Rs. 278/ TP: Rs. 332/ Upside: 19%)

For 3QFY2013, Siyaram Silk Mills (SSM) reported mixed set of numbers. The company's top line grew by 25.6% yoy to Rs. 279cr, 7.8% higher than our estimate of Rs. 259cr for the quarter. However, the company disappointed on the operating margin front as it dipped by 199bp yoy to 11.2% for the quarter, against our estimate of 13.1%. This was due to higher expenses, majorly the raw material cost and the employee cost. This resulted in a bottomline growth of 4.6% yoy, at Rs. 14cr, in line with our expectation.

We remain positive on the company as the company is on strong expansion mode in order to take advantage of the growing demand for branded fabric and garments in India. The company has already installed 72 looms in 1HY2013 and expects to add another 50by the end of FY2013E. At CMP of Rs. 278, the stock is trading at a PE of 4.2x FY2014E earnings. We maintain our Buy recommendation on the stock with a revised target price of Rs. 332 based on a target P/E of 5.0x for FY2014E.

Source : Equity Bulls

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