Siyaram Silk Mills - Q1FY14 Result Review - Angel Broking

For 1QFY2014, Siyaram Silk Mills (SSM) reported numbers mixed set of numbers. The company's top line grew substantially by 22.1% yoy to Rs. 251cr for the quarter, 9.5% above with our estimate of Rs. 229cr. However, the company disappointed on the operating margin front. On yoy basis, the operating margin dipped by 88bp and came in at 10.3% for the quarter against our estimate of 11.2% mainly due to higher than expected raw material cost as a per cent of net sales and higher employee cost. Interest outgo for the quarter was Rs. 7cr, in-line with our estimate; however, depreciation cost for the quarter stood at Rs. 7cr, higher than our estimate of Rs. 5cr. Tax for the quarter stood at Rs. 5cr against our estimate of Rs. 7cr. Consequently, the company reported a bottomline of Rs. 11cr, 4.1% higher yoy, against our estimate of Rs. 10cr.

The company is on expansion mode and plans to add 50 looms and 100 garment machines in FY2014E. Also, the company has signed 27 franchise agreements in the first two months of FY2014 out of targeted 90 for the full year for strengthening and improving brand visibility. At CMP of Rs. 242, the stock is trading at a PE of 3.1x FY2015E earnings. We maintain our Buy recommendation on the stock with a revised target price of Rs. 311 based on a target P/E of 4.0x for FY2015E.

Source : Equity Bulls

Keywords