Views on Nilkamal 2QFY2016 Results: Angel Broking

Views of Mr. Milan Desai (Research Analyst - Mid Caps, Angel Broking) on Nilkamal 2QFY2016 Results:

Nilkamal results in-line with expectations

"For 2QFY2016, Nilkamal reported a good set of numbers. The top-line grew by 4.7% YoY to INR 482cr, which is in-line with our estimate of INR 482cr. The raw material cost as a percentage of sales, declined by 575bp YoY to 58.5% of sales. As per our estimates, the average polyethylene prices declined by 18.5% on YoY basis (8.4% decline on QoQ basis) during the quarter resulting in improved gross margins. However, the employee cost and other expenses increased by 57bp YoY and 156bp YoY to 6.7% and 24.3% of sales respectively; as a result, the EBITDA margin expanded by 361bp YoY to 10.4%. We had built in EBITDA margin estimate of 10.9%. The interest expense has declined by 48.4% YoY to INR 4 which is reflected in INR 35cr reduction in debt by the company. Aided by higher other income, the net profit at INR 26 came in slightly higher than our estimate of INR 22cr.

The lower raw material cost scenario has benefited the company and the prices of polymers are likely to remain at lower levels. We remain positive on the company given its leading position in the plastic furniture industry. We will assign a rating post management interaction."

Shares of NILKAMAL LTD. was last trading in BSE at Rs.1172 as compared to the previous close of Rs. 978.75. The total number of shares traded during the day was 229689 in over 15721 trades.

The stock hit an intraday high of Rs. 1174.5 and intraday low of 1006. The net turnover during the day was Rs. 254260965.

Source : Equity Bulls

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