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Research
Views on Surya Roshni 2QFY2016 Result: Angel Broking
Posted On : 2015-11-08 01:07:09( TIMEZONE : IST )
Views of Mr. Milan Desai (Research Analyst - Mid Caps, Angel Broking) on Surya Roshni 2QFY2016:
Surya Roshni numbers mostly in-line with estimates:
"For 2QFY2016, Surya Roshni posted a decent set of numbers. The top-line grew by 4.3% YoY to INR722cr led by superb performance by the Lighting Division that grew by 24.1% YoY to INR355cr. The Steel Division declined by 9.2% YoY to INR414cr which is largely attributed to sharp decline in commodity prices which had to be passed on. The top-line was marginally below our estimate of INR734cr. The EBITDA margin witnessed a slight decline of 36bp YoY to 7.8% (against our estimate of 8.3%) on account of higher employee and other expenses. However, the same was mostly made up by 244bp YoY decline in raw material cost to 70.3% of sales. The company had increased its advertisement spent in the past quarter by roping in celebrities to promote its Lighting Business which could have resulted in higher other expenses. The company has reduced its debt in the half year and as a result, the interest cost has declined by 16.3% YoY to INR24cr. Aided by lower interest outgo, the net profit grew by 3.7 YoY to INR13 vis-Ã -vis our estimate of INR17cr.
The Lighting Division of the company has shown strong growth momentum (growing at 23.3% on YoY basis in 1HFY2016) and is generating sufficient cash flows, which is enabling it reduce its debt quantum. We remain positive on the company given that it has a superior reach in terms of dealer count which should help in capitalizing on the structural shift in the lighting industry towards LED lighting. We maintain our BUY recommendation on the stock with a target price of INR183."
Shares of SURYA ROSHNI LTD. was last trading in BSE at Rs.126.8 as compared to the previous close of Rs. 129.2. The total number of shares traded during the day was 54611 in over 551 trades.
The stock hit an intraday high of Rs. 131.2 and intraday low of 125.5. The net turnover during the day was Rs. 7008998.
