Views on Visaka Industries 3QFY2016 Result: Angel Broking

Views of Mr. Milan Desai (Research Analyst - Mid Caps, Angel Broking) on Visaka Industries 3QFY2016 results:

3QFY2016 numbers below expectation

"For 3QFY2016, Visaka Industries posted numbers that were below our estimates. The top-line during the quarter was flat witnessing a marginal growth of 0.6% YoY to INR 215cr. This was lower than our estimate of INR 239cr. The raw material cost as a percentage of sales increased by 455bp YoY to 57.7% of sales and employee expense grew by 146bp YoY to 7.8% of sales. However, this was compensated by 645bp YoY decline in other expenses to 26.9% of sales and resulting in EBITDA margin improving by 44bp YoY to 7.7% and EBITDA growing by 6.7% YoY to INR 16cr. This is in-line with our estimate of 7.1% and INR 17cr respectively. The company reported bottom-line of INR 1.1cr which is lower than our estimate of INR 1.6cr.

The top-line for the Building Products segment declined by 3.6% on YoY basis to INR 167cr. The EBIT margin for the segment reported 153bp YoY expansion to 3.9%. The Synthetic Yarn segment witnessed 5.1% YoY growth in its top-line to INR 41cr with EBIT margin expanding by 73bp YoY to 13.3%.

Considering the weakness in rural economy, the performance of the building products division is likely to remain subdued in the near term. The negative currency movement, which has impacted raw material cost, is likely to stabilize going forward. Moreover, the Synthetic Yarn business is performing well which in the longer run should benefit from rise in textile exports. We maintain our BUY recommendation on the stock."

Shares of VISAKA INDUSTRIES LTD. was last trading in BSE at Rs.102.7 as compared to the previous close of Rs. 105.5. The total number of shares traded during the day was 2886 in over 62 trades.

The stock hit an intraday high of Rs. 107 and intraday low of 101.1. The net turnover during the day was Rs. 304549.

Source : Equity Bulls

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