RSWM Limited - Q4FY16 Result Update - Anand Rathi

- For the Q4 FY16, net revenue remained flat at Rs. 7791mn on y-o-y basis. Yarn division witnessed marginally growth of ~3% at Rs. 6804mn while fabric division de-grew by ~5% at 1241mn. Margins for the quarter came in at 15.2% versus 14.4% Q4FY15. The company is now focusing on value added products that account for 15% of total revenues and exports 30%.

- For the full year, net profit rose 24% to Rs 1060mn as against Rs 849mn. Net revenue however declined by ~2% to Rs 29547mn as against Rs 30033mn. On operational front, for the year as a whole, the company reported margins of 14% from 12% reported in earlier fiscal.

- The company has completed all its expansion of capacities that were taking place from last two years. It is now streamlining its capacities. Management is confident of achieving significant margin expansion in FY17 given cost reductions, new capacities being added both in the yarn as well as in the denim division which will go on stream. However management capacities being added both in the yarn as well as in the denim division which will go on stream. However management foresees a stagnant growth for the year on account of streamlining the capacities while after that they expect 15% growth in top-line. Also management is confident of the company being debt free by FY19. The current debt is around Rs 8800mn and they play to repay around Rs 2200mn each for the next two years. Cash profits too will aid debt repayment.

- The company owns the Mayur Suitings brand and has high-end customers like Raymond, Siyaram Silk Mills, Welspun India, etc.

- With most of the expansions coming on stream, company is positive on achieving growth momentum in its top-line and margins. We continue to remain positive on the stock and maintain our BUY recommendation on the stock with the target price of Rs. 440 per share

Shares of RSWM LTD. was last trading in BSE at Rs.386.9 as compared to the previous close of Rs. 340.7. The total number of shares traded during the day was 166374 in over 5097 trades.

The stock hit an intraday high of Rs. 399.9 and intraday low of 351. The net turnover during the day was Rs. 64041509.

Source : Equity Bulls

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