Dollar Industries Ltd - Result Update - BUY - TP Rs.560 - Kotak

- Dollar Industries Ltd (DIL) Q2FY18 results were inline with our estimates. The Net revenue for the quarter was at Rs 2.13 bn which was up by 8% yoy and was below our estimates due to GST impacting volumes in the quarter. EBITDA for the quarter grew by 19% yoy to Rs 291 mn with EBITDA margin ahead of estimates at 13.7% (vs our estimates of 12%). This is due to improved efficiency, better product mix, input tax credit and increase in selling price. PAT grew by 27% yoy on strong margin and reduction in term loan resulting in decline in interest expenses. The management has maintained positive outlook for H2FY18 and guided for ~30% yoy growth in revenue with better margins. This would be driven by restocking in the system, strong performance by brands and strong winter positively impacting thermalwears products. We have revised our estimates factoring in better margins and lower interest expenses led by debt reduction through preferential allotment of shares to the promoters. We maintain our positive view on the company and expect company's PAT to grow faster than revenue in the longer run. The stock is trading at PE of 32.1x on FY19 revised EPS of Rs 14.8. We maintain BUY rating on the stock with revised target price of Rs 560 (Vs Rs 550 earlier).

Source : Equity Bulls

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