Result Update: Indo Count Industries Ltd - BUY - TP Rs.135 - Kotak

Indo Count Industries Ltd (ICIL) reported inline Q3FY18 results, with volume remained flattish sequentially. Standalone net revenues for the quarter declined by 8.5% yoy to Rs 4.6 bn due to inhouse spinning transfer, rupee appreciation and change in incentive structure. On demand side, destocking continued to impact volume offtake in the US market, but the intensity of destocking has reduced. As per the management, the demand situation is improving on qoq and expect pickup in volume from existing as well as new clients. The company has maintained flattish volume guidance for FY18E and aims to utilize its capacity fully by FY21E. EBITDA margins for the quarter declined by 520 bps yoy to 15.1% which is inline due to rupee appreciation. As per management, the cotton prices have been stable and expect EBITDA margins to be in the range of 15-17%. We have cut our estimates for FY19E factoring in decline in realization and external yarn sales with lower EBITDA margin; and introduce FY20E estimates. We recommend BUY (Vs Accumulate earlier) as we see upside in the stock, after recent correction with revised target price of Rs 135 (Vs Rs 142 earlier), valuing the stock at 11x FY20E EPS.

Shares of INDO COUNT INDUSTRIES LTD. was last trading in BSE at Rs.100.95 as compared to the previous close of Rs. 99.35. The total number of shares traded during the day was 86056 in over 760 trades.

The stock hit an intraday high of Rs. 103 and intraday low of 99.2. The net turnover during the day was Rs. 8739863.

Source : Equity Bulls

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