Result Update: Mirza International Ltd - BUY - TP Rs.120 - Kotak

MIL Q1FY19 results were below our estimates due to below expected performance in make to order exports and lower margins.

Key Highlights

- MIL reported inline revenue of Rs 2.6bn, a growth of 3.9% yoy led by 40% yoy growth in branded shoes revenue and 17.6% yoy decline in revenue from make to order exports. Red Tape brand exports recovered strongly on a low base of last year. On domestic side, domestic brand sales grew by 27% yoy which was on the lower side as the company has guided for 50% yoy growth in domestic brand sale in FY19E.

- EBITDA margin declined by 100 bps yoy to 16.5% and was below our estimates on account of lower margins in the branded shoes business on yoy. In the quarter, the company witnessed increase in working capital which took its debt to Rs 3.1 bn (Vs Rs 2.7 bn at the end of Q4FY18).

- MIL management has maintained guidance for 50% growth in revenue from domestic brand business based on strong response expected for Red Tape sports, Bond Street and other new brands. The company expects improvement in exports business (0-5% growth Vs 10% growth guided earlier), as it sees some sign of improvement in the segment.

Valuation & outlook

- We have cut our EPS estimates for FY19E & FY20E by 15.5% and 16% respectively factoring in lower growth in domestic brand business and decline in exports business in Q1FY19.

- The stock is trading at PE of 15.5x and 12.3x based on FY19E and FY20E revised EPS of Rs 6.3 and Rs 8.0, respectively. We maintain our Buy rating on the stock with revised target price of Rs120 (Vs Rs143 earlier).

Shares of MIRZA INTERNATIONAL LTD. was last trading in BSE at Rs.100.3 as compared to the previous close of Rs. 99.95. The total number of shares traded during the day was 33677 in over 538 trades.

The stock hit an intraday high of Rs. 102.7 and intraday low of 99.45. The net turnover during the day was Rs. 3412508.

Source : Equity Bulls

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