Q3FY21 Company Update - Butterfly Gandhimathi - ICICI Direct

Butterfly Gandhimathi (BGAL) reported strong revenue growth of 70% YoY to Rs. 298 crore in Q3FY21. The healthy growth was on the back of enhanced customer interest in kitchen appliances due to accentuated preference for home cooked food. Revenue growth was visible across all channels except gas dealers. Though gross margins were lower (change in product, channel mix) by 400 bps YoY to 41.7%, EBITDA margins expanded 480 bps YoY to 12% due to positive operating leverage. On the back of strong operational performance, PAT rose from Rs. 1.1 crore in Q3FY20 to Rs. 18.7 crore in Q3FY21.

Valuation & Outlook

Strong demand enabled the company to run at near full utilisation level. The management guided that it could exit FY21E with more than 20% revenue growth. The company is also planning a capex of Rs. 30 crore to enhance the plant capacity. The new capex would enable BGAL to have a peak revenue potential of ~ Rs. 1400 crore over the next few years. Factoring in the strong performance in 9MFY21, we model revenue CAGR of 15% in FY20-23E. We expect a gradual improvement in margin profile (operating leverage and decline in lower margin OMC business) and expect EBITDA margins to increase to 10.7% by FY23E. BGAL has shown consistent improvement on financial performance parameters. Owing to enhanced revenue visibility and improved margin profile we revise the rating from HOLD to BUY with a revised target price of Rs. 750 (1.3x FY23E EV/sales, previous TP: Rs. 390).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Butterfly_CoUpdate_Feb21.pdf

Shares of Butterfly Gandhimathi Appliances Ltd was last trading in BSE at Rs.590 as compared to the previous close of Rs. 626.4. The total number of shares traded during the day was 11630 in over 664 trades.

The stock hit an intraday high of Rs. 639.8 and intraday low of 590. The net turnover during the day was Rs. 7175757.

Source : Equity Bulls

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