Q3FY21 Company Update - Shaily Engineering Plastics - ICICI Direct

Shaily reported a fairly strong performance in Q2FY21 & Q3FY21, helping cover up its revenue losses occurred due to pandemic related lockdowns in Q1FY21. Further, the company has guided strong order pipeline that provides revenue visibility for the next two years. With better operating leverage and a complete pass on mechanism of inflationary pressure to its clients (with a lag of three months), we believe EBITDA margin may improve ~100 bps in FY20-23E. Better cash flows, going forward, will be utilised to fund the future capex and reduce debt (H2FY21 debt at ~Rs. 134 crore). That would result in a robust PAT CAGR of ~34% in FY20-23E.

Valuation & Outlook

We introduce our FY22E and FY23E estimates with revenue, PAT CAGR of 23%, ~34%, respectively, in FY20-23E. We roll over our valuation on FY23E and value the stock at 15XFY23E earnings. We upgrade our rating from HOLD to BUY and a revised target price of Rs. 1060 (earlier Rs. 595), given its strong sales recovery in 9MFY21 along and a robust order book pipeline.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ShailyEngg_CoUpdate_Feb21.pdf

Shares of SHAILY ENGINEERING PLASTICS LTD. was last trading in BSE at Rs.935 as compared to the previous close of Rs. 940.4. The total number of shares traded during the day was 1519 in over 60 trades.

The stock hit an intraday high of Rs. 959 and intraday low of 913.6. The net turnover during the day was Rs. 1440119.

Source : Equity Bulls

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