Motilal Oswal is bullish on Eveready Industries has recommended buy rating on the stock with a target price of Rs 458 in its research report dated February 06, 2018.
Motilal Oswal's research report on Eveready Industries
EVRIN ’s revenue rose 12.2% YoY to INR3 ,696m (est. of INR3,792 m) in 3 QFY18 . EBITDA margin shrunk 144bp YoY to 9.3 % (est. of 10.0%), while EBITDA fell 2.9 % YoY to INR342 m (est. of INR375 m) due to a significant rise of 200bp in other expenses ( led by INR 100m ad spends during the festive season in the appliances and lighting segment) .Consequently, adjusted PAT grew 23% YoY to INR209 m, lower than our est imate of INR253m. Turnover in battery and flashlights remained flat, while that in LED segment grew by 33% YoY.
Outlook
The asset monetization phase should drive RoCE to 1 2% by FY20 from meager 5% in FY17. Based on the cut in EBITDA, we lower our TP to INR 820 (INR910 earlier), assigning 15x Dec’19 EV/EBITDA. Maintain Buy.For all recommendations report, click here
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