ICICI Direct recommended hold rating on Vardhman Textiles with a target price of Rs 700 in its research report dated June 30, 2020.
ICICI Direct's research report on Vardhman Textiles
Vardhman Textiles posted a weak Q4FY20 performance due to lockdown impact in second half of March. Consolidated revenues fell 9.5% YoY to Rs 1596 crore due to 10% fall in textile segment. Though gross margins improved 340 bps YoY to 48.5% owing to lower input cost, negative operating leverage led to a fall in EBITDA margin by 80 bps to 14.1% with EBITDA down 15% to Rs 225.1 crore. Hence, PAT fell 18% YoY to Rs 149 crore.
Outlook
We downgrade from BUY to HOLD rating with a target price of Rs 700 (7x FY22E earnings).
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