The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E. Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.
Arihant Capital's research report on Hariom Pipe Industries
Hariom Pipe Industries Ltd (HPIL) reported strong numbers, FY22 revenue stood at INR 431cr (+69% YoY); beats our estimates of INR 410cr. EBITDA stood at INR 56cr (+19% YoY), in line with our estimates of INR 55cr. EBITDA Margin contracted by 46 bps to 13% vs 13.5% in FY21. The slight reduction in EBITDA Margin mainly due to increase in employee cost in terms of sales. In FY22, employee cost in terms of sales stood at 5% vs 3.7% in FY21. PAT stood at INR 32cr (111% YoY) vs our estimates of INR 27cr, PAT Margin expanded by 147bps to 7.4% vs 6% in FY21.
Outlook
We have a BUY rating at a TP of INR 403 per share; valued at EV/EBITDA multiple 4.2x and its FY24E EBITDA of INR 186cr; an upside of 102.6%.
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