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.
Khambatta Securities' research report on Century Plyboards (India)
Century Plyboards (India) Limited’s (CPIL’s) FY22 results were broadly in line with our expectations as the company reported robust growth in 4Q FY22 and FY22, led by all key segments. Revenues grew by 20.9% y-o-y and 42.1% to Rs 901.1 crore and Rs 3,027.0 crore in 4Q FY22 and FY22, respectively. There was strong volume growth across product segments, led by Plywood (+33.9%) and followed by Particle Board (+32.7%), Laminates (+22.3%) and MDF (+20.8%) over the full year. EBITDA growth was strong as EBITDA margin benefitted from the price hikes the company executed across product-lines, enabling pass-through of higher input costs, as well as from operating leverage. Full year EBITDA margin increased by 179 bps to 17.5%. In 4Q FY22, EBITDA margin expanded by 94 bps y-o-y and 27 bps q-o-q to 17.8%, driven by increases in product prices. PAT grew by 2.1% y-o-y to Rs 88.8 crore in 4Q FY22. The lower growth in PAT was due to higher total tax expenses as a result of deferred tax charges taken during the quarter. Full-year PAT increased by 54.2% to Rs 313.2 crore.
Outlook
The CPIL stock has appreciated 213% since we initiated coverage on the company with a BUY rating on 09 October 2020. Based on an unchanged target P/E multiple of 35x FY24E EPS, we value CPIL at Rs 741, reiterating a BUY with an upside of 39% from current levels.
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