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.
LKP Research's research report on Endurance Technologies
Endurance Technologies (Endurance) reported consolidated revenues of ₹20.8 bn, a 10% qoq growth led largely by price hikes taken in the European business. EBITDA margins grew 160 bps qoq to 12.4% led by 12.7% margins in domestic business and 11.5% margins in the European business. Both the margins surprised the street positively. The EBITDA beat was due to lower than expected RM cost to sales ratio (66.7% v/s 68% qoq in the standalone operations). In the India business, revenues dropped 3% yoy to ₹15.5 bn, however, the company continued to outperform the underlying industry as 2W production declined ~21% yoy in 4QFY22 v/s a revenue decline of 3% yoy for Endurance. Adj. PAT dipped 27% yoy to ₹1.36 bn.
Outlook
Considering Endurance’s size and strong market share in its operating segments, the stock should command a premium to its domestic peers. Maintain BUY with a target price of ₹1,637.
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