Vardhman Textiles’ (VTL) standalone revenues came in line with our expectations. However, the EBITDA margin was higher than our expectations on account of an 84 bps improvement in gross margin to 51.8%. Revenues grew 1% YoY to | 1400.1 crore, in line with our estimate of | 1406 crore.EBITDA grew 2% YoY to | 290 crore and was higher than our estimate of | 271.5 crore. EBITDA margins were also higher than our expectation of 19.3% at 20.7%. Higher employee cost (up 75 bps YoY to 7.5%) negated the gross margin improvement while EBITDA margin grew 20 bps YoY. Interest cost increased 4% to | 24.9 crore while depreciation declined 8% YoY to | 79.9 crore leading to PAT growth of 1.4% YoY to | 150.1 crore.
Valuation: ICICI Securities Limited have revised upwards FY17, FY18 earnings estimates and upgraded the valuation multiple.They have revised their target price to | 1100 (valuing the company at 4.5x FY18E EV/EBITDA) with a BUY recommendation.