Siyaram Silk Mills Ltd. share price target

Siyaram is strategically transforming itself from a textile manufacturer to a major garmenting and brand house.

Siyaram Silk Mills (Siyaram) reported disappointing results with revenues declining 5.4% to | 281.4 crore due to a subdued market scenario. The first quarter is usually a seasonally weak one for the company. A pick-up in revenue growth in the forthcoming festive season would be a key parameter to watch, going ahead.EBITDA declined 4.4%YoY | 29.71 crore. EBITDA margins improved marginally by 11 bps YoY 10.55%. A 250 bps decline in raw material cost to sales ratio aided the EBITDA margin improvement in spite of an increase in employee cost to sales ratio and higher processing charges to sales ratio .Though other income increased 25% YoY to | 5.05 crore, higher interest cost (up 32% at | 9.01 crore) and increase in depreciation (up 11.7% YoY to | 10.88 crore) led the net profit to decline 23.1% YoY to | 9.77 crore.

Valuation : A strong product portfolio and pan-India network along with aggressive brand promotion with focus on asset light franchise model would enable SSML to register a steady growth in revenue, going ahead. Though we remain positive on the prospects of the company, we believe the key monitorable would be the up-tick in revenue growth in the forthcoming festive season. We have factored in the weak performance in Q1FY17 and revised our EPS estimate downward. We expect EPS to grow a CAGR of 20.5% to | 131.5 in FY16-18E. We have a HOLD recommendation on the stock with a revised target price of | 1315 (based on 10x FY18E EPS of | 131.5). However, we advise caution while buying owing to low liquidity in such stocks.

Shift from textile to high margin mass market branded retailer has changed fortune for the company. Buoyant rural and semi-urban economy is expected to augur well for the company.

ICICI Securities Ltd | Retail Equity Research Siyaram Silk Mills (Siyaram) reported flattish growth in revenue and EBITDA for Q4FY16. Revenues increased 5% YoY to | 505 crore....

Siyaram Silk Mills (SSML)' results for 4QFY2016 have come in below our estimates. The company has reported a lower top-line growth and a flattish bottom-line. During the quarter, the company acquired Balkrishna Synthetics Ltd, which is involved in the business of processing synthetic fabrics, for a consideration of ~Rs45cr. This acquisiti..

Siyaram Silk Mills (SSML) has strong brands which cater to premium as well as popular mass segments of the market. The companys brands include Siyarams Mistair, J. Hampstead, Royal Linen, Casa, Moda, Zenesis ,Moretti etc. Further, in FY2014, SSML entered the ladies salwar kameez and ethnic wear segment with its brand Siya. SSML has a nationwide network of about 1,600 dealers and business partners, which enables it to scale the entire country. The company has plans to increase its retail network to 200 stores by FY2016E (from 190 currently) and add another 200- 250 stores over the next three to four years. Further, the companys brands are sold across 3,00,000 multi-brand outlets in the country. We expect SSML to continue to perform well against its competition as it will be able to leverage on its strong brand, superior market reach and market positioning of its products. ? SSML has a relatively asset-light model of operations, with a balanced mix of own manufacturing and outsourcing. The company has been on an expansion spree by primarily focusing on widening its presence through franchise stores (250 plus franchise showrooms planned by FY2016-end). Going forward, we expect SSML to report a net sales CAGR...

For 2QFY2016, Siyaram Silk Mills (SSML) results have come in slightly below our estimates. The company has reported a flattish top-line and bottom-line growth. Flattish top-line growth: The top-line for the quarter came in flat; ie it declined marginally by 0.02% yoy to Rs398cr. Underperformance at the EBITDA level: The EBITDA for the quarter grew by ~2% yoy to Rs50cr and the EBITDA margin expanded by 20bp yoy to 12.5%. The raw material cost as a percentage of sales declined by 226bp yoy to 48.6% but there was a 99bp yoy and 107bp yoy increase in employee and other expense, respectively, resulting in an almost flat EBITDA margin for the quarter. Flattish PAT growth: During the quarter, the net profit came in flat at Rs23cr (as against Rs22cr in 2QFY2015) due to lower sales growth. Outlook and Valuation: Going forward, we expect SSML to report a net sales CAGR of ~10% to ~Rs1,815cr and adj.net profit CAGR of ~12% to Rs98cr over FY2015-17E on back of market leadership in blended fabrics, strong branding, wide distribution channel, strong presence in tier II and tier III cities and emphasis on latest designs and affordable pricing points. At the current market price, SSML...

Siyaram posted a robust growth of 18% YoY of Rs.4, 800mn and 45% QoQ on account of higher volume and value realizations in the textiles segment. It was also due to improved performance from its E-commerce and SKD segment. EBITDA increased by 35% YoY to Rs. 584mn and by 68% on QoQ basis owing to lower raw material prices. EBITDA margins expanded by 166 bps to 12.2% on QoQ basis & by 153 bps compared to Q4FY14 on account of better operational efficiency. The margins in the textile segment were improved on back of higher capacity utilization.

Karvy initiates coverage of Siyaram Silk Mills Ltd with a Buy Rating. Siyaram's (SSML) net sales, EBIDTA and PAT grew (YoY) by 25%, 27% and 16% respectively during FY14 due to robust volume growth and price hike. Going forward, we expect 22% CAGR revenue growth over FY14FY16E led by better product mix and strong position in blended fabric segment