Vardhman Textiles Ltd. share price target

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.

ICICI Securities Ltd | Retail Equity Research Vardhman Textiles' (VTL) revenues came in below our expectations. However, adjusted profitability came in line with our expectations...

Vardhman Textile Ltd. (VTL) consolidated sales de-grew grew by 3% YoY to `1652.9 crores in Q1FY16 while EBIDTA margins expanded by 180 bps YoY to 21.2% on account of lower cotton costs and improve in fabric realisation assisted spreads. Lower depreciation by...

Vardhman Textiles (VTEX) sales, EBITDA grew 3% & 13% YoY whereas PAT de-grew by 60% YoY during Q3FY15. EBITDA margin decreased by 760bps YoY on account of higher cotton inventory. Going forward, management is optimistic on maintaining its margins on stabilizing raw-material costs, optimized product mix & higher turnover on capex.

In Q3FY15, Vardhman's revenue de-grew by 3.8% to Rs. 14,674mn on a Q-o-Q basis on account of subdued demand in yarn, whereas the sales grew by 2.5% compared to Q3FY14. ? EBITDA declined by 29.7% YoY to Rs. 2,431 mn and by 7% on Q-o-Q basis. Raw material/Sales increased to 53.5% from 46.1% in Q3FY14. EBITDA margins for the quarter declined by 40 bps owing to high raw material costs.Depreciation for the quarter increased by 5.3% to Rs. 1,226 mn and 71.5% YoY.

Karvy initiates coverage of Vardhman Textiles Ltd with a Hold Rating. Vardhman Textiles Ltd (VTEX) Sales, EBITDA & PAT grew by a healthy 24%, 50%& 102% in FY14 on account of stable raw material prices, higher realizations and strong exports. However, the trend is unlikely to sustain owing to weak demand from China and increased depreciation.