EIIL balance sheet likely to get de-leveraged post monetization of Chennai land for Rs 1 Bn. Management sounded confident about 1/ monetizing other non-strategic assets in the near term as and 2/ strengthening balance sheet...

EIIL Q1FY19 result was higher than our estimates; company posted operating margin expansion following the immense disappointment in the previous quarter, when the company reported EBITDA loss. Management is able to reassure (during the course of our interaction) that most of the challenges are...

We interacted with the management of EIIL to get perspective on the company's operations-core business and new initiatives. Following the immense disappointment in the Q4FY18 result when the company reported EBITDA loss, management is now able to reassure (during the course of our interaction) that most of the challenges are close to get sorted and situation...

New Developments to Bring Optimism: Q3FY17 posted revenue of Rs. 3294Mn, which changed (10.2%)/1.6% in QoQ/YoYrespectively, not really indicating any major impact due to demonetization. 9MFY17revenues stood at Rs. 10504Mn, higher by 1.0% as compared to 9MFY16. EBITDA margin for Q3FY17 recorded 10.7%, down by 93bps QoQ and 90bps YoY due to increase in employee spending for their upcoming appliances division. However, other expenses have moderated this quarter by 111bps as compared to Q2FY17.

Flattish Sales Compensated by Higher Operating Efficiency: Q2FY17 sales stood at Rs. 3666 Mn, 3.5% higher in QoQ and 0.3% decrease in YoY basis. Usually the second quarter records highest sales and mostly exceedsthe previous years numbers as observed in the last four years; however, it is not the same now due to weak rural demand. The Battery segment is facing turbulence due to increase in Chinese dumping and has de-grown by ~ 2% during this quarter.Nevertheless, the sales were in-line with our estimates with a mere 1% deviation while LED sales recorded a turnover of Rs. 505Mn as compared to Rs. 263 Mn inQ2FY16.

Revenues miss estimates: Eveready Industries' (EVRIN) 1QFY17 revenue grew at a subdued pace of 1.8% to INR3,544m (v/s est. of INR3,760m) on the back of flattish growth across the battery, flashlights and electrical businesses. The LED business registered 56% YoY growth, which was offset by a 30% YoY decline in the CFL business, leading to flattish blended growth in the electrical segment. EBITDA margins remained flat at 10.6% in 1QFY17 (v/s estimate of 10.7%)....

Consolidated revenues are expected to grow at CAGR of 15.3% during FY16-FY18E to Rs. 17581 Mn in FY18E, majorly driven by their lighting segment growth on account of strong LED sales supported by their competitive pricing strategy in the retail market. EBITDA is estimated to increase at a CAGR of 17.5% during FY16-FY18E with margins touching 9.2% in FY17E and 9.5% in FY18E from 9.1% in FY16 as a result of reducing raw material costs in past years and we have assumed the trend to continue.