Indo Count Industries Ltd. share price target

ICNT's revenue declined 17.4% YoY to INR4,237m (est. of INR4,975m) in 4QFY18. EBITDA margin shrunk 350bp YoY to 14.1% (est. of 13.6%). EBITDA declined 34% YoY to INR596m (est. of INR677m). Accordingly, adj. PAT fell 45% YoY to INR268m (est. of INR356m). For FY18, revenue declined 13% to INR19,582m, the margin contracted 560bp to 13.4% and adj . PAT fell 46% to INR1,253m

Dismal performance in 9MFY18; volume off take a key monitorable Indo Count Industries (ICNT) reported a weak set of numbers for 9MFY18, driven by a) decline in the volume of bed sheets exported to the US, b) INR appreciation and c) higher costs. Margins for 9MFY18 compressed 604bps YoY to multi-year lows. 9M PAT declined 42% YoY to INR 1bn, below our estimates of INR 1.1bn. The company has completed phase-I capex to augment capacity from 68mn mtrs to 90mn mtrs. Management maintained FY18 volume guidance at 56mn mtrs. Cotton price movement and the off take in volume going forward remains the key monitorable. The Board has...

Home textile industry of late has been plagued by destocking, resulting in off-take deferments from large retailers, especially in the US. ICNT, however, has started witnessing better projections from same retailers and customers who had destocked. Also, as the intensity of destocking is reducing, ICNT is witnessing a marginal pick-up in demand as well. Also, with US business growth expected to increase from 1.9% to 2.5% in 2019, ICNT is set to benefit from better demand.

We recently hosted Indo Count Industries' (ICNT) management at our Midcap Conference,' wherein we gained detailed insights into how the overall textiles business environment is shaping up post a muted 1HFY18. We note that the first half of the current fiscal for textiles was plagued by multiple headwinds from sharply higher raw material prices, to a reduction in duty drawback and ROSL rates. However, encouragingly,...

Accordingly, adj. PAT fell 42.8% YoY to INR359m (est. of INR517m). Easing cotton prices a silver lining amid policy headwinds: 2QFY18 witnessed increased pressure on margins on account of a rise in raw material cost by 260bp. Also, the GoI revised the duty drawback rate from 7.5% to 2%, and the ROSL rate from 3.9% to 1.55%, which is expected to result in margin erosion of ~250bp. However, cotton prices have started to correct (-10% to INR38,000 per candy) compared to last procurement by the company, the benefit of which is expected to be visible from 4QFY17....

EBITDA margin fell sharply to 16.4% (our estimate 18.4%). The company has been guiding to maintain its EBITDA margin of atleast 20%; hence, EBITDA margin of 16.4% is a sharp miss in our view. We cut our FY18/19 sales/EBITDA/PAT estimates to factor in weak Q1FY18 and lower guidance; Maintain Buy with lower target price of Rs153. Key Highlights and Investment Rationale Top-line growth disappoints again: Indo Count's net sales were impacted by lower off-take from some of its customers. Although there was no loss of customers, Indo...

Over the FY13-17 period ICIL's revenue, EBITDA and PAT have grown at a CAGR of 16.1%, 44.6% and 67.8% respectively. The company's focus going forward for the current year will be towards efficient utilization of all resources, increased global market share in bedding, promote domestic brand pan India. The company has completed phase 1 capex of increasing its capacity expansion from 68 mn meters to 90 mn meters. Under phase 2 capex, the company is awaiting land approvals from regulatory authorities for its in-house weaving capacity. Going forward the management has guided for EBITDA margins of 20%. For FY18, the company's target...

Indocount's turnaround story is exemplary and reaffirms how a focused and able leadership can transform a business. An asset-light business model, geographic and category expansions and increasing contribution of value added products have been the hallmark of ICNT's journey over past 3-4 years.

Indo Count Industries Ltd. (ICIL) reported a subdued Q4FY17 results on expected lines. Net sales came in flat yoy at Rs 512.9Crs. EBITDA and PAT stood at Rs 90.1crs and Rs 48.1crs respectively.