Indo Count Industries Ltd. share price target

Management maintains 20% EBITDA margin guidance: Management expects volumes to grow by ~10% in FY18 while it expects EBITDA margin to be atleast 20% during FY18. The company expects cotton prices to moderate from Q4FY17 levels which should aid cost benefits. Indo Count has hedged 60% of its FY18 receivables. Although INR has appreciated recently against the USD, Indo Count expects to maintain margins with improved product mix, cost efficiencies and operating...

Indo Count Industries (ICIL) has reported a poor set of numbers this quarter in continuation with its previous 3 quarters' trend. Sales at INR 513 cr were flat and much below our...

Weak Q3FY17; Capacity Expansion is as Per Schedule: Weak Q3FY17, margins declined by 213bps QoQ - Indo Count recorded revenueof Rs. 5029 Mn with a de-growth of 12.7% QoQ. EBITDA stood at Rs. 1020 Mn with a decline of 12.4% and the EBITDA margins stood at 20.3% with a dip of 213 bps QoQ. As a result of the topline and margin decline, Indo Count reported PAT ofRs. 562 Mn with a drop of 10.4% against Q2FY17.

Indo count reported dismal Q3FY17 on account of subdued demand during the quarter. Net sales came in at Rs 502.8crs. EBITDA and PAT stood at Rs 101.9crs and Rs 56.3crs respectively. Higher raw material cost and operating expenses weighed on margins of the company.

Indo Count Industries (ICIL) has reported a poor set of numbers this quarter in continuation with its previous 2 quarters??trend.

Muted revenue growth, EBITDA margins to sustain: In Q2FY17, Indo Count recorded a flat YoY revenue growth at Rs. 5763 Mn. This is due to the summer in US got extended and the demand for the winter goods was muted which impacted one & half month of sales along with election in USA which further disappointed the sales. EBITDA stood at Rs. 1164 Mn with the growth at 10.6% and the margins stood at 20.2% gaining 200 bps YoY mainly due to subdued prices of yarn and correction in overhead costs.

Muted growth, Margin expanded with operational efficiency

Slowdown in sales growth (6%) last quarter left investors uncertain about the pickup in demand from overseas markets, particularly US. Not only sales growth slid to lowest in last few quarters, but operating margins were also lower - 19.8% Vs 20.7% in the same quarter a year ago, resulting in cut in our estimates- 4.1% for FY17. Steady rise in cotton prices in last few months explains the shrinkage in material margins 46.5% Vs 50.1% in Q1FY16 and 47.4% in Q4FY16. Despite the growing revenue share of home textiles division and increasing value added products (read: institutional bedding, fashion bedding and utility...

ICIL is the 2nd largest exporter of Home Textiles (bed linen, bed sheets and quilts). Company is benefiting from expanding into new profitable territories with better mix of valued added products.

Indo Count Industries Limited - ICIL intent is to increase the share of high-value fashion, institutional and utility bedding from 10% to 30% in the next few years. Currently, China holds 85-90% market share in these segments, which provides a huge opportunity for market share gains.They expect ICNT to post 19% revenue CAGR and 31% PAT CAGR over FY16-18. Focus on brands and increase in the revenue share of higher value products should entail higher realizations and margins. They expect 160bp margin expansion over FY16-18 to 23%. Motilal Oswal decreased Buy price target of Indo Count Industries Limited to 1380.0 (12x FY18E EPS).

Trendlyne has 3 reports on ICIL updated in the last year from 2 brokers with an average target of Rs 1205. Brokers have a rating for ICIL with 1 downgrade in past 6 months.