Indo Count Industries Ltd. share price target

About the stock: Indo Count Industries (ICIL) is the world's largest bed-linen player established in 1988. Traditionally operating in bed linen segment, the company expanded its presence into high margin utility and fashion bedding segment in US through organic and inorganic route. It has portfolio of ~25 brands (licensed + owned) to position well in US and other exporting markets. It has 4 manufacturing...

Textile companies are focusing on diversification as risk mitigating strategy with focus on diversifying the production base in other countries and improve the regional mix and not to depend on single country/region in the near future....

ICIL 2.0 scaling the core + expanding brands + entering utility segment: ICIL 2.0 emphasises on strengthening the core, expand into high margin segments such as utility/fashion bedding and expand the branded product portfolio to build a sustainable business model in long run. Over the past 1215 months, it has invested significantly in value enhancement projects from acquisitions and capacity expansion to brand building and talent development, laying a solid foundation for its next phase of growth. The company expects the branded portfolio to add US$100mn and utility...

Traction in overall performance; expect re-rating

Volumes hit, acquisition-related spends affect margin

Growth levers in place; industry tailwinds to support

All stars aligning; valuation re-rating on cards

Demand stays in check despite supply chain led disruptions

Volume guidance revised upwards; better H2 expected

Utilization of low cost inventory restricts margin decline

Growth takes a pause; US holiday sales demand awaited

Volumes declined 12% YoY to 21.1 million metre on account of unprecedented supply chain challenges and lower demand in key geographies on account of third wave of pandemic. Judicious price hikes and better product mix translated into average realisations increasing by 9% YoY to | 344/metre. Revenue de-grew 3% YoY to | 756.4 crore Conscious effort to sell value added products has allowed the company to combat inflationary pressure and maintain 50%+ gross margins (up 380 bps...

Steady numbers; FY22E volume guidance reduced