Sutlej Textiles Initiating Coverage Report By Nirmal Bang & Q1 FY2016 Results Presentation

Valuation & Recommendation: Sutlej Textiles posted an adjusted PAT of Rs.116.1 crore on net sales of Rs.1878.2 crore in FY’15. We expect Sutlej Textiles to clock 25.9 per cent CAGR in net profit aided by 14.6 per cent CAGR in net sales and improvement in EBIDTA margins. Healthy net sales growth outlook, EBIDTA margin improvement, efficient working capital management and strong balance sheet are key value drivers for stock performance over the medium term. At Rs555, the stock trades 5.0x FY17 EV/ EBIDTA and 3.4x FY18 EV EBIDTA, which makes it an attractive valuation given the strong earnings growth outlook and healthy return ratio. We value the company at 4.5x EV/EBITDA for FY’18E to arrive at a price target of Rs.796 over the next 12-15 months, providing an upside of 43 per cent from the present level.

Sutlej-Textiles-Presentation

Sutlej Textiles & Industries Ltd 30 July 2015