Himatsingka Seide has registered robust results for the quarter ending September 2013. The consolidated revenues from operations grew by 16.3% to Rs.549.79 crores vs. Rs.477.70 cr. in the corresponding quarter last year. Operating profit climbed sharply by 31% at about Rs.54.77 crores as against Rs.41.80 crores in the previous year quarter; driven by cost optimization measures. The net profit skyrocketed at Rs.18.05 crore for the quarter as compared to Rs.9.36 crore (pre-exceptional). EPS for the quarter stood at Rs.1.83.
With increasing geographical presence, strong brands, efficient cost optimization measure and improved realisation; Himatsingka Seide Ltd. revenue visibility looks clear. We believe the company is trading at an attractive valuation at 8.57x and 5.49x of FY14EPS of Rs.7.09 and FY15EPS of Rs.11.07. We initiate a ‘BUY’ on the stock with a target price of Rs.80 (appreciation of about 32%) with the medium to long term investment horizon.
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