Siyaram Silk Mills 3QFY2018 Result Update By Angel Broking

Siyaram Silk Mills

3QFY2018 Result Update

For 3QFY2018, Siyaram Silk Mills (SSM) posted good set of results, exceeding our expectations on both, top-line as well as bottom-line fronts. Revenues grew by ~16% yoy (above our estimate). On the operating front, the company reported operating margin improvement. On the bottom-line front, SSM reported growth of ~64% yoy to Rs 22cr on the back of strong top-line growth, higher other income and lower taxes.

Top-line driven by strong volume growth: The Company’s top-line grew by ~16% yoy to Rs 394cr on the back of strong growth in volume and price hike.

Strong revenue growth and operating performance boost overall profitability: On the operating front, the company’s margin has improved by 45bbp yoy at 12.8%.

The company reported ~64% yoy rise in its net profit to Rs 22cr on the back of strong revenue growth, higher other income and lower taxes.

Outlook and Valuation: Going forward, we expect SSML to report a net sales CAGR of ~12% to ~Rs 1,981cr and adj.net profit CAGR of ~16% to Rs126cr over FY2017-19E on back of market leadership in blended fabrics, strong brand building, wide distribution channel, strong presence in tier II and tier III cities and emphasis on latest designs and affordable pricing points. At the current market price, SSML trades at an inexpensive valuation. We have a buy recommendation on the stock and target price of Rs 813.