February 22, 2017 / 01:23 PM IST
Visaka Industries (VIL) delivered yet another strong earnings beat as its EBITDA/PAT rose 31%/386% YoY in Q3FY17 (EBITDA 29% ahead of our estimates), driven by its steady market share gain in asbestos cement sheet (ACS) segment (thus moderating demonetisation impact), lower RM costs and improved cost efficiencies. These more than offset the profit dips in cement boards & panels (CBP) and yarn segments. Better working capital management and lower debt/interest cost accelerated PAT growth.
Outlook
We expect ACS’ profitability to remain strong benefiting from good monsoon led demand uptick and subdued fibre cost. We expect CBP profits to rebound on steady domestic sales and as exports bottoms out in FY17. The capacity increase in its yarn segment should drive segmental profit. We expect VIL to deliver 16%/35% EBITDA/PAT CAGR during FY16-18, boosting its return ratios ahead of its peers’. We reiterate BUY with revised TP of Rs 300.
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