Nilkamal Ltd is engaged in the manufacturing and retail sales of moulded plastic furniture and material handling products. The company has three divisions viz. plastics, lifestyle furniture and furnishings & accessories. Nilkamal’s manufacturing plants are located at Barjora (West Bengal), Hosur (Tamil Nadu), Jammu, Dadra & Nagar Haveli, Noida (UP), Sinnor and Nashik (Maharashtra) and in Pudducherry.

Outlook and Valuation: We forecast Nilkamal to report top-line CAGR of ~9% to `2,635cr over FY17-20E on the back of healthy demand growth in plastic division. On the bottom-line front, we estimate ~10% CAGR to `162cr owing to improvement in volumes. Further, better margins and lower interest cost would aid profitability. We initiate coverage on Nilkamal with a Buy recommendation and target price of `2,178 (20x FY2020E EPS), indicating an upside of ~16% from the current levels.

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