Siyaram Silk Mills (SSML)’ results for 1QFY2017 have come in below our
estimates with the company having reported a de-growth in its top-line as well as
the bottom-line for the quarter.
Top-line de-growth: The top-line for the quarter de-grew by ~5% yoy to Rs281cr
which can be mainly attributed to lower volume growth.
Underperformance at the EBITDA level: The EBITDA for the quarter de-grew by
~4% yoy to Rs30cr and the EBITDA margin expansion by 11bp yoy to 10.6% due
to lower raw material cost.
PAT declines: During the quarter, the net profit de-grew ~22% yoy to Rs10cr
due to de-growth in sales and poor operating margin.
Outlook and Valuation: Going forward, we expect SSML to report a net sales
CAGR of ~12% to ~Rs2,040cr and profit CAGR of ~14% to Rs115cr over
FY2016-18E. The same would be on the back of market leadership in blended
fabrics, strong branding, wide distribution channel, strong presence in tier II and
tier III cities and emphasis on latest designs at affordable pricing points. At the
current market price, SSML trades at an inexpensive valuation (at a P/E of 10.2x
its FY2018E earnings). We have a Buy rating on the stock and target price of

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