For 1QFY2019, Siyaram Silk Mills (SSML) posted subdued set of results, which were below our expectations on both, top-line as well as bottom-line fronts. Revenue was flat yoy, however, the company reported operating margin improvement. On the bottom-line front, SSML reported de-growth of ~4% yoy to ~`10cr due to subdued top-line growth.

Outlook and Valuation: Going forward, we expect SSML to report a net sales CAGR of ~12% to ~`2,166cr and adj. net profit CAGR of ~15% to `152cr over FY2018-20E on the 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 prices, SSML trades at inexpensive valuations. We maintain our Buy recommendation on the stock with a Target Price of `700.

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