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Research

IIFL maintains add on Vardhman Textiles, target price Rs 1,050

| September 23 2019 16 : 38 IST | The Economic Times

Add Vardhman Textiles Ltd. at a price target of Rs 1050.

IIFL has maintained add rating on Vardhman Textiles in the long term with a target price of Rs 1,050. The stock ended down 1.8% at Rs 921.80 on Friday while the Sensex closed 1921.15 points up at 38,014.62.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 1650.36 crore, down -6.41% from last quarter sales of Rs 1763.41 crore and down -2.92 % from last year same quarter sales of Rs 1699.97 crore. The company has reported net profit after tax of Rs 118.46 crore in the latest quarter.

Investment Rationale

In contrast to healthy 32% EBITDA growth witnessed in FY19 on the back of expanding yarn spreads and improving product mix, Vardhman Textiles’ FY19 annual report expects demand uncertainty post the US-China trade war to weigh on FY20 yarn spreads, said IIFL. The brokerage expects weak yarn spreads in H1 to drive 250 bps moderation in EBITDA margin to 14.9%. This along with the last phase of capex spends should moderate RoCE to 12%, said IIFL.

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