MOSL: EVEREADY INDUSTRIES (Buy)-Segments recover from GST hiccup
​Eveready Industries: Segments recover from GST hiccup
(EVRIN IN, Mkt Cap USD0.4b, CMP INR351, TP INR400, 14% Upside, Buy)
- Revenue in-line, PAT beats estimates: EVRIN’s overall revenue increased 3.5% YoY to INR3,982m (est. INR4,155m) in 2QFY18. EBITDA margin expanded 70bp YoY to 11.8% (est. of 10.7%), while EBITDA grew 10.6% YoY to INR471m (est. of INR443) on account of a significant fall of 200bp in other expenses (15.1% of net sales v/s est. of 17.9%). Also, other income came in at INR128m, significantly higher than estimate of INR20m. Consequently, adjusted PAT grew 42% YoY to INR364m (est. of INR261m). Battery volumes grew 7% YoY, with turnover up 5% YoY. Flashlight volumes grew 8%, but turnover declined 4% YoY on account of an adverse impact of GST rates.
- High-margin luminaire segment to drive profitability: Turnover grew robustly by 112% YoY to INR706m in LED products sold through trade channels. LED now contributes >80% of total lighting revenues, leading to a healthy EBITDA margin of 16% v/s EBITDA loss in 2QFY17. The segment is set to deliver a higher margin, with a greater focus on new launches in the luminaire segment. Additionally, lower-margin CFL products are expected to be phased out of the company’s portfolio by 1QFY19.
Eveready is engaged in manufacturing and selling dry cell batteries, flashlights, packet tea and insect repellents. Co.'s dry cell batteries, rechargeable batteries and flashlights were sold under the brand Eveready; packet tea under brand names Tez, Jaago, Premium Gold and Classic; and insect repellents under brand Eveready Poweron. Co. operates predominantly in India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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