MOSL: INDO COUNT INDUSTRIES (Buy)-Muted quarter-one-offs hurt margins
​Indo Count Industries: Muted quarter; one-offs hurt margins
(ICNT IN, Mkt Cap USD0.5b, CMP INR194, TP INR229, 18% Upside, Buy)
- Results below expectations: ICNT reported revenue of INR5,129m (est. of INR5,460m) in 4QFY17, marking flattish YoY growth. EBITDA declined 26% from INR1,224m in 4QFY16 to INR901m (est. of INR1,174m) in 4QFY17. EBITDA margin contracted 630bp to 17.6% (est. of 21.5%) from 23.8% in 4QFY16, despite gross margin improvement (+410bp YoY to 52.2%), due to higher other expenses (+910bp to 28.6% v/s 19.5% in 4QFY16). Consequently, PAT declined 28.1% from INR679m in 4QFY16 to INR488m (est. of INR669m) in the quarter. For FY17, revenue grew 7% to INR22.6b, EBITDA margin shrunk 300bp to 19% and PAT declined 11% to INR2,567m. ICNT ended FY17 with volumes of 56m mtrs v/s 54m mtrs in FY16 (+3.7%).
- One-offs lead to EBITDA margin contraction: EBITDA margin shrunk due to: 1) pre-operative expenses in case of newly commissioned capex to the tune of INR80-100m, which is passed through P&L under Ind-AS, 2) devaluation of inventory in international subsidiary, which due to product strategy change by client had to be written down and sold at lower realization (total hit of ~INR200m), 3) higher employee expenses on upfront investment to support future growth and 4) higher job work charges. As per management, EBITDA margin would have been higher by 225bp in the absence of these one-offs.
Indo Count Industries Limited is an India-based home textile company engaged in the activity of manufacture of textile products. The Company is involved in the manufacture of bedding, quilts, pillows, sleeping bags and others, and preparation and spinning of cotton fibers, including blended cotton. The Company operates as an end-to-end bedding provider. The Company offers products under categories, including bed sheets, fashion bedding, utility bedding and institutional bedding. The Company's brands include Boutique Living, Revival, Pure Collection, NeoFresh, Haven, Thermal Balance, Touch Sense and Color Sense. The Company is a manufacturer/exporter of bed linen. The Company exports its products to approximately 50 countries in over five continents. The Company has showroom and distribution centers in the United States, the United Kingdom and Australia. It also sells products online through e-tailers. The Company has manufacturing factories located in Kolhapur, Maharashtra.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.