MOSL: INDO COUNT INDUSTRIES (Neutral)-Strong volume recovery, but revenue yet to impress
Indo Count Industries: Strong volume recovery, but revenue yet to impress; Guidance maintained
(ICNT IN,Mkt Cap USD0.2b, CMP INR82, TP INR93, 13% Upside, Neutral)
- Largely in-line result; gross margin flat: ICNT's revenue increased 5.8% YoY to INR4,569m (est. of INR4,361m) in 1QFY19. EBITDA margin shrank 110bp YoY to 14% (est. of 14.7%), as employee expense increased 60bp YoY to 7.1% of net sales and other expenses rose 50bp YoY to 24.1% of net sales. Gross margin was flat YoY at 49.9%. EBITDA declined marginally by 2% YoY to INR641m (in-line). Adj. PAT declined 10% YoY to INR288m (est. of INR309m) in 1QFY19, primarily on account of a higher-than-anticipated tax rate of 38.9%, as against 35.6% in the year-ago period.
- Volume guidance maintained amidst favorable global environment: After declining by 3% in FY18, volumes recovered with robust growth of 22% YoY in 1QFY19. Inventory levels of US retailers (clothing and accessories) increased by 0.4% in Feb'18 and remained flat over Mar-May'18, which is encouraging considering the average decline of 2.2% from April'17 to Jan'18. Amidst the improving global scenario, management maintained its FY19 volume growth guidance of 7-11% (our estimate: +5%).
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.
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