NILKAMAL LTD Q2 FY18

NILKAMAL Ltd posted stable yearly numbers with strong sequential growth in September quarter FY18. Profit After Tax grew 6% YOY and 24% sequentially. PAT was reported at Rs. 278 Mn in the current quarter against Rs. 263 Mn same period previous year. EBDITA stood at Rs. 583 Mn compared to Rs. 537 Mn corresponding quarter previous year growing 8% YOY and 22% on quarterly basis. Income from Sales/Revenue fell 7% YOY in the current quarter and stood at Rs. 4647 Mn compared to Rs. 5014 Mn in Q2 FY17. Other income declined heavily by 61% YOY and was reported at Rs.10 Mn in the current September quarter FY18.  Operating Expenditure stood at Rs. 4074 Mn in Q2 FY18 compared to Rs. 4502 Mn same period previous year. Operating expenditure was curtailed 10% on yearly basis and 15% sequentially leading to higher EBDITA and healthy EBDITA Margins. EBDITA margin jumped 183 basis points YOY whereas sequential expansion was even higher by 346 basis points. EBDITA Margin stood at 12.54% in the current quarter against 10.72% corresponding period previous year. Finance costs declined 5% YOY to Rs. 28 Mn in the current September quarter and taxation expenditure fell 27% YOY at Rs. 109 Mn leading to strong Net Profit Margins. Net Profit Margin jumped 74 basis points yearly and was reported at 5.99% against 5.25% same period previous year with sequential jump of 172 basis points. One basis point is 0.01%.

The company’s major revenue source is its Plastics division which contributes 89% of its total revenues and was reported with a de-growth of 5% at Rs. 4191 Mn in the current quarter whereas Lifestyle, furniture, furnishing & Accessories constituting 11% of revenues declined 20% YOY at Rs. 530 Mn in the current September quarter. The company has incurred capital expenditure of Rs. 203 Mn totaling to Rs.480 Mn in the first half year. Nilkamal Ltd is an industry pioneer in the manufacturing business of moulded furniture & material handling products with diversified product profile along with a diversified customer base including household customers, industrial customers and retail buyers. The company also has presence in retail business of lifestyle furniture furnishings and accessories under its brand ‘@home’ & Nilkamal Mattresses. The company’s performance has been impacted by GST in the early part of the second quarter but profitability has been sustained by improving operational efficiency. The company is also incurring additional capex of Rs. 500 Mn in the second half of FY18. We recommend BUY for the stock at target price of Rs. 1820 for medium & long term. 

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