Buy Suryalakshmi Cotton; target of Rs 145: Firstcall

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Firstcall Research's report on Suryalakshmi Cotton Mills
"The company jumps to Rs. 69.32 million against Rs. 59.42 million in the corresponding quarter ending of previous year, an increase of 16.66%. Turnover of Rs. 1871.43 million for the 1st quarter of the financial year 2015-16 as against Rs. 1817.43 million in the 1st quarter of the financial year 2014-15. In Q1 FY16, EBIDTA is Rs. 265.22 million as against Rs. 248.45 million in the corresponding period of the previous year, grew by 6.75%. EPS of the company stood at Rs. 4.16 a share during the quarter, registering 1.62% increase over previous year period. Profit before interest, depreciation and tax is Rs. 265.22 million as against Rs. 248.45 million in the corresponding period of the previous year."

Outlook and Conclusion

At the current market price of Rs. 125.70, the stock P/E ratio is at 14.10 x FY16E and 11.97 x FY17E respectively.

Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 8.92 and Rs. 10.50 respectively.

Net Sales an PAT of the company are expected to grow at a CAGR of 4% & 14% over 2014A to 2017E respectively.

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On the basis of EV/EBITDA, the stock trades at 4.53 x for FY16E and 4.06 x for FY17E respectively.

Price to Book Value of the stock is expected to be at 0.83 x and 0.77 x for FY16E and FY17E respectively.

"The results of its efforts are reflected in the export revenues increasing two fold in the 1st Qtr. The company is focusing on development of new and high value added denim fabric, which command higher realizations in the market and also face significant less competitive environment. We recommend ‘BUY’ in this particular scrip with a target price of Rs 145 for Medium to Long term investment", says Firstcall Research Report.

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