Pokarna Q2FY17: Firstcall are overweight for medium to long term investment

Firstcall India Equity | May 17, 2016, midnight


SYNOPSIS

  • Pokarna Ltd is one of the largest exporters of Quartrz surfaces in India with exports to more than 50 countries (incl. Granite & Quartrz) Globally.
  • The company has achieved a turnover of Rs.973.16 mn for Q2 FY17 as against Rs. 986.03 mn in Q2 FY16.
  • During the quarter, net profit increased by 44.67% to Rs. 188.71 mn from Rs. 130.44 mn in the corresponding quarter ending of previous year.
  • EBITDA for the quarter stood as Rs. 380.88 mn higher by 16.38% as compared to corresponding period of the previous year.
  • During the quarter, PBT increased by 33.85% to Rs. 243.21 mn from Rs. 181.70 mn in the corresponding period of the previous year.
  • EPS of the company stood at Rs. 30.43 in Q2 FY17 against Rs. 21.04 in the corresponding quarter of the previous year.
  • Pokarna Ltd has announced that Pokarna Engineered Stone Ltd, the wholly owned subsidiary, has partnered IKEA India, to serve as its exclusive quartz surfaces supply and installation partner.
  • Pokarna Engineered Stone Ltd is planning to expand its quartz surfaces production capacity by 130% with investment of Rs. 325 crore in Greenfield facility.
  • Net Sales and Operating Profit of the company are expected to grow at a CAGR of 18% and 35% over 2015 to 2018E, respectively.


OUTLOOK AND CONCLUSION

  • At the current market price of Rs. 1129.30, the stock P/E ratio is at 9.90 x FY17E and 8.71 x FY18E respectively.
  • Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 114.07 and Rs. 129.64 respectively.
  • Net Sales and Operating Profit of the company are expected to grow at a CAGR of 18% and 35% over 2015 to 2018E, respectively.
  • On the basis of EV/EBITDA, the stock trades at 6.20 x for FY17E and 5.55 x for FY18E.
  • Price to Book Value of the stock is expected to be at 4.63 x and 3.47 x for FY17E and FY18E.
  • Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

 

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