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Target: ₹250
CMP: ₹193.45
Indo Count Industries Ltd (ICIL) has reported 23.4 per cent growth in its consolidated revenues at ₹807 crore in Q4-FY23 as against ₹653.8 crore in Q4-FY22. In terms of volume, the sales volume for the company grew 15.9 per cent in Q4-FY23 at 20.4 million meters as against 17.6 million meters in the corresponding quarter of FY22.
In terms of operating performance, the company’s operating margins stood 17.9 per cent at ₹144.2 crore in Q4FY23 against 14.6 per cent at ₹97.7 crore in Q4-FY22, an improvement of 324 basis points. The profit after tax margins for the company stood 11.4 per cent at ₹91.9 crore in Q4FY23 (7.5 per cent at ₹48.8 crore). The improvement in margins was due to better realisation and improved utilisation.
In terms of value-added business, the share in sales for branded, fashion, e-commerce and domestic home textiles business stood at 14 per cent, 19 per cent, 10 per cent, and 2.5 per cent, respectively for FY23. The e-commerce and domestic home textiles business registered an increase in share by 300 and 50 basis points, respectively and total share of value-added business increased to 45.5 per cent in FY23 against FY22. The company continues to aim at further increasing value-added share in revenues.
With raw material prices cooling off, supply chain issues fading and returning back to normalcy along with improving demand outlook bodes well for the company in the medium term. Also, with completion of capex the company is set to increase utilisation levels in the coming quarter which should aid in improving margins. The company’s net debt levels are also comfortable and is on a declining path. We believe ICIL is well placed to capture opportunity on the back of healthy balance sheet, financial prudence, and focused approach. We have updated our estimates on the company and maintain our BUY rating on the stock with a revised target price of ₹250 per share.
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