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IDBI Capital
Nilkamal (Accumulate)
Target: ₹1,321
CMP: ₹1,297.30
Nilkamal Ltd.’s Q1-FY21 result was below our estimates on all parameters. The slowdown in economic activity owing to nationwide lock-down amid Covid-19 severely impacted business.
Net sales declined by 53.2 per cent y-o-y to ₹251.30 crore, while EBITDA came at a loss of ₹10 crore. The company reported net loss of ₹28.90 crore compared to net profit of ₹29.2 crore in Q1-FY20. After a lull in April and May, June reported healthy growth in demand.
The management guided that July and August had further improvement in the trend and net sales was at 85 per cent of net sales compared to same period last year and 100 per cent normalcy in business is expected from Q3-FY21 onwards.
We believe the company is well placed to overcome the crisis with its extensive distribution network, direct connect with the industrial customers and strong brand recall amongst retail customers.
We have kept our net sales/PAT estimates unchanged for FY21/FY22. Maintain Accumulate with a target price of ₹1,321 (unchanged), by assigning 12x PER on FY22.
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