Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
29 January 2017
Q3FY17 Results Update | Sector: Others
Growth continues to be subdued; New categories to drive growth
Revenue and EBITDA beat estimates:
EVRIN’s 3QFY17 revenue grew 2% YoY
17.5 / 0.3
to INR3,294m (est. of INR2,852m). Growth, however, was impacted by lower
291 / 190
demand due to demonetization, flattish growth in battery and a decline in
flashlights. LED business grew 73% YoY. This, however, was offset by a 56%
decline in CFL business, leading to small blended growth in the lighting
TP: INR287 (+19%)
Financials & Valuations (INR b)
EPS Gr. (%)
segment. EBITDA declined 6% YoY to INR352m (est. of INR292m) due to
incremental cost in appliances business, with EBITDA margin contracting
90bp to 10.7% (est. of 10.2%). Adjusted PAT grew 65% YoY to INR352m (est.
of INR155m) due to reversal of tax relating to the previous year.
Healthy growth in LED sales:
Total sales of LED increased 73% to INR467m
from INR269m in 3QFY16. This included revenue from government orders to
the tune of INR50m. Volume-wise, growth was 168% YoY. Management
highlighted that average selling prices have almost halved from last year and
that de-growth in CFL business has impacted lighting segment growth.
New product categories to drive growth:
EVRIN’s range of products in small
appliances segment (value for money positioning) clocked revenue of
INR120m in 3QFY17. The response for kitchen and heating appliances was
good; EVRIN plans to launch air purifier in 4QFY17. It also plans to expand in
west and south India, and invest ~5% of revenue in brand building in FY18.
Valuation and view:
We believe that new categories and LED business will
drive growth for EVRIN, leveraging upon its strong brand. Considering the
impact of tax reversal, we increase earnings for FY17E/FY18E by 34%/8%.
We expect revenue CAGR of 8% and PAT CAGR of 22% over FY16-19E. We
value the stock at 17x FY19E; maintain
with a target price of INR287.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554