Hitachi Home & Life Solutions (HHLS) reported lower-than-expected numbers for
2Q FY 2012. The company’s revenue declined by 2.1% yoy from Rs.131 cr in
2Q FY 2011 to Rs.128 cr (8.3% lower compared to our estimates of Rs.139 cr).
The company’s EBITDA margin came in at 1.6%, down 7.05% yoy, due to higher
employee and other expenses. The company reported a higher forex loss on ECB
during the quarter, which led to loss of Rs.7 cr as compared to profit of Rs. 5 cr in
2Q FY 2011.
We expect the company’s sales volume to increase at a CAGR of 14.7% over
FY 2011-13E, which would lead profits to increase to Rs. 41 cr in FY 2013E from Rs. 29 cr
in FY 2011.
At the CMP of Rs.165, the stock is trading at attractive valuations with PE
of 9.3x FY 2013E earnings. We maintain our Buy rating on the stock with a target
price of Rs. 212, based on a target PE of 12x for FY2013E.
Review by Angle Broking
2Q FY 2012. The company’s revenue declined by 2.1% yoy from Rs.131 cr in
2Q FY 2011 to Rs.128 cr (8.3% lower compared to our estimates of Rs.139 cr).
The company’s EBITDA margin came in at 1.6%, down 7.05% yoy, due to higher
employee and other expenses. The company reported a higher forex loss on ECB
during the quarter, which led to loss of Rs.7 cr as compared to profit of Rs. 5 cr in
2Q FY 2011.
We expect the company’s sales volume to increase at a CAGR of 14.7% over
FY 2011-13E, which would lead profits to increase to Rs. 41 cr in FY 2013E from Rs. 29 cr
in FY 2011.
At the CMP of Rs.165, the stock is trading at attractive valuations with PE
of 9.3x FY 2013E earnings. We maintain our Buy rating on the stock with a target
price of Rs. 212, based on a target PE of 12x for FY2013E.
Review by Angle Broking
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