Buy Himatsingka Seide; target of Rs 290: Kotak Securities
Kotak Securities’ research report on Himatsingka Seide
Himatsingka Seide Ltd (HSL) is a vertically integrated home textile player with manufacturing facilities in India and has retail and distribution businesses in North America, Europe and Asia. The company has adopted integrated business model with presence from farm to store. This results into cost efficiency and delivering quality products to its customers. HSL is focused on building a strong brand portfolio through owned and licensed brands contributing 75-80% of its revenue. It has license to manufacture, source and distribute home textiles brands such as Calvin Klein Home, Tommy Hilfiger Home, Barbara Barry, etc in major geographies such as North America, Europe, etc. Going forward, the company intends to add more brands as part of its long term growth strategy and enhancing its market share in branded home textiles segment. HSL is at the final stage of its capex with deleveraging going to be the core focus of the company. We expect company’s sales, EBITDA and PAT to grow at a CAGR of 11.5%, 17.8% and 13.7% respectively with 360bps improvement in EBITDA margins in FY18-21E.
We initiate coverage on the stock with BUY rating and target price of Rs 290, valued at 12x FY20E EPS.
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