A home textiles company reported a 16% year-on-year revenue growth in the June 2024 quarter, beating expectations by 3.2%. The growth was driven by increased volumes and export growth. While the home textiles segment performed well, the flooring and carpets segment faced challenges due to shipping issues in the Red Sea. Despite solid operational performance, both EBITDA and PAT missed estimates by 11.5% and 1%, respectively.
Company Outlook:
- Revenue Growth: Management expects 10-12% growth in revenue for 2024-25.
- EBITDA Margins: Aiming for 15-15.5% margins, with hopes to increase to 16-17% in the coming years, supported by strong export growth and emerging businesses (flooring, advanced textiles, and domestic consumer).
Product Portfolio:
- The company exports to over 50 countries and offers a wide range of products, including bed linen, bath linen, rugs, flooring solutions, curtains, and mattresses.
- Demand Drivers: Durability, changing consumer preferences, growing demand for home decor, and a rising real estate sector.
Market Opportunities:
- Export Growth: Positive demand outlook from the US, supported by comments from Walmart and Target, and opportunities during the US holiday season.
- Government Support: Benefiting from the PLI scheme and the ‘China plus one’ strategy.
- Potential FTAs: Free trade agreements with the UK and Europe could open new markets.
Strategic Initiatives:
- Focus on branding, innovation, product development, R&D, and value-added services.
- Strengthening online presence through marketplaces like Myntra and Amazon, and an omnichannel approach.
- Capex Guidance: Rs.860 crore for 2024-25, aimed at terry towel projects, transmission lines, and modernization to improve revenue visibility and productivity.
Stock Performance:
- The stock has significantly outperformed the market, delivering 70.4% returns compared to the BSE Sensex’s 22.9%.
Analyst Ratings:
- The stock has seen a notable increase in consensus analyst ratings over the past month, indicating growing bullishness among analysts.
This company’s strong performance and strategic initiatives make it a stock worth considering for investment, according to experts.
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