IDBI Capital report on Kohinoor Foods:
FY07 revenues at Rs 5,892 million is up by 9% YoY on account of increase in branded sales. EBIDTA margin at 10% have increased by 138bps YoY leading to rise in PAT by 6% YoY to Rs 221 million.
FY07, PAT exceeding expectation
In FY07, KFL’s revenues increased by 9% YoY to Rs 5,892 million on account of 20% YoY increase in branded basmati rice revenues to Rs 3,292 million. Branded foods division contributed Rs 374 million to the topline, exhibiting an increase of 40% YoY. EBIDTA margins at 9.9% exceeded our expectation of 9.1% in FY07. This is on back of 24% YoY increase in branded sales that now contribute around 62% of total turnover. This lead to PAT rising by 6% YoY to Rs 221 million. Net profit margin stood at 3.7% inspite of increase in interest cost by 59% YoY and depreciation by 28% YoY.
Q4FY07, subdued quarter
For Q4FY07, revenue declined by 15% YoY to Rs 1,750 million on account of decline in commodity sales. However, operating profit increased by 17% YoY to Rs 172 million. EBIDTA margin at 9% increased by 237bps YoY on account of 20% increase in branded sales. PAT declined by 13% YoY to Rs 42 million. The decline was also lead by increase in depreciation cost by 31% YoY and interest cost by 32% YoY. Net profit margin increased by 8 bps YoY to 2.4%.
Valuation
KFL has reported excellent set of number exceeding our expectation. Going forward, we expect the company to post robust performance in FY08. The company's plans of ramping up rice milling capacity to 45 MTPH and RTE capacity to 100,000 pouches a day, are intact and expected to yield results by FY08. The current market price discounts FY08E EPS of Rs 18.7 by 3.3x. We reiterate ‘Buy’ with a target price of Rs 161.