Butterfly Gandhimathi Appliances’ Net Up 89%

Butterfly Gandhimathi Appliances, which we had recommended in the ‘choice scrip’ column of the Dalal Street Investment Journal (Vol 28 Issue 17), has come out with fantastic Q1FY14 numbers. The south-based home appliances company has reported 91% growth in its revenues to Rs 230 crore. The net profit has increased by 89% to Rs 8.85 crore during the quarter. Overall, the results are in line with expectations.

During the quarter, the company has reported 7% growth in its retails sales, wherein the company sells its branded products. Under this category, it has seen 18% growth in LPG stoves and 7% growth in Mixie. In the institutional category, the company has seen 10% YoY growth to Rs 30.81 crore. Exports have soared by 58% but this segment in value terms is very small at the moment.

The EBITDA margins of the company for the quarter have come in at 7.4% against 10.24% a year ago. In Q4FY13, the company reported EBITDA margins of 8.77%. The higher raw material costs have eaten in to its profits but the company had guided lower margins as it wants to grow and is also set to increase its geographical reach to states other than those in the southern India.

For the quarter, the company has reported finance costs of Rs 3.67 crore against Rs 4.16 crore showing a YoY decline of 12%. The debt of the company remains very less and hence finance costs have shown a healthy decline. The company is also in the process of increasing its capacity through a mix of debt and internal accruals. We don’t expect a huge rise in debt as guided by the management of the company.

We would recommend a 1-year price target of Rs 460 and remain quite upbeat on the stock. At the CMP of Rs 352, one can garner returns of 30% within a year.