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  • Company Update: Eveready Industries India Ltd – BUY – TP Rs.322

    Publish date: 26th June, 2018

    We interacted with the management of Eveready Industries India Ltd (EIIL) to get perspective on the company's operations-core business and new initiatives. Following the immense disappointment in the Q4FY18 result when the company reported EBITDA loss, management is now able to reassure (during the course of our interaction) that most of the challenges are close to get sorted and situation across verticals have largely stabilized now.

    Key Highlights

     As per management, after a prolonged period of disruption in the batteries & flashlight business, sales have now started to pick up and is expected to build further momentum going ahead. BIS compliance has also been leading to the reduction in the imports of cheap Chinese batteries, which has started to benefit the domestic industry.

     Operating margins are expected to recover in FY19 on back of improved volumes in the core business and normalization in costs overheads in the appliances/ confectionary business.

    Valuation & outlook

     Maintain FY19/20 forecasts and DCF assumptions, we recommend 'BUY' with unchanged target price of Rs 322. Despite attractive upside potential, we expect stock to remain under pressure in the short term, susceptible to 1/ further developments in the CCI event and 2/ reversal in sales momentum.


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