HSIL Ltd. – Q1FY12 Result Update

HSIL announced its Q1FY12 results and reported a very strong performance. Its revenues increased to INR 3280 mn, an increase of 41.5% as compared to Q1FY11. The EBITDA posted by the company was INR 627 mn, an increase of 55.5% YoY. EBIDTA margins increased by 180 basis points to 20.4%

The Profit before Tax (PBT) increased to INR 417 mn, a rise of 130% as compared to the first quarter of the previous financial year. The Profit after Tax (PAT) showed a robust growth of 111% to INR 285 mn. The PAT margins increased substantially by 309 basis points to 9.36% Cash profits showed strong growth of 32% to INR 410 mn.

Outlook and Valuations

At current market price of INR 219, the stock is trading at a P/E of 10.5x for FY12 estimated earnings. Looking at the robust performance by the company in the first quarter and given the expansion plans in place and management capabilities to drive the business, we re-rate and recommend a “BUY” on the stock with a price target of INR265.

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