1 VTL share price target reports by brokerages below. See what is analyst's view on VTL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Vardhman is among the few textile companies that has been able to maintain a debt equity ratio below one in spite of continuous capacity additions. Though the near term financial performance is expected to be dented owing to low domestic and export demand, we expect VTL to tide over the same owing to its strong balance sheet and long standing relationship with marquee clients that would enable a quick demand recovery when the situation normalises. The stock has seen a sharp correction of 40% over the last month. We believe that in spite of near term negative impact on its profitability, the company offers a favourable risk reward perspective. We maintain BUY rating with a target price of | 800 (7x FY21E earnings).
After a subdued FY20, we expect revenues to grow 8% in FY21E to | 7617 crore as the expanded capacity is likely to attain optimum utilisation level. We expect the EBITDA margin to rebound in FY21 due to lower input cost and stable yarn/fabric realisations. In spite of being in a capital intensive business, Vardhman has continuously maintained debt equity ratio below 1. The focus of the management would be on converting more yarn to fabric, which would lend better stability to EBITDA margin. The stock has declined 17% in the last six months owing to subdued financial performance. However, we believe VTL’s performance will improve in FY21 owing to revival in revenue growth and better EBITDA margins. Hence, we upgrade the stock to BUY rating with a target price of Rs 1100 (8x FY21E EPS).
We expect revenues to grow at a CAGR of 5% in FY19-21E to | 7511 crore as the expanded capacity is likely to come on stream in Q2FY20. In spite of being in a capital intensive business, Vardhman has continuously maintained debt equity ratio below 1. Also, it has a strong balance sheet that would enable it to pursue calibrated growth opportunities. Themanagement’s focus would be on converting more yarn to fabric, whichwould lend better stability to EBITDA margin. We expect the EBITDA margin to be range bound at 16-17% for FY20E, FY21E. We have a HOLD rating on the stock with a target price of | 990 (PE of 8x FY21 EPS).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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