Buy Sheela Foam, target price Rs 2500: ICICI Securities

ICICI Securities has buy call on Sheela Foam with a target price of Rs 2500. The current market price of Sheela Foam Ltd. is Rs 2035.65. Time period given by analyst is 1 year when Sheela Foam price can reach defined target.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 748.94 Crore, down -11.01 % from last quarter Total Income of Rs 841.58 Crore and up 45.06 % from last year same quarter Total Income of Rs 516.28 Crore. Company reported net profit after tax of Rs 58.37 Crore in latest quarter.

Investment Rationale
The brokerage cuts FY22E earnings estimates by 5%; modelling revenue / EBITDA / PAT CAGR of 21% / 23% / 32% over FY21-23E. It maintains BUY with a DCF-based target price of Rs2,500. At the target price, the stock will trade at 29X P/E multiple Mar-23E. Key downside risks are (1) adverse movement in prices of key inputs and (2) increase in competition from global players/Indian e-commerce.

Promoter/FII Holdings
Promoters held 73 per cent stake in the company as of March 31, 2021, while FIIs held 1.7 per cent, DIIs 23.2 per cent and public and others 2.1 per cent.


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