UNSP’s sales growth of 17% was ahead of estimates aided by a favourable base due to constraints in BIO supplies. Prestige above (P&A) sales grew by 21% YoY on volume/realization growth of ~10%. Adj. Ebitda margin of 17% was significantly above estimates but is expected to normalise to company guidance of ~15% as staff/ad expenses normalise. Analysts of IIFL Capital Services upgrade FY24/25 EPS by 5%/2% on higher Ebitda margin. Valuations at 57x FY25 PE are rich and they see limited upside from these levels. Maintain ADD, TP of Rs.1050.
Beats estimates on all fronts:
UNSP reported 17% sales growth aided by favourable base due to constrained supplies of BIO portfolio. P&A sales grew by 21% YoY (4% above IIFLe) with realisation growing by 10% beating analysts of IIFL Capital Services estimates by 5%. P&A volumes grew by 10% YoY and were in-line with IIFLe. Adj. Ebitda margin of 17% expanded by 437bps YoY beating their estimate due to higher GM and lower staff expenses. Staff expenses were lower than quarterly run-rate of ~Rs.1.4-1.5bn guided by the company but the company expects these to normalise in subsequent quarters.
Expect growth/margins to normalise:
Healthy P&A sales/volume growth of 21%/10% in Q1 benefitted from low base and change in cyclicality of business. Going ahead as the base normalises, analysts of IIFL Capital Services expect growth to moderate to low-teens in H2 in-line with company’s guidance. Moreover, the demand stress in popular segment is expected to increase further owing to duty hikes in Karnataka and the resultant 14-17% increase in MRP. Similarly, Ebitda margin of 17% was ahead of company guidance of 15% and with normalisation of staff/ad expenses together with persistent inflation, margin is expected to be ~15% in H2.
FY24/25 EPS upgrade by 5%/2%:
Analysts of IIFL Capital Services upgrades come on the back of higher Ebitda margin forecast post the beat in Q1. They are projecting Ebitda margin of 15.7% in FY24 building in gradual recovery to 16.3%/16.7% from there in FY25/26. Valuations at 57x FY25 PE are elevated and they see limited upside from these levels. Maintain ADD, TP of Rs.1050.
Related Tags
Invest wise with Expert advice
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.