Himatsingka Seide Ltd (HSL) is a vertically integrated one of the Top Home Textile player with a global footprint. On the manufacturing front, HSL operates in India with one of the largest capacities in the world consisting of 23 mn meters per annum for bed linen products and 2.2 mn meters per annum for Drapery and Upholstery fabric (Silk). On the Distribution front, HSL operations spread across Asia, Europe and North America through its retail and wholesale distribution arms carrying some of the most prestigious brands (Calvin Klein Home, Barbara Berry, Peacock Alley, Bellora etc) in the Home Textile space and caters to Private Labels (Esprit and Waverly) major retailers across these geographies. With the economy on the revival mode, both in the US and India; HSL volumes are set to grow at a CAGR of ~9% over FY13-16E vs CAGR of ~3% over FY10-13 well complemented by structural shift happening in demand for Indian Textiles internationally.
With the blended capacity utilization set to increase to ~93% by FY16E from ~76% in FY13 and robust distribution network across geographies, HSL is well placed and set to move into a higher growth trajectory by recording a revenue CAGR of 15% over FY13-16E and capitalize on future growth opportunities. Softening of raw material prices, favorable product mix, highly focused management, cost efficiency and economies of scale, all set to complement in EBIDTA margin expansion to 10.2 in FY16E vs 9.2% in FY13.
At a target PE multiple of 8x FY16E EPS of 12.1 giving us a target price of Rs 100 with an upside of 70% in 12-18 Months
