Result Update on Styrolution for 2QCY2013 with an Buy recommendation and a Target Price of `492 (12 months).
Styrolution ABS Ltd. (Styrolution) reported mixed set of numbers for 2QCY2013. Top line for the quarter came in flat at `230cr, lower by 2.4% yoy as compared to our estimate of `268cr. EBITDA grew marginally by 0.8% yoy and came in at `15cr,
while margins expanded by 20bp yoy to 6.3% owing to lower raw material
cost as percentage of sales. However, due to sharp depreciation in the
currency during the quarter, EBITDA margin has eroded by 337bp
sequentially. Net profit plunged by 14.7% yoy to `8.3cr on account of lower other income (by 7.0% yoy) and higher tax outgo (39.5% of PBT as compared to 29.3% in 2QCY2012). We have revised our estimates downwards but continue to maintain Buy rating on the stock with the revised target price of `492, based on target PE of 14x for CY2014E.
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