Fundamental Result Update

D P Abhushan Ltd Q1FY22 Result Update


D P Abhushan (DPAL) reported robust topline growth of 322% YoY to INR 1,753 mn due to lower base of last year. On a sequential basis, sales de-grew by 70% as all stores were closed for approximately 44-50 days during the quarter due to restrictions led by covid. Gold/Silver sales volume during the quarter decreased by 70% QoQ/49% QoQ. Due to decrease in cost of material, gross margin of the company has increased by 422 bps QoQ at 9%. Weighted average cost of gold bullion decreased from INR 4,812/gram to INR 4,587/gram, as a result gross margin has improved. EBITDA for the quarter grew by 53% YoY and de-grew by 36% QoQ to INR 104 mn. EBITDA margin for the quarter expanded by 317bps QoQ at 5.9%. Profit for the quarter increased by 30% YoY to INR 43 mn.


Valuation and Outlook

Company has performed reasonably well during the quarter, primarily on margins front. Sales remain impacted due to covid and it is expected to bounce back strongly from Q2FY22E with upcoming festive season. We believe, DPAL’s initiatives of improving SSSG and increasing sales from new stores along with industry tailwinds provides enough headroom for growth. We increase our topline growth estimate from 12% CAGR to 15% CAGR for FY21-23E as a result our PAT estimate has increased by 5% each for FY22/23E. Company is expected to clock ~15%/29% revenue/PAT CAGR over FY21-23E. We reiterate our Buy rating on the stock with a revised TP of INR 265/share (earlier INR 252), based on P/E of 13x FY23E EPS. Since our coverage (initiated in Jul’20), stock has given a absolute return of 271%. Please see our rating & recommendation history in the last page of report.

 

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