- 08 Feb 2022
- ICICIdirect Research
Butterfly Gandhimati reports subdued financial performanceBUTTERFLY - 1150 Change: 29.55 (2.64 %)
News:Butterfly Gandhimati's (BGAL) revenue de-grew 13% YoY to Rs.258 crore on a very high base. Gross margins declined 189 bps YoY to 39.8%% on account of higher raw material cost. Decline in gross margins and increase in employee cost to sales ratio by 251 bps to led to EBITDA margin declining by 380 bps YoY to 8.2% with EBITDA being lower by 41% YoY to Rs.21.2 crore. Consequently, net profit declined 51% YoY to Rs.9.1 crore.
Views: The revenue de-growth in Q3FY22 is mainly owing to higher base of previous year (70% YoY growth in Q3FY21) and certain festive sales being preponed to Q2FY22. Revenue growth for 9MFY22 was at 21.5% for December 2021. Also, higher raw material prices have led to YoY decline in gross margin of the company. The company is expected to take price hike of ~ 5-7% in line with peers to shore up its margins. With demand likely to remain upbeat owing to renewed customer interest in cooking appliances (as people preferred home cooked food), the company is targeting revenue growth of 15-20% and EBITDA margin of ~ 10%+ (~100 bps YoY Improvement) in FY23. On the balance sheet front, the company has reduced its debt from Rs.45 crore in 9MFY21 to Rs.24 crore in 9MFY22 and the debt equity ratio is comfortable at ~ 0.1x in 9MFY22.