- 05 Aug 2022
- ICICIdirect Research
HAWKINS COOKERS REPORTS STEADY FINANCIAL PERFORMANCE
News: Hawkins reported 31% YoY growth in revenues for Q1FY23 to Rs 198 crore (Q4FY22: 271 crore). Owing to input cost pressures gross margin declined by 610 bps YoY to 52.1% (Q4FY22: 44.9%). However due to positive operating leverage employee and other expense to sales ratio declined by 280 bps and 410 bps YoY respectively which led to EBITDA margin improvement of 90 bps YoY to 16.9% (Q4FY22: 11.4%). EBITDA increased by 37% YoY to Rs 33 crore (Q4FY22: 31 crore). Consequently, PAT registered a YoY growth of 35% to Rs 23.1 crore (Q4FY22: Rs 21.4 crore).
View: The company’s gross margin continued to contract on a YoY basis probably due to input cost inflation. However, the gross margin has improved on a QoQ basis which suggests that the company might have taken a price hike during the quarter. The key monitorable will be whether the company takes further price hike to shore up its gross margin in the ensuing quarter. Also commodity prices have started to soften from their peak which should aid the company’s margins over next few quarters. Demand for cooking appliances has moderated as a category from its peak. We continue to remain positive on Hawkins owing to its robust balance sheet and good promoter pedigree. Over the years, the company has maintained balance sheet prudence with controlled working capital cycle (20% of sales), non-leverage balance sheet and generating healthy RoCE of 55%+.
Impact: Neutral.