Siyaram reports strong operational performanceSIYSIL - 570 Change: 0.55 (0.10 %)
News: SSML reported strong recovery in Q3FY22, with revenue growth of 47% YoY to Rs.562 crore (two year CAGR 16%; QoQ growth : 17%). Gross margin improved 840 bps YoY to 45.2% (Q2FY22: 43.8%) probably due to improved product mix and existence of lower cost inventory. Improvement in gross margins led to the company to report all-time high EBITDA margin of 18.2% (Q2FY22: 17.7%) in spite of increase in other expense to sale ratio by 380 bps to 19.4%. Absolute EBITDA came in at Rs.102 crore vs. Rs.52 crore in Q3FY21. Robust operational performance resulted in company reporting PAT of Rs.69.1 crore vs PAT of Rs.28.1 crore in Q3FY21.
Views: Strong revenue growth and improvement in gross margin augur well for SSML’s profitability. The company is expected to benefit from unorganised to organised shift as many smaller unorganised players are facing financial stress. Siyaram owing to its strong balance sheet appears to be well placed to benefit from the current volatile market scenario and garner increased market share. The company’s focus on strengthening balance sheet is visible with significant decline in debt over the years from Rs.590.0 crore in FY18 (D/E: 0.9x) to Rs.222 crore (D/E: 0.3x). SSML is expected to benefit from a demand revival post reduction/removal of restrictions on trade activities owing to its strong brand portfolio and pan-India distribution network.