Shares of Lux Industries have multibagger returns this year (year-to-date or YTD), with the stock rising more than 131% in 2021. multibagger stock There has been an increase of more than 105% in the period of six months alone. The stock of brokerage firm Anand Rathi is seeing further gains.
Lux’s Q2 FY22 beat Anand Rathi’s estimates in the form of 50% and 25% year-on-year (YoY) growth in net profit and revenue. However, H1FY22 working capital was higher (160 days) due to seasonal nature of business, which is expected to decrease by the end of the year.
“On its profitable growth path, we are excited about Lux’s long-term growth prospects because of its strong brand equity, launches and long-standing operations in innerwear. With H1FY22 surpassing our estimates, we grow our FY22e/FY23e revenues by 2%/3% and EPS by 5%/6%,” said Anand Rathi’s note.
The brokerage has downgraded its rating on Lux Industries to . Upgraded to Buy with a higher target price of ₹5,322. However, it sees slow growth in its premium range, intense competition and rise in raw material prices as key risks.
According to Anand Rathi, higher cost of raw materials and stocking winter products led to increase in inventory, while debtors were high due to lack of liquidity in the market. Management expects the working capital to be maintained at FY 2012 level by the end of FY 2012.
“To counter higher raw material prices, the company has increased its selling price by 10-11% in the last 11-12 months, and is likely to hike prices in Q3 FY22. Prices will increase further in the fourth quarter on increase in GST rates.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
Don’t miss a story! Stay connected and informed with Mint.
download
Our App Now!!
.