ICICI Direct has given Buy recommendation for Hawkins Cookers with a target price of Rs. 6800 in its research report issued on Feb 04, 2021
ICICI Direct’s research report on Hawkins Cookers
Owing to renewed customer interest in cooking appliances (as people preferred home cooked food) Hawkins reported healthy topline growth of 20% YoY to Rs 231 crore in Q3FY21. The company successfully launched a new range of pressure cookers and products like Tri-Ply stainless steel cookware. Further, Hawkins has enhanced its presence in online segment coupled with improved distribution and dealer reach. Gross margins for Q3FY21 declined 210 bps YoY to 56.8% owing to a change in channel mix and steady increase in raw material prices. We believe Hawkins has perked up its marketing spends during the quarter, which has led to other expenses increasing materially by 21% YoY to Rs 70 crore. Employee expenses increased 16% YoY to Rs 28.6 crore. Hence, EBITDA margins fell 216 bps YoY to 14.1%, with absolute EBITDA up 4% YoY to Rs 32.6 crore. Due to higher cash & bank balance, other income was at Rs 2.6 crore vs. Rs 0.9 crore in Q3FY20. Ensuing PAT grew 8% YoY to Rs 24.2 crore. Hawkins through its brand patronage (second largest player in pressure cooker segment) and healthy b/s is well placed to further consolidate its market positioning.
We reiterate our BUY rating on the stock with a revised target price of Rs 6800 (33x FY23E EPS of Rs 206, previous TP: Rs 4900).
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