Centrum’s research report on Mirza International
We maintain our BUY rating on Mirza International with a TP of Rs215 (20x FY20E EPS). Growth in domestic revenue continues to be strong double digit on the back of traction in sports shoes and lower price point Bond Street. Management plans to focus on North India market for sports shoes and also on online-offline stores which they plan to scale to 70-100 store over next 1 year. Entry in the women footwear segment is a logical extension which would bear fruits over next 2 years as the management is targeting to sell 0.5mn pairs. Further they have received upholstery orders from China which would boost tannery sales which has been declining. While exports continue to decline at double digit, we believe the worst is behind and the growth would now be gradual from the exports front.
Revenue estimates have been reduced by 5% for FY18E on the back of sustained decline in the footwear exports and leather. Operating profit was cut by 4.8%/2% for FY18E/FY19E on lower revenues and lower gross margins while PAT has been lowered by 6.8%/3.1% over similar period. We maintain our Buy rating on the stock with a TP of Rs215, 20x FY20E EPS. Key downside risk being sustained pressure on the export revenues.
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