Siyaram Silk Mills (SSML), reported good numbers on an operational basis in for Q2FY18. EBITDA margins expanded by 270 bps to 15.2 per cent, following lower raw material cost (down 592 bps y-o-y to 43.1 per cent of sales. Revenue was flat at Rs 423 crore, showing slow pick-up in consumer demand (following GST). Good operational performance and lower interest cost (down 23 per cent to Rs 7 crore) resulted in net profit growth of 19 per cent to Rs 31 crore.
As of Sept’17 SSML’s debt stood at Rs 435 crore. SSML has launched various brands from value for money (Siyaram’s, Mistair, Oxemberg, MSD) to premium brands (J Hampstead, Cadini, Zenesis, Moretti and Royale Linen).
SSML has been focusing on brand building exercise, which is expected to ensure high brand recall and help demand. Contribution of readymade garments business is expected to increase to 27 per cent in FY19E vs 21 per cent in FY17. Increasing focus on premium brands and high margin readymade garments segment is likely to bode well for the company.