Interloop Limited (ILP) announced its 4QFY24 result today, where the company recorded an unconsolidated earnings of Rs2.6bn (EPS of Rs1.87).
This takes FY24 earnings to Rs15.8bn (EPS of Rs11.25) down 11% YoY as compared to FY23 profit of Rs20.2bn (EPS of Rs14.39).
The earnings came lower than expectations for 4QFY24 due to lower than expected Gross Margins.
Gross Margins for 4QFY24 stood at 22% against 29% in 3QFY24. The decline was primarily attributed to the full operation of the apparel plant project which negatively impacted margins, as per our channel checks.
Net sales for 4QFY24 increased by 20% YoY and 11% QoQ to Rs43bn, in line with expectations. The Apparel plant began from mid-November and now fully operational contributed to this growth driving the increase in sales.
Distribution expenses rose by 59% YoY and 36% QoQ to Rs1.8bn. Administrative Expenses increased by 21% YoY while down 14% QoQ to Rs2bn. This rise in expenses was driven by the setup of the apparel plant.
Other income rose by 42x YoY and 140% QoQ to Rs211mn in 4QFY24.
Finance costs for the company have increased by 74% YoY and 4% QoQ to Rs2.7bn in 4QFY24.
Effective tax rate stood at 15% in 4QFY24 (1.08% of turnover) compared to 3% in 4QFY23 (1.28% of turnover) and 12% in 3QFY24 (1.40% of turnover).
We maintain a Buy call with Target Price of Rs90 per share, representing a 29% upside. Currently, ILP is trading FY25F P/E of 6.9x vs a 5-year average P/E of 13.7x.
