Interloop (ILP) Q3 earnings preview

Interloop Limited (ILP) board is scheduled to meet on 30-April, 2024 to discuss company’s 3QFY24 results. Here are the important points from their earnings preview:

Expected EPS Decline

In the upcoming 3QFY24 results, Interloop Limited (ILP) is anticipated to report an earnings per share (EPS) of Rs0.93. This represents a significant decrease from the Rs6.84 reported in the same quarter of the previous year, 3QFY23.

The decline in earnings is primarily attributed to the absence of windfall exchange gains experienced last year. In 3QFY23, there was a notable exchange gain, while this year, an exchange loss is expected due to the quarter-on-quarter appreciation of the PKR/US$.

Excluding the impact of exchange gains or losses, a robust revenue growth of 35% is projected. However, despite this growth, there is still an expected YoY decline in EPS by 58%. The Hosiery segment is expected to be the main contributor to revenues, accounting for approximately 80% of the company’s top-line.

Margin Expectations

In terms of margins, ILP is expected to face some challenges in the upcoming quarter. Gross margins are forecasted to decline by 100 basis points (bps) to 27% quarter-on-quarter (QoQ).

Several factors contribute to this decline, including a decrease in overall export prices, appreciation of the PKR/US$ exchange rate, expenses related to the commissioning of new apparel facilities, and increased fuel costs.

Additionally, there will be the impact of full-quarter depreciation and financial charges compared to the previous quarter.

Long-Term Growth Outlook

Despite the anticipated short-term challenges, the long-term growth outlook for Interloop Limited remains positive. Analysts reiterate a Buy rating for ILP with a target price of Rs100.

Factors contributing to this positive outlook include the expected recovery in export volumes and prices, normalization of PKR/US$ depreciation, increased revenue contribution and margins from fully commissioned new apparel facilities, and reduced dependence on external financing with expected declines in interest rates.

(Rs mn)	3QFY24E	3QFY23	YoYΔ	2QFY24	QoQΔ	9MFY24E	9MFY23	YoYΔ
Net Sales	34,327	31,206	10%	35,316	-3%	108,143	84,128	29%
Gross Profit	9,269	15,363	-40%	10,711	-13%	33,554	30,722	9%
PAT	1,308	9,583	-86%	2,984	-56%	10,334	14,169	-27%
EPS (Rs)	0.93	6.84	-86%	2.13	-56%	7.37	10.11	-27%
EPS–Exchg gain	1.27	3.04	-58%	2.62	-52%	8.05	4.32	86%

Disclaimer:
The information in this article is based on research by JS Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.