BUTTERFLY GANDHIMATHI APPLIANCES LIMITED

Recommendation history

• FY 2022HoldHold: FY22 revenue rose to ₹1,005 crore from ₹869 crore, but EBITDA fell to ₹51 crore from ₹78 crore and PAT dropped to ₹16 crore from ₹36 crore, showing severe margin pressure. Crompton’s majority stake offers a credible route to pan-India distribution and product expansion, but management gave no quantified margin-recovery, synergy, capex, or earnings targets despite direct shareholder pressure.
• 2021-10-28HoldHold: Q2 was a record, but the reported strength was partly driven by Diwali being pulled forward by 10 days; management targets FY22 revenue growth of 20–25% or roughly ₹1,050–1,100 crore. EBITDA margin held at 11.6%, but gross margin remains under pressure from volatile commodities, with only 4–5% of price increases implemented and further hikes still uncertain. The organized-market share gains and non-South expansion are attractive, but margin recovery and the durability of growth remain unproven.
• 2021-08-05HoldHold: Q1 revenue rose to ₹144 crore from ₹76 crore, but the five-week plant shutdown masked underlying demand and EBITDA margins weakened as gross margin fell roughly 1%. Management reiterated 10–15% FY22 revenue growth, roughly ₹950–1,000 crore, with EBITDA margin around FY21 levels; however, commodity inflation, only partial price pass-through and a still-unproven efficiency improvement leave the risk/reward balanced rather than compelling.
• 2021-05-21HoldHold: FY21 was strong, with revenue up 28% to Rs.870 crore, EBITDA margin at 9.3%, working-capital days near 36, and a net-cash balance sheet. The growth and balance-sheet repair support the bull case, but FY22 visibility is weak: roughly 90% of traditional retail outlets were shut during the lockdown, raw-material inflation remains volatile, and management’s 10–15% growth outlook is conditional while margins may decline in Q1.
• Q3 2021HoldHold: Q3 was exceptionally strong, with revenue around Rs.300 crore, 9M FY21 growth of 17%, near-100% capacity utilization and net debt of only about Rs.3.6 crore. The Rs.1,000 crore revenue and 10%+ EBITDA-margin target in 12–24 months is credible directionally, but the call did not establish a clean buy case: demand benefited from Covid-led home cooking and organized-sector disruption, while commodity inflation, normalized costs, high marketing spend and capacity constraints remain unresolved.
• Q2 2021BuyBuy: Q2 revenue was approximately Rs.288-290 crore, up 19%, with 12% EBITDA margin, while net debt fell to Rs.45.5 crore from roughly Rs.180 crore in March. The bull case is sustained organized-market share gains, 42-43% gross margins, better working capital and non-South growth; the key tension is that H1 revenue remained below last year and Q2 is seasonally strong, so the 12% EBITDA margin should not be annualized.
• Q1 2021HoldHold: Q1 revenue fell about 50%, producing an EBITDA loss of Rs. 3.8 crore and a PAT loss of Rs. 8.79 crore, while July reportedly recovered to flat year-on-year. Management expects FY21 sales at 85%-90% of FY20, FY21 EBITDA margin near 7%, and PBT positivity by year-end, but the recovery depends on lockdown-free retail normalization and does not yet resolve the company’s structurally low profitability and Rs. 150 crore gross debt.