Brokerage Firm Prabhudas Lilladher Initiates Coverage on Flair Writing Industries with a Target Price of Rs 411

Prabhudas Lilladher Raises FY28E EPS Estimates for Flair Writing Industries Amid Healthy Traction

Prabhudas Lilladher's research report on Flair Writing Industries has shown a mixed performance in the company's recent quarter. Despite cutting FY27E EPS estimates by 2% to account for rising raw material (RM) inflation, the research firm has raised FY28E EPS estimates by 6% due to healthy traction in creatives and steel bottles.

Flair Writing Industries reported an in-line performance with revenues of INR3,230mn, which aligns with Prabhudas Lilladher's estimate of INR3,297mn. The company's EBITDA margin also came in at 17.9%, which is in line with the research firm's estimate of 17.1%. However, the top-line growth, which had been increasing by around 17-20% in the last five quarters, suffered a decline of 8.4% in 4QFY26 due to the Middle East (ME) crisis impacting export OEM revenue. Furthermore, as around 35% of the RM basket is crude-linked and Flair Writing Industries has only around 4-5 weeks of additional RM cover, the EBITDA margin is likely to remain under pressure in 1QFY27E.

Despite these challenges, Prabhudas Lilladher believes that inflationary pressures are transitory and the EBITDA margin is expected to recover to 18.3% in FY28E from 16.5% in FY27E.

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Outlook

Prabhudas Lilladher expects sales and PAT (Profit After Tax) CAGR (Compound Annual Growth Rate) of 15% and 16% over FY26- FY28E, respectively. The research firm retains a BUY rating on the stock with a target price of INR411, based on a target multiple of 23x FY28E EPS. The stock trades at an attractive valuation of 22x/17x over the research firm's FY27E/FY28E EPS estimates, which is significantly lower than DOMS Industries' valuation of 50x/38x over the same estimates. Prabhudas Lilladher believes that the recent correction offers a good entry point from a long-term perspective and maintains a BUY rating on the stock.