Slight margin beat. Positive narrative on festive demand though early to call a recovery
· MSIL posted an EBIT margin beat in a rather challenging 2nd Quarter FY20
· Cost efficiencies and inventory adjustments helped on gross margin front despite higher discounting
· The company noted positive initial festive demand trends (low single digit growth) led by aggressive discounts, festive sentiment and better conversions
· On the positive side, tailwinds on raw material front, cost controls and volume pick up should aid stable to improving margins.
· MSIL is best placed to play a recovery trade in the Auto space given inventory clean up and good response to new model launches (S-Presso and XL6 seeing good response)
· While valuations look demanding, they can very well sustain amid expectations of an improving growth outlook and underlying operating leverage in the business.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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