La Opala Q4 Results Review - Miss Led By Channel Restructuring, Lower Discretionary Spending: Nirmal Bang

Nirmal Bang Report

La Opala RG Ltd.’s Q4 FY24 operating performance came significantly below our expectations on account of lower revenue. Reduced consumer spending and channel correction measures by the company impacted revenue performance, as per management.

Despite ~19% YoY decline in revenue in FY24, the management has guided for ~15% revenue growth during FY25, lower than our estimate. Also, considering the higher year-end inventory (up 33% YoY) on the books, La Opala is not going with the earlier plan of debottlenecking at Sitarganj in FY25. Borosilicate in-house manufacturing has already been pushed to next year.

While the commentary on growth is not reassuring for FY25, we believe risk-reward is still favourable. Therefore, after earnings revision, we maintain Buy with a revised target price of Rs 370 (25 times PE on FY26E).

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