Gul Ahmed Textile Mills Limited : Margin expansion to drive growth! - By BMA Research

<p></p><ul><li><span style="font-size:medium;">We re-initiate our coverage on Gul Ahmed Textile Mills Limited (GATM) with a TP of PKR44/sh, offering an upside of 16% on last closing &ndash; Overweight.</span></li></ul><ul><li><span style="font-size:medium;">Our conviction on the stock is based on i) production efficiency (margins up 7ppsYoY in 9MFY16), ii) increasing focus on high margin local sales and&nbsp;&nbsp;iii) lower finance cost on account of conversion of loans at lower LTFF rates.</span></li></ul><ul><li><span style="font-size:medium;">GATM posted 9MFY16 earnings of PKR3.1/sh, representing a growth of 2.0xYoY. In 3QFY16, the company reported a growth of 2.5xYoY in earnings to PKR1.7/sh.</span></li></ul><ul><li><span style="font-size:medium;">Although topline will remain depressed in FY16 (down 8%YoY), we eye a gradual reco...