Pre-Ind-AS 116 EBITDA up 13% YoY: On a pre-Ind-AS 116 basis, FLFL reported an in-line performance in 1QFY20. Revenue rose by a healthy 17% YoY, driven by 23% YoY growth in Brand Factory. EBITDA grew 13% YoY, with the margin contracting 30bp YoY to 8.7% due to higher SG&A. PAT declined 15% YoY to INR313m; the decline was higher at 26% YoY to INR274m (16% miss) including the loss of INR39m from associates/JVs. On an Ind-AS 116 basis, revenue was up 17% YoY and PAT excluding associates/JVs was down 23% YoY to INR284m. SSSG moderated to 5% YoY in 1QFY20 from 8% YoY in 1QFY19 and 9% QoQ in 4QFY19. Brand Factory SSSG moderated from double-digit in FY19 to 2.5% in the quarter. Central reported better SSSG of 7% compared to the same period last year. For FY20, we estimate SSSG of 6%/8% at Central/Brand Factory.
We adjust our target price and EV/EBITDA multiple based on Ind-AS 116 workings. Subsequently, we assign 7.5x EV/EBITDA on FY21 EBITDA of INR14.3b to arrive at a target price of INR575 (prior: INR585). At our TP, it is valued at an implied P/E of 41x on FY21, in line with the three-year average P/E multiple. Maintain Buy.