Citi's Samuel Seow says Reliance Worldwide's guidance "looks soft" and implies a 4-6 per cent miss of consensus estimates.
"Reliance is expecting group revenues to be down low single digits (percentage) in FY24," he notes. "Including FX, consensus is looking for growth in FY24 of about 3 per cent or implied guidance is 4-6 per cent lower."
"Looking at margins, we estimate the guidance of holding margins flat is in line with expectations."
"However the lower sales means implied EBIT guidance could be 4-6 per cent lower."
"Expect share price to be soft in line with weaker outlook, however we note the multiple is depressed/implying some pricing in already," Mr Seow says.
FY23 was a "reasonably solid result in challenging conditions", with EBIT of $222m in line with consensus of $221m, but the tax rate was only about 18 per cent versus guidance of 22-25 per cent, with NPAT 5 per cent better than expected.
