52 One Year - Myirisbreport.myiris.com/SKPSEC/ETEEVERE_20130128.pdfJan 28, 2013 · January 28,...

January 28, 2013

Everest Industries Ltd

Complete Building Solutions provider …

CMP: Rs.247 Target: Rs. 354 Initiating Coverage - Buy

SKP Securities Ltd www.skpmoneywise.com of 13

Company Profile

Everest Industries Ltd (EIL), Incorporated in 1934, offers complete range of

building solutions like roofing, ceiling, wall, flooring, cladding, door and the pre

engineered steel buildings for the industrial, commercial & residential sector. It

enjoys 13% market share of FC roofing industry in India. The company has a

pan India presence with a large distribution network and state-of-art

manufacturing facilities at Kymore, Nashik, Coimbatore, Kolkata and Roorkee.

Investment Rationale

Transforming into a complete building solutions provider:

EIL, in the recent past, has forayed into various value- added allied

segments like cladding solutions, ceiling solutions, wall solutions, and floor

solutions etc. to provide end to end solutions in building construction.

EIL has reduced its reliance on FC roofing sheets which now constitute

around 60% of the company’s revenues as against ~75% earlier. The Steel

Buildings segment constitutes around 25%, while other products like boards

and panels constitute the balance of the company’s turnover.

Evolution of Pre Engineered Buildings in the India:

Currently PEBs are in a very nascent stage in India. In the last five years,

the demand and awareness about PEBs has grown multifold. Given the

infrastructural requirement of India over the next two decades, the demand

for PEBs will increase by 6 times.

Manufacturing industries like automobile, engineering goods and services

like logistics, warehousing and infrastructure are large users of PEBs and

they are now applying modern PEB structures. The recent move of allowing

FDI in multi-brand retail sector is a big positive for PEB business.

EIL’s PEB segment revenue grew at a CAGR of 34% during FY09-12.

Going ahead, we believe that PEB top-line would continue to grow at 17%

and 24% during FY13 and FY14 respectively.

Government thrust on rural housing – boosting demand:

Government thrust on developing backward areas has led to an increase in

construction of schools, housing and hospitals.

Under IAY around 11 million houses were build in 11th five year plan. The

proposed budget for rural housing for the 12th plan is Rs. 1,500 billion.

FC sheet industry is mainly driven by rural households moving up the value

chain from kuccha to pucca housing, helped by improving labour market

and government welfare schemes like NREGS, NRLM, etc.

Healthy financial and consistent dividend payout:

EIL’s revenue grew at a CAGR of 24% during FY07-12. Going ahead, we

believe that top-line would continue to grow at 20% and 17% during FY13

and FY14 respectively. EIL to deliver an EBITDA margin more than 10%

and PAT margin more than 6% during FY13-14E.

EIL follows a consistent dividend policy with a minimum payout of ~20%.

We expect, EIL will pay dividend of Rs.9/sh and Rs.10/sh in FY13E and

FY14E respectively.

Outlook & Recommendation

At CMP, the stock trades 5.6x its FY13E earning of Rs.43.9 and 4.9x its

FY14E earnings of Rs.50.5

EIL has among the best diversified businesses compared with rivals such as

HIL, Visaka and Ramco which makes for an attractive valuation. Hence, we

initiate coverage on the stock with „BUY‟ recommendation and a target

price of Rs.354 (7x FY14E EPS), at 43% upside over the period of 15

month.

Key Share Data

Face Value (Rs.) 10

Equity Capital (Rs. in Mn.) 151.1

M.Cap (Rs. in Mn.) 3754.1

52-wk High/Low 282.7/119.0

One Year Avg. Daily Vol (In Qty) 14570

BSE Code 508906

NSE Code EVERESTIND

Reuters Code EVRI.BO

Bloomberg Code EVI:IN

Shareholding Pattern (as on 31st Dec, 2012)

Source: BSE

Key Financials (Rs. In Mn.)

Particulars FY11 FY12 FY13E FY14E

Net Sales 7231.0 8868.6 10660.1 12464.6

growth (%) 10.8% 22.6% 20.2% 16.9%

EBITDA 658.2 807.6 1119.3 1283.9

PAT 407.0 527.6 664.9 763.7

growth (%) 35.6% 29.6% 26.0% 14.9%

EPS (Rs.) 27.0 34.9 43.9 50.5

BVPS (Rs.) 138.3 165.1 198.3 237.1

Key Financials Ratio

Particulars FY11 FY12 FY13E FY14E

P/E (x) 9.2 7.1 5.6 4.9

P/BVPS (x) 1.8 1.5 1.3 1.0

Mcap/Sales (x) 0.5 0.4 0.4 0.3

EV/EBITDA (x) 7.1 5.2 3.7 2.9

ROACE (%) 17.2% 21.6% 23.7% 24.7%

ROAE (%) 21.3% 23.0% 24.2% 23.2%

EBITDA Mar(%) 9.1% 9.1% 10.5% 10.3%

PAT Mar (%) 5.6% 5.9% 6.2% 6.1%

D/E (x) 0.5 0.3 0.4 0.2 Source: Company, SKP Research

Price Performance EIL vs. BSE Small Cap

Analyst: Chirag K. Gothi

Tel No.: +91 22 2281 9012; Mobile: +91 9870895720

Email: [email protected]

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Promoter 49.7%

mailto:[email protected]


Everest Industries Ltd.

Industry Overview

Oligopoly structure of the FC sheet industry

The fibre cement industry in India has a capacity in excess of 5.5 million MT. There

are 17 players and over 60% market share controlled by 4 major players, EIL is one of

the leading player, who controls 13.2% of FC sheet roofing industry and expected to

increase his market share through capacity expansion. Other prominent players being

HIL, Visaka and Ramco Industries.

These players have similar strengths and weaknesses in the FC sheet segment and also

have similar strategy to pass on increasing material cost to customers to maintain

margin. The high concentration in the industry limits the bargaining power of buyers.

Products are competitively priced with little brand premium and the buyer is usually a

price taker.

FC Roofing Industry Size (Million MT) Market Share (Volume)

Source: ACPMA Source: ACPMA

Capacity of Players – Product wise

Capacity HIL Ltd Everest Ind Visaka Ind Ramco Ind

FC Sheet (MT pa.) 940,000 674,000 752,000 654,000

Allied Products

Building Panels & Boards (MT pa.) 460,000* 136,000 48,000 48,000

AAC Blocks (CuM.) 340,000

Cement Clinker Grinding (MT pa.)

216,000

Non - Allied Products Thermal

Insulation (Tns) Steel Building

(Tns) Textile Yarn (Spindles)

Cotton Yarn (Spindles)

Capacity 6,000 30,000 1,816 43,296 Source: Company, SKP Research Note: * figure in no.

Raw Material: Chrysotile asbestos fibre, cement, Fly ash and wood pulp are the key

raw material used in FC roofing sheets. Chrysotile fibre is completely imported from

countries like Brazil, Canada, Zimbabwe, Kazakhstan etc.

Cement Fibre Sheet Composition (Volume) Cement Fibre Sheet Composition (Value)

Source: Company, SKP Research Source: Company, SKP Research

3.29

3.52

3.69 3.75

4.07

2.6

2.8

3.0

3.2

3.4

3.6

3.8

4.0

4.2

FY08 FY09 FY10 FY11 FY12

18.9%

15.9%

13.6%13.2%

10.6%

27.8%

8%

45%47%

53%30%

17%

OPC Cement

Fly ash and others

Chrysotile fibre

Chrysotile fibre

OPC Cement

Fly ash and others

Vishaka / Shakti

Charminar

Utkal

Ramco Everest

Others



Pre- Engineered Steel Building Industry

"Pre-engineered steel buildings" are those which are fully fabricated in the factory after

designing, shipped to site in CKD (completely knocked down) condition; and all

components are assembled and erected at site with nut-bolts, thereby reducing the time

of completion.

PEB systems are extensively used in industrial and many other non-residential

constructions worldwide, it is relatively a new concept in India. These concepts were

introduced to the Indian markets in the late 1990's with the opening up of the economy;

and a number of multi–nationals setting up their projects.

The market potential of PEB’s is 1.5 million MT per annum. The current pre

engineered steel building manufacturing capacity is 0.6 million MT per annum. The

industry is growing at the compound rate of 25 to 30%.

Notable players in this segment are Kirby, Tata Bluescope, Interarch, Zamil (Saudi

Arabia), Multicolor Projects, Cold Steel, Tiger Steel and Everest Industries.

The Company: A Snap Shot

Everest Industries Limited, a pioneer building solutions company, has been a trusted name

for 76 years. Over the years, its strategic investments in technology have allowed it to

continually introduce innovative products in the market.

Currently company run under dynamic Chairman Mr Aditya Vikram Somani and his team.

Key management personnel include Mr M.L. Gupta (Vice Chairman), Mr Manish Sanghi

(MD), Mr Rakesh Gupta (CFO) and Mr Y. Srinivasan Rao (ED-Operations).

Products manufactured by EIL are distinguished for their high performance, durability and

architectural versatility. EIL offers complete range of building solutions like roofing,

ceiling, wall, flooring, cladding, door and PEB for the industrial, commercial & residential

sector. Its product range has gained wide acceptance in Asia, Africa, South Pacific and

Europe. It enjoys ~13% market share of Indian FC sheet roofing solution industry.

EIL is expanding their product portfolio in such away to become-

“Complete Building Solutions provider”

Segment Product Portfolio Demand drivers

Bu

ild

ing P

rod

uct

Fibre Cement Sheet Revenue contribution: 60%

Market position: 13% of market share

(Installed capacity – 5,74,000 MT)

Fibre Cement Roofing,

Hi-Tech - Non Asbestos

Modern Roofing

Industrial sheds,

Agricultural buildings,

Warehouses, Poultry farms,

Garage, Verandahs etc.

Boards & Panels Revenue contribution: 15%

(Installed capacity – 1,36,000 MT)

Ceiling solution,

Flooring solution,

Walling solution,

Cladding solution,

Solid wall - Sandwich panel

Residential apartments,

Commercial complex,

Industrial complex, mall etc.

Pre fabricated Shelter - Internal /

External Walls

Steel Building Revenue contribution: 25%

Market position: 5% of market share of India

(Installed capacity – 30,000 MT)

Pre-Engineered Buildings

Factory and Warehouses

Institutional buildings

Recreational facilities

Smart Steel Buildings

Commercial and office buildings

Industrial utility buildings

Site offices and residences

Malls and Restaurants

Source: Company, SKP Research



Investment Rationale

Transforming into a complete building solutions provider

EIL, in the recent past, has forayed into various value- added allied segments like

cladding solutions, ceiling solutions, wall solutions, and floor solutions etc. to provide

end to end solutions in building construction. EIL has hence successfully transformed

itself into a building solution player from a roofing company.

Boards and panels are primarily urban products, used largely in commercial applications

as an alternative to wood-based products. Not only are they cheaper, they’re also

available in a variety of finishes and sizes and thus find favor with architects and

designers.

In FY 2009, EIL entered into pre engineered steel buildings (PEB) business caters to the

industrial clients by providing customized end to end solutions (right from consultation,

designing, manufacturing to installation).

EIL has reduced its reliance on FC roofing sheets which now constitute around 60% of

the company’s revenues as against ~75% earlier. The Steel Buildings segment

constitutes around 25% of EIL’s sales, while other products like boards and panels

constitute the balance of the company’s turnover.


EIL’s Complete Building Solutions

Source: Company

0%

20%

40%

60%

80%

100%

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13E Mar-14E

FC Sheet Boards & Panels PEB



Government thrust on rural housing – boosting demand

Government thrust on developing backward areas has led to an increase in construction

of schools, housing and hospitals.

Total houses to be build under IAY is to be around 11 million in 11th Five Year Plan.

The proposed budget for rural housing for the 12th Five Year plan is Rs 1,500 billion.

Rising disposable income by increasing minimum support price (MPS) of primary

product and different government initiatives to provide dwelling and employment to

give more pricing power in the hands of rural people.

FC sheet industry is mainly driven by rural households moving up the value chain from

kuccha to pucca housing, helped by improving labour market and government welfare

schemes which are given below:

Initiatives Allocation (Rs bn.)

Impact on Roofing Market 11th Plan 12th Plan

National Rural Employment Scheme

(NREGS) 1,165 3,220

Enhances the livelihood security of people from rural areas providing

employment and increasing purchasing power

Indira Aavas Yojana (IAY) 596 1,500 To replace all kuccha houses from Indian villages by 2017

National Rural Livelihood Mission

(NRLM ) 290 527

To build linkages with mainstream institutions, including Banks, and Govt

departments to address the various dimensions of poverty

Pradhan Mantri Gram Sadak Yojana

(PMGSY) 812 2,000

To provide farm to market access and new connectivity may involve

‘new construction’ where the link to the habitation is missing

Rashtriya Krishi Vikas Yojana

(RKVY) 250 630 Plans for agricultural development, increasing income of farmers

Source: Planning Commission, SKP Research

According to Census; In India, there were 249 million houses in 2001 which were

increased to 306 million in 2011. In 2001, FC cement and metal roofing contributed to

12%. Above government initiative, it increased to 15.9%.

Census 2001 (249 million homes) Census 2011 (306million homes)

Source: Census, SKP Research

Clay Tiles – 30% Grass, Thatch, Wood, Mud – 22% Plastic, Tarpaulin & Others – 2%

RCC – 21% RCC – 29.4%

Bricks – 6.6% Stone – 8.6%

Fibre Cement & Metal Roofing–15.9%

Clay Tiles – 23.8% Grass, Thatch, Wood, Mud – 15.1% Plastic, Tarpaulin & Others – 0.6%


RCC – 21% RCC – 21%

Bricks - 6% Stone – 7%

Fibre Cement & Metal Roofing - 12%




Evolution of Pre Engineered Buildings in the India

Currently PEBs are in a very nascent stage in India. Architects and consultants in India

are gradually becoming aware of the benefits of using PEBs in their design.

Diagram below shows advantages of PEBs


Another vital aspect which works in PEBs’ favour is the growing and much needed

thrust towards eco-friendly construction. The "Green" benefits of a PEB are as follows:

PEBs use steel and don’t require cutting down valuable forests.

Modern steel manufacturers employ energy efficient methods in steel production

that help to substantially reduce greenhouse gas emissions.

PEBs are manufactured with a high proportion of recycled content, i.e. steel. So,

manufacturer or builder can get up to 30 LEED points for using steel in the

construction of the building.

PEBs provide healthy indoor environment.

PEBs are durable, cost-effective, energy efficient and green.

PEBs, after demolition doesn’t accumulate wastage like asphalt shingles, concrete,

brick and wood.

Steel building roofs used in PEB's reflect light and heat keeping the buildings

cooler in hot weather and thus reducing cooling costs and helps in saving the

environment.

The market for PEB in India is estimated at Rs.45 billion with a 25-30% growth rate.

In India, at present, only 27% of all industrial and institutional buildings use pre-

engineered buildings, while in United States, more than 70% of all construction in

industrial and institutional segments is done using pre- engineered buildings.

In the last five years, the demand and awareness about PEBs has grown multifold. Given

the infrastructural requirement of India over the next two decades, the demand for PEBs

will increase by 6 times.

Manufacturing industries like automobile, power, textiles, engineering goods and

services like logistics, warehousing and infrastructure are large users of PEBs and they

are now applying modern PEB structures. The recent move of allowing FDI in multi-

brand retail sector is a big positive for PEB business.

PEB

Advantage

Tumkey Solution

Consistent & superior quality

Saving in construction time

Reduction in project cost

Single source responsibility

Flexibility in expansion

Low maintenance

Energy efficiency

Architectural versatility

Seismic resistant



EIL scaling up with pre-engineered buildings

EIL has undertaken more than 500 projects in 25 States covering more than 30 million

sq ft of built-up area from FY09. The projects include a canteen of 10,000 sq ft to a

gigantic factory of over 300,000 sq ft.

EIL has done some interesting projects such as Blow Past Ltd factory that has a vaulted

structure at ends and is one of the first LEED certified Green PEBs and a factory for

NSSL at Nagpur which is a wave shape building. Logistics Agri Warehouses located at

Deesa and Ramganjmandi are the first cold storage units to use PEB.

From last two years, EIL strongly focus on inventory management with raw material

purchase to be done only post receiving ~30% of the project cost, the utilisation levels

will improve while cost pressures will also be minimal. However, margin of this

segment is a matter of concern for few quarters till the segment achieves critical mass.

EIL’s PEB segment revenue grew at a CAGR of 34% during FY09-12. Going ahead,

we believe that PEB sales growth would continue to grow at 20% CAGR during FY12-

14E. We expect, volumes grow with CAGR of 18.7% during FY12-14E.


Strong brand and wide distribution network

EIL has strengthened its presence across India with an extensive manufacturing and

distribution network spread across the country backed by strong brand ‘Everest’.

EIL has a wide distribution network all across India with 38 sales depots and more than

6,000 retail sales points together with the strength of over 1,600 highly qualified and

experienced engineers, designers and technicians, EIL provides building solutions to

over 100,000 villages and 600 cities.

After successfully catering to the Indian market, EIL has widened its horizons in the

international arena. With consistent exports to Europe, Africa, Australia and Asia; EIL is

all set to scale new heights and establish a strong foundation in the global market.

Current Facilities and Business Segments

Plant Product Capacity

Bhagwanpur, Roorkee, Uttarakhand FC Sheet 100,000 MT

Boards and Panels 50,000 MT

Lakhmapur, Nasik, Maharashtra FC Sheet 90,000 MT

Boards and Panels 86,000 MT

Kymore, Katni, Madhya Pradesh FC Sheet 94,000 MT

Kolkata, West Bengal FC Sheet 94,000 MT

Podanur, Coimbatore, Tamil Nadu FC Sheet 196,000 MT

Total 710,000 MT

Bhagwanpur, Roorkee, Uttarakhand Steel building products 30,000 MT

Greenfield capacity by Q1FY14

Balasore, Orissa FC Sheet 100,000 MT

Ranchi, Jharkhand Metal roofing 7,000 MT


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8345094396 92508 97134

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Mar-09 Mar-10 Mar-11 Mar-12 Mar-13E Mar-14E

PEB Volume MT Realisation per MT in Rs. MT.



Concerns

Fluctuation in the prices of key raw materials: The main raw material for fibre

cement sheets are cement, pulp, fly ash and imported fibre. Any hike in prices of

cement, fly ash or fibre may have adverse impact on the margin of the company.

Average Cement Price in India

Source: Bloomberg, SKP Research

Steel is the major raw material of PEB segment, hence volatility in global steel prices

will also affect margin accordingly.

Steel Price (HRSheets-10G)

Source: Bloomberg, SKP Research

Government spending: Rural schemes like NREGS, IAY, NRLM etc. play an vital

role for the business of EIL. Any changes or decrease in spending by the government

on these schemes could reduce the purchasing power of rural people.

Monsoon effect: Rural income is largely dependent on agriculture, which is a

function of monsoon. A poor monsoon could have adverse effect on the demand for

roofing in rural India.

More pressure on India to ban chrysotile fibre Use:

India is facing mounting pressure to ban the use of asbestos. The Chrysotile fibre

is still widely used in the country despite being banned in 52 other nations,

including those in the European Union, because of known health risks.

Mining of asbestos is banned in India, but its usage is not. Thus, the industry

depends on 100 per cent import from Canada, Brazil, Russia, Zimbabwe &

Kazakhstan.

Over the last few years, EIL’s management has taken steps to diversify into

related products and reduce its dependence on asbestos. It has introduced

products such as polyvinyl alcohol fibre sheets (non-asbestos roofing sheet),

pulp-based boards (E boards) which are non-asbestos products and also entered

into PEB.

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Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

Rs./MT



Financial Outlook

Healthy top-line growth in both divisions:

EIL witnessed healthy growth in both divisions (Building Products and PEB), with

increasing in top-line at a CAGR of 24% from Rs.3038 million in FY07 to Rs.8869

million in FY12.

EIL has been declaring excellent set of numbers over the last few years on the back of

strong thrust of government on rural housing, diversified product segment, and constantly

increasing production capacity.

Going ahead, we believe that EIL‟s top-line would continue to grow at 20.2% and

16.9% during FY13E and FY14E respectively with resolved labour issue at Nasik plant

and commencement of 100,000MTPA Greenfield facility in Q1FY14E and.


Looking at improving EBITDA margins:

Over the last three years, EIL maintained EBITDA margin above 9% and PAT margin

around 4.6-5.9% but in FY09 PAT margin was low due to high debt burden.

Going ahead, we expect company to deliver an EBITDA margin more than 10% and

PAT margin more than 6% during FY13E-14E respectively with continually introduce

innovative products in the market.


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18.6%

21.4%

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35.3%

30.4%

35.4%

16.9%

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Building Product (BP) PEB BP growth PEB growth

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4 65

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849.2% 9.3%

9.1% 9.1%

10.5% 10.3%

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6%

7%

8%

9%

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11%

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EBITDA EBITDA Margin

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5.9%6.2% 6.1%

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PAT PAT MarginRs. in million Rs. in million

Rs. in million

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Healthy Return Ratios & Consistently Dividend Payout:

EIL is consistently improving return ratios with ROAE & ROACE from ~10% in FY09

to ~22% in FY12 due to lower leverage, improvement in fixed asset turnover ratio and

improving EBIDTA margins. We expect to maintain at around 24% going forward

amid better working capital management and optimal utilization of assets.

EIL follows a consistent dividend policy with an average payout of ~20% which reflects

its attitude towards minority shareholders.


Peer Group Analysis on TTM Basis

Company FV CMP Revenue EBITDA Margin PAT Margin EPS P/E P/BV EV/EBITDA ROE ROCE D/E MCap/Sales

HIL Ltd 10 465 10174 1250 12.3 681 6.7 91.3 5.1 0.88 3.80 17.35 19.29 0.35 0.34

Everest 10 247 10193 1088 10.7 617 6.1 40.8 6.1 1.25 3.92 20.70 24.00 0.42 0.37

Visaka 10 125 8658 1096 12.7 557 6.4 35.1 3.5 0.61 3.00 17.26 18.86 0.51 0.23

Ramco 1 66 7975 1237 15.5 647 8.1 7.5 8.8 1.25 6.18 14.16 20.57 0.45 0.72

Source: Company, Bloomberg, SKP Research

9.9

18.5

21.3

23.0 24.2

23.2

11.615.4

17.2

21.623.7

24.7

5.0

10.0

15.0

20.0

25.0

30.0


ROAE ROACE

2.5

4.5 4.5

7.0

9.0

10.025.6%

22.2%

16.7%

20.1%20.5%

19.8%

15%

17%

19%

21%

23%

25%

27%

0.0

2.0

4.0

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8.0

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12.0


Dividend Dividend Payout Ratioin Rs.

Rs. in million

%



Valuation:

EIL has shown a strong performance in FY12 and 9mFY13 with increasing revenue mix

towards PEB and boards & panels. EIL has among the best diversified businesses

compared with rivals such as HIL, Visaka and Ramco. While some of them, such as HIL,

are larger than Everest in the roofing business, the overall quality of Everest’s revenue mix

sets higher valuation.

At CMP, the stock trades 5.6x its FY13E earning of Rs.43.9 and 4.9x its FY14E earnings of

Rs.50.5. Hence, we initiate coverage on the stock with „BUY‟ recommendation and a

target price of Rs.354 (7x FY14E EPS), at 43% upside over the period of 12 month.

1 year forward P/E Band

Source: SKP Research

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Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12

Price 4X 5X 6X 7X 8X 9X



Financial Performance:

Income Statement Figures: Rs. in million

Particulars Mar-11 Mar-12 Mar-13E Mar-14E

Net Sales 7231.0 8868.6 10660.1 12464.6

growth (%) 10.8% 22.6% 20.2% 16.9%

Expenditure 6572.8 8061.0 9540.7 11180.8

(Inc)/Dec in Stocks (139.8) 11.8 (255.8) (124.6)

Raw materials 3944.1 4750.5 5948.3 6805.7

Purchase of Traded Goods 57.8 136.2 149.2 174.5

Power & Fuel Exp 693.7 797.5 938.1 1121.8

Employees Expenses 283.6 318.9 383.8 448.7

Packing & Freight Exp 638.8 794.0 906.1 1059.5

Other Expenses 1094.6 1252.2 1471.1 1695.2

EBIDTA 658.2 807.6 1119.3 1283.9

EBIDTA Margin (%) 9.1% 9.1% 10.5% 10.3%

Depreciation 189.0 200.8 215.4 240.2

EBIT 469.2 606.8 903.9 1043.6

Other Income 116.49 177.90 85.28 124.65

Interest Expenses 53.9 44.4 55.8 53.4

Profit Before Tax 531.8 740.3 933.4 1114.9

Tax 124.8 212.7 268.5 351.2

Profit After Tax 407.0 527.6 664.9 763.7

growth (%) 35.6% 29.6% 26.0% 14.9%

PAT Margin (%) 5.6% 5.9% 6.2% 6.1%

O/S of Shares 15.1 15.1 15.1 15.1

EPS 27.0 34.9 43.9 50.5

DPS 4.5 7.0 9.0 10.0

Dividend payout ratio (%) 16.7 20.1 20.5 19.8

Balance Sheet Figures: Rs. in million Particulars Mar-11 Mar-12 Mar-13E Mar-14E

Share Capital 150.8 151.1 151.4 151.4

Reserves 1934.2 2344.0 2850.2 3437.5

Net Worth 2085.4 2495.5 3002.0 3589.3

Total Debt 1107.9 810.4 1181.1 760.9

Stockists Deposit (Unsec) 119.0 166.2 217.0 255.7

Deferred Tax Liability (Net) 240.8 239.0 234.0 234.0

Total Liabilities 3553.1 3711.0 4634.0 4839.9

Net Block 2149.4 2202.6 1987.1 2246.9

Capital work-in-progress 79.4 82.6 450.0 100.0

Total Fixed Assets 2228.8 2285.2 2437.1 2346.9

Investments 0.2 0.2 0.2 0.2

Inventories 1535.5 1579.8 1960.4 2297.4

Sundry Debtors 202.4 417.0 496.5 580.5

Cash and Bank Balances 186.6 351.3 750.0 800.0

Loans & Advances 515.8 576.4 641.6 749.9

Current Assets 2559.3 2924.5 3848.5 4427.8

Current Liab & Prov 1235.2 1498.9 1651.9 1935.1

Net Current Assets 1324.1 1425.6 2196.7 2492.7

Miscellaneous 0.0 0.0 0.0 0.0

Total Assets 3553.1 3711.0 4634.0 4839.9

Source: Company Data, SKP Research

Ratio Analysis Particulars Mar-11 Mar-12 Mar-13E Mar-14E

Earnings Ratios (%)

EBDITA Margin 9.1 9.1 10.5 10.3

Net Profit Margin 5.6 5.9 6.2 6.1

ROACE 17.2 21.6 23.7 24.7

ROANW 21.3 23.0 24.2 23.2

ROAA 11.9 14.5 15.9 16.1

Valuation Ratio

P/E (x) 9.2 7.1 5.6 4.9

Price/BVPS (x) 1.8 1.5 1.3 1.0

EV / EBITDA (x) 7.1 5.2 3.7 2.9

EV / Net Sales (x) 0.6 0.5 0.4 0.3

Balance Sheet Ratio

D/E Ratio 0.5 0.3 0.4 0.2

Current Ratio 2.1 2.0 2.3 2.3

Interest Coverage 10.9 17.7 17.7 21.9

FA Turnover Ratio 3.4 4.0 5.4 5.5

Inventory Days 85 72 75 75

Debtors Days 16 17 17 17

Creditors Days 57 53 53 53

DuPont Analysis

PAT / PBT 0.8 0.7 0.7 0.7

PBT / EBIT 0.9 0.9 0.9 1.0

EBIT / Net Sales 0.1 0.1 0.1 0.1

Net Sales / Total Assets 2.0 2.4 2.3 2.6

Total Assets / Equity 1.7 1.5 1.5 1.3

ROE 19.5% 21.1% 22.1% 21.3%

Cash Flow Statement Figures: Rs. in million Particulars Mar-11 Mar-12 Mar-13E Mar-14E

PBT 531.8 740.3 933.4 1114.9

Depreciation 189.0 200.8 215.4 240.2

Interest expense 53.9 44.4 55.8 53.4

Other (income)/Loss (116.5) (177.9) (85.3) (124.6)

(Inc)/Dec in WC (332.8) 63.1 (372.3) (246.1)

Taxes paid (124.8) (212.7) (268.5) (351.2)

Operating Cash Flows 200.7 658.0 478.5 686.6

Capital expenditure (151.7) (257.2) (367.4) (150.0)

(Inc)/Dec in Investment 0.3 0.0 0.0 0.0

Other income 116.5 177.9 85.3 124.6

Investing Cash Flows (35.0) (79.3) (282.1) (25.4)

Inc/(Dec) in debt (55.0) (250.3) 421.5 (381.5)

Dividend Paid Incl. Tax (79.6) (123.0) (158.7) (176.4)

Inc/(Dec) in Capital 3.1 0.3 0.2 0.0

Interest paid (53.9) (44.4) (55.8) (53.4)

Other Adjustments 14.3 3.3 (5.0) 0.0

Financing Cash Flows (171.1) (414.1) 202.3 (611.3)

Chg. in Cash & Equ (5.4) 164.6 398.7 50.0

Opening Cash Balance 192.1 186.6 351.3 750.0

Closing Cash Balance 186.6 351.3 750.0 800.0



Notes:

The above analysis and data are based on last available prices and not official closing rates. SKP Research is also available on Bloomberg, Thomson

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