Savera Industries Ltd - NSE...Savera Industries Ltd’s (Savera’s) Q2FY12 results were in line...

© CRISIL Limited. All Rights Reserved.

Enhancing investment decisions

Q2FY12 Result Update

Savera Industries Ltd


Explanation of CRISIL Fundamental and Valuation (CFV) matrix

The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process –

Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental

grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The

valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to

grade 1 (strong downside from the CMP).

CRISIL Fundamental Grade

Assessment CRISIL Valuation Grade

Assessment

5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)

4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)

3/5 Good fundamentals 3/5 Align (+-10% from CMP)

2/5 Moderate fundamentals 2/5 Downside (- 10-25% from CMP)

1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)

Analyst Disclosure

Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest

that can bias the grading recommendation of the company. Additional Disclosure

This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer:

This Exchange-commissioned Report (Report) is based on data publicly available or from sources considered reliable by CRISIL

(Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for

any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are subject to change without

any prior notice. Opinions expressed herein are our current opinions as on the date of this Report. Nothing in this Report constitutes

investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold

any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this

Report. This Report is for the personal information only of the authorized recipient in India only. This Report should not be

reproduced or redistributed or communicated directly or indirectly in any form to any other person – especially outside India or

published or copied in whole or in part, for any purpose.

© CRISIL Limited. All Rights Reserved. CRISIL RESEARCH | 1

Fair Value Rs 73 CMP Rs 36

November 29, 2011

Savera Industries Ltd Stable growth as expected

Fundamental Grade 2/5 (Moderate fundamentals)

Valuation Grade 5/5 (CMP has strong upside)

Industry Hotels, Restaurant & Leisure

Savera Industries Ltd’s (Savera’s) Q2FY12 results were in line with CRISIL Research’s expectations. Revenue grew by 7.5% y-o-y, which is in line with our expectation. However, higher employee cost offset revenue growth which has resulted in lower EBITDA margin of 26.8%, (declined by 448 bps y-o-y), though it was in line with our expectations. Given the higher interest and depreciation costs, PAT declined by 19% y-o-y to Rs 15 mn. We maintain our fundamental grade of 2/5. Q2FY12 result analysis

• Revenue grew by 7.5% y-o-y to Rs 131 mn, which is in line with our

expectation. For H1FY12, revenue grew by 12.8% y-o-y to Rs 256. We

understand that occupancy rate (OR) and average room rate (ARR) during

the quarter were stable compared to last quarter though we do not have

the exact number as we have not been able to interact with the

management. The OR and ARR in Q2FY11 stood at 73% and Rs 3,182

• EBITDA margin decreased by 448 bps y-o-y to 26.8% due to higher

employee and operating costs which increased by 36.5% and 14.8% y-o-y,

respectively. For H1FY12, EBITDA margin was 29.5%, down by 138 bps

y-o-y

• Increased interest cost and depreciation impacted profitability during the

quarter. PAT declined by 19.0% y-o-y to Rs 15 mn and was slightly below

our estimates. For H1FY12, PAT declined by 5.4% y-o-y to Rs 33 mn. Key development

• Mrs Neena Reddy, one of the promoter has increased her stake in the

company by 0.54% to 9.05% via open market purchase. Also, one of the

promoter group companies, Amaravathi Restaurant Pvt Ltd, increased

stake in the company by 0.38% to 0.68% via open market purchase

Valuations: Current market price has strong upside

We continue to use the EV/adjusted room basis to value Savera. We have assigned a multiple of Rs 4.5 mn on EV/adjusted room, which translates into a fair value of Rs 73 per share. Based on the current market price, our valuation grade is 5/5.

KEY FORECAST

(Rs mn) FY09 FY10 FY11# FY12E FY13E

Operating income 397 352 480 506 538

EBITDA 117 95 140 148 160

Adj PAT 5 25 53 70 83

Adj EPS-Rs 0.4 2.1 4.5 5.9 6.9

EPS growth (%) (91.6) 435.4 109.3 31.7 18.1

Dividend yield (%) 1.6 1.7 3.3 3.6 4.3

RoCE (%) 17.4 16.4 25.4 26.7 29.1

RoE (%) 2.1 10.7 19.9 22.6 22.6

PE (x) 90.3 16.9 8.1 6.1 5.2

P/BV (x) 1.8 1.8 1.5 1.3 1.1

EV/EBITDA (x) 5.6 6.4 4.3 3.6 2.8

#FY11 numbers are based on abridged financials

NM: Not meaningful; CMP: Current market price

Source: Company, CRISIL Research estimate

CFV MATRIX

KEY STOCK STATISTICS NIFTY 4851

NSE ticker SAVERA

Face value (Rs per share) 10

Shares outstanding (mn) 11.9

Market cap (Rs mn)/(US$ mn) 429/8

Enterprise value (Rs mn) /(US$ mn) 606/12

52-week range (Rs) (H/L) 52/29

Beta 0.9

Free float (%) 40.5%

Avg daily volumes (30-days) 2,925

Avg daily value (30-days) (Rs mn) 0.1

SHAREHOLDING PATTERN

PERFORMANCE VIS-À-VIS MARKET

Returns

1-m 3-m 6-m 12-m

SAVERA -5% -1% -2% -21%

NIFTY -10% 2% -11% -16%

ANALYTICAL CONTACT Chetan Majithia (Head) [email protected]

Sandeep Panchal [email protected]

Bhaskar Bukrediwala [email protected]

Client servicing desk

+91 22 3342 3561 [email protected]

1 2 3 4 5

1

2

3

4

5

Valuation Grade

Fu

nd

am

en

tal G

rad

e

Poor Fundamentals

ExcellentFundamentals

Str

on

gD

ow

nsid

e

Str

on

gU

psid

e52.3% 52.3%

59.2% 59.5%

47.8% 47.8%40.8% 40.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-10 Mar-11 Jun-11 Sep-11

Promoter Others



Q2FY12 Result Summary (Rs mn) Q2FY12 Q1FY12 Q2FY11 q-o-q (%) y-o-y (%) H1FY12 H1FY11 y-o-y (%)

Net sales 131 127 122 3.4 7.5 256 227 12.8

Raw materials cost 28 18 29 56.0 (3.5) 55 53 3.1

Raw materials cost (% of net sales) 21.0% 13.9% 23.4% 710bps -241bps 21.5% 23.5% -203bps

Employees cost 31 24 23 29.6 36.5 55 43 27.6

Other expenses 37 44 32 (16.3) 14.8 70 60 16.7

EBITDA 35 41 38 (13.8) (7.9) 75 70 7.8

EBITDA margin 26.8% 32.1% 31.3% -534bps -448bps 29.5% 30.9% -138bps

Depreciation 6 7 5 (8.2) 16.8 12 10 21.5

EBIT 29 34 33 (14.9) (11.7) 63 60 5.5

Interest and finance charges 8 7 6 7.8 29.8 15 12 22.5

Operating PBT 21 27 27 (20.8) (20.6) 49 48 1.3

Other Income - 0 - - - - - -

Exceptional items - - - - - - (4) 0.0

PBT 21 27 27 (21.6) (20.6) 49 52 -6.1

Tax 7 9 9 (29.9) (24.1) 16 17 -7.6

PAT 15 18 18 (17.3) (19.0) 32.9 35 -5.4

Adj PAT 15 18 18 (17.3) (19.0) 33 35 -5.4

Adj PAT margin 11.4% 14.3% 15.2% -286bps -375bps 12.9% 15.3% -247bps

No of equity shares (mn) 11.9 11.9 11.9 - - 11.9 11.9 0.0

Adj EPS (Rs) 1.3 1.5 1.6 (17.3) (19.0) 2.8 2.9 -5.4

Source: Company, CRISIL Research

Moderate revenue growth EBITDA margin declines

Source: Company, CRISIL Research Source: Company, CRISIL Research

Savera underperformed NIFTY Fair value movement since initiation

-indexed to 100

Source: NSE, CRISIL Research Source: NSE, CRISIL Research

90 100 106 122 119 131 127 131

3.4%

11.1%

6.4%

14.6%

-2.3%

10.4%

-3.5%

3.4%

-10%

-5%

0%

5%

10%

15%

20%

0

20

40

60

80

100

120

140

Dec-

09

Mar

-10

Jun-

10

Sep-

10

Dec-

10

Mar

-11

Jun-

11

Sep-

11

(Rs mn)

Net Sales Sales Growth (RHS)

22 29 32 38 33 35 41 35

24.4%

28.8%30.2% 31.3%

27.8% 26.7%

32.1%

26.8%

0%

5%

10%

15%

20%

25%

30%

35%

0

5

10

15

20

25

30

35

40

45

Dec-

09

Mar

-10

Jun-1

0

Sep-

10

Dec-

10

Mar

-11

Jun-1

1

Sep-

11

(Rs mn)

EBITDA EBITDA Margin(RHS)

0

50

100

150

200

250

Jun-

10

Aug

-10

Sep-

10

Oct

-10

Nov

-10

Dec-

10

Jan-1

1

Feb-1

1

Mar

-11

Apr-

11

May-1

1

Jun-

11

Jul-

11

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Savera NIFTY

0

20

40

60

80

100

120

0

10

20

30

40

50

60

70

80

Nov-1

0

Dec-

10

Jan-1

1

Feb-1

1

Mar

-11

Apr-

11

May-1

1

Jun-

11

Jul-

11

Aug

-11

Sep-

11

Oct

-11

Nov-1

1

('000)(Rs)

Total Traded Quantity (RHS) CRISIL Fair Value Savera



VALUATION

We continue to value Savera on the EV/adjusted room basis. We have assigned

a multiple of Rs 4.5 mn on EV/adjusted room. Given the inherent value of its

230-room hotel in Chennai and the strong outlook for the hospitality sector, we

maintain our fair value of Rs 73. Based on the current market price, our

valuation grade is 5/5.

One-year forward P/E band One-year forward EV/EBITDA band


P/E – premium/discount to NIFTY P/E movement


CRISIL IER reports released on Savera Industries Ltd

Date Nature of report

Fundamental

grade Fair value

Valuation

grade

CMP

(on the date of report)

11-Nov-10 Initiating coverage* 2/5 Rs 73 5/5 Rs 55

16-Feb-11 Q3FY11 result update 2/5 Rs 73 5/5 Rs 38

07-June-11 Q4FY11 result update 2/5 Rs 73 5/5 Rs 38

26-Aug-11 Q1FY12 result update 2/5 Rs 73 5/5 Rs 37

29-Nov-11 Q2FY12 result update 2/5 Rs 73 5/5 Rs 36

* For detailed initiating coverage report please visit: www.ier.co.in

CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.

0

10

20

30

40

50

60

70

80

90

Apr-

08

Jun-

08

Aug

-08

Oct

-08

Jan-0

9

Mar

-09

May-0

9

Aug

-09

Oct

-09

Dec-

09

Mar

-10

May-1

0

Jul-

10

Sep-

10

Dec-

10

Feb-1

1

Apr-

11

Jul-

11

Sep-

11

Nov-1

1

(Rs)

Savera 4x 6x 8x 10x 12x

0

100

200

300

400

500

600

700

800

900

1,000

Apr-

08

Jun-

08

Aug

-08

Oct

-08

Jan-0

9

Mar

-09

May-0

9

Aug

-09

Oct

-09

Dec-

09

Mar

-10

May-1

0

Jul-

10

Sep-

10

Dec-

10

Feb-1

1

Apr-

11

Jul-

11

Sep-

11

Nov-1

1

(Rs mn)

EV 3x 4x 5x 6x

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

Apr-

08

Jun-0

8

Aug-

08

Oct

-08

Jan-

09

Mar-

09

May-

09

Aug-

09

Oct

-09

Dec-

09

Mar-

10

May-

10

Jul-

10

Sep

-10

Dec-

10

Feb-

11

Apr-

11

Jul-

11

Sep

-11

Nov-

11

Premium/Discount to NIFTY Median premium/discount to NIFTY

-20

0

20

40

60

80

100

120

Apr-

08

Jun-

08

Aug

-08

Oct

-08

Jan-0

9

Mar

-09

May-0

9

Aug

-09

Oct

-09

Dec-

09

Mar

-10

May-1

0

Jul-

10

Sep-

10

Dec-

10

Feb-1

1

Apr-

11

Jul-

11

Sep-

11

Nov-1

1

(Times)

1yr Fwd PE (x) Median PE

+1 std dev

-1 std dev



FINANCIALS

Note: All ratios are computed on Adj PAT

Source: Company, CRISIL Research estimate

Income statement Balance Sheet

(Rs mn) FY09 FY10 FY11# FY12E FY13E (Rs mn) FY09 FY10 FY11# FY12E FY13E

Operating income 397 352 480 506 538 Liabilities

EBITDA 117 95 140 148 160 Equity share capital 60 60 119 119 119

EBITDA margin 29.5% 26.9% 29.1% 29.2% 29.7% Reserves 173 185 166 217 277

Depreciation 30 21 23 22 23 Minorities - - - - -

EBIT 88 73 117 126 137 Net worth 232 245 285 336 397

Interest 51 25 24 19 13 Convertible debt - - - - -

Operating PBT 37 48 93 106 124 Other debt 231 186 186 132 78

Other income (8) (3) - 2 2 Total debt 231 186 186 132 78

Exceptional inc/(exp) - - (4) - - Deferred tax liability (net) 4 4 4 4 4

PBT 29 45 89 108 127 Total liabilities 468 435 475 472 479

Tax provision 24 19 32 38 44 Assets

Minority interest - - - - - Net fixed assets 440 431 434 422 409

PAT (Reported) 5 25 57 70 83 Capital WIP - - - - -

Less: Exceptionals - - (4) - - Total fixed assets 440 431 434 422 409

Adjusted PAT 5 25 53 70 83 Investments 0 4 2 2 2

Current assets

Ratios Inventory 8 9 12 13 14

FY09 FY10 FY11# FY12E FY13E Sundry debtors 17 13 17 18 19

Growth Loans and advances 36 27 36 39 39

Operating income (%) (13.3) (11.3) 36.5 5.4 6.3 Cash & bank balance 7 9 25 31 52

EBITDA (%) (25.1) (19.0) 47.6 5.8 8.1 Marketable securities - - - - -

Adj PAT (%) (91.6) 435.4 126.0 31.6 18.1 Total current assets 69 58 90 101 124

Adj EPS (%) (91.6) 435.4 109.3 31.7 18.1 Total current liabilities 52 65 51 53 56

Net current assets 17 (7) 39 48 67

Profitability Intangibles/Misc. expenditure 11 7 - - -

EBITDA margin (%) 29.5 26.9 29.1 29.2 29.7 Total assets 468 435 475 472 479

Adj PAT Margin (%) 1.2 7.2 11.2 13.8 15.4

RoE (%) 2.1 10.7 19.9 22.6 22.6 Cash flow

RoCE (%) 17.4 16.4 25.4 26.7 29.1 (Rs mn) FY09 FY10 FY11# FY12E FY13E

RoIC (%) 9.6 10.9 19.0 20.7 22.9 Pre-tax profit 29 45 93 108 127

Total tax paid (24) (19) (34) (38) (44)

Valuations Depreciation 30 21 22 22 23

Price-earnings (x) 90.3 16.9 8.1 6.1 5.2 Working capital changes (13) 26 (31) (3) 1

Price-book (x) 1.8 1.8 1.5 1.3 1.1 Net cash from operations 22 73 50 90 107

EV/EBITDA (x) 5.6 6.4 4.3 3.6 2.8 Cash from investments

EV/Sales (x) 1.7 1.8 1.3 1.1 0.9 Capital expenditure 60 (9) (18) (10) (10)

Dividend payout ratio (%) 146.9 28.1 26.6 22.3 22.1 Investments and others - (4) 2 - -

Dividend yield (%) 1.6 1.7 3.3 3.6 4.3 Net cash from investments 60 (13) (16) (10) (10)

Cash from financing

B/S ratios Equity raised/(repaid) - - 60 - -

Inventory days 12 14 14 14 14.5 Debt raised/(repaid) (84) (45) (0) (54) (54)

Creditors days 36 64 26 25 25.3 Dividend (incl. tax) (7) (7) (16) (18) (21)

Debtor days 18 15 15 15 14.8 Others (incl extraordinaries) 10 (6) (56) (1) (1)

Working capital days 3 (4) (1) 11 11.1 Net cash from financing (81) (58) (12) (73) (76)

Gross asset turnover (x) 0.6 0.5 0.7 0.7 0.8 Change in cash position 1 1 22 6 20

Net asset turnover (x) 0.8 0.8 1.1 1.2 1.3 C losing cash 7 9 25 31 52

Sales/operating assets (x) 0.8 0.8 1.1 1.2 1.3

Current ratio (x) 1.3 0.9 1.8 1.9 2.2 Quarterly financials

Debt-equity (x) 1.0 0.8 0.7 0.4 0.2 (Rs mn) Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12

Net debt/equity (x) 1.0 0.7 0.6 0.3 0.1 Net Sales 122 119 131 127 131

Interest coverage 1.7 2.9 5.1 6.5 10.7 Change (q-o-q) 15% -2% 10% -4% 3%

EBITDA 38 33 35 41 35

Per share Change (q-o-q) 19% -13% 6% 16% -14%

FY09 FY10 FY11# FY12E FY13E EBITDA margin 31.3% 27.8% 26.7% 32.1% 26.8%

Adj EPS (Rs) 0.4 2.1 4.5 5.9 6.9 PAT 18 18 11 18 15

CEPS 2.9 3.9 6.3 7.8 8.8 Adj PAT 18 18 11 18 15

Book value 19.5 20.5 23.9 28.2 33.3 Change (q-o-q) 109% -2% -39% 65% -17%

Dividend (Rs) 0.6 0.6 1.2 1.3 1.5 Adj PAT margin 15.2% 15.2% 8.3% 14.3% 11.4%

Actual o/s shares (mn) 11.9 11.9 11.9 11.9 11.9 Adj EPS 1.6 1.5 0.9 1.5 1.3


CRISIL Research Team

Senior Director

Mukesh Agarwal +91 (22) 3342 3035 [email protected]

Analytical Contacts Tarun Bhatia Director, Capital Markets +91 (22) 3342 3226 [email protected]

Prasad Koparkar Head, Industry & Customised Research +91 (22) 3342 3137 [email protected]

Chetan Majithia Head, Equities +91 (22) 3342 4148 [email protected]

Jiju Vidyadharan Head, Funds & Fixed Income Research +91 (22) 3342 8091 [email protected]

Ajay D'Souza Head, Industry Research +91 (22) 3342 3567 [email protected]

Ajay Srinivasan Head, Industry Research +91 (22) 3342 3530 [email protected]

Sridhar C Head, Industry Research +91 (22) 3342 3546 [email protected]

Manoj Mohta Head, Customised Research +91 (22) 3342 3554 [email protected]

Sudhir Nair Head, Customised Research +91 (22) 3342 3526 [email protected]

Business Development

Vinaya Dongre Head, Industry & Customised Research +91 (22) 33428025 [email protected]

Ashish Sethi Head, Capital Markets +91 (22) 33428023 [email protected]

CRISIL’s Equity Offerings

The Equity Group at CRISIL Research provides a wide range of services including:

Independent Equity Research

IPO Grading

White Labelled Research

Valuation on companies for use of Institutional Investors, Asset Managers, Corporate

Other services by the Research group include

Funds & Fixed Income Research

Mutual fund rankings

Wealth Tracking and Financial Planning tools for asset managers, wealth managers and IFAs

Valuation for all debt instruments

Developing and maintaining debt and hybrid indices

Consultancy and research support to retirement funds

Industry & Customized Research

Provide comprehensive research coverage across 65 sectors

Customised research on market sizing, demand modelling and entry strategies

Customised research content for Information Memorandum and Offer Documents


Head Office: CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai - 400 076 Phone : 91-22-3342 3000 Web: www.crisil.com Download reports from: www.ier.co.in

Ahmedabad / Mumbai Vishal Shah - Manager, Business Development Email : [email protected] I Phone : 9820598908 Bengaluru Gayathri Ananth – Senior Manager, Business Development Email : [email protected] I Phone : 9886498175 Chennai / Hyderabad Kaliprasad Ponnuru - Manager, Business Development Email : [email protected] I Phone : 9642004668

Delhi Arjun Gopalkrishnan - Manager, Business Development Email :[email protected] I Phone : 9833364422 Kolkata Priyanka Agarwal - Manager, Business Development Email : [email protected] I Phone : 9903060685 Mumbai / Pune Vivek Tandon - Manager, Business Development Email : [email protected] I Phone : 9903060685

Vinaya Dongre – Head, Business Development

Email : [email protected] I Phone : 9920225174

Sagar Sawarkar – Senior Manager, Business Development Email : [email protected] I Phone : 9821638322

Regional Contacts:

To know more about CRISIL IER, please contact our team members:

Ashish Sethi – Head, Business Development


About CRISIL Limited

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are

India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks

and leading corporations.

About CRISIL Research CRISIL Research is the country’s largest independent and integrated research house with strong domain expertise

on Indian economy, industries and capital markets. We leverage our unique research platform and capabilities to

deliver superior perspectives and insights to over 1200 domestic and global clients, through a range of research

reports, analytical tools, subscription products and customised solutions.



Ahmedabad / Mumbai Vishal Shah - Manager, Business Development Email : [email protected] I Phone : 9820598908 Bengaluru Gayathri Ananth – Senior Manager, Business Development Email : [email protected] I Phone : 9886498175 Chennai / Hyderabad Kaliprasad Ponnuru - Manager, Business Development Email : [email protected] I Phone : 9642004668

Delhi Arjun Gopalkrishnan - Manager, Business Development Email :[email protected] I Phone : 9833364422 Kolkata Priyanka Agarwal - Manager, Business Development Email : [email protected] I Phone : 9903060685 Mumbai / Pune Vivek Tandon - Manager, Business Development Email : [email protected] I Phone : 9903060685

Ashish Sethi – Head, Business Development Email : [email protected] I Phone : 9920807575

Regional Contacts:

To know more about CRISIL IER, please contact our team members:

Sagar Sawarkar – Senior Manager, Business Development



Savera Industries Ltd - NSE...Savera Industries Ltd’s (Savera’s) Q2FY12 results were in line...

Documents

Transcript of Savera Industries Ltd - NSE...Savera Industries Ltd’s (Savera’s) Q2FY12 results were in line...