The Jeypore Sugar Company Ltd

Transcription

1 The Jeypore Sugar Company Ltd Q3FY11 Result Update Enhancing investment decisions

2 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 (1-25% from CMP) 3/5 Good fundamentals 3/5 Align (+-1% from CMP) 2/5 Moderate fundamentals 2/5 Downside (- 1-25% 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.

3 The Jeypore Sugar Company Ltd Revenues below estimates Fundamental Grade 2/5 (moderate fundamentals) Valuation Grade 3/5 (CMP is aligned) Industry Food products The Jeypore Sugar Company Ltd s (Jeypore Sugar s) Q3FY11 revenues were below CRISIL Equities estimates. We have not been able to confirm from the management the quantity of cane crushing during this season and the status on start of production from the Pothavaram plant and so maintain our earnings estimates for the time being. CRISIL Research expects sugar prices to remain firm between Rs 29,-32, per tonne during SS We anticipate Jeypore Sugar could clock higher revenues in Q4FY11 on account of a) a firm outlook on sugar prices, b) expected cane production surplus leading to higher crushing days and c) start of production from the Pothavaram plant. Hence, we maintain the fundamental grade of 2/5. Q3FY11 result analysis Jeypore Sugar s Q3FY11 revenues declined 29.1% y-o-y to Rs 432 mn due to delayed start in cane crushing in SS EBITDA declined 6% y-o-y to Rs 63 mn due to 4% increase in other expenditure. The company posted adjusted net loss Rs 12 mn in Q3FY11 compared to a net profit of Rs 76 mn in Q3FY1. Valuations: Current market price is aligned We continue to use the P/BV method to value Jeypore Sugar. We maintain our assigned P/BV of.9x FY12E book value and our fair value of Rs 152 per share. We also maintain our 3/5 valuation grade. KEY FORECAST (Rs mn) FY8 FY9 FY1 FY11E FY12E Operating income 1,944 1,792 2,42 2,975 3,89 EBITDA Adj PAT (75) (7) 192 (5) 78 Adj EPS-Rs NM NM 42.3 NM 17.3 EPS growth (%) NM NM NM NM NM Dividend yield RoCE (%) RoE (%) NM NM 29.1 NM 1.6 PE (x) NM NM 4.5 NM 7.9 P/BV (x) EV/EBITDA (x) NM: Not meaningful; CMP: Current Market Price Source: Company, CRISIL Equities estimate February 28, 211 Fair Value Rs 152 CMP Rs 142 CFV MATRIX KEY STOCK STATISTICS NIFTY 5333 NSE ticker JEYPORE Face value (Rs per share) 1 Shares outstanding (mn) 4.5 Market cap (Rs mn)/(us$ mn) 639/14 Enterprise value (Rs mn) /(US$ mn) 3,351/73 52-week range (Rs) (H/L) 24/136 Beta.89 Free float (%) 55.2 Avg daily volumes (3-days) 179 Avg daily value (3-days) (Rs mn).2 SHAREHOLDING PATTERN 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Excellent Fundamentals Fundamental Grade Poor Fundamentals % Strong Downside Valuation Grade 54.5% 54.5% 54.5% 54.5%.8%.8%.8%.7% 44.8% 44.8% 44.8% 44.8% PERFORMANCE VIS-À-VIS MARKET Returns Strong Upside Mar-1 Jun-1 Sep-1 Promoter FII DII Others 1-m 3-m 6-m 12-m JEYPORE -8% -15% -31% -36% NIFTY -7% -9% -3% 9% ANALYTICAL CONTACT Chetan Majithia (Head) chetanmajithia@crisil.com Onkar Kulkarni Suresh Guruprasad okulkarni@crisil.com sguruprasad@crisil.com Client servicing desk clientservicing@crisil.com CRISIL EQUITIES 1

4 The Jeypore Sugar Company Ltd. Q3FY11 Result Summary (Rs mn) Q3FY11 Q2FY11 Q3FY1 q-o-q (%) y-o-y (%) Net sales (3) (29) Raw materials cost (57) (35) Raw materials cost (% of net sales) 43.5% 99.2% 47.7% 935 bps 323 bps Employees cost (38) Other expenses EBITDA 63 (66) 156 (195) (6) EBITDA margin 14.5% -14.9% 25.6% (1491) bps (3647) bps Depreciation (46) EBIT 41 (81) 116 (151) (65) Interest and finance charges Operating PBT (14) (133) 76 (9) (118) Other income 1 2 (32) n.m. Exceptional income/ (expense) - - PBT (12) (131) 76 (91) (116) Tax PAT (12) (131) 76 (91) (116) Adj PAT (12) (131) 76 (91) (116) Adj PAT margin -2.9% -29.5% 12.4% n.m. n.m. No of equity shares (mn) () EPS (Rs) (2.7) (29.) 16.7 (91) (116) Adj EPS (Rs) (2.7) (29.) 16.7 (91) (116) Delayed start in cane crushing resulted in y-o-y decline in sales Lower sales and higher other expenditure resulted in 6% y-o-y drop in EBITDA Source: Company, CRISIL Equities EBITDA margin improved in Q3FY11 Losses declined in Q3FY11 (Rs mn) 9 7% 8% (Rs mn) 2 32% 4% % 56% 11% 22% 26%.1% -15% 14% 7% 6% 5% 4% 3% 2% 1% % -1% % 3% 12% 12% 3% -13% -3% 3% 2% 1% % -1% -2% -3% -2% -15-3% -4% Mar-9 Jun-9 Dec-9 Mar-1 Jun-1 Sep-1 Mar-9 Jun-9 Dec-9 Mar-1 Jun-1 Sep-1 Net Sales EBITDA Margin (RHS) Source: Company, CRISIL Equities PAT PAT Margin (RHS) Source: Company, CRISIL Equities Share price movement Fair value movement since initiation (Rs) (in ') Feb-9 May-9 Aug-9 Nov-9 Feb-1 May-1 Aug-1 Nov-1 Jan-11 Jan-11 Jan-11 Jan-11 Jeypore -Indexed to 1 NIFTY Traded Quantity (RHS) Fair Value Jeypore CRISIL EQUITIES 2

5 The Jeypore Sugar Company Ltd. VALUATION We continue to use the P/BV method to value Jeypore Sugar. We maintain our assigned P/BV of.9x FY12E book value and our fair value of Rs 152 per share. One-year forward P/BV band One-year forward EV/EBITDA band (Rs) (Rs mn) Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Sep-8 Mar-9 Jun-9 Dec-9 Mar-1 Jun-1 Sep-1 Jeypore Sugar.4x.7x 1.2x 1.5x 2x 2.5x Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Sep-8 Mar-9 Jun-9 Dec-9 Mar-1 Jun-1 Sep-1 Jeypore Sugar 5x 6x 7x 8x P/BV movement EV/EBITDA movement std dev std dev std dev std dev. - Jun-6 Aug-6 Oct-6 Jan-7 Mar-7 May-7 Aug-7 Oct-7 Dec-7 Feb-8 May-8 Jul-8 Sep-8 Feb-9 Apr-9 Jul-9 Nov-9 Jan-1 Apr-1 Jun-1 Aug-1 Nov-1 1yr Fwd P/BV (x) Median P/BV Jun-6 Aug-6 Oct-6 Jan-7 Mar-7 May-7 Aug-7 Oct-7 Dec-7 Feb-8 May-8 Jul-8 Sep-8 Feb-9 Apr-9 Jul-9 Nov-9 Jan-1 Apr-1 Jun-1 Aug-1 Nov-1 1yr fwd EV/EBITDA Median EV/EBITDA CRISIL IER reports released on The Jeypore Sugar Company Ltd Date Nature of report Fundamental grade Fair value Valuation grade CMP (on the date of report) 2- Initiating coverage* 2/5 Rs 152 3/5 Rs Q3FY11 result update 2/5 Rs 152 3/5 Rs 142 * For detailed initiating coverage report please visit: CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters. CRISIL EQUITIES 3

6 The Jeypore Sugar Company Ltd. FINANCIALS Income statement Balance Sheet (Rs mn) FY8 FY9 FY1 FY11E FY12E (Rs mn) FY8 FY9 FY1 FY11E FY12E Operating income 1,944 1,792 2,42 2,975 3,89 Liabilities EBITDA Equity share capital EBITDA margin 1.5% 2.3% 25.4% 17.% 19.8% Reserves Depreciation Minorities EBIT Net worth Interest Convertible debt Operating PBT (86) (3) 269 (56) 14 Other debt 1,99 2,424 2,836 2,936 2,886 Other income Total debt 1,99 2,424 2,836 2,936 2,886 Exceptional inc/(exp) Deferred tax liability (net) PBT (67) (5) 112 Total liabilities 2,649 3,123 3,699 3,759 3,772 Tax provision (5) Assets Minority interest Net fixed assets 1,446 1,384 1,33 3,617 3,377 PAT (Reported) (61) (5) 78 Capital WIP 1,226 1,848 2,189 Less: Exceptionals Total fixed assets 2,672 3,233 3,519 3,618 3,377 Adjusted PAT (75) (7) 192 (5) 78 Investments Current assets Ratios Inventory 1,915 1,78 1,574 1,953 2,612 FY8 FY9 FY1 FY11E FY12E Sundry debtors Growth Loans and advances Operating income (%) n.m n.m Cash & bank balance EBITDA (%) n.m nm 48.6 Marketable securities Adj PAT (%) n.m n.m n.m n.m n.m Total current assets 2,642 2,366 2,169 2,854 3,758 Adj EPS (%) n.m n.m n.m n.m n.m Total current liabilities 2,682 2,487 1,995 2,719 3,369 Net current assets (41) (121) Profitability Intangibles/Misc. expenditure EBITDA margin (%) Total assets 2,649 3,123 3,699 3,759 3,772 Adj PAT Margin (%) n.m n.m 7.9 n.m 2.1 RoE (%) n.m n.m 29.1 n.m 1.6 Cash flow RoCE (%) (Rs mn) FY8 FY9 FY1 FY11E FY12E RoIC (%) Pre-tax profit (81) (5) 112 Total tax paid (1) (2) (9) - (34) Valuations Depreciation Price-earnings (x) n.m n.m 4.5 n.m 7.9 Working capital changes 352 (2) (242) 136 (199) Price-book (x) Net cash from operations EV/EBITDA (x) Cash from investments EV/Sales (x) Capital expenditure (1,241) (671) (394) (3) Dividend payout ratio (%) n.m Investments and others - - () - - Dividend yield (%) Net cash from investments (1,241) (671) (394) (3) Cash from financing B/S ratios Equity raised/(repaid) Inventory days Debt raised/(repaid) (5) Creditors days Dividend (incl. tax) (5) (5) (26) 8 (13) Debtor days Others (incl extraordinaries) (2) Working capital days (7) (41) (11) (2) 1 Net cash from financing (65) Gross asset turnover (x) Change in cash position 21 (1) Net asset turnover (x) Closing cash Sales/operating assets (x) Current ratio (x) Quarterly financials Debt-equity (x) (Rs mn) Q3FY1 Q4FY1 Q1FY11 Q2FY11 Q3FY11 Net debt/equity (x) Net sales Interest coverage Change (q-o-q) -5% -45% 62% -18% -3% EBITDA (66) 63 Per share Change (q-o-q) 12% 49% -1% % -195% FY8 FY9 FY1 FY11E FY12E EBITDA margin 25.6% 69.9%.1% -14.9% 14.5% Adj EPS (Rs) (16.6) (1.5) 42.3 (11.) 17.3 PAT (7) (131) (12) CEPS Adj PAT (7) (131) (12) Book value Change (q-o-q) -5% -85% -72% 88% -91% Dividend (Rs) Adj PAT margin 12.4% 3.5% -12.9% -29.5% -2.9% Actual o/s shares (mn) Adj EPS (15.4) (29.) (2.7) Note: All ratios are computed on Adj PAT Source: Company, CRISIL Equities estimate CRISIL EQUITIES 4

7 CRISIL Independent Equity Research Team Mukesh Agarwal Director +91 (22) Tarun Bhatia Director, Capital Markets +91 (22) Chetan Majithia Head, Equities +91 (22) Sudhir Nair Head, Equities +91 (22) Nagarajan Narasimhan Director, Research +91 (22) Ajay D'Souza Head, Research +91 (22) Aparna Joshi Head, Research +91 (22) Manoj Mohta Head, Research +91 (22) Sridhar C Head, Research +91 (22) sridharc@crisil.com 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 CRISINFAC Industry research on over 6 industries and Economic Analysis Customised Research on Market sizing, Demand modelling and Entry strategies Customised research content for Information Memorandum and Offer documents

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