The Varhad Group. Bansal Roofing Products Limited. Company Overview. Industry Overview. Financial Overview CMP: INR30.50.

Transcription

1 Iron and Steel Products l SME Research Bansal Roofing Products Limited CMP: INR30.50 Stock data BSE code BSE ID BRPL Face value (INR) 10 No of shares (m) 2.2 Market cap (INRm) m avg. daily vol (No) 1,142.8 Free float (INRm) 22.0 Dividend yield (%) 0 S&P BSE SME IPO Stock performance (%) 52week H/L INR34.5/28.0 1M 3M 9M* Absolute (%) Relative (%) Shareholding pattern (%) Promoters FIIs DIIs Others 67.2% 0.0% 0.0% 32.8% Relative stock movement Company Overview Bansal Roofing Products Limited was originally incorporated on May 01, 2008, as Bansal Roofing Private Limited under the provisions of the Companies Act, 1956 with the Registrar of Companies, Gujarat, Dadra & Nagar Havelli. Pursuant to Shareholders Resolution passed at the Extra Ordinary General Meeting of the Company held on August 24, 2013 name of our Company was changed to Bansal Roofing Products Private Limited from Bansal Roofing Private Limited. Industry Overview Steel is one of the most widely used metals in the world. India has become the second best in terms of growth amongst the top ten steel producing countries in the world and a net exporter of steel during. Steel production in India recorded a growth rate of 4.8 per cent in February 2014 over February The cumulative growth during April February, stood at 4.2 per cent over the corresponding period of the previous year. Steel contributes to nearly two per cent of the gross domestic product (GDP) and employs over 500,000 people. The total market value of the Indian steel sector stood at USD57.8bn in 2011 and is expected to touch USD95.3bn by Financial Overview Revenue in increased by 11.7% YoY to INR191.6m. However, EBITDA margins went up from 5.6% in to 5.7% in. In absolute terms, EBITDA increased from INR9.6m in to INR11.0m in. PAT improved to INR6.6m in against PAT of INR604m in, mainly due to the increase in sale. Provision for taxes increased to INR6.6m in from INR6.4m. Total assets increased from INR14.8m in to INR16.4m in. Sundry debtors decreased from INR19.6m in to INR5.0m in and inventory increased from INR22.2m in to INR41.0m in. Source: BSE Feb 2015 Table 1: Key financials (Y/e March) Sales (INRm) YoY Growth (%) , EBITDA (INRm) EBITDA Margin (%) PAT (INRm) EPS (INR) YoY Growth (%) RoE (%) P / E (x) Source: Company, Varhad Research

2 Feb 2013 l SME Research Industry Overview Industry size: India s economy is the third largest in the world after USA and China with a GDP Purchasing Power Parity of USD4.7tn (Source: World Bank). Steel is one of the most widely used metals in the world. It forms a key constituent of all major economies. Accordingly, the growth in steel consumption is a function of the growth pattern of its various enduse sectors viz. manufacturing, infrastructure, automobile, housing etc. which ultimately guide the country s economy. India has become the second best in terms of growth amongst the top ten steel producing countries in the world and a net exporter of steel during. Steel production in India recorded a growth rate of 4.8 per cent in February 2014 over February The cumulative growth during April February, stood at 4.2 per cent over the corresponding period of the previous year. Steel contributes to nearly two per cent of the gross domestic product (GDP) and employs over 500,000 people. The total market value of the Indian steel sector stood at USD57.8bn in 2011 and is expected to touch USD95.3bn by The infrastructure sector is India s largest steel consumer, thereby attracting investments from several global players. Owing to this connection with core infrastructure segments of the economy, the steel industry is of high priority right now. Also, steel demand is derived from other sectors like automobiles, consumer durables and infrastructure; therefore, its fortune is dependent on the growth of these user industries. Market Size: India s real consumption of total finished steel grew by 0.6 per cent yearonyear in to million tonnes (MT), according to Joint Plant Committee (JPC), Ministry of Steel. Construction sector accounts for around 60 per cent of the country's total steel demand while the automobile industry consumes 15 per cent. India became net steel exporter in and is likely to maintain the momentum in FY15 as producers are looking to dock more overseas shipment to tide over subdued domestic consumption. Total steel exports by India during stood at 5.59 MT, as against imports of 5.44 MT. During the period, Steel Authority of India (SAIL) clocked a 30 per cent growth in exports and aims to more than double the shipments to 1 MT in FY15. Rashtriya Ispat Nigam Ltd (RINL), which exported 1 lakh tonne steel last fiscal, aims to treble that in the current fiscal. Iron ore export from India has showed a 253 per cent increase during the period October December 2013, at 3.75 MT as against 1.06 MT in the corresponding period of the previous year, on the back of the opening of new mines inchhattisgarh, Madhya Pradesh and Rajasthan, as per the Federation of Indian Mineral Industries (FIMI). Growth drivers: Increasing geographical area as roofing markets have shown increased growth with many projects coming up in real estates, infrastructural developments. Company also wants to focus on cordial relationship with its suppliers, customers and employees as it has only 10 major suppliers. Company also wants to build a professional organization which believes in transparency and commitment in its work with customers, suppliers, government authorities, banks and financial institutions. Short term outlook: Reduced uncertainty over global economy and good monsoon season in India will act as the major growth drivers for the Commodity Trading industry in the near term. However, NSEL crash has reduced the effects the growth drivers in near term and will continue to impact the commodity trading till proper regulatory frameworks are in place. About the company Bansal Roofing Products Limited mainly a manufacturer of roofing sheets and roofing accessories such as Colour Coated Roof Sheets, FRP Roof Sheets, Polycarbonate Sheets. Company also manufacture Eco Ventilators and other miscellaneous Roofing Accessories and provide all roofing solutions to its valuable customers, under one roof. Company believes that they have built domain expertise in roofing solutions in a short span which has contributed in our business growth. Promoters of the Company have been associated with roofing industry since more than a decade. Company was incorporated in 2008, with foraying into business of marketing of roofing sheets and started trading of the same afterwards. Company started its 2

3 commercial production in the year 2012, since than its continued rapid growth is a testament to the certainty, its Customers experience every day. Organisation structure In the organisation structure, Board of Directors have vested all powers to Chairman and Managing Director who is supported by the whole time directors. All of them are well supported and guided in day today operations by an experienced team. Chart 1: Organisation structure Board of Board Directors Board Board Sangeeta Gupta Wholetime Director Kaushalkumar Gupta Chairman & Managing director Satishkumar Gupta Wholetime Director Niladri Seal Accounts & Administration Head Manager Accounts Executive K R Lekshmanan Harneetkaur Anand Nikhi Patel Kishore Mulchandani Factory manager Company Secretary & Compliance officer Marketing Manager Export Manager Marketig Support Executive 3

4 Board of Director Table 2: Composition of Board Name Director type Business relationship with company Mr Kaushalkumar Gupta Chairman and Managing Director Promoter Mr Satishkumar S Gupta Whole Time Director Director Mrs. Sangeet K. Gupta Whole Time Director Promoter Mrs. Beena Bisht Non Executive Director Independent Ms Bhavitaben Gurjar Baid Non Executive Director Independent Mrs. Shilpa Jadeja Non Executive Director Independent Source: Company Key Strength and growth drivers Experienced Management Team: Benefit from the leadership of company s management team, which has extensive experience in roofing industry. Promoters have more than adequate experience in roofing industry and have successfully grown under their efficient leadership in the past. Range Of Products: Over the years Bansal Roofing Pro. Ltd has strengthened their products portfolio in order to address the varied and expanding requirement of our customers. Their products portfolio include Colour Coated Roof Sheets, FRP Roof Sheets, Polycarbonate Sheets, Turbo Ventilators and other miscellaneous Roofing Accessories. Quality Assurance and Standards: They believe in providing their customers the best possible quality. All products that leave the factory premise goes through stringent quality check. Cost Beneficial Manufacturing Facility: Company s manufacturing facilities has all good facility. Company believe that this enables them to control costs and increase its profit margins and gives it a competitive advantage over some of its competitors who do not have their own manufacturing facilities. They believe that its large skilled workforce with knowledge and expertise in roofing industry is a key competitive strength that has enabled them to establish and maintain our reputation and brand. Risk and concerns Dependency on economic growth of national economy at large. Capital Intensive industry. Low margin. Volatile Raw material pricing High competition intensity is a risk Competition from cash rich companies IPO Details The Issue includes a fresh Issue of 6,80,000 Equity Shares of the Company at an Issue Price of INR30.00 per Equity Share. The Company proposes to utilize the funds which are being raised through this Issue towards the objects and gain benefits of listing on SME platform of BSE. Table 3: Proposed usage of proceeds of IPO Particulars Proposed use (INRm) To meet long term working capital requirement 15.4 General Corporate Purpose 1.0 Public Issue Expenses 4.0 Total 20.4 Source: Company 4

5 Financial Performance Revenue in increased by 11.7% YoY to INR191.6m. However, EBITDA margins went up from 5.6% in to 5.7% in. In absolute terms, EBITDA increased from INR9.6m in to INR11.0m in. PAT improved to INR6.6m in against PAT of INR604m in, mainly due to the increase in sale. Provision for taxes increased to INR6.6m in from INR6.4m. Total assets increased from INR14.8m in to INR16.4m in. Sundry debtors decreased from INR19.6m in to INR5.0m in and inventory increased from INR22.2m in to INR41.0m in. Competition analysis Bansal Roofing Pro Ltd Industry is diversified including both large established players and small unorganized players. Table 4: Peer comparison Company CMP (INR) Mcap (INRm) Rev (INRm) EBITDA Margin (%) EPS (INR) PE (x) BRPL USHAMART , MEENST * PITHMST Source: BSE Valuation On valuation front, on 19 February 2015, the stock was trading at 7.0x in on P/E basis. On EV/Sales basis, the stock is trading at 0.3x in, whereas on P/B basis, the stock is trading at 2.1x in. 5

6 Financial snapshot Chart 1: Sales trend Chart 2: Margin trend Sales (INRm) Sales (% YoY, RHS) 2,500 2,000 1,500 1, (2) EBITDA (INRm) EBITDA mgn (%, RHS) (2.0) (4.0) (6.0) (8.0) Chart 3: EPS trend Chart 4: Working capital profile EPS (INR) EPS Growth(% YoY, RHS) Debtors TO Stock TO Creditors TO (2.0) (4.0) (6.0) (8.0) (50) (100) (150) (200) (250) Chart 5: Return trend Chart 6: Valuation 100% 50% 0% 50% 100% ROE (%) ROCE (%) (10.00) (20.00) (30.00) PE EV/EBITDA P/B (RHS) % (40.00) Source: Company, Varhad Research 6

7 Financial Summary* Profit and loss (INR m) Balance sheet (INR m) Year ending 31 March Year ending 31 March Revenue Net Block Raw Materials Investments Staff Cost Cash and Banks Balance Other Expenditure Inventory Total Cost Sundry Debtors EBITDA Loans and Advances EBITDA margin (%) Other Current Assets Depreciation Other EBIT Total Assets Interest Expenses Gross Debt Nonoperating Income Trade Payables PBT Provisions & other curr lia Provision for Tax Others PAT (Adjusted) Equity Capital Growth % , Reserves & Surplus PAT margin (%) Share Application money Minority Interest Minority Interest Extra Ordinary Shareholders' funds PAT (Reported) Total Liabilities Cash Flow Metrics Ratios, growth and per share analysis YoY % change Cash Flow from Operations Revenue , Changes in Working Capital EBITDA , Operating Cash Flow Recurring EPS Capex Ratios (%) FCF ROE Investing Cash Flow ROCE Financing Cash Flow EBITDA Margin Net Change in Cash EBITDA/Net Interest (x) Ratio Du Pont Analysis Net Debt/Equity (x) Net Debt/ EBITDA (x) Net Profit Margins (%) Inventory days Total Assets Turnover Debtors days Leverage Multiplier Payables day ROAE (%) Total Asset TO ratio Valuation Fixed Asset TO Ratio Per share data (INR) EV/Sales EPS reported (diluted) EV/EBITDA Recurring EPS (diluted) P/E (x) DPS P/B(x) Book Value(basic) Dividend yield (%) Wtd avg ord shares (m) FCF yield (%) 1, Wtd avg dil shares (m) Source: BSE, Company, Varhad research 7

8 DISCLAIMER Varhad Financial Consultancy Services Private Limited (Varhad FCS), an entity of the Varhad Group has taken utmost care to ensure accuracy and objectivity while writing this report based on publicly available information or from reliable sources. However, neither the accuracy nor completeness of information contained in this report is guaranteed. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report can be construed as either investment or any other advice or any solicitation, whatsoever. The subscriber/user assumes the entire risk of any use made of this report or data herein. Varhad FCS specifically states that it or any of its entities or employees do not have any financial liabilities whatsoever to the subscribers / users of this report. This report is for personal information only of the authorised recipient in India only. This report or part of it should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied for any purpose. DISCLOSURE Each member of the team involved in writing this research report, hereby affirms that there exists no conflict of interest that can bias the research on the company. PUBLISHED BY Varhad Financial Consultancy Services (VFCS) is the research and financial consultancy services entity of the Varhad Group. We have one of the best inhouse research team, which has sound understanding of SMEs through clients across India. We provide project specific, company specific and sector specific consultancy services. We help companies expand businesses through network expansion. We also help in balance sheet strengthening and improvement in both credit and business profile of the company. Head Office: Ground Floor, E07/01, Sector 1, Vashi, Navi Mumbai Tel: Regional Offices: B111, Parmar Chambers, Sadhu Vasvani Chowk, Pune