HBL Power Systems Ltd.

Transcription

1 Stock Review of Techno Funda Research Product Early Signals Early Signals Call Information Data Scrip Code Grade Face Value CMP Target Stop Loss HBL Power Systems Ltd D SHARE HOLDING (%) HBL Power Systems Ltd. (HBL) is a leading manufacturer of Batteries, DC Power Promoters 72.9 Systems and Electronic Products. It caters to industrial applications and has clientele FII 5.4 segment which includes telecom, railways, defence, power, non-conventional energy, FI / MF 1.8 petroleum, oil& gas, UPS etc. Body Corporates 11.8 Public & Others 8.1 It is a market leader in telecom batteries with a market share of about 50%. HBL manufactures a range of batteries such as Lead Acid (VRLA), Ni-Cad, Lithium and Silver STOCK DATA Zinc batteries and electronic products for Railways and Defence. Reuters Code HBLS.BO Foreseeing huge investment outlays in Power, Telecom and Defence sectors by Govt. Of Bloomberg Code HBPS@IN India, HBL has been aggressively expanding its capacities in the past few years. NSE Symbol HBLPOWER To enter the automotive segment, it has recently developed and test marketed PLT Mkt.Cap mn batteries for diesel engines (for gensets, trucks, etc) mn Demand in Key Sectors addressed by HBL i.e. Telecom, Railways & Core Industry 52 Weeks (H/L) Rs.330 / 90 remains firm. Its competitive position is steadily improving both in India and overseas. Its recent capex plan comprises of a Rs.2500 mn capacity expansion program in Lead- Avg. Daily Shares Acid batteries from 1020 mn AH to 1400 mn AH by FY10, which would drive the Volume (6m) company s growth in future. Price Performance (%) 1M 3M 6M During 9MFY09, while its revenues grew by 39.1%, its EBITDA margins grew by 213 bps and its APAT grew by 50% YoY to Rs mn. 200 Days EMA Rs.176 At CMP of Rs. 213, the stock is trading at a valuation of 0.9x its FY10E ABV & 5.2x FY10E * fully diluted equity Earnings. Shares Outstanding(*) Y/E Mar Revenues APAT EBITDA AEPS (Rs.) PER (x) ROCE (%) FY FY09E FY10E Viral Shah viral.shah@sushilfinance.com This report based on Techno Funda Research and our View / Target Price has been derived accordingly. Please refer to the disclaimer on the last page. ROE (%) P/BV (x) Part of Bonanza 1

2 Q3FY09 results update: During Q3FY09, HBL s revenues remained flat at 3.4% YoY to Rs mn but its EBITDA declined by of 18% YoY to Rs mn while its EBITDA margins decreased by 373 bps. Its PBT (including other income) stood at Rs mn in Q3FY09, while its APAT stood at Rs mn, registering a de-growth of 36.5% YoY. KEY UPDATES : Promoters raised their ownership to 72.87% end Mar 2009 from 70.52% end Dec The company has started electronic projects for specialized electronics products at multiple locations two in Andhra Pradesh (AP) and three outside AP. To cater overseas market for industrial batteries, HBL has signed a JV with ihlocall partners in Saudi Arabia to manufacture batteries at an estimated cost of $ 28 mn. As of Mar 08 JV with IAI ELTA had not yet commenced exports although the plant has been set up while the railway electronic signaling product approval had spilled over for the next financiali year. KEY RISKS: High volatility in raw material prices of lead, nickel, potassium hydroxide and cadmium hydroxide could effect the margins of the company. Delays in the investments in the sectors served by HBL could adversely affect the revenues and estimates. QUARTERLY RESULTS STATEMENT (Rs.mn) Y/E March Q3FY09 Q3FY08 Q2FY09 Revenues Total Expenses EBITDA Interest EBDT Depreciation EBT (excl O.I) Other Income EBT (incl O. I) Tax APAT Extraordinary items RPAT

3 BALANCE SHEET STATEMENT (Rs.mn) PROFIT & LOSS STATEMENT (Rs.mn) As on 31 st March FY10E FY09E FY08 FY07 Share Capital Net Sales 15, , , ,118.5 Reserves Total T. Shareholders Funds Deferred tax liability Total Debt 4, , , ,762.8 Capital employed 10, , , ,264.3 Net Block Capital WIP Investments Total Current Assets 8, , , ,041.6 Total Current Liabilities 3, , , , Net Current Assets 5, , , ,019.5 Misc. Exp.not W/off Total Assets 10, , , ,264.3 Total Expense 13, , , ,392.0 Operating Profit 2, , , Interest Depreciation Other Income Profit before tax 1, , , Tax APAT 1, Extraordinary Items RPAT 1, Source: Company, Sushil Finance Research Estimates 3

4 FINANCIAL RATIOS Net Sales Adjusted Net Profit EBITDA EPS CEPS Gross Fixed Assets Capital Employed EPS (Rs.) CEPS (Rs.) BVPS (Rs) PER (x) PEG (x) P/CEPS (x) P/BVPS (x) EV/EBITDA (x) EV/Net Sales (x) FINANCIAL RATIOS ROCE (%) ROE (%) EBIDTA Margin (%) EBDTA Margin (%) Net Profit Margin (%) Tax/PBT (%) Avg. Collection Period (Days) Avg. Payment Period (Days) Net Fixed Assets (x) Total Assets (x) Market Price per share Market Capitalisation 5, , , ,171.5 Enterprise Value 10, , , ,572.5 Source: Company, Sushil Financial Services Estimates 4

5 Disclaimer As the title suggests, the objective of this report is to provide early signals to investors about stocks, which are likely to witness price up move in medium to long term. Companies are selected based on certain Fundamental / Technical indicators and it may be possible that our view on these stocks may have been formed without meeting the company management. We advise caution as far as investing / disinvesting in these stocks since these stocks are not strictly based on detailed technical / fundamental analysis. All the data appearing in this report is from sources believed to be reliable but we do not guarantee that it is correct or accurate. Additional information with respect to any securities referred to herein will be available upon request. Sushil Financial Services Private Limited and its connected companies, and their respective directors, Officers and employees (to be collectively known as SFSPL) may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities. SFSPL may act upon or make use of information contained herein prior to the publication thereof. This data sheet is for private circulation only and the said document does not constitute an offer to Buy or sell any securities mentioned herein. While utmost care has been taken in preparing the above, we claim no responsibility for its accuracy. We shall not be liable for any direct or indirect losses arising from the use thereof and the investors are requested to use the information contained herein at their own risk. 5