Siyaram Silk Mills Ltd

Transcription

1 Q4FY11 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. CRISIL Limited. All Rights Reserved.

3 Company Siyaram Silk name Mills Ltd Another Tag line strong quarter Fundamental Grade Valuation Valuation Grade Grade Industry Industry X/5 4/5 ( (Superior fundamentals) fundamentals) X/5 3/5 (CMP (CMP is/has is aligned) ) Textile, (GICS Apparel Code) & Luxury Goods Siyaram Silk Mills Ltd s (SSML s) Q4FY11 revenues were higher than CRISIL Equities expectations driven by strong growth across brands, whereas margins remained in line with expectations. Going forward we expect demand for clothing and furnishing fabric to remain strong. We maintain our fundamental grade of 4/5. Q4FY11 result analysis SSML s Q4FY11 revenues increased 3% y-o-y to Rs 2,455 mn owing to strong volume growth across brands and products. EBITDA margins contracted by about 8 bps to 13% y-o-y largely on account of higher other expenses. Operating profitability remained flat q- o-q. Lower EBITDA margin coupled with higher interest expenses lowered PAT margin by around 1 bps y-o-y. However, higher other income and stable operating profitability augmented PAT by 17% q-o-q to Rs 186 mn and improved PAT margin by 6 bps to 7.6%. The company has declared a dividend of Re 7 per share. At the current market price, dividend yield is 2%. Revised capacity expansion on schedule The management had announced a revised capacity expansion plan for the FY11-13 period in the previous quarter. The plan entailed a revision of timelines for the fabric capacity owing to uncertainty surrounding the TUF scheme. The government has restructured and extended the scheme till FY12, as a result the revised plan is on schedule. Revenue estimates revised marginally upwards We have marginally raised our revenue estimates for FY12 and FY13 in view of the strong demand for the company s products. However, earnings estimates for FY12 are revised marginally downwards on account of higher interest rates. Valuations: Current market price is aligned We continue to value SSML based on the discounted cash flow method and retain our fair value of Rs 374. The stock has risen by 25% since our report dated February 14, 211. At the current market price, the stock merits a valuation grade of 3/5. KEY FORECAST (Rs mn) FY9 FY1 FY11E# FY12 FY13 Operating income 6,525 8,5 1,33 1,994 14,159 EBITDA ,89 1,196 1,77 Adj PAT Adj EPS-Rs EPS growth (%) Dividend yield (%) RoCE (%) RoE (%) PE (x) P/BV (x) EV/EBITDA (x) #FY11 numbers based on abridged financials NM: Not meaningful; CMP: Current Market Price Source: Company, CRISIL Equities estimate May 25, 211 Fair Value Rs 374 CMP Rs 379 CFV MATRIX KEY STOCK STATISTICS NIFTY 5387 NSE ticker SIYSIL Face value (Rs per share) 1 Shares outstanding (mn) 9.4 Market cap (Rs mn)/(us$ mn) 3,619/8 Enterprise value (Rs mn) /(US$ mn) 5,276/ week range (Rs) (H/L) 45/156 Beta.95 Free float (%) 32.9% Avg daily volumes (3-days) 1,5 Avg daily value (3-days) (Rs mn) 3.9 SHAREHOLDING PATTERN 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Excellent Fundamentals Fundamental Grade PERFORMANCE VIS-À-VIS MARKET Returns 1-m 3-m 6-m 12-m Siyaram Silk Mills Ltd -.1% 22% -8% 123% NIFTY -6% 1% -7% 11% ANALYTICAL CONTACT Sudhir Nair (Head) Arun Vasu Vinay Chhawchharia Poor Fundamentals % Strong Downside Valuation Grade 28.8% 29.% 29.4% 29.3% 4.2% 3.9% 3.6% 3.6% 67.1% 67.1% 67.1% 67.1% snair@crisil.com avasu@crisil.com Strong Upside Jun-1 Sep-1 Dec-1 Mar-11 Promoter DII Others vchhawchharia@crisil.com Client servicing desk clientservicing@crisil.com CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 1

4 Q4FY11 Result Summary (Rs mn) Q4FY11 Q3FY11 Q4FY1 q-o-q (%) y-o-y (%) FY11 FY1 y-o-y (%) Net sales 2,455 2,28 1, ,587 6, Raw materials cost 1,232 1, ,247 3, Raw materials cost (% of net sales) 5.2% 49.8% 51.4% 38bps -122bps 49.5% 51.1% -16 bps Employees cost (1.) Other expenses ,786 2, EBITDA , EBITDA margin 13.% 13.1% 13.8% -7bps -83bps 12.7% 11.% 163 bps Depreciation (2.1) EBIT Interest and finance charges Operating PBT Other Income Extraordinary Income/(expense) nm - 16 nm PBT Tax PAT Adj PAT Adj PAT margin 7.6% 7.% 8.6% 6bps -14bps 6.7% 5.3% 137 bps No of equity shares (Mn) Adj EPS (Rs) Source: Company, CRISIL Equities Sales continue to grow, margins remain stable PAT and PAT margins continue to improve (Rs mn) (Rs mn) 3, 2,5 2, 1,5 8.% 8.6% 1.3% 1.5% 14.% 13.% 12.7% 13.1% 11.5% 16% 14% 12% 1% 8% % 8.1% 4.% 5.% 7.% 7.6% 6.7% 1% 9% 8% 7% 6% 5% 1, % 4% 2% % 2.8% % 3% 2% 1% % % Q4FY9 Q1FY1 Q2FY1 Q3FY1 Q4FY1 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q4FY9 Q1FY1 Q2FY1 Q3FY1 Q4FY1 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Quarterly Sales Source: Company, CRISIL Equities EBITDA Margin (RHS) Quarterly PAT Source: Company, CRISIL Equities PAT Margin (RHS) Share price movement Fair value movement since initiation (Rs) (in ') 1, Jan-8 Mar-8 May-8 Jul-8 Oct-8 Dec-8 Feb-9 Apr-9 Jul-9 Sep-9 Nov-9 Jan-1 Apr-1 Jun-1 Aug-1 Nov-1 Jan-11 Mar-11 5-Oct 19-Oct 2-Nov 16-Nov 3-Nov 14-Dec 28-Dec 11-Jan 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May Siyaram -Indexed to 1 NIFTY Total Traded Quantity (RHS) CRISIL Fair Value Siyaram CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 2

5 EARNINGS ESTIMATES REVISED We have marginally increased our revenue estimates for FY12 and FY13 in view of the strong demand for the company s products. However, earnings estimates for FY12 are revised marginally downwards on account of higher interest rates. FY12E FY13E Particulars Unit Old New % change Old New % change Revenue (Rs mn) 1,845 1, % 13,893 14, % EBITDA (Rs mn) 1,187 1,196.8% 1,686 1,77 1.2% EBITDA margin % 1.9% 1.9% % 12.1% - PAT (Rs mn) % % PAT margin % 5.6% 5.3% -29bps 6.2% 6.3% 12bps EPS Rs % % CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 3

6 VALUATION We continue to value SSML based on the DCF method and retain our fair value of Rs 374. Our current forecast period is from FY12 to FY21 to factor in the capex plan. The stock has risen by 25% since our report dated February 14, 211. At the current market price, the stock merits a valuation grade of 3/5. One-year forward P/E band (Rs) One-year forward EV/EBITDA band (Rs mn) 12,5 1, 7,5 5, 2,5 Nov-7 Feb-8 May-8 Jul-8 Oct-8 Dec-8 Mar-9 May-9 Aug-9 Oct-9 Jan-1 Apr-1 Jun-1 Sep-1 Nov-1 Feb-11 Apr-11 Nov-7 Feb-8 May-8 Jul-8 Oct-8 Dec-8 Mar-9 May-9 Aug-9 Oct-9 Jan-1 Apr-1 Jun-1 Sep-1 Nov-1 Feb-11 Apr-11 Siyaram 1x 3x 5x 7x 9x EV 2x 4x 6x 8x P/E-premium/discount to NIFTY P/E movement % -1% 25-2% -3% 2-4% -5% 15-6% -7% 1 +1 std dev -8% -9% -1% 5-1 std dev Nov-7 Feb-8 May-8 Jul-8 Oct-8 Dec-8 Mar-9 May-9 Aug-9 Premium/Discount to NIFTY Oct-9 Jan-1 Apr-1 Jun-1 Sep-1 Nov-1 Feb-11 Median Apr-11 Nov-7 Feb-8 May-8 Jul-8 Oct-8 Dec-8 Mar-9 May-9 1yr Fwd PE (x) Aug-9 Oct-9 Jan-1 Apr-1 Jun-1 Sep-1 Nov-1 Median PE Feb-11 Apr-11 CRISIL IER reports released on Siyaram Silk Mills Ltd Fundamental Valuation CMP Date Nature of report grade Fair value grade (on the date of report) 8-Sep-1 Initiating coverage* 4/5 Rs 34 3/5 Rs Nov-1 Q2FY11 result update 4/5 Rs 374 2/5 Rs Feb-11 Q3FY11 result update 4/5 Rs 374 4/5 Rs May-11 Q4FY11 result update 4/5 Rs 374 3/5 Rs 379 * For detailed initiating coverage report please visit: CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters. CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 4

7 FINANCIALS Income statement Balance Sheet (Rs mn) FY9 FY1 FY11# FY12E FY13E (Rs mn) FY9 FY1 FY11# FY12E FY13E Operating income 6,525 8,5 1,33 1,994 14,159 Liabilities EBITDA ,89 1,196 1,77 Equity share capital EBITDA margin 7.6% 9.3% 1.6% 1.9% 12.1% Reserves 1,329 1,65 2,14 2,67 3,421 Depreciation Minorities EBIT ,371 Net worth 1,423 1,699 2,198 2,71 3,515 Interest Convertible debt Operating PBT ,169 Other debt 2,135 1,686 2,686 2,786 3,16 Other income Total debt 2,135 1,686 2,686 2,786 3,16 Exceptional inc/(exp) Deferred tax liability (net) PBT ,283 Total liabilities 3,738 3,568 5,54 5,658 6,71 Tax provision Assets Minority interest Net fixed assets 2,19 1,98 1,873 2,515 3,479 PAT (Reported) Capital WIP Less: Exceptionals Total fixed assets 2,37 1,984 2,477 3,219 3,534 Adjusted PAT Investments Current assets Ratios Inventory ,496 1,566 2,95 FY9 FY1 FY11# FY12E FY13E Sundry debtors 1,138 1,168 1,835 1,747 2,347 Growth Loans and advances Operating income (%) Cash & bank balance EBITDA (%) Marketable securities Adj PAT (%) Total current assets 2,391 2,378 3,671 3,632 4,758 Adj EPS (%) Total current liabilities 721 1,13 1,293 1,373 1,75 Net current assets 1,67 1,365 2,378 2,259 3,8 Profitability Intangibles/Misc. expenditure EBITDA margin (%) Total assets 3,738 3,568 5,54 5,658 6,71 Adj PAT Margin (%) RoE (%) Cash flow RoCE (%) (Rs mn) FY9 FY1 FY11# FY12E FY13E RoIC (%) Pre-tax profit ,283 Total tax paid (27) (15) (267) (256) (392) Valuations Depreciation Price-earnings (x) Working capital changes (99) 98 (751) Price-book (x) Net cash from operations (218) EV/EBITDA (x) Cash from investments EV/Sales (x) Capital expenditure (197) (14) (72) (1,) (65) Dividend payout ratio (%) Investments and others 2 (328) Dividend yield (%) Net cash from investments (195) (468) (672) (97) (62) Cash from financing B/S ratios Equity raised/(repaid) Inventory days Debt raised/(repaid) (399) (449) 1, 1 23 Creditors days Dividend (incl. tax) (55) (66) (77) (77) (77) Debtor days Others (incl extraordinaries) () () Working capital days Net cash from financing (442) (492) Gross asset turnover (x) Change in cash position (11) 8 Net asset turnover (x) Closing cash Sales/operating assets (x) Current ratio (x) Quarterly financials Debt-equity (x) (Rs mn) Q4FY1 Q1FY1 Q2FY11 Q3FY11 Q4FY11 Net debt/equity (x) Net Sales 1,886 1,697 2,155 2,28 2,455 Interest coverage Change (q-o-q) 14% -1% 27% 6% 8% EBITDA Per share C hange (q-o-q) 52% -26% 4% 9% 7% FY9 FY1 FY11# FY12E FY13E EBITDA margin 14.% 11.5% 12.7% 13.1% 13.% Adj EPS (Rs) PAT CEPS Adj PAT Book value C hange (q-o-q) 145% -48% 71% 9% 17% Dividend (Rs) Adj PAT margin 8.6% 5.% 6.7% 7.% 7.6% Actual o/s shares (mn) Adj EPS Numbers are adjusted for trade discounts, returns and rebates Note: All ratios are computed on Adj PAT #FY11 numbers based on abridged financials Source: Company, CRISIL Equities estimate CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 5

8 CRISIL Independent Equity Research Team Mukesh Agarwal Senior Director +91 (22) Tarun Bhatia Director, Capital Markets +91 (22) Chetan Majithia Head, Equities +91 (22) Sudhir Nair Head, Equities +91 (22) Prasad Koparkar Head, 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 CRISIL Limited. All Rights Reserved.

9 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 12 domestic and global clients, through a range of research reports, analytical tools, subscription products and customised solutions. To know more about CRISIL IER, please contact our team members: Vinaya Dongre Head, Business Development vdongre@crisil.com I Phone : Ashish Sethi Head, Business Development asethi@crisil.com I Phone : Sagar Sawarkar Senior Manager, Business Development ssawarkar@crisil.com I Phone : Regional Contacts: Ahmedabad / Mumbai / Pune Vishal Shah - Manager, Business Development vishah@crisil.com I Phone : Bengaluru / Chennai Anand Krishnamoorthy - Manager, Business Development ankrishnamoorthy@crisil.com I Phone : Hyderabad Kaliprasad Ponnuru - Manager, Business Development kponnuru@crisil.com I Phone : Kolkata / Delhi Priyanka Agarwal - Manager, Business Development priyagarwal@crisil.com I Phone : Head Office: CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai Phone : CRISIL Limited. All Rights Reserved. Web: Download reports from: