LIBERTY PHOSPHATES LTD.(LPL)

Transcription

1 LIBERTY PHOSPHATES LTD.(LPL) Date : 26 th September, 212 Stock Performance Details Background Current Price : Rs. 92.6** Face Value : Rs. 1 per share 52 wk High / Low : Rs / Rs Total Traded Volumes : 19, shares** Market Cap : Rs. 133 crore** Sector : Fertilizers EPS (FY212) : Rs per share P/E (TTM) : 2.68 (x)^ P/BV (TTM) :.87 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : LIBERTYP BSE Scrip Code : **as on26 th September, 212; ^ as on June 212 Shareholding Details June 212 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 86,23, Total Institutional Holdings (FIIs & DIIs) 48,4.34 Public Holdings 57,66, Based in Mumbai, Liberty Phosphates Ltd. (LPL) commenced operations in 1976 and is engaged in the manufacture and sale of Single Super Phosphate (SSP). The Company has four manufacturing units situated at Udaipur (Rajasthan), Nandesari (Gujrat), Kota (Rajasthan) and Pali (Maharashtra). Single Super Phosphate, NPK Mixed Fertilizers and Magnesium Sulphate are the Company's key products. As a group, it has a manufacturing capacity of 8,26, MTS. per annum of SSP Fertilizer, 1,65, MT per annum of NPK and 5 MT of Magnesium Sulphate (source: company website) The raw materials required by LPL for manufacturing process of SSP are Rock Phosphate & Sulphuric Acid. The Company enters into long term contracts with suppliers of raw materials. Total 1,44,38,21 1. Strategy Focus Due to modernization of farming techniques, a mixture of seeds and granular fertilizer is used at the time of sowing itself. This has resulted into shifting of fertilizer demand from powder to granular fertilizer. The company has enhanced its production capacity of Granulated SSP from 2475 MT/annum to 33 MT/annum during FY 212 to tap this demand. The Company has decided to install a SSP Plant of 1,32, MT/annum capacities at Rae Bareilly in the State of Uttar Pradesh to cater the needs of the farmers in the Northern and Eastern Indian regions. LPL appears to be locating its facilities in close proximity to raw material sources and markets to cater to the growing demand effectively through enhanced reach. An Initiative of the BSE Investors Protection Fund 1

2 Financial Snapshot Particulars Standalone Financials (Rs. in Million) Income Statement FY12 FY11 FY1 Net Sales / Income from Operations 4, ,64. 2,32.9 Expenses Cost of material consumed 2,69.8 1,87.3 1,914.2 Change in Inventories Employee Benefit Expenses Administrative & Other Expenses 1, EBIDTA Depreciation & Amortization Finance Costs / Interest Expense Other Income Profit After Tax (PAT) Key Ratios Income Statement EBIDTA Margin (%) PAT Margins (%) Balance Sheet Networth 1, Non Current Liabilities / Loan Funds Non Current Assets / Fixed Assets Inventories ,.5 Debtors 1, Key Ratios Balance Sheet Debt : Equity (x) Book Value (BV) (in Rs.) Return on Capital Employed (ROCE) (%) Return on Equity (ROE) (%) Debtors Turnover Ratio (x) Inventory Turnover Ratio (x) Valuation Ratios P/E (x) P/BV (x) EV / EBDITA (x) Source : Capitaline.com; as on year ended 31 st March, 212 From the Research Desk of LKW s Gurukshetra.com During FY 212, LPL achieved production of 4,83,53 MT of Single Super Phosphate, NPK Mixed Fertilizers and Magnesium Sulphate as against production of MT in the previous year recording growth of 25.14%. During the year under review the Company recorded a turnover of Rs.4,865.9 million, a rise of 33.6% due to better capacity utilization. In FY 212, EBITDA rose by 53% at Rs million and the Net Profit stood at Rs million registering a growth of 53.23% over the corresponding figures of FY 211. This improvement is attributed to the cost control measures adopted by the management that have aided the EBIDTA and bottomline performance. The PAT stood at Rs million, reflecting an increase of over 5% for the period under review. The reason attributed to an improved bottomline performance An Initiative of the BSE Investors Protection Fund 2

3 as well as upward trend in margins is the overall operational efficiency achieved by the company despite weak economic conditions. The EBIDTA and PAT margins stood at 19.9% and 11.1% in FY212 an improvement over FY211 which saw margins at 16.6% and 9.7% respectively. This is despite, the increase in cost of inputs, high interest costs and an overall weak economic growth. However, in terms of managing working capital cycle, the company appears to have stretched its position on the receivables front, as the Debtors stood at Rs.1,665.8 million in FY212 an increase of 166% as compared to Rs million in FY211. Going forward, with a weak monsoon witnessed during Q1 FY13, the receivables collection period could get further extended causing a strain on working capital requirements. During Q1 FY 213, the Net Sales stood at Rs.1,164.3 million an increase of 11.22%. The EBITDA witnessed a drop of 25.42% as cost of raw materials consumed increased sharply along with selling and administrative expenses. Net Profit stood at Rs million resulting in a drop of 36.98%. This is mainly on account of the increase in interest expenses, general increase in cost of production and sharp increase in forex losses. Resultantly, the EBITDA Margins and Net Profit Margins were lower at 11.92% and 5.39% when compared on a year on year basis. However, with a weak monsoon witnessed from June 212 September 212, agricultural and allied activities are likely to be impacted which could have an impact on the performance if the company too as it is high dependent on a good monsoon for sale of fertilizers to farmers who are the end users. Moreover, the highly regulated nature of the fertilizer industry exposes LPL to the risk of any adverse announcement on the fertilizer subsidy front from the government which could have an impact on the operational performance. Performance on the Bourses Stock Performance as on 26 th September 212 % Liberty Phosphate BSE Small Cap An Initiative of the BSE Investors Protection Fund 3

4 Peer Comparison The below mentioned tables provide a snapshot of the company s financial performance during FY212 as compared to some of its peers with a similar business model and product profile operating in the Chemicals & Fertilizer Industry. Standalone Financials (Rs. in Million) Particulars Liberty Khaitan Rama Phosphates Chemicals Phosphates Net Sales 4,865 6,444 5,539 EBIDTA PAT EBIDTA Margins (%) PAT Margins (%) P/E (x)^ P/BV (x)^ Debt : Equity (x) EV / EBITDA (x)^ Source : Capitaline Database, ^TTM as on June 212 About the Industry The Indian economy is predominantly agrarian in nature and as a result, the Indian fertilizer industry has good scope in the country as it is one of the vital inputs for enhancing agri produce. However, India has a tremendous task of feeding its fast increasing population. In order to be self sufficient in food grains, heavy reliance will have to be placed on fertilizers. Single Super Phosphate (SSP) Fertilizer industry is the pioneering fertilizer industry in the country as SSP fertilizer is cost effective and provides phosphorous and sulphur at lower cost. Hence, small and marginal farmers prefer to use it because it is easily affordable. Major portions of agricultural land in India are Sulphur deficient, and it adversely affects the crop yield. Single Super Phosphate (SSP) fertilizer contains Sulphur and Calcium besides Phosphorus so it is an ideal manure to eliminate sulphur deficiency of soil resulting into increase in yield of pulses, groundnut etc. to a great extent. The role of SSP in improving soil health of the country is recognized and is proved by the recent policy pronouncement of the Union Government. Finance Act, 212 has given stimulus to the fertilizer industry through reduction of basic customs duty on some water soluble fertilizers and liquid fertilizers, other than urea, from 7.5 percent to 5. percent and from 5. percent to 2.5 percent. Also the imports of equipment for fertilizer projects are being fully exempted from basic customs duty of 5. percent for 3 years. One can thus expect SSP to have a good future in the years to come. (source: Company Annual Report) Outlook Agriculture and allied sectors are considered to be the mainstay of the Indian economy. They are an important source of raw materials and demand for many industrial products, particularly for Fertilizers, Pesticides, Agricultural implements and a variety of consumer goods. They contribute nearly 22% of Gross Domestic Product (GDP) of India. With ever increasing population and limited land available for agriculture, it is imperative to increase productivity. Fertilisers serve this purpose well and hence the demand going forward can be expected to remain satisfactory for LPL given that it has been a fair performer in the industry. However, the industry is subject to regulatory changes and the same needs to be monitored as any change in policy on the fertilizer subsidy (Nurtrient Based Subsidy NBS) front by the Government could impact the company s performance. Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra.com from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra.com in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and LKW s Gurukshetra.com shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. An Initiative of the BSE Investors Protection Fund 4

5 Financial Graphs 6, 5, Net Income from Operations Rs.in Millions 4, 3, 2, 1, 4,865 3,64 2,33 FY 21 FY 211 FY 212 EBITDA & EBITDA Margins Rs. in Millions % 92 FY 21 FY 211 FY 212 EBIDTA EBIDTA Margins PAT & PAT Margins Rs. in Millions FY 21 FY 211 FY % PAT PAT Margins An Initiative of the BSE Investors Protection Fund 5

6 Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW), commenced business in 199 and is currently engaged in providing WEALTH ADVISORY, CORPORATE ADVISORY and ECONOMIC & FINANCIAL RESEARCH & CONTENT services. LKW s ECONOMIC & FINANCIAL RESEARCH & CONTENT division currently generates Reports on Economic & Industry Trends, Global & Indian Equity Markets, Fundamental Analysis of IPOs, Companies & Industries, Management Meeting Reports, Balance Sheet & Financial Analysis Reports and an Economic Political and Sentiment Barometer. LKW also conducts Capital Market related Training Programs and has cutting edge expertise in Mutual Fund Analysis and specializes in Grading of Mutual Fund Schemes and IPOs. GURUKSHETRA.com is an online initiative of LKW that focuses on Personal Finance while theipoguru.com is India s Premier Primary Market (IPO) Portal. Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office : B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai consulting@lotusknowlwealth.com Tel : Website : An Initiative of the BSE Investors Protection Fund 6