Banco Products India Ltd D 2 Rs. 89 Rs. 99/16

Transcription

1 StockReview of TechnoFunda ResearchProduct Portfolio Track Portfolio Track Information Data BSE Code Grade FV (Rs.) CMP 52Weeks H/L D 2 Rs. 89 Rs. 99/16 STOCK DATA Target Price Rs.116 Banco Products India Ltd (BPIL) is a supplier of high quality engine cooling components and engine sealing gaskets to the automotive industry. It supplies radiators, intercoolers and engine gaskets that are designed to meet or even exceed original equipment (OE) engineering specifications. Reuters Code BNCO.BO BPIL is an OE supplier to top few Indian automobile companies which includes Telco, Ashok Leyland, Mahindra Bloomberg Code BNCO@IN & Mahindra, Premier Auto, Hindustan Motors and Maruti Udyog. NSE Symbol BANCOINDIA BPIL caters to the domestic as well as foreign markets. Exports constitutes 35% of its total revenue. The main Mkt.Cap. Rs mn export market of the company are European Countries, Far East, Africa & some parts of America. Shares 75% of the company s revenues are derived from radiators & the rest 30% from Gaskets. BPIL has 20 25% 71.5 mn Outstanding(*) market share in its product segment in India. The major growth driver for the company has been its radiator Avg. Daily 187,336 Shares business, which has been growing at around 30 35%. The company has installed capacity to manufacture 80 mn Volume (6m) gaskets, 4,000 MT CFJS and 882,000 aluminum and copper brass automotive radiators per year. Price Performance (%) Recently BPIL acquired 100% shares of a Netherland based company NRF, which is a leading manufacturer of 1M 3M 6M radiators, for a sum of 17.7 mn. BPIL has been a supplier to NRF for more than 15 years and is familiar with its market, products & management. 200 Days EMA Rs.64 During 9MFY10, BPIL s standalone net sales increased by 27% YoY to Rs.2926 mn. Its APAT stood at Rs.566 mn, * fully diluted dequity registering a growth of 93.3% YoY while its EPS for 9 months stood at Rs Going ahead, we expect its FY10, SHARE HOLDING (%) FY11 &FY12 consolidated revenues to grow by 35%, 126% & 10% respectively whereas, APAT to grow by 76%, 22.5% & 16% respectively. Our FY11 & FY12 estimates incorporates NRF s Financials. Promoters The company has a very strong Balance Sheet with zero Net Debt. We believe that BPIL will be able to leverage FI / MF 0.36 its design and manufacturing skills with NRF s market presence and its niche product range in marine coolers Body Corporates 2.59 into shipbuilding industry in India & South East Asia. Public & Others At the CMP of Rs.89, the stock trades at an attractive valuation of 6.2x its FY12 earnings and Price/Book Value of 1.3x FY12E, with high FY12 ROE of +20%. Y/E Mar. (Cons.) REVENUE (Rs.mn) APAT (Rs.mn) AEPS (Rs.) AEPS (% Chg.) FY (4.9) FY10E FY11E FY12E Bhavika Shah bhavika.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. P/E (x) ROCE (%) ROE (%) P/BV (x) 1

2 Product Details: BPIL offers a complete line of radiators, intercoolers, oil coolers and all types of engine gaskets. Gaskets: This division provides complete sealing solutions for every conceivable application like Automotive, Industrial and Agriculture. BPIL manufacture gaskets using environment friendly non asbestos fibres as well as using asbestos fibres. BPIL manufactures and exports a whole range of automotive gaskets for diesel engines, agriculture diesel engines, cylinder head gaskets including asbestos steel composite cylinder head gasket, copper cylinder head gasket, edge moulded cylinder head gasket, gasket head kit, steel composite cylinder head gasket, graphite composite cylinder head gasket and multi layered steel cylinder head gasket. It has an installed capacity to manufacture 80 mn gaskets per year. BPIL has a technical collaboration with Japan Metal Gaskets Company, Japan which also holds 4.5% equity stake in BPIL. Radiators: This division provides radiators ranging from high performance radiator, auto radiator, car radiator, industrial radiators, intercoolers ranging from air to water intercooler, air to air intercooler, custom designed inter cooler, cabin heater and replacement cores for various Automotive, Industrial and Agricultural applications. BPIL also manufactures oil coolers in both brazed Aluminum and Copper Brass designs for automotive and off road applications. BPIL is a supplier and exporter of radiators and charge air coolers to all major OEMS within India and some leading companies in Europe. BPIL s list of Customers include Tata Motors, Ashok Leyland, Mahindra & Mahindra, Bharat Earth Movers Limited, Caterpillar, John Deere, Tafe, JCB, Massey Ferguson, Indian Railways, Boss Manufacturing Limited and Case New Holland. They also cater to radiator replacement and auto & car part radiator markets with extensive range of radiators covering popular German, French and Japanese cars. It has an installed capacity to manufacture 882,000 aluminum and copper brass automotive radiators per year CFJS: High quality compressed jointing sheets are made from environment friendly non asbestos fibres. They manufacture compressed jointing sheets for various sealing media like steam, oil, acids, alkalies and alcohols, etc. BPIL covers a complete range of automotive and industrial jointing applications in thickness ranging from 0.25 mm to 5.00 mm sheets. It has an installed capacity to manufacture 4,000 MT CFJS per year. Radiators Gaskets CFJS(Compressed Fibre Jointing Sheet 2

3 Financial Performance : BPIL has been performing exceedingly well over the past 5 years with its Revenues & APAT growing at a CAGR 20% & 30% resp. Its EBIDTA margins have shown a remarkable increase from 13% in FY07 to 18.2% in FY09. During Q3FY10, BPIL s net sales increased by 68.9% YoY to Rs.1072 mn. Its EBIDTA increased by 82.6% to Rs.770 mn, while the EBIDTA margins increased by 800 bps to 26.3%. Its APAT stood at Rs.566 mn, registering a growth of 93.3% YoY while its EPS for 9 months stood at Rs During 9MFY10, BPIL s net sales increased by 26.8% YoY to Rs.2926 mn. Its EBIDTA increased by 82.6% to Rs.770 mn, while the EBIDTA margins increased by 800 bps to 26.3%. Its APAT stood at Rs.566 mn, registering a growth of 93.3% YoY while its EPS for 9 months stood at Rs The reason for increase in margins is due to introduction of new products, improvement in manufacturing processes, improvement in scrap ratios and various other factors put together. Details on Acquisition : BPIL acquired 100% stake in NRF for a sum of 17.7 mn during Feb NRF is a leading European manufacturer and distributor of Automotive, Industrial and Marine heat exchangers with its head office and main manufacturing facility in Netherland and other manufacturing facilities in France, England and Spain. It has sales and distribution facilities in Belgium, Germany, Austria, Italy, Poland and Switzerland. NRF sells copper brass & aluminum radiators, marine heat exchangers, oil coolers, air coolers & automotive air conditioning products. It has Europe wide distribution for all its range of products. It is well known for its quality product, wide availability as well as rapid product delivery. For the financial year ended November, 2009, NRF had sales of 64 mn with EBIDTA of 4.3 mn and Profit after Tax of 1.9 mn. Its Net current assets were 24.8 mn, cash and bank balances in hand was 3.7 mn and Net shareholders funds were 32.3 mn. Key Risk : Foreign currency volatility may impact the financials of the company given that 35% of its Revenues are from Exports (most of which are Euro denominated) while its Raw materials imports are dollar denominated. Quarterly & 9MFY10 St. (Standalone) (Rs.mn) Y/E March Q3FY09 Q3FY10 9MFY09 9MFY10 Revenue RM Consumption Staff costs Other Expenditure Total Expenditure EBITDA Interest EBDT Depreciation PBT excl. OI Other Income PBT incl OI Tax APAT Et Extraordinary Exp./ /(Inc) RPAT

4 Balance Sheet Consolidated* (Rs.mn) P & L Consolidated* (Rs.mn) As on 31 st Mar. FY09 FY10E FY11E FY12E Share Capital Reserves 1, , , ,859.3 Shareholders Funds 1, , , ,002.3 Secured Loans Unsecured Loans Total Loans Total Liabilities 1, , , ,406.3 Fixed Assets , ,286.2 Investments , Sundry Debtors , ,167.2 Y/E March FY09 FY10E FY11E FY12E Net Sales RM Consumption Staff Cost Research & Dev Exps Manufacturing Exps Selling & Dist. Exps Admin & Other Expenses Total Expenditure EBITDA Interest Cash and Bank EBTDA Loans and Advances Depreciation Inventories , ,852.9 PBT Excl. Other Income Current Assets 1, , , ,641.3 Other Income Current Liabilities PBT Incl. Other Income Provisions Tax Current Liabilities , ,413.3 Net Profit Net Current Assets 1, , , ,228.0 Extra ord./adjusted Items Deferred Tax Assets (Net) (86.3) (45.4) (7.4) 37.4 Adjusted Net Profit Total Assets 1, , , ,406.3 AEPS (Rs) Source: Company, Sushil Finance Research Estimates * Financial estimates for NRF have been consolidated for our FY11 & FY12 estimates. 4

5 Please Note: The objective of this report is to provide fundamental information on stocks covered under our product Portfolio Track. These stocks 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. 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. Disclaimer: This report is prepared for the exclusive use of Sushil Group clients only and should not be reproduced, re circulated, published in any media, website or otherwise, in any form or manner, in part or as a whole, without the express consent in writing of Sushil Financial Services Private Limited. Any unauthorized use, disclosure or public dissemination of information contained herein is prohibited. This report is to be used only by the original recipient to whom it is sent. This 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. This report has been prepared for information purposes only and is not a solicitation, or an offer, to buy or sell any security. It does not purport to be a complete description of the securities, markets or developments referred to in the material. The information, on which the report is based, has been obtained from sources, which we believe to be reliable, but we have not independently verified such information and we do not guarantee that it is accurate or complete. All expressions of opinion are subject to change without notice. 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. 5