Savera Industries Ltd

Transcription

1 Q4FY11 Result Update Enhancing investment decisions CRISIL Limited. All Rights Reserved.

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 Steady growth Fundamental Grade Valuation Grade Industry 2/5 (Moderate fundamentals) 5/5 (CMP has strong upside) Hotels, Restaurant & Leisure Savera Industries Ltd s (Savera s) Q4FY11 revenues and earnings were in line with CRISIL Equities expectations. Revenue growth was healthy on the back of higher food & beverage (F&B) and health club income. However, EBITDA margin declined 6% y-o-y (we had already factored this in our estimates) due to higher renovation costs incurred on the Bengaluru property. Consequently, PAT margins dropped 67 bps. We maintain the fundamental grade of 2/5. Q4FY11 result analysis Savera s Q4 revenues grew by 31% y-o-y to Rs 131 mn on the back of higher room rent and strong F&B income. Room rent income grew by 25% y-o-y to Rs 58 mn. The increase in room rent is attributed to increase on occupancy rate (OR). OR increased to 75% in Q4FY11 from 64% in Q4FY1. For FY11, revenues grew by 36.6% to Rs 48.3 mn. EBITDA margin declined by 592 bps y-o-y to Rs 26.7% due to higher expenditure on the Bengaluru property. However, FY11 EBITDA margin expanded by 334 bps y-o-y to 29.1% primarily due to the high-margin F&B business. PAT grew by 21.8% y-o-y to Rs 11 mn due to sales growth. FY11 PAT grew by 57% to Rs 57 mn. Key development Despite an additional 5% service tax levied on hotel rooms, during the budget in February, we believe the impact on Savera will be limited as it operates in the four-star category. Valuations: Current market price has strong upside We continue to value Savera on the EV/adjusted room basis. We have assigned a multiple of Rs 4.5 mn on EV/adjusted room, which translates into a fair value of Rs 73 per share. Based on the current market price, our valuation grade is 5/5. KEY FORECAST (Rs mn) FY9 FY1 FY11# FY12E FY13E Operating income EBITDA Adj Net income EPS-Rs EPS growth (%) (91.7) Dividend yield PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) NM: Not meaningful; CMP: Current Market Price #FY11 numbers based on the abridged financials estimate June 7, 211 Fair Value Rs 73 CMP Rs 39 CFV MATRIX KEY STOCK STATISTICS NIFTY 5517 NSE ticker SAVERA Face value (Rs per share) 1 Shares outstanding (mn) 11.9 Market cap (Rs mn)/(us$ mn) 488 / 11 Enterprise value (Rs mn) /(US$ mn) 665 / week range (Rs) (H/L) 119 / 29 Beta 1.1 Free float (%) 47.8% Avg daily volumes (3-days) 5,515.6 Avg daily value (3-days) (Rs mn).2 SHAREHOLDING PATTERN 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Excellent Fundamentals Fundamental Grade Poor Fundamentals % 1.% Strong Downside Valuation Grade 48.8% 49.8% 47.8% 47.8% 5.3% 5.3% 52.3% 52.3% Strong Upside Jun-1 Promoter FII Others PERFORMANCE VIS-À-VIS MARKET Returns 1-m 3-m 6-m 12-m SAVERA -9% 12% -32% n.a NIFTY -6% 4% -9% 1% ANALYTICAL CONTACT Sudhir Nair (Head) snair@crisil.com Sandeep Panchal sapanchal@crisil.com Bhaskar Bukrediwala bsbukrediwala@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 Raw materials cost Raw materials cost (% of net sales) 12.5% 12.6% 13.9% -6bps -133bps 21.8% 26.% -423bps Employees cost Other expenses EBITDA EBITDA margin 26.7% 27.8% 32.6% -112bps -592bps 29.1% 25.8% 334bps Depreciation EBIT Interest and finance charges Operating PBT Other Income n.m Extraordinary Income/(expense) - - (4) - - (4) -. PBT Tax PAT (39.3) Adj PAT (39.3) Adj PAT margin 8.3% 15.2% 9.% -684bps -67bps 11.2% 7.2% 474bps No of equity shares (mn) Adj EPS (Rs) (4.6) (37.9) Stable growth in revenues EBIDTA and EBITDA margins (Rs mn) % % 15% 11% 1% 6% 3% -2% % 15% 1% 5% % -5% -1% -15% (Rs mn) 4 31% 29% 3% 31% 35 28% 27% 24% % % 3% 25% 2% 15% 1% 5% % Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Net Sales Sales Growth (RHS) EBITDA EBITDA Margin(RHS) Increase in OR......Keeps ARR under pressure 8% 7% 64% 66% 73% 64% 75% (Rs/Day) 4,5 6% 5% 44% 46% 46% 46% 3,5 4% 3% 32% 2,5 2% 1% 1,5 4,254 3,973 3,676 3,388 3,347 3,291 3,198 3,182 3,464 3,56 % 5 Q3FY9 Q4FY9 Q1FY1 Q2FY1 Q3FY1 Q4FY1 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q3FY9 Q4FY9 Q1FY1 Q2FY1 Q3FY1 Q4FY1 Q1FY11 Q2FY11 Q3FY11 Q4FY11 OR ARR CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 2

5 Share price movement Fair value movement since initiation (Rs) , 1, 8, 6, 4, 2, Jun-1 -indexed to 1 Savera NIFTY Total Traded Quantity (RHS) CRISIL Fair Value Savera CRISIL Limited. All Rights Reserved. CRISIL EQUITIES 3

6 VALUATION We continue to value Savera based on an EV/adjusted room basis. We have assigned a multiple of Rs 4.5 mn on EV/adjusted room. Given the inherent value of the property and the strong outlook for the hospitality sector we maintain our fair value of Rs 73. Based on current market price, our valuation grade is 5/5. One-year forward P/E band (Rs) One-year forward EV/EBITDA band (Rs mn) 1,2 1, Jun-1 Jun-1 Savera 5x 8x 11x EV 3x 5x 7x P/E premium/discount to NIFTY P/E movement % -1% -2% -3% -4% -5% -6% -7% -8% (Times) std dev -1 std dev Jun-1 Jun-1 Premium/Discount to NIFTY Median 1yr Fwd PE (x) Median PE CRISIL IER reports released on Savera Industries Ltd Fundamental Valuation CMP Date Nature of report grade Fair value grade (on the date of report) 11- Initiating coverage* 2/5 Rs 73 5/5 Rs Q3FY11 result update 2/5 Rs 73 5/5 Rs 38 7-June-11 Q4FY11 result update 2/5 Rs 73 5/5 Rs 38 * 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 Liabilities EBITDA Equity share capital EBITDA margin 29.5% 26.9% 29.1% 29.2% 29.7% Reserves Depreciation Minorities EBIT Net worth Interest Convertible debt Operating PBT Other debt Other income (8) (3) Total debt Exceptional inc/(exp) - - (4) - - Deferred tax liability (net) PBT Total liabilities Tax provision Assets Minority interest Net fixed assets PAT (Reported) Capital WIP Less: Exceptionals - - (4) - - Total fixed assets Adjusted PAT Investments Current assets Ratios Inventory FY9 FY1 FY11# FY12E FY13E Sundry debtors Growth Loans and advances Operating income (%) (13.3) (11.3) Cash & bank balance EBITDA (%) (25.1) (19.) Marketable securities Adj PAT (%) (91.6) Total current assets Adj EPS (%) (91.6) Total current liabilities Net current assets 17 (7) Profitability Intangibles/Misc. expenditure EBITDA margin (%) Total assets Adj PAT Margin (%) RoE (%) Cash flow RoCE (%) (Rs mn) FY9 FY1 FY11# FY12E FY13E RoIC (%) Pre-tax profit Total tax paid (24) (19) (34) (38) (44) Valuations Depreciation Price-earnings (x) Working capital changes (13) 26 (31) (3) 1 Price-book (x) Net cash from operations EV/EBITDA (x) Cash from investments EV/Sales (x) Capital expenditure 6 (9) (18) (1) (1) Dividend payout ratio (%) Investments and others - (4) Dividend yield (%) Net cash from investments 6 (13) (16) (1) (1) Cash from financing B/S ratios Equity raised/(repaid) Inventory days Debt raised/(repaid) (84) (45) () (54) (54) Creditors days Dividend (incl. tax) (7) (7) (16) (18) (21) Debtor days Others (incl extraordinaries) 1 (6) (62) (1) (1) Working capital days 3 (4) (1) Net cash from financing (81) (58) (18) (73) (76) Gross asset turnover (x) Change in cash position Net asset turnover (x) Closing cash Sales/operating assets (x) Current ratio (x) Quarterly financials Debt-equity (x) (Rs mn) Q4FY1 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Net debt/equity (x) Net Sales Interest coverage C hange (q-o-q) -6% 6% 15% -2% 1% EBITDA Per share C hange (q-o-q) 1% -1% 19% -13% 6% FY9 FY1 FY11# FY12E FY13E EBITDA margin 32.6% 3.2% 31.3% 27.8% 26.7% Adj EPS (Rs) PAT CEPS Adj PAT Book value C hange (q-o-q) 2% -2% 19% -2% -39% Dividend (Rs) Adj PAT margin 9.% 8.3% 15.2% 15.2% 8.3% Actual o/s shares (mn) Adj EPS #FY11 numbers based on the abridged financials 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: