Everest Kanto Cylinder Ltd.

Transcription

1 Industrial Goods CMP Rs. 82 August 16, 2011 BSE Code BSE ID EKC High/Low 1Y (Rs.) 133 / 68 Avg. vol (3m) 98,219 Market Cap (Rs Cr) 879 Net IB Debt (Rs Cr) 286 Enterprise value(rs Cr) 1,166 Shareholding % Mar-11 Jun-11 Promoters MFs/ Fis/ Banks FIIs Public & Others Stock Chart ( Relative to Sensex) Aug Feb Aug-11 EKC Sensex Stock Perfm.(%) 1M 6M 1Yr Absolute (7.9) 2.2 (29.8) Rel. to Sensex (22.4) Financials (Rs.Cr) FY09 FY10 FY11 Revenue y-o-y 62.1% -23.7% 19.1% EBITDA y-o-y 69.2% -76.8% 120.0% PAT EPS (Dil.) y-o-y 29.0% -69.9% 62.4% EBITDA Margin 31.4% 9.5% 17.6% PAT Margin 16.0% 6.3% 9.0% D/E(x) P/E(x) 6.0x 20.0x 12.3x EV/EBITDA(x) 4.3x 18.6x 8.5x ROCE 16.2% 0.5% 6.5% ROE 22.2% 6.7% 9.3% Financial year ends at March 31 Annual Financials are on consolidated basis Qtry Fin 09/10 12/10 03/11 06/11 Revenue PAT EPS Quarterly Financials are on consolidated basis Everest Kanto Cylinder Ltd. 1QFY12 Results Review Everest Kanto Cylinder Ltd (EKC) reported 1QFY12 results with consolidated revenue of Rs crores. During the quarter, volumes grew 29.7% Y-o-Y to 2,43,517 cylinders. Average selling price also improved 18.7% Y-o-Y to Rs. 8,730 per cylinder. Thus, both price and volume contributed to the 54.3% Y- o-y rise in revenue. The company generated most of its revenue from India and UAE (Dubai), which grew 21.9% and 52.9%, respectively over the same period last year. China, USA & Hungary, the company s other major markets, also registered impressive growth. On the cost front, the company made significant progress. Total operating costs, as percentage of revenue, declined significantly from 93.9% in the 1QFY11 to 77.7% in the 1QFY12. This improved its EBITDA margin considerably from 6.1% to 22.3% over the period under comparison. This along with gain on foreign exchange variation and fall in interest expenses helped the company to turn positive. EPS improved to Rs from negative Rs in 1QFY11. Key highlights of the quarter Price and volume supported top-line growth The company displayed a strong performance in 1QFY12. All the markets experienced strong growth. But more importantly, the company made significant progress in China, USA & Hungary, which contributed very little to the company s revenue. This implies that the company was able to expand its reach in these markets during the quarter. Fall in operating cost helped improve EBIDTA margin Apart from registering strong top-line growth, the company made significant progress in controlling costs. All the major components of operating costs like raw material and employee costs declined during the quarter in terms of percentage of revenue. This helped expand EBITDA margin. Net profit margin improved significantly Y-o-Y During the quarter, interest expenses declined 46.1% Y-o-Y to Rs. 1.6 crores. The company also gained on foreign exchange variations. All these along with growth in other income allowed the company to post a net profit in 1QFY12 compared to a net loss in 1QFY11. Quarterly Financial Summary Consolidated Particulars Y-o-Y Q-o-Q 1QFY12 1QFY11 4QFY11 () Gr % Gr % TTM Total Income % -10.6% EBITDA % -4.2% EBITDA Margin % 22.3% 6.1% 20.8% 20.7% EBIT 31.7 (7.4) 34.6 LP -8.5% EBIT Margin % 14.8% -5.3% 14.4% 13.2% Net Profit 29.0 (10.6) 34.0 LP -14.6% Net Profit Margin % 13.5% -7.6% 14.2% 12.9% EPS Source: Company Financials, ICRA Online Research TTM-trailing twelve months Valuations EKC trades at a P/E multiple of 12.3x on its consolidated FY11 EPS of Rs and 8.5x EV/EBITDA multiple based on FY11 EBITDA of Rs. 138 crore.

2 Segment Revenue India and Dubai remained the major contributor to the company s total revenue India UAE (Dubai) China USA & Hungary Source: Company, ICRA Online Research Segment EBIT margin 45% 39.0% EBIT margin improved in India and Dubai, the company s two major markets. EBIT Margin % 35% 25% 15% 5% 24.7% 24.7% 14.5% 5.7% 28.7% 8.8% 30.0% 9.2% -5% -15% -11.4% India UAE (Dubai) Average price per cylinder went up to Rs in 1QFY12 from Rs. 7,353 in 1QFY11. Source: Company, ICRA Online Research Region wise sales volume trend (In numbers) Particulars 1QFY12 1QFY11 % change FY11 FY10 India (Industrial & Cylinder) % CNG Cylinder - Dubai % Jumbo - USA % Cylinders - China % Total % Sales Realisation (Rs/Cylinder) % Source: Company, ICRA Online Research -2-

3 Sales grew 21.9% Y-o- Y in India, while it grew 52.9% Y-o-Y in Dubai during 1QFY12. During 1QFY12, contribution from China, USA & Hungary increased over 1QFY11. India remained the company s major revenue generator India with revenue of Rs crores in 1QFY12 remained the company s highest revenue generator. India along with Dubai, the company s other major market, reported aggregate revenue of Rs crores in 1QFY12 compared to Rs crores in 1QFY11. Revenue increased 21.9% Y-o-Y in the Indian market, while it grew 52.9% Y-o-Y in the Dubai market. The growth in India was primarily driven by volume but in Dubai it was primarily driven by price. For instance, volume of CNG cylinders in India increased 41% Y-o-Y, while selling price in Dubai, increased 46.2% Y-o-Y during the quarter. Despite strong double digit growth, revenue contribution from India and Dubai declined Y-o-Y during the quarter. However, the fall in revenue contribution was more in the Indian market compared to the Dubai market. China, USA & Hungary continued to make strong progress Other markets that contribute to the company s top-line growth include China, USA & Hungary. China, which contributed about 6.5% to the company s net sales, witnessed the highest growth during the quarter. This was followed by USA & Hungary, which together contributed about 16.1% to the company s net sales. Despite strong growth in China, EBIT margin remained under pressure due to intense competition. On the other hand, USA & Hungary witnessed improvement in EBIT margin primarily due to 10.6% rise in product selling price. -3-

4 Revenue increased significantly on a Y-o-Y basis Volume and price helped drive top-line growth during the quarter Total Income Source: Company Financials, ICRA Online Research EBITDA margin reflects a rising trend Strong top-line growth along with fall in operating expenses helped expand EBITDA margin during the quarter % % % % 22.3% % 15% 5% -5% -15% EBDITA Margin % EBITDA EBITDA margin (%) -25% Source: Company Financials, ICRA Online Research Net profit margin increased Y-o-Y Net profit margin moved from negative 7.6% in 1QFY11 to positive 13.5% in 1QFY12 due to fall in interest expenses and rise in other income % 11.7% 14.2% 13.5% % % 10% 0% -10% -20% Net Profit Margin % Net Profit Net Profit Margin % Source: Company Financials, ICRA Online Research -4-

5 Summary Financials (consolidated) Profit & Loss Statement Particulars (Rs Crore) 1QFY12 1QFY11 4QFY11 Y-o-Y Gr% Q-o-Q Gr% TTM FY11 Net Sales % -10.4% Other Op. Revenue % -30.2% Total Income % -10.6% Cost of Good Sold (100.6) (83.6) (128.9) 20.4% -21.9% (436.9) (419.9) Gross Profit % 2.5% Employee Costs (21.5) (18.2) (23.1) 18.4% -6.7% (86.1) (82.8) Other Expenditure (44.4) (28.7) (38.0) 54.8% 16.9% (157.4) (141.7) EBITDA % -4.2% Depreciation (16.1) (15.9) (15.3) 1.3% 5.5% (64.1) (63.9) EBIT 31.7 (7.4) 34.6 LP -8.5% Interest (1.6) (3.0) (1.4) -46.1% 15.5% (6.8) (8.2) Other Income % -28.9% Forex Gain/Loss (net) 1.8 (11.2) 1.9 NP PBT 33.7 (21.1) 37.7 LP -10.6% Income Tax (2.3) 10.1 (4.9) PN (15.9) (4.3) Profit after Tax 31.4 (11.0) 32.8 LP -4.2% Extra Ordinary Items (2.4) (2.4) 0.0 Min. Interest & Others (0.2) 0.2 Net Profit 29.0 (10.6) 34.0 LP -14.6% Rep. Basic EPS Rep. Diluted EPS Equity Capital Face value LP: loss to profit PN: positive to negative NP: negative to positive Ratio Analysis Particulars (Rs Crore) 1QFY12 1QFY11 4QFY11 Y-o-Y (bps) Q-o-Q (bps) FY10 FY11 Margins Gross Margin (%) 53.1% 39.8% 46.3% 1, % 46.3% EBITDA Margin (%) 22.3% 6.1% 20.8% 1, % 17.6% EBIT Margin (%) 14.8% -5.3% 14.4% 2, % 9.5% Net Profit Margin (%) 13.5% -7.6% 14.2% 2,118 (64) 12.9% 9.0% Valuation EPS BVPS P/BV (x) P/E (x) EV/ EBITDA (x) EV/ Sales (x)

6 Contact Details: Rahul Jain ICRA Online Limited, Phone: Disclaimer All information contained in this document has been obtained by ICRA Online Limited from sources believed by it 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 ICRA Online Limited 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 ICRA Online Limited 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 holding company and of the subsidiary companies and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued by any entity. Published on behalf of The Stock Exchange Investors' Protection Fund Bombay Stock Exchange Ltd. P J Towers, Dalal Street, Mumbai. Tel: /