ESS DEE ALUMINIUM LTD

Size: px

Start display at page:

Download "ESS DEE ALUMINIUM LTD"

Clarissa Poole
5 years ago
Views:

ESS DEE ALUMINIUM LTD Result Update: Q3 FY 11 C.M.P : Rs.480.00 Target Price : Rs. 547.00 Date :27 th April 2011 BUY Stock Data: Sector: Face Value Rs. Aluminium Rs.10.00 52 wk. High/Low (Rs.) 534.

04 Share Holding Pattern 1 Year Comparative Graph ESS DEE Aluminium Ltd BSE SENSEX SYNOPSIS ESS DEE (ESS DEE ALUMINIUM LTD) and India Foils Ltd.

1 ESS DEE ALUMINIUM LTD Result Update: Q3 FY 11 C.M.P : Rs Target Price : Rs Date :27 th April 2011 BUY Stock Data: Sector: Face Value Rs. Aluminium Rs wk. High/Low (Rs.) / Volume (2 wk. Avg.) BSE Code Market Cap (Rs.In mn) Share Holding Pattern 1 Year Comparative Graph ESS DEE Aluminium Ltd BSE SENSEX SYNOPSIS ESS DEE (ESS DEE ALUMINIUM LTD) and India Foils Ltd. (IFL) combine is a leading provider of packaging solutions - with core competency in aluminium packaging - for the Indian pharmaceutical and Food & FMCG industry. ESS DEE was the first in India to manufacture dedicated high-end Pharma packaging products like cold form blister and child-resistant-blister packaging. ESS DEE also established presence in the prophylactics segment and have been entrusted with the task of providing specialized aluminium foil based laminates for large contraceptive brands. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 22% and 182% over 2009 to 2012E respectively. During the quarter, the company has reported Net Profit increased to Rs million from Rs million in previous year same quarter. Years Net sales EBITDA Net Profit EPS P/E FY FY 11E FY 12E

2 Peer Group Comparison Name of the company CMP(Rs.) Market Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%) Ess Dee Alum Hindalco Inds Parekh Alum Hind Aluminium Investment Highlights Q3 FY11 Results Update ESS DEE Aluminium Ltd disclosed results for the quarter ended December Net sales for the quarter moved up 19% to Rs million as compared to Rs million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs million from Rs million in previous year same quarter. The Basic EPS of the company stood at Rs for the quarter ended December Quarterly Results - Consolidate (Rs in mn) As At Dec-10 Dec-09 %change Net sales Net Profit Basic EPS

3 Basic EPS of the company stood at Rs

4 Break up of Expenditure Expenditure for the quarter stood at Rs mn, which is around 21% higher than the corresponding period of the previous year. Raw material cost of the company for the quarter accounts for 64% of the sales of the company and stood at Rs mn from Rs mn of the corresponding period of the previous year. Employees cost decreased 5%YoY to Rs.68.22mn from Rs.71.76mn and accounts for 4% of the revenue of the company for the quarter. OPM and NPM for the quarter stood at 31% and 20% respectively from 31% and 20% respectively of the same period of the last year. 4

5 Company Profile Ess Dee Aluminium (EDAL) is engaged in manufacturing of aluminium foil and poly vinyl chloride (PVC) based products. In the year 2004 the company set up aluminium foil manufacturing in Daman. Currently the EDAL owns 8 state of the art manufacturing plant spread across India. Ess Dee is a leading supplier of primary packaging materials. EDAL has clientele includes pharmaceutical companies and FMCG majors namely Ajanta Pharma, Cadila Pharmaceuticals, Dr. Reddy's Laboratories, Pidilite Industries, Reckitt Benckiser, Wockhardt, Kalindi Medicure, Hindustan Latex, Indico Remedies, Zydus Cadila, Ranbaxy Laboratories are amongst others The company also exports to customers located in Latin America, Africa, Middle East and South East Asia. Products Ess Dee manufactures a range of aluminium foil-based and poly vinyl chloride based products used for various types of packaging Aluminium Strip Pack Foil This is a soft aluminium foil used to protect the packaged material for its prescribed shelf life. Aluminium Blister Pack Foil This is a hard aluminium foil coated with heat seal lacquer used for protecting drugs till the prescribed shelf life. PVC Film This type of products are used for packaging of capsules and tablets biscuits, cakes and food trays. It has properties like thermoforming, shape retention, barrier and sealing. 5

6 PVDC Coated PVC Film this product has basic feature of PVC film but is used for high moisture and oxygen sensitive products like vitamins and capsules. Strengths: State of Art manufacturing and R&D facility. Strategic plant location facilitating PAN India presence. Market leader in the organized segment. Derisked business with diverse and innovative products catering to different segments. Reputed client base. Opportunities: Strong growth opportunities in china and other world markets. The Indian and global markets are bullish and offers significant opportunities for capital infusion to fund capex need. 6

7 Financial Results 12 Months Ended Profit & Loss Account (Consolidate) Value(Rs.in million) FY09A FY10A FY11E FY12E 12m 12m 12m 12m Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross Profit Depreciation Profit before Tax Tax Profit after Tax Minority Interest Net Profit Equity Capital Reserves Face Value(Rs.) Total No. of Shares EPS *A=Actual, *E=Estimated 7

8 Quarterly Ended Profit & Loss Account (Consolidate) Value(Rs.in million) 30-Jun Sep Dec Mar-11 3m(A) 3m(A) 3m(A) 3m(E) Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross Profit Depreciation Profit before Tax Tax Profit after Tax Minority Interest Net Profit Equity Capital Face Value(Rs.) EPS *A=Actual, *E=Estimated 8

9 Key Ratio Particulars FY09 FY10 FY11E FY12E EPS (Rs.) EBITDA Margin (%) 2.56% 29.44% 32.09% 31.68% PAT Margin (%) -8.81% 17.34% 20.93% 20.85% P/E Ratio (x) ROE (%) % 24.25% 25.95% 22.92% ROCE (%) 0.29% 27.21% 28.17% 25.69% EV/EBITDA (x) Debt-Equity Ratio Book Value (Rs.) P/BV Charts: 9

10 10

11 11

12 Outlook and Conclusion At the current market price of Rs , the stock is trading at x FY11E and 9.00 x FY12E respectively. Price to Book Value of the stock is expected to be at 2.68 x and 2.07 x respectively for FY11E and FY12E. Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs and Rs respectively. ESS DEE was the first in India to manufacture dedicated high-end Pharma packaging products like cold form blister and child-resistant-blister packaging. ESS DEE also established presence in the prophylactics segment and have been entrusted with the task of providing specialized aluminium foil based laminates for large contraceptive brands. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 22% and 182% over 2009 to 2012E respectively. During the quarter, the company has reported Net Profit increased to Rs million from Rs million in previous year same quarter. 12

13 On the basis of EV/EBITDA, the stock trades at 6.74 x for FY11E and 5.94 x for FY12E. We expect that the company will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. Industry Overview The most commercially mined aluminium ore is bauxite, as it has the highest content of the base metal. The primary aluminium production process consists of three stages. First is mining of bauxite, followed by refining of bauxite to alumina and finally smelting of alumina to aluminium. Production of 1 tonne of aluminium requires 2 tonnes of alumina while production of 1 tonne of alumina requires 2 to 3 tonnes of bauxite. The aluminium production process can be categorized into upstream and downstream activities. The upstream process involves mining and refining while the downstream process involves smelting and casting & fabricating. Downstream-fabricated products consist of rods, sheets, extrusions and foils. Indian manufacturers are the lowest cost producers of the base metal due to access to captive power, cheap labour and proximity to abundant supply of raw material. Among the different downstream activities, Aluminium Foil Packaging is among one of the fastest growing sector. Demand for aluminium foil packaging sector is characterized as a derived demand, which means the demand for this sector is derived from the demand of other sector. For Aluminium packaging industry, the demand is derived from sector likes Pharmaceuticals, Foods, Fast Moving Consumer Goods (FMCG). Most of the industries create wealth but the packing industry plays a unique role by way of both creation of wealth through a wide range of manufacturing activities and also by way of preserving wealth or value created. It serves the economy by helping preservation of the quality and increasing the life of the products ranging from milk and biscuits,to drugs and medicines, processed and semi-processed foods, fruits and 13

14 vegetables, edible oils, besides domestic appliances and industrial machinery and other need. Pharmaceutical packaging occupies a considerable portion of the overall aluminium packaging market in India and is growing steadily with the same pace of the industry. Pharmaceutical packaging consists of various types of glass, pet bottles, strip and blister packs, injectibles, ampoules, bulk packs, etc. Upward trends in medication consumption clubbed with adoption of stricter regulations and standards governing which boost global growth opportunities for packaging products. Pharmaceutical and Food packaging requirements focused exclusively on preserving the quality of enclosed products. Initially, Packaging was merely a medium to carry a product but discovery of aluminium foil in the flexible form along with the properties like tasteless, odorless and opaque has further differentiate it from other substitute as a potential packaging material. The aluminium foil packaging industry has registered a robust growth rate over the past years and is expected to increase at a higher rate. The Indian aluminium industry registered a growth of around 9% in FY09. Strong growth in industrial, infrastructure, automobile, transportation and power sectors during the first half of the fiscal were the key drivers for the demand. However, realizations for the fiscal fell significantly on account of fall in LME prices due to the global credit crisis, thus causing a dent in margins. On the other hand, the steep depreciation of Indian rupee against the US dollar impacted the industry positively. The total aluminium production in the country stood at around 1.35 m tonnes in FY09. 14

15 Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Firstcall India Equity Research: info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods D. Ashakirankumar Automobile A. Rajesh Babu FMCG H.Lavanya Oil & Gas T.Joshna Diversified Dheeraj Bhatia Diversified Manoj kotian Diversified Nimesh Gada Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO s, QIP s, F.P.O s,takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and 15

THERMAX LTD. Result Update: Q2 FY 12. C.M.P : Rs Target Price : Rs Date : 03 rd Nov 2011 BUY

THERMAX LTD. Result Update: Q2 FY 12. C.M.P : Rs Target Price : Rs Date : 03 rd Nov 2011 BUY THERMAX LTD Result Update: Q2 FY 12 C.M.P : Rs.492.00 Target Price : Rs.556.00 Date : 03 rd Nov 2011 BUY Stock Data: Sector: Capital Goods Face Value Rs. Rs.2.00 52 wk. High/Low (Rs.) 926.90/407.05 Volume