BUY CMP 974.25 Target Price 1100.00 NILKAMAL LIMITED Result Update(PARENT BASIS): Q1 FY 16 OCTOBER 12 th 2015 ISIN: INE310A01015 Index Details Stock Data Sector Plastic Products BSE Code 523385 Face Value 10.00 52wk. High / Low (Rs.) 1179.00/315.75 Volume (2wk. Avg.) 11000 Market Cap (Rs. in mn.) 14538.25 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales 17866.59 19831.91 21616.79 EBITDA 1438.14 1986.36 2220.00 Net Profit 424.61 818.99 973.18 EPS 28.45 54.88 65.22 P/E 34.24 17.75 14.94 Shareholding Pattern (%) As on June-15 As on March-15 PROMOTER 64.13 64.13 FIIs 2.79 2.25 DIIs 2.75 4.23 OTHERS 30.33 29.39 1 Year Comparative Graph NILKAMAL LIMITED BSE SENSEX SYNOPSIS Nilkamal Ltd is the world's largest manufacturer of moulded furniture of product mix right from bins, crates, pallets, Material Handling Equipment. The company s revenue for the June quarter rose by 9.16% to Rs. 4575.52 mn from Rs. 4191.60 mn, when compared with the prior year period. During Q1 FY16, Net profit increased by 362.79% to Rs. 253.01 mn from Rs. 54.67 mn in Q1 FY15. EBIDTA has increased by 83.50% YOY from Rs. 543.37 mn to Rs. 296.12 mn in current June quarter. EPS of the company stood at Rs. 16.95 a share during the quarter as against Rs. 3.66 over previous year period. During Q1 FY16, Plastic segment grew up by 9% at Rs. 4015.31 mn against Rs. 3682.63 mn in Q1 FY15. The Company s retail business under the brand name @home registered a healthy growth of 21% on y-o-y basis. Nilkamal s Indo-German joint venture Nilkamal Bito Storage Systems Private Limited grew by 119% on y-o-y basis. Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 33% over 2014 to 2017E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Nilkamal Ltd 974.25 14538.25 28.45 34.24 2.95 45.00 Finolex Industries Ltd 265.00 32885.30 5.47 48.45 4.18 20.00 Kkalpana Industries (India) Ltd 23.15 2177.80 0.64 36.17 0.95 0.00 Responsive Industries Ltd 81.05 21633.30 0.91 89.07 3.97 10.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q1 FY16, Nilkamal Ltd is the world's largest manufacturer of moulded furniture of product mix right from bins, crates, pallets, Material Handling Equipment, reported its financial results for the quarter ended 30 th June, 2015. Months June-15 June-14 % Change Net Sales 4575.52 4191.60 9.16 PAT 253.01 54.67 362.79 EPS 16.95 3.66 362.79 EBITDA 543.37 296.12 83.50 The company s revenue for the quarter rose by 9.16% to Rs. 4575.52 million from Rs. 4191.60 million, when compared with the prior year period. Net profit increased by 362.79% to Rs. 253.01 million from Rs. 54.67 million in Q1 FY15. EBIDTA has increased by 83.50% YOY from Rs. 296.12 million to Rs. 543.37 million in current June quarter. Reported earnings per share of the company stood at Rs. 16.95 a share during the quarter as against Rs. 3.66 over previous year period. Break up of Expenditure Particulars Q1 FY16 Q1 FY15 Cost of Materials consumed 1932.58 1809.90 Employees Benefit Expenses 313.19 275.24 Depreciation 122.81 140.51 Other Expenses 1051.84 913.30 Purchase of Traded Goods 1047.18 936.51
Segment Revenue Latest Updates Nilkamal s Indo-German joint venture Nilkamal Bito Storage Systems Private Limited grew by 119% on y-o-y basis. The Company s retail business under the brand name @home registered a healthy growth of 21% on y-o-y basis, recording net sales of Rs. 504.77 mn for Q1 FY16 against Rs. 417.04 mn for Q1 FY15. COMPANY PROFILE Nilkamal Ltd is the world's largest manufacturer of moulded furniture and India's leading manufacturer of Material Handling Systems. Company is also a pioneer in the home retailing segment making a foray in this field with the home chain of complete home solution stores dotting in the Indian map. Company, positioned as a Home Maker store, is a perfect one-stop solution store for home planning, with finest quality furniture, soft furnishing, home accessories and a plethora of a whole lot of Services to enhance your indoor and outdoor spaces. The design of a company is contemporary yet practical, mirroring Indian taste & finesse. The comprehensive product mix right from bins, crates, pallets, Material Handling Equipment ranging from Pallet Trucks to Stackers, Forklifts, shelving and racking plus all equipment required for the logistics industry which is growing at a rapid pace in India. The company s quality is widely accepted internationally and had an office in Ajman, UAE to cater to the Middle Eastern Markets. It also exports to most major markets in Europe and Americas which are known for being sticklers for quality. It has consistently won prestigious export awards and is now an Export House. The Visual Merchandising at every store is done in minute detail to suit the Indian taste. The Company has advanced machinery in Injection Moulding, Rotational Moulding, Vaccum Forming, Polyurethane Injection (of insulation) and capabilities for SMC and Blow Moulding.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, 2014-2017E FY14A FY15A FY16E FY17E I SOURCES OF FUNDS A) Shareholder's Funds a) Share Capital 149.23 149.23 149.23 149.23 b) Reserves and Surplus 4478.25 4775.13 5594.11 6433.23 Sub-Total Net worth 4627.48 4924.36 5743.34 6582.46 B) Non Current Liabilities a) Long term borrowing 928.20 439.42 360.32 302.67 b) Deferred Tax Liabilities (Net) 243.05 157.78 135.69 122.12 c) Other Long Term Liabilities 332.69 370.74 404.11 436.44 d) Long term Provisions 67.97 69.60 71.69 73.84 Sub-Total Non Current liabilities 1571.91 1037.54 971.81 935.07 C) Current Liabilities a) Short term borrowings 1759.92 1252.39 1077.06 969.35 b) Trade payables 941.57 953.24 1010.43 1038.71 c) Other Current liabilities 840.51 808.21 848.62 940.27 d) Short term Provisions 221.28 229.05 245.08 259.79 Sub-Total Current Liabilities 3763.28 3242.88 3181.19 3208.11 TOTAL LIABILITIES (A + B + C) 9962.66 9204.77 9896.34 10725.64 II ASSETS D) Non-Current Assets Fixed Assets i. Tangible assets 3285.64 2816.63 2985.63 3224.48 ii. Intangible Assets 40.16 20.13 17.51 18.56 iii. Capital work-in-progress 21.55 13.61 15.52 17.38 a) Sub-Total Fixed Assets 3347.35 2850.37 3018.66 3260.42 b) Non-current investments 255.63 255.63 270.97 284.52 c) Long-term Loans and Advances 564.48 521.67 563.40 597.21 d) Other non-current assets 4.37 10.71 12.00 13.19 Sub-Total Non-Current Assets 4171.83 3638.38 3865.02 4155.33 E) Current Assets a) Inventories 3006.35 2766.69 3012.62 3313.88 b) Trade receivables 2175.51 2315.50 2454.43 2626.24 c) Cash and Bank Balances 180.52 82.03 106.63 125.83 d) Short-terms loans & advances 369.64 359.76 410.13 451.14 e) Other current assets 58.81 42.42 47.51 53.21 Sub-Total Current Assets 5790.83 5566.40 6031.32 6570.30 TOTAL ASSETS (D + E) 9962.66 9204.77 9896.34 10725.64
Annual Profit & Loss Statement for the period of 2014 to 2017E Value(Rs.in.mn) FY14A FY15A FY16E FY17E Description 12m 12m 12m 12m Net Sales 16547.69 17866.59 19831.91 21616.79 Other Income 35.27 62.50 82.49 90.74 Total Income 16582.95 17929.09 19914.41 21707.53 Expenditure -15098.22-16490.95-17928.05-19487.53 Operating Profit 1484.74 1438.14 1986.36 2220.00 Interest -414.25-295.42-230.43-202.78 Gross profit 1070.49 1142.72 1755.93 2017.22 Depreciation -489.22-537.57-585.95-626.96 Profit Before Tax 581.27 605.15 1169.98 1390.26 Tax -180.95-180.54-350.99-417.08 Net Profit 400.32 424.61 818.99 973.18 Equity capital 149.23 149.23 149.23 149.23 Reserves 4478.25 4775.13 5594.11 6433.23 Face value 10.00 10.00 10.00 10.00 EPS 26.83 28.45 54.88 65.22 Quarterly Profit & Loss Statement for the period of 31 st Dec, 2014 to 30 th Sep, 2015E Value(Rs.in.mn) 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15E Description 3m 3m 3m 3m Net sales 4226.42 4902.69 4575.52 4941.56 Other income 28.06 19.99 25.36 26.63 Total Income 4254.48 4922.68 4600.88 4968.19 Expenditure -3915.05-4416.54-4057.51-4472.11 Operating profit 339.43 506.13 543.37 496.08 Interest -85.77-69.47-50.60-44.53 Gross profit 253.66 436.66 492.77 451.55 Depreciation -137.63-121.64-122.81-125.27 Profit Before Tax 116.03 315.03 369.96 326.28 Tax -31.39-98.17-116.95-98.05 Net Profit 84.64 216.86 253.01 228.23 Equity capital 149.23 149.23 149.23 149.23 Face value 10.00 10.00 10.00 10.00 EPS 5.67 14.53 16.95 15.29
Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) 26.83 28.45 54.88 65.22 EBITDA Margin (%) 8.97 8.05 10.02 10.27 PBT Margin (%) 3.51 3.39 5.90 6.43 PAT Margin (%) 2.42 2.38 4.13 4.50 P/E Ratio (x) 36.32 34.24 17.75 14.94 ROE (%) 8.65 8.62 14.26 14.78 ROCE (%) 26.98 29.86 35.82 36.25 Debt Equity Ratio 0.58 0.34 0.25 0.19 EV/EBITDA (x) 11.48 11.23 7.99 7.07 Book Value (Rs.) 310.10 329.99 384.88 441.11 P/BV 3.14 2.95 2.53 2.21 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs.974.25, the stock P/E ratio is at 17.75 x FY16E and 14.94 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 54.88 and Rs. 65.22 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 33% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 7.99 x for FY16E and 7.07 x for FY17E. Price to Book Value of the stock is expected to be at 2.53 x and 2.21 x for FY16E and FY17E respectively. We recommend BUY in this particular scrip with a target price of Rs. 1100.00 for Medium to Long term investment.
INDUSTRY OVERVIEW The Indian plastics industry made a promising beginning in 1957 with the production of polystyrene. Thereafter, significant progress has been made, and the industry has grown and diversified rapidly. The industry spans the country and hosts more than 2,000 exporters. It employs about 4 million people and comprises more than 30,000 processing units, 85-90 per cent of which are small and medium-sized enterprises. Steady Growth in Exports India is one of the most promising exporters of plastics among developing countries. The plastics industry produces and exports a wide range of raw materials, plastic-moulded extruded goods, polyester films, laminates, moulded/soft luggage items, writing instruments, plastic woven sacks and bags, polyvinyl chloride (PVC), leather cloth and sheeting, packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/medical surgical ware, tarpaulins, laminates, fishnets, travel ware, and others. The Indian plastics industry has started manufacturing specific items to meet customer requirements. Design, style, and pattern are set based on the requirements of customers in export markets. The Indian plastics industry offers excellent potential in terms of capacity, infrastructure and cheap labour availability. It is supported by a large number of polymer producers, and plastic process machinery and mould manufacturers in the country. Among the industry s major strengths is the availability of raw materials in the country. Thus, plastic processors do not have to depend on imports. These raw materials, including polypropylene, high-density polyethylene, lowdensity polyethylene and PVC, are manufactured domestically. Outlook The company is undergoing a transformative program focusing on the enhancement of the strategic and operational efficiencies of all its businesses. This will enable the company to be on an accelerated growth path with improved efficiency and profitability. Disclaimer: This document is prepared by our research analysts and it 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 we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its 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. Firstcall Research and/ or its affiliates and/or employees will not be liable for the recipients investment decision based on this document.
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