Plastic Products October 30, 2012 *CMP Rs. 24 BSE Code 517437 BSE ID DUTRON High/Low 1Y (Rs.) 28.3/20.2 Average Volume (3M) 17345 Market Cap (Rs. Cr.) 14 Shareholding % Jun-12 Sept-12 Promoters 62.42 62.42 DIIs # - - FIIs # - - Public & Others 37.58 37.58 Stock Chart ( Relative to Sensex) 155 130 105 80 20-Oct-11 20-Apr-12 20-Oct-12 DUTRON Sensex Stock Performance (%) 1M 6M 1Yr Dutron 1.1 2.1 11.6 Sensex 0.2 8.2 10.0 Financials FY10 FY11 FY12 Revenue 53.3 68.7 61.7 Y-o-Y 24.0% 28.9% -10.2% EBITDA 3.8 3.7 3.9 Y-o-Y 39.4% -2.5% 3.1% Net Profit 1.7 1.4 1.0 Y-o-Y 62.5% -17.0% -27.4% EPS (Dil.) 2.8 2.3 1.7 EBITDA Margin 7.2% 5.4% 6.3% Net Profit Margin 3.1% 2.0% 1.6% P/E(x) 8.6x 10.4x 14.3x Financial year ends at March 31 on consolidated basis. All figures in Rs. crore except for per share data # FIIs- Foreign Institutional Investors Dutron Polymers Limited Company Overview Dutron is a pioneer of PVC hose pipes in India. Beginning as a modest plastic pipe manufacturer in 1962, Dutron Group went on to procure world specialist Kanaflex PVC hose pipe manufacturing know-how. Later on, during 1980s, Dutron started manufacturing PVC Braided Hoses, Flat Delivery Hoses, Corrugated pipes and plastic sheets. Today, Dutron is one of the largest manufacturers of PVC hoses and plastic pipe systems in India and offers plastic products for all types of piping applications. Dutron s products are manufactured using world class technologies from Totaku Industries, Inc. Osaka, Japan. Dutron Group s manufacturing plants are located at three places in Gujarat: Vatva in Ahmedabad, Bharuch and a state-of-the-art plant at Kheda. Company Fundamentals Dip in Sales turnover Dutron Polymers has reported a total revenue of Rs. 61.7 crore in FY12 against Rs. 69 crore in FY11. The dip in revenue growth is mainly attributed to the global economic slowdown, which had an impact on the demand for industrial products across the globe. The Y-o-Y growth has been negative in FY12 and stood at 10.2% against the previous figure of 29%. Margin Pressure Operating profits remained almost same with negligible increment for the year under review. However, net profit margins have decreased to 1.6% from 2.0% because of marginal increase in finance and depreciation costs in FY12. Debt Equity Ratio The debt equity ratio stood at 0.6 times, which is relatively low and the interest coverage ratio stood at 2.3 times for FY12. Key Strengths - Vast experience in the plastic industry - Has registered brand name in the local and international market - Advanced technology and latest products in plastic segment - Variety in product line - Foreign exchange earner # DIIs- Domestic Institutional Investors *CMP based on the closing value as on 30th Oct. 2012
Company Business Dutron Group was founded in 1962 and has been continuously growing since then. Dutron is a pioneer of PVC hose pipes in India. Beginning as a modest plastic pipe manufacturer, Dutron procured world specialist Kanaflex PVC hose pipe manufacturing know-how. During 1980s, Dutron started manufacturing PVC Braided Hoses, Flat Delivery Hoses, Corrugated pipes and Plastic Sheets. Its product portfolio further expanded with international standard HDPE/MDPE/PP pipe systems, UPVC pipes and fittings in 1990s. Today, Dutron is the largest manufacturer of PVC hoses and one of the largest manufacturers of plastic pipe systems in India. Products catering to various sectors The company manufactures an array of products which are used widely by various sectors. They are customized to suit every need. For example, in Civil, its products are used in Irrigation, Drainage, Sewer, Gardening, whereas in the Industries segment, they are used in Chemicals, Effluents and Air. In Food Utilities, Dutron products are used in Water, Gas, Cable Ducting and in the Building sector it is used heavily in Soil, Waste & Rain Water and Plumbing. Dutron's products are manufactured using world class technologies from Totaku Industries, Inc. Osaka, Japan for Dutron Kanaflex PVC reinforced hose pipes. The company s product list is given below: Quality At Dutron, quality is an attitude and complete quality assurance procedure ensures adherence to perfection in standard and consistency. Markets Dutron s products are used in international markets of many Gulf countries like the UAE, Saudi Arabia, Muscat, Qatar, Bahrain, Kuwait and also in Indonesia, Sri Lanka and several countries in Africa. Dutron s dealers in India are spread across almost every town throughout the country. Source: Company website : http://www.dutronindia.com Initiative of the BSE Investors Protection Fund -2-
Industry Overview Plastic plays a significant role in the major sectors of the economy like agriculture, water management, automobiles, transportation, construction, telecommunication and electronics, besides defence and aerospace, computers and power transmissions. Since 1957, the plastic industry in India has made significant achievements by starting production of Polystyrene. In the last few decades, the industry has grown to a sizable base. The material is gaining importance in different spheres of activities and the per-capita consumption is increasing at a fast pace. Continuous advancement and developments in polymer technology, processing machineries, expertise, and cost-effective manufacturing is fast replacing the typical materials in different segments with plastic.* The next two decades will witness an unprecedented growth in India's plastics industry from 69,000 machines to 150,000 machines by 2020.India's demand for plastics in irrigation alone is expected to cross 2.5 million tonnes by 2015. The Indian automobile industry is growing at more than 18% per annum and has an ever growing requirement for plastic. The plastic processing industry is a source of great potential for global businesses. There is tremendous scope for innovative technological upgradation. The per-capita consumption of plastic products in India is growing and is moving towards 8% GDP growth. ** Latest developments *** The Indian plastic industry is at the verge of high growth rate over about 10-12%, which is contributed by demand from end-user industries. This trend has been driving the automotive sector, since the economy is already showing signs of recovery from the downturn. As the plastic industry depends a lot on automotive sector, launch of new cars in the small segment are expected to drive the demand for plastic. India is likely to dominate the rest of the world's plastic demand with the domestic per-capita consumption set to double by 2012. The domestic Indian plastic industry expects an investment of nearly $80 billion over the next four years. The Indian Government has identified the petrochemicals industry as a 'high priority' sector, because plastic plays an important role in providing the basic necessities for everyday use, while conserving the scarce natural resources. Role of Plastic Industry in the Indian Economy 2005*** 2015*** @ 15% CARG, Consumption of Plastic Polymers 4.7 Million Tonnes 18.9 Million Tonnes Employment In Plastic Industry (Direct+ Indirect) 2.5 Million 9.5 Millions Plastic Industry's Turnover Rs. 35,000 Crores Rs. 1,33,245 Crores Export of Plastic Products @ 30% CARG US$ 1900 Millions US $ 10215 Millions Contribution of Polymers and Plastic Products to the Exchequer Rs. 6200 Crores Rs. 15990 Crores Source: * www.india-exports.com/plastic.html; ** www.plastindia.org/default.asp; *** www.indianmirror.com/indian-industries/plastic.html Competitor Analysis We have compared Dutron Polymers with its close peers in the plastic industry. Company Year End CMP* M Cap Revenue EBIT Margin Dutron Polymers Tijaria Poly Pipes Mar-12 Mar-12 24 6.93 14 16 61.7 92.7 4.0% 1.61% 1.68-1.65 14.3x -4.2x Prima Plastics Mar-12 12.60 13 60.1 6.65% 1.99 6.5x Source: : CMP & Mcap from BSE india website, Operating Profits from Capitaline (for EBIT Margin) *CMP as of 30th Oct closing value. EPS P/E Initiative of the BSE Investors Protection Fund -3-
Summary Financials Particulars (Rs crore) FY10 FY11 FY12 Net Sales 53.1 60.7 54.1 Other Op. Revenue 0.2 8.0 7.5 Total Revenue 53.3 68.7 61.7 Growth (%) 24.0% 28.9% -10.2% Cost of Goods Sold -47.0-63.1-56.3 Gross Profit 6.3 5.6 5.4 Employee Costs -1.0-0.5-0.5 Other Expenditure -1.5-1.3-1.0 EBITDA 3.8 3.7 3.9 Growth (%) 39.4% -2.5% 3.1% Depreciation -0.8-1.2-1.3 EBIT Profit 3.0 2.5 2.5 Finance cost -0.5-0.8-1.1 Other Income 0.1 0.1 0.1 Exceptional Items 0.0 0.0 0.0 PBT 2.6 1.8 1.5 Growth (%) 66.0% -28.7% -15.8% Income Tax -0.9-0.4-0.5 Profit after Tax 1.7 1.4 1.0 Extra Ordinary Items 0.0 0.0 0.0 Net Profit 1.7 1.4 1.0 Growth (%) 62.5% -17.0% -27.4% Rep. Basic EPS 2.78 2.31 1.68 Rep. Diluted EPS 2.78 2.31 1.68 Equity Capital 6.0 6.0 6.0 Face value 10 10 10 Ratio Analysis FY10 FY11 FY12 Margins EBITDA Margin (%) 7.2% 5.4% 6.3% Net Profit Margin (%) 3.1% 2.0% 1.6% Valuation P/E (x) 8.6 10.4 14.3 P/BV (x) 1.1 1.0 1.0 Profitability ROCE (%)* 17.0% 10.9% 11.9% RONW(%) 12.7% 10.1% 7.2% Solvency Ratio Debt/ Equity Ratio (x) 0.3 0.7 0.6 Interest Cover (x) 5.6 3.2 2.3 *Bifurcation between Long Term and Short Term Debt is not available for FY10 Initiative of the BSE Investors Protection Fund -4-
Contact Details: ICRA Online Limited research@icraonline.com 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 su ch information. All information contained herein must be construed solely as statements of opinion, and ICRA Online Limited shall not be liable for any losse s 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 o r are to be issued by any entity. Published on behalf of BSE Investors' Protection Fund BSE Investor s Protection Fund First Floor, P J Towers, Dalal Street, Mumbai. Tel: 22721233/34 www.bseindia.com Initiative of the BSE Investors Protection Fund -5-