Plastic Products l BSE Research Caprihans India Ltd. The Varhad Group CMP: INR92.15 Stock data BSE code 509486 BSE ID CAPRIHANS Face value (INR) 10 No of shares (m) 13.1 Market cap (INRm) 1,210.3 3m avg. daily vol (No) 4,322.6 Free float (INRm) 339.7 Dividend yield FY15 (%) 1.6 S&P BSE Sensex 26,145.7 Stock performance (%) 52-week H/L 98.7/61.2 1M 3M 12M Absolute (%) 17.4 25.2 3.6 Relative (%) 18.9 25.7 11.7 Shareholding pattern (%) Promoters FIIs DIIs Others 71.93% 0.00% 3.72% 24.35% Relative stock movement Company Overview Caprihans India Limited is a public limited company and became a part of EVC group in 1997. EVC was acquired by the INEOS group in 2001. The INEOS Films business was acquired by Bilcare in 2010. Caprihans India Limited is today part of Bilcares Solutions Division. It is one of the largest manufacturers of PVC films in India and has got expertise of more than 35 years in this field. It manufacturers a wide variety of PVC films both flexible & rigid and also sheets/boards made from other polymers like ABS, PP, HDPE and rigid PVC. FY15 and recent performance Net sales in FY15 increased by 4.1%% YoY to INR2,519.6m from INR2,419.6m in FY14. EBITDA increased from INR82.8m in FY14 to INR104.5.0m in FY15. The company reported net profit of INR70.5m in FY15, compared to INR52.5m in FY14. The company has declared a dividend of INR1.5 per share in FY15. In balance sheet, fixed assets decreased to INR161.3m in FY15 compared to INR172.6m in FY14. The investments remained nil in FY15. Loans and Advances were recorded at INR62.2m FY15. Cash & Bank Balances increased from INR207.6m in FY14 to INR315.5m in FY15. Operating cash flow for the firm increased from INR66.9m in FY14 to INR159.1m in FY15. Revenue for Q2FY16 was recorded at INR636.0m against INR682.8m in Q2FY15. The company has operating profit of INR49.8m in Q2FY16. In Q2FY16, net profit was reported at INR27.3m against INR19.8m in Q2FY15. Source: BSE Table 1: Key financials (Y/e March) FY 13 FY 14 FY 15 Sales (INRm) 2,205.9 2,419.6 2,519.6 YoY Growth (%) 13.2 9.7 4.1 EBITDA (INRm) 107.6 82.8 104.5 Dec 2015 EBITDA Margin (%) 4.9 3.4 4.1 PAT (INRm) 67.9 52.5 70.5 EPS (INR) 5.2 4.0 5.4 YoY Growth (%) -4.9-22.6 34.2 RoE (%) 6.5 4.9 6.4 P / E (x) 17.8 23.0 17.2
Industry Overview The plastic films and sheets market is expected to grow at a decent pace during the coming decade driven by its increasing application in food and pharmaceutical packaging. Plastic films and sheets are primarily made of polyethylene and polypropylene. The increasing disposable of the consumers together with the growing demand for packaged food is driving the market for plastic films & sheets. The plastic films & sheets market is projected to register a CAGR of 5.0% between 2014 and 2019 to reach USD118.6bn, by 2019. Asia-Pacific holds a significant market share in the plastic films & sheets market. China leads the Asian market in terms of demand for plastic films & sheets. Asia-pacific is thus expected to maintain its dominance in the global market owing to the steady growth in China and India. Board of Director Table 2: Composition of Board Name Director type Business relationship with company Mr. Mofatraj P Munot Director Chairman, Promoter, Non-Executive Director Mr. Mohan H Bhandari Director Promoter, Non-executive Director Mr. Robin Banerjee Director Managing Director, Executive Mr. Suresh A Gandhi Director Non-Executive Director Mr. Bhoumick S Vaidya Director Independent Non-Executive Director Mr. K.V.Mani Director Independent Non-Executive Director Ms. Anjali Seth Director Independent Non-Executive Director Mr. Siddharth S Shetye Director Independent Non-Executive Director Mr. Nitin K Joshi Director Independent Non-Executive Director Source: Company Key Strength and growth drivers With the growing trend of mass consumerism and better living standards, demand for plastic products are expected to grow. Opportunities in converting certain non-pvc packaging applications into PVC-based films in rational subsidy schemes the SSP industry shall benefit the most due to its inherent advantage to the farmers. Risk and concern Competition from domestic markets from the organized and unorganized sector. The overall capacity in the industry is significantly more than the overall demand leading to threats of margin pressures. Interim Performance In Q2FY16, the revenue decreased YoY by 6.9% from INR682.8 in Q2FY15 to INR636.0m. On operational front, in Q2FY16, the Company reported operating profit of INR49.8m as against a profit of INR38.0m in Q2FY15. In Q2FY16, net profit was recorded at INR27.3m as against INR19.8m in Q2FY15. 2
Table 3: Summary of year to date performance (INRm) Q2FY16 Q2FY15 YoY % Q1FY16 QoQ% H1FY16 H1FY15 YoY % Revenue 636.0 682.8-6.9 607.5 4.7 1,243.5 1,340.7-7.2 EBITDA 49.8 38.0 31.1 41.9 18.9 91.7 77.5 18.3 EBITDA Margin (%) 7.8 5.6 2.3 6.9 0.9 7.4 5.8 1.6 PAT 27.3 19.8 37.8 22.9 19.6 50.2 41.2 21.9 Competition analysis Table 4: Peer comparison CMP Mcap Rev (INR) (INRm) (INRm) NPM (%) EPS(INR) PE(x) Caprihans India Ltd 92.2 1,210.3 2,519.56 2.8 5.4 17.2 Sintex Industries Ltd 104.3 46,575.2 40,178.20 11.4 12.5 8.1 Wim Plast Ltd 2,020.4 12,122.4 3,660.30 10.5 63.9 31.6 Shaily Engineering Plastics Ltd 549.3 4,564.7 1,797.10 7.2 17.2 31.9 Source: BSE Financial snapshot Chart 1: Sales trend Chart 2: Margin trend Chart 3: EPS trend Chart4: Working Capital Profile 3
Financial Summary Profit and loss (INR m) Balance sheet (INR m) Year ending 31 March FY13 FY14 FY15 Year ending 31 FY13 FY14 FY15 March Revenue 2,205.9 2,419.6 2,519.6 Net Block 196.8 172.6 161.3 Direct Expense 1,524.6 1,722.7 1,765.3 Investments 0.0 0.0 0.0 Staff Cost 151.4 180.7 203.6 Cash and Banks 174.8 207.6 315.5 Balance Other Expenditure 422.3 433.4 446.2 Inventory 278.8 366.7 275.0 Total Cost 2,098.3 2,336.7 2,415.1 Sundry Debtors 630.3 573.6 606.2 EBITDA 107.6 82.8 104.5 Loans and 67.2 69.0 62.2 Advances EBITDA margin (%) 4.9 3.4 4.1 Other Current 28.2 33.3 49.4 Assets Depreciation 34.4 35.3 34.5 Other 27.0 27.9 38.7 EBIT 73.2 47.5 70.0 Total Assets 1,403.1 1,450.8 1,508.2 Interest Expenses 0.0 0.0 0.0 Gross Debt 0.0 0.0 0.0 Non-operating Income 30.8 33.6 38.7 Trade Payables 172.1 178.5 203.3 PBT 103.9 81.0 108.7 Provisions & other 165.9 180.1 169.3 curr lia Provision for Tax 36.0 28.5 38.2 Others 7.5 5.1 4.9 PAT 67.9 52.5 70.5 Equity Capital 131.3 131.3 131.3 Growth % -4.9-22.6 34.2 Reserves & Surplus 926.3 955.8 999.3 PAT margin (%) 3.1 2.2 2.8 Share Application 0.0 0.0 0.0 money Minority Interest 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 Extra Ordinary 0.0 0.0 0.0 Shareholders' 1,057.7 1,087.2 1,130.7 funds PAT (Reported) 67.9 52.5 70.5 Total Liabilities 1,403.1 1,450.8 1,508.2 Cash Flow Metrics Ratios, growth and per share analysis FY13 FY14 FY15 Y-o-Y % change FY13 FY14 FY15 Net Profit before tax 103.9 81.0 108.7 Revenue 13.2 9.7 4.1 Operating Cash Flow 104.1 66.9 159.1 EBITDA -2.7-23.0 26.1 Investing Cash Flow -29.1-11.0-28.2 Recurring EPS -4.9-22.6 34.2 Financing Cash Flow -22.9-23.0-23.0 Ratios (%) Net Change in Cash 52.1 32.9 107.9 ROE 6.5 4.9 6.4 Op.cash and Equivalent 122.7 174.8 207.6 ROCE 6.5 4.9 6.4 Cl.cash and Equivalent 174.8 207.6 315.5 EBITDA Margin 4.9 3.4 4.1 Ratio - Du Pont Analysis Net Debt/Equity (x) -16.5-19.1-27.9 FY13 FY14 FY15 Net Debt/ EBITDA (x) -1.6-2.5-3.0 Net Profit Margins (%) 3.1 2.2 2.8 Inventory days 47.6 48.7 46.5 Total Assets Turnover 2.1 2.2 2.3 Debtors days 95.7 90.8 85.5 Leverage Multiplier 1.0 1.0 1.0 Payables day 24.1 26.4 27.7 ROAE (%) 6.5 4.9 6.4 Total Asset TO ratio 2.1 2.2 2.3 Valuation Fixed Asset TO Ratio 10.8 13.1 15.1 FY13 FY14 FY15 Per share data (INR) EV/Sales 0.5 0.4 0.4 EPS reported (diluted) 5.2 4.0 5.4 EV/EBITDA 9.6 12.1 8.6 Recurring EPS (diluted) 5.2 4.0 5.4 P/E (x) 17.8 23.0 17.2 DPS 1.5 1.5 1.5 P/B(x) 1.1 1.1 1.1 Book Value(basic) 80.9 83.2 86.5 Dividend yield (%) 1.6 1.6 1.6 Wtd avg ord shares (m) 13.1 13.1 13.1 FCF yield (%) 14.6 21.7 8.9 Wtd avg dil shares (m) 13.1 13.1 13.1 Source: BSE, Company, Varhad research 4
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