BUY CMP 600.00 Target Price 670.00 LA OPALA RG LIMITED Result Update: Q2 FY14 DECEMBER 31 st 2013 ISIN: INE059D01012 Index Details Stock Data Sector Houseware BSE Code 526947 Face Value 10.00 52wk. High / Low (Rs.) 630.00/230.80 Volume (2wk. Avg. Q.) 2635 Market Cap (Rs. in mn.) 6358.80 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY13A FY14E FY15E Net Sales 1539.16 1656.14 1778.69 EBITDA 422.13 466.51 504.43 Net Profit 228.79 255.29 275.58 EPS 21.59 24.09 26.00 P/E 27.79 24.91 23.07 Shareholding Pattern (%) SYNOPSIS La Opala RG Limited was established in the year 1988 in India. And in 1999, Radha Glass and La Opala merged to become La Opala RG Limited. The company s main objective is to manufacture glass and glass products of all types, mainly exports 85 per cent of crystal ware. La Opala RG Ltd has a network of 125 Distributors and 10000 dealers across the country and the number is increasing at the rate of 15 per cent annually and also exports 10 per cent of opal ware to 20 countries. The company s net sales registered 7.34% increase and stood at a record Rs. 398.36 million from Rs. 371.13 million over the corresponding quarter last year. During the quarter end of Q2 FY14, net profit was up by 31.92% at Rs. 58.94 million against Rs. 44.68 million in Q2 FY13. 1 Year Comparative Graph In Q2 FY14, EBITDA has increased by 18.03% at Rs. 114.10 million from Rs. 96.67 million in the corresponding quarter of previous year. LA OPALA RG LIMITED BSE SENSEX During the quarter under review, the modernization of the furnace at the Opal Division, Madhupur unit, Jharkhand has been successfully completed. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 30% over 2012 to 2015E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) La Opala RG Ltd. 600.00 6358.80 21.59 27.79 8.58 35.00 Piramal Glass Ltd. 87.95 7116.60 3.63 24.23 1.48 10.00 Borosil Glass Works Ltd. 748.00 2248.50 84.96 8.80 0.36 150.00 Hawkins cook Ltd. 2325.00 12294.20 70.57 32.95 22.45 500.00
Recommendation & Analysis - BUY La Opala RG Limited was established in the year 1988 in India. The Company entered the crockery market and introduced a wide range of opalware with a capacity of 688 tons per annum at Madhupur, Bihar. The main object of the company is to manufacture glass and glass products of all types. In 1999, Radha Glass and La Opala merged to become La Opala RG Limited. The company has a strong marketing Network of 125 Distributors and 10000 dealers across the country and the number is increasing at the rate of 15 per cent annually and also exports 10 per cent of opal ware to 20 countries La Opala Rg Limited, net sales has increased by 7.34% from Rs. 371.13 million for the quarter ended September 30, 2012 to Rs. 398.36 million for the quarter ended September 30, 2013. Net profit was up by 31.92% at Rs. 58.94 million in Q2 FY14 against Rs. 44.68 million in Q2 FY13. The company has reported a strong profitable growth in quarter ended 30 th SEPTEMBER 2013. During the quarter ended Q2 FY14, EBITDA has increased by 18.03% at Rs. 114.10 million from Rs. 96.67 million in the corresponding quarter of previous year. The over all good performance of the company has been possible due to higher utilization of capacity, aggressive marketing policy, introduction of new designs and improvement in product quality. In the financial year 2013-14, the Company plans to continue with the momentum which has been achieved in the previous year, despite threats and challenges. To achieve this objective, actions have already been initiated to explore untouched market, strengthen distribution network, improve logistics, introduce new product design and upgrade quality, keeping the pricing policy at levels affordable to its customers. Barring unforeseen circumstances, the future of the Company appears to be encouraging. We expect the company to post a CAGR of 16% and 30% in its top-line and bottom-line respectively. Hence, we recommend BUY for LA OPALA RG LIMITED with a target price of Rs. 670.00 on the stock.
QUARTERLY HIGHLIGHTS (STANDALONE) Results updates- Q2 FY14, La Opala RG Ltd has a Network of 125 Distributors and 10000 dealers across the country and the number is increasing at the rate of 15 per cent annually and also exports 10 per cent of opal ware to 20 countries and has reported its financial results for the quarter ended 30 SEPTEMBER, 2013. Months SEP-13 SEP-12 % Change Net Sales 398.36 371.13 7.34 PAT 58.94 44.68 31.92 EPS 5.56 4.22 31.92 EBITDA 114.10 96.67 18.03 The company has achieved a turnover of Rs. 398.36 million for the 2 nd quarter of the current year 2013-14 as against Rs. 371.13 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 114.10 millions an increased by 18.03% and a net profit of Rs. 58.94 million against Rs. 44.68 million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 5.56 for the 2 nd quarter as against an EPS of Rs. 4.22 in the corresponding quarter of the previous year. Break up of Expenditure During the quarter, Total Expenditure increased mainly on account of Advertisement & sales promotion by 23%, Depreciation by 18%, along with Employee benefits expenses by 6% are the primary attribute for the growth of expenditure when compared to corresponding quarter of previous year. The Total Expenditure in Q2 FY14 stood to Rs. 303.36 million rose by 4 per cent as against Rs. 290.92 million in Q2 FY13. Break up of Expenditure Q2 FY14 Q2 FY13 Cost of Materials Consumed 78.74 92.81 Power & Fuel 53.62 63.4 Advertisement & Sales Promotion 48.49 39.28 Employee Benefit Expenses 51.22 48.53 Depreciation 17.51 14.82 Other Expenses 42.3 63.06
Latest Updates During the half year end H1 FY14, total income of the company has increased by 12% to Rs. 724.10 millions against Rs. 646.51 millions in H1 FY13. Profit after tax has increased by 43.13% to Rs. 103.94 millions in H1 FY14 against Rs. 72.62 millions in H1 FY13. During the quarter under review, the modernization of the furnace at the Opal Division, Madhupur unit, Jharkhand has been successfully completed. COMPANY PROFILE Opal Glass making, first perfected in France, was transplanted to India in 1988 by LaOpala, a grand, 70 years presence in the national glass industry. Since then, the company has made it its mission to bring the beauty of opal glass home to Indians and Laopala s endeavor and commitment has created waves in the lifestyle market. The company entered the crockery market and introduced a wide range of opalware with a capacity of 688 tons per annum at Madhupur, Jharkhand. The main object of the company is to manufacture glass and glass products of all types. In 1999, Radha Glass and La Opala merged to become La Opala RG Limited. The company with its endeavor to make its presence felt in the international market started exporting its products with the first consignment leaving the Indian port in 1993. Since then the company had registered a phenomenal growth in export and is currently exporting to more than 30 countries which includes USA, UK, France, Spain, Italy and Middle East nations. A leader in the Indian tableware market, the company s products are a favorite in countries like USA, UK, France, Turkey, Middle East and South East Asian countries. Awards The company has been listed, out of 19 Indian companies, in the Top 200 Asian companies in Forbes Asia's Best under a Billion (BUB) list, from a pool of 15,000 stock traded companies in Asia Pacific with revenues between $5 million and $1 billion. Brands Laopala La Opala, the founders of opalware India have over the years brought together the export fusion of artistry and finesse. Products are not only microwaves safe and Chip resistant, but even white. Match the best across the globe.
Diva from Laopala Classique Collection The classique Collection, Comprises an elegant range of tableware that stands out for its striking milky white glaze and consumer-friendly properties. Its exquisitely chic international designs, make owning this collection, the ultimate reason of pride. Ivory Collection As timeless as tradition its elf, ivory has adorned the walls and plates of kings and nawabs alike. Its soft milky glaze, its smooth texture has been adored through the centuries. Diva brings you a collection as refi ned as ivory. The secret of the classiest dinner parties is now in your hand. Manish Malhotra It isn t every day that a leading Indian fashion designer feels the urge to create dinnerware designs. Inspired by its designs, Manish Malhotra, designer par excellence, dedicated his designs to all that he is inspired by. Adding to Diva a one-of-a-kind, haute couture collection meant to be collectibles for connoisseurs of high taste and the uber-chic. Solitaire Solitaire Crystal is handcrafted to protection as per global standards in aesthetic and design. Every cut and every sparkle redefines the spheres of clarity. Renowed Globally, it makes a prominent presence of India in the entire world market of Cruystals.
FINANCIAL HIGHLIGHT (STANDALONE) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March31, 2012-2015E LA OPALA RG LIMITED. FY-12A FY-13A FY-14E FY-15E I EQUITY AND LIABILITIES A) Shareholder's Funds a) Share Capital 105.98 105.98 105.98 105.98 b) Reserves and Surplus 450.55 634.71 890.01 1165.60 Sub-Total Net worth 556.53 740.69 995.99 1271.58 B) Non Current Liabilities a) long term borrowing 111.19 149.87 119.90 137.88 b) Deferred Tax Liabilities 57.21 75.16 102.97 133.86 c) Other Long term Liabilities 11.94 11.86 13.05 13.96 d) Long term Provisions 14.45 0.90 0.90 0.95 Sub-Total Non Current Liabilities 194.79 237.79 236.81 286.65 C) Current Liabilities a) Short term borrowings 90.81 88.85 186.59 238.83 b) Trade payables 34.13 39.53 59.69 62.08 c) Other Current Liabilities 110.31 153.76 137.10 162.49 d) Short term Provisions 37.48 55.98 88.45 99.95 Sub-Total Current Liabilities 272.73 338.12 471.82 563.34 TOTAL EQUITY AND LIABILITIES (A + B + C) 1024.05 1316.60 1704.63 2121.58 II ASSETS D) Non-Current Assets: Fixed Assets i. Tangible assets 486.56 638.51 842.83 1095.68 ii. Intangible assets 0.03 0.01 0.01 0.01 iii. Capital Work in Progress 19.58 8.80 41.36 51.70 a) Total Fixed Assets 506.17 647.32 884.20 1147.39 b) Non-current investments 0.75 0.88 0.95 1.01 c) Long Term loans and advances 63.36 56.48 59.30 65.23 Sub-Total Non-Current Assets 570.28 704.68 944.46 1213.64 E) Current Assets: a) Current Investment 0.00 74.38 110.08 133.20 b) Inventories 260.25 307.84 360.17 432.21 c) Trade receivables 163.45 185.98 215.74 248.10 d) Cash and Bank Balances 4.27 8.30 11.21 13.95 e) Short-terms loans & advances 8.20 11.58 31.27 40.39 f) Other current assets 17.60 23.84 31.71 40.10 Sub-Total Current Assets 453.77 611.92 760.17 907.94 TOTAL ASSETS (D + E) 1024.05 1316.60 1704.63 2121.58
Annual Profit & Loss Statement for the period of 2012 to 2015E Value(Rs.in.mn) FY12A FY13A FY14E FY15E Description 12m 12m 12m 12m Net Sales 1150.11 1539.16 1656.14 1778.69 Other Income 1.99 10.25 11.07 11.73 Total Income 1152.10 1549.41 1667.21 1790.42 Expenditure -882.74-1127.28-1200.70-1285.99 Operating Profit 269.36 422.13 466.51 504.43 Interest -40.71-41.90-43.58-45.32 Gross profit 228.65 380.23 422.93 459.11 Depreciation -45.91-55.58-63.36-70.96 Profit Before Tax 182.74 324.65 359.57 388.15 Tax -56.71-95.86-104.28-112.56 Net Profit 126.03 228.79 255.29 275.58 Equity capital 105.98 105.98 105.98 105.98 Reserves 450.55 634.72 890.01 1165.60 Face value 10.00 10.00 10.00 10.00 EPS 11.89 21.59 24.09 26.00 Quarterly Profit & Loss Statement for the period of 31 MARCH, 2013 to 31 DEC, 2013E Value(Rs.in.mn) 31-Mar-13 30-June-13 30-Sep-13 31-Dec-13E Description 3m 3m 3m 3m Net sales 399.33 321.78 398.36 489.98 Other income 1.13 2.37 1.59 2.04 Total Income 400.46 324.15 399.95 492.02 Expenditure -282.88-239.75-285.85-339.80 Operating profit 117.58 84.40 114.10 152.21 Interest -10.20-9.52-11.03-10.81 Gross profit 107.38 74.88 103.07 141.41 Depreciation -14.48-14.57-17.51-18.39 Profit Before Tax 92.90 60.31 85.56 123.02 Tax -29.57-15.30-26.62-30.76 Net Profit 63.33 45.01 58.94 92.27 Equity capital 105.98 105.98 105.98 105.98 Face value 10.00 10.00 10.00 10.00 EPS 5.98 4.25 5.56 8.71
Ratio Analysis Particulars FY12A FY13A FY14E FY15E EPS (Rs.) 11.89 21.59 24.09 26.00 EBITDA Margin (%) 23.42 27.43 28.17 28.36 PBT Margin (%) 15.89 21.09 21.71 21.82 PAT Margin (%) 10.96 14.86 15.42 15.49 P/E Ratio (x) 50.45 27.79 24.91 23.07 ROE (%) 22.65 30.89 25.63 21.67 ROCE (%) 41.56 48.77 40.68 34.91 Debt Equity Ratio 0.36 0.32 0.31 0.30 EV/EBITDA (x) 24.34 15.61 14.26 13.33 Book Value (Rs.) 52.51 69.89 93.98 119.98 P/BV 11.43 8.58 6.38 5.00 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 600.00, the stock P/E ratio is at 24.91 x FY14E and 23.07 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.24.09 and Rs.26.00 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 30% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 14.26 x for FY14E and 13.33 x for FY15E. Price to Book Value of the stock is expected to be at 6.38 x and 5.00 x respectively for FY14E and FY15E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs.670.00 for Medium to Long term investment.
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