BUY CMP 55.30 Target Price 65.00 UMANG DAIRIES LTD Result Update (PARENT BASIS): Q4 FY15 JUNE 17 th 2015 ISIN: INE864B01027 Index Details Stock Data Sector Packaged Foods BSE Code 500231 Face Value 5.00 52wk. High / Low (Rs.) 83.60/46.00 Volume (2wk. Avg.) 16000 Market Cap (Rs. in mn.) 1216.78 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales 2511.45 2863.05 3206.61 EBITDA 166.12 191.31 213.53 Net Profit 85.16 97.82 109.82 EPS 3.87 4.45 4.99 P/E 14.29 12.44 11.08 Shareholding Pattern (%) 1 Year Comparative Graph UMANG DAIRIES LTD S&P BSE SENSEX SYNOPSIS Umang Dairies Limited is a J.K. Organisation group company and it provides various dairy products in India. During the quarter, net profit stood at Rs. 35.70 mn against Rs. 35.74 mn in the corresponding quarter ending of previous year. Revenue for the quarter stood at Rs. 743.09 mn from Rs. 942.39 mn, when compared with the prior year period. During Q3 FY15, EBIDTA is Rs. 69.81 mn as against Rs. 58.47 mn in the corresponding period of the previous year, grew by 19.39%. During the quarter, PBT increased by 11.39% to Rs. 56.74 mn from Rs. 50.94 mn over the corresponding quarter of the previous year. Reported earnings per share of the company stood at Rs. 1.62 a share during the quarter. During the quarter, EBIDTA and PAT margins are stood at 9% and 5% respectively. During FY15, revenue increased by 16% to Rs. 2511.45 mn from Rs. 2163.82 mn in FY14. During the year 2014-15, PAT rises by 43% to Rs. 85.16 mn from Rs. 59.61 mn over the previous year 2013-14. Umang Dairies Ltd has recommended dividend for the FY2014-15, @ Re.1/- per share (20%) of Rs. 5/- each. Net Sales of the company are expected to grow at a CAGR of 17% over 2014 to 2017E. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Umang Dairies Ltd 55.30 1216.78 3.87 14.29 4.50 20.00 Kwality Limited 46.50 10171.00 6.44 7.22 1.88 10.00 DFM Foods Ltd 470.00 4700.80 11.01 42.69 9.64 25.00 MilkFood Ltd 159.00 776.90 2.09 76.08 2.24 0.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q4 FY15, Months Mar-15 Mar-14 % Change Revenue 743.09 942.39-21.15% PAT 35.70 35.74-0.11% EPS 1.62 1.62-0.11% PBIDT 69.81 58.47 19.39% The net profit stood at Rs. 35.70 million against Rs. 35.74 million in the corresponding quarter ending of previous year, a decrease of 0.11%. Revenue for the quarter fell by 21.15% to Rs. 743.09 million from Rs. 942.39 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 1.62 a share during the quarter. Profit before interest, depreciation and tax is Rs. 69.81 million as against Rs. 58.47 million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Cost of Material consumed Employee benefits expenses Depreciation and amortization expenses Value in Rs. Million Q4 FY15 Q4 FY14 % Change 606.15 847.13-28% 30.11 22.53 34% 8.40 4.16 102% Other Expenses 100.74 96.68 4%
COMPANY PROFILE Umang Dairies Limited is a J.K. Organisation group company, provides various dairy products in India. The Company s plant is located in the milk surplus area of western Uttar Pradesh. It is the first dairy plant from the private sector to have received ISO Certification. As on date the plant has HACCP Certification from DNV, ISO 9001 : 2008, ISO 14001 : 2004 and OHSAS 18001 : 2007 Certifications. The plant has a capacity to process over 8,00,000 litres of milk per day (3,00,000 litres drying plant & 5,00,000 litres liquid milk plant). The plant has the state of art equipments, imported from Gaulin (USA) & Hassia (Germany). A fully developed R&D centre constantly works for improving systems of milk collection, processing and product upgradation. Over the years, the Company has built up a Village Level Collection (VLC) network including Chilling Centers and collects milk from over 300 villages comprising about 12000 farmers twice a day. The milk so collected is not only of better quality but is also cheaper as compared to the milk purchased from the Contractors. This gives the Company an edge over many other players in the industry. J.K. Organisation, founded over 100 years ago, is an eminent industrial group in India. The Group has multibusiness, multi-product and multi-location operations. The Companies in the Group manufacture and sell a large range of products with leadership position in several areas including Automotive Tyres and tubes, Paper & Pulp, Cement, V-Belts, Oil Seals, Power Transmission Systems, Hybrid Seeds, Woolen Textiles, Readymade Apparels, Sugar, Food & Dairy Products, Cosmetics etc. MARKETING Geographical reach of Company s popular brands of Dairy Creamers - WHITE MAGIK, DAIRY TOP and MILK STAR increased. On an average, Company is shipping 6-7 million sachets of consumer pack dairy creamers every month. Single serve sachets of White Magik are being supplied regularly to Air India, Jet Airways and Indian Railways as a part of tea & coffee kit. During the year 2014, Company launched two new products Doodz Flavoured Milk in NCR and poly pouched liquid milk in Lucknow under the brand name JK Milk. Both the products have been well received in the market place.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, 2014-2017E FY14A FY15A FY16E FY17E SOURCES OF FUNDS Shareholder's Funds Share Capital 145.92 145.92 145.92 145.92 Reserves and Surplus 103.25 160.35 232.51 302.26 1. Sub Total - Net worth 249.17 306.27 378.43 448.18 Non Current Liabilities Long term liabilities 27.39 36.36 40.72 44.80 Deferred Tax Liabilities 20.46 31.74 36.82 41.23 Other Long term Liabilities 115.87 115.82 122.76 127.68 Long term Provisions 9.59 13.12 15.74 18.26 2. Sub Total - Non Current Liabilities 173.31 197.03 216.04 231.96 Current Liabilities Short term borrowings 126.97 109.04 97.05 87.34 Trade Payables 90.44 76.90 67.67 71.05 Other Current Liabilities 125.39 144.16 161.45 174.37 Short Term Provisions 86.34 73.46 77.13 80.22 3. Sub Total - Current Liabilities 429.14 403.55 403.30 412.98 Total Liabilities (1+2+3) 851.62 906.85 997.77 1093.12 APPLICATION OF FUNDS Non-Current Assets Fixed Assets Tangible assets 285.57 334.43 374.56 415.76 Intangible assets 0.29 0.17 0.19 0.20 Capital Work in Progress 9.88 11.88 13.42 14.63 a) Sub Total - Fixed Assets 295.74 346.47 388.17 430.59 b) Long Term loans and advances 19.61 22.24 24.69 26.91 c) Other non-current assets 0.10 0.10 0.10 0.11 1. Sub Total - Non Current Assets 315.45 368.81 412.95 457.61 Current Assets Inventories 389.14 430.24 467.62 508.15 Trade receivables 60.08 43.08 45.66 49.32 Cash and Bank Balances 9.30 6.92 7.96 9.39 Short-terms loans & advances 77.65 57.79 63.57 68.66 2. Sub Total - Current Assets 536.17 538.03 584.82 635.52 Total Assets (1+2) 851.62 906.85 997.77 1093.12
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 2163.82 2511.45 2863.05 3206.61 Other Income 2.69 2.14 2.35 2.54 Total Income 2166.51 2513.58 2865.40 3209.15 Expenditure -2059.68-2347.46-2674.09-2995.62 Operating Profit 106.83 166.12 191.31 213.53 Interest -5.37-9.99-10.99-11.87 Gross profit 101.46 156.13 180.32 201.66 Depreciation -14.92-26.29-32.33-37.50 Profit Before Tax 86.54 129.84 147.99 164.16 Tax -26.93-44.68-50.17-54.34 Net Profit 59.61 85.16 97.82 109.82 Equity capital 110.02 110.02 110.02 110.02 Reserves 103.25 160.35 232.51 302.26 Face value 5.00 5.00 5.00 5.00 EPS 2.71 3.87 4.45 4.99 Quarterly Profit & Loss Statement for the period of 30 th Sep, 2014 to 30 th June, 2015E Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E Description 3m 3m 3m 3m Net sales 516.65 699.63 743.09 668.78 Other income 0.73 0.17 1.13 0.86 Total Income 517.38 699.80 744.22 669.64 Expenditure -494.53-653.65-674.41-626.65 Operating profit 22.85 46.15 69.81 42.99 Interest -1.26-1.35-4.67-3.50 Gross profit 21.59 44.80 65.14 39.49 Depreciation -6.04-6.43-8.40-9.91 Profit Before Tax 15.55 38.37 56.74 29.58 Tax -5.04-12.35-21.04-10.03 Net Profit 10.51 26.02 35.70 19.55 Equity capital 110.02 110.02 110.02 110.02 Face value 5.00 5.00 5.00 5.00 EPS 0.48 1.18 1.62 0.89
Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) 2.71 3.87 4.45 4.99 EBITDA Margin (%) 4.94% 6.61% 6.68% 6.66% PBT Margin (%) 4.00% 5.17% 5.17% 5.12% PAT Margin (%) 2.75% 3.39% 3.42% 3.42% P/E Ratio (x) 20.41 14.29 12.44 11.08 ROE (%) 27.95% 31.50% 28.56% 26.64% ROCE (%) 33.12% 46.28% 46.56% 46.11% Debt Equity Ratio 0.72 0.54 0.40 0.32 EV/EBITDA (x) 12.75 8.16 7.04 6.27 Book Value (Rs.) 9.69 12.29 15.57 18.74 P/BV 5.71 4.50 3.55 2.95 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs.55.30, the stock P/E ratio is at 12.44 x FY16E and 11.08 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 4.45 and Rs. 4.99 respectively. Net Sales of the company are expected to grow at a CAGR of 17% over 2014 to 2017E. On the basis of EV/EBITDA, the stock trades at 7.04 x for FY16E and 6.27 x for FY17E. Price to Book Value of the stock is expected to be at 3.55 x and 2.95 x for FY16E and FY17E respectively. We recommend BUY in this particular scrip with a target price of Rs.65.00 for Medium to Long term investment. INDUSTRY OVERVIEW India holds the second-largest arable land resources in the world and also possesses 46 of the 60 soil types in the world. The country is the largest producer of pulses, milk, tea, cashew, mangoes, and buffalo meat; and the second-largest producer of tea, wheat, sugarcane, and rice. The food processing industry is one of the largest industries in India and ranks fifth in terms of production, consumption and exports. With an estimated value of US$ 181 billion in FY13, the food processing sector is further estimated to expand at a compound annual growth rate (CAGR) of 10 per cent by 2015. The industry contributed 9.8 per cent to India s gross domestic product (GDP) manufacturing in 2013.
During FY11 14, India's Exports of processed food and related products (inclusive of animal products) increased at a CAGR of 34.6 per cent to US$ 22.4 billion. Main export destinations for food products have been the Middle East and Southeast Asia. The Government of India's strong policy support gives a boost to this sector. Some of these policies, such as encouraging the private sector by exempting the export earnings from corporate taxes, has helped in this sector's growth. The government has also allowed 100 per cent foreign direct investment (FDI) under automatic route, opened up mega food parks, assigned Agri Export Zones and provided incentives for development of storage facilities. There is enough scope for growth in the food industry in supply chain infrastructure and contract farming. Also, the government's policies are expected to help turn the Indian food processing industry into a global outsourcing hub. 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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