Textiles l BSE Research Prag Bosimi Synthetics Ltd. CMP: INR5.56 Stock data BSE code 500192 BSE ID PRAGBOS Face value (INR) 10.0 No of shares (m) 74.4 Market cap (INRm) 413.6 3m avg. daily vol (No) 2,491.6 Free float (INRm) 219.6 Dividend yield FY15 (%) 0.0 S&P BSE Sensex 26,145.7 Stock performance (%) 52week H/L 7.1/4.0 1M 3M 12M Absolute (%) 35.9 12.6 14.2 Relative (%) 37.5 10.8 22.6 Shareholding pattern (%) Promoters FIIs DIIs Others 46.91% 0.00% 0.13% 52.96% Relative stock movement Company Overview Prag Bosimi Synthetics Ltd. joint venture between the Assam government and the H B Vyas Group, has restarted polymer production in Feb 2012 after a period of 6 years at an initial investment of INR150cr. The company, the first publicprivate partnership (PPP) project in the Northeast, produces polyester partially oriented yarn (POY) and polyester filament yarn (PFY) with an annual capacity of 36,000tpa in Assam. FY15 and recent performance Company has declared results for a period of 18 months ended Mar 15. Company reported revenue of INR16.0m during the same period. Operating loss of INR57.4m was recorded. Prag Bosimi Synthetics Ltd. recorded net loss of INR370.0m for period of 18 months. Net fixed assets were recorded at INR2,048.8m. Loans and advance of INR194.5 were reported, whereas cash and bank balance was recorded at INR1.8m for the same period. On liabilities side, trade payables was recorded at INR10.6m. Company had an operating cash outflow of INR113.5m during the said period. We have not compared the finances as the reporting of the company had been for 18 months. In Q2FY16, revenue of INR641.1m was recorded. Company reported operating profit of INR66.1 in Q2FY16 against operating loss of INR11.3m in Q2FY15. Company reported net profit of INR23.4m in Q2FY16 against net loss of INR54.0m in Q2FY15. Source: BSE Table 1: Key financials (Y/e March) Mar 12 Sep 13 Mar 15 Sales (INRm) 5.6 1,001.0 16.0 Dec 2015 YoY Growth (%) # 17,842.7 98.4 EBITDA (INRm) 72.0 4.6 57.4 EBITDA Margin (%) 1,290.6 0.5 358.8 PAT (INRm) 237.3 * 266.7 * 370.0 * EPS (INR) 1.5 * 3.6 * 5.0 * YoY Growth (%) 67.0 135.5 38.7 RoE (%) 18.5 24.4 43.5 P / E (x) 3.7 1.6 1.1 Note: (*) Net Profit/ EPS considered without taking prior period items; (#) Not Applicable; Source: Company, Varhad Research
Industry Overview According to Goldman Sachs, India is expected to become the world third largest economy by 2035. There is a growing demand in polyester sector. The global supply constraints, substantial price increase and uncertain outlook for cotton availability is creating considerable substitution opportunities for polyester products like polyester filament yarn (PFY) and polyester staple fibre (PSF). "It is expected that polyester will capture around 80% of incremental global fibre demand of around 2.9mtpa over the medium to long term," The global economies are well on their way to recovery after seeing the recession in past couple of years. The India polyester segment is maintaining a compounded annual growth rate (CAGR) of more than 10% for the past two years. Board of Director Table 2: Composition of Board Name Director type Business relationship with company Mr. H.K Sharma Chairman Chairman, Nominee of AIDC, Non Executive Director Mr. Hemant B. Vyas Managing Director Managing Director, Promoter Director Mr. Devang H. Vyas Director Non Executive Mr. M. K Das Director Non Executive and Independent (AIDC) Mr. Girindra Mohan Das Director Non Executive and Independent Shmt. Deepali Pathak Director Non Executive and Independent Mr. Rohit Doshi Director Non Executive and Independent Note: AIDC: Assam Industrial Development Corporation; Source: Company Key Strength and growth drivers PBSL is the only Polyester yarn plant in the entire North east as well as West Bengal, Bihar, Orissa, UP and Punjab and thus it has a huge domestic market at its disposal. Being located in Assam, PBSL can explore the SAARC countries market like Bangladesh, Nepal, Bhutan and Sri Lanka which have huge demand for POY. Further, SAFTA agreement makes the member countries extremely viable option for Exports and PBSL is expected to derive benefit from them due to its location in Assam. PBSL has also received a formal approval from Assam Industrial Development Corporation Limited to set up a Textile Park. Risk and concern The yarn produced by PBSL is an intermediary product, and is dependent on other segments of industry in value chain. The other threats to the segment in which the Company operates are pricing of raw materials Interim Performance During Q2FY16, revenue increased by 204.5 times on YoY basis from INR3.1m in Q2FY15 to INR641.1m. On operational front, operating profit of the company increased by 6.84 times YoY from operating loss of INR11.3m in Q2FY15 to operating profit INR66.1m in Q2FY16. Net profit of the company increased by 1.4 times YoY to INR23.4m in Q2FY16 against net loss of INR54.0m in Q2FY15. Table 3: Summary of year to date performance (Consolidated) (INRm) Q2 FY16 Q2FY15 YoY % Q1FY16 QoQ% H1FY16 H1FY15 YoY % Revenue 641.1 3.1 20,448.0 280.8 128.3 921.9 5.6 16,478.6 EBITDA 66.1 11.3 684.1 24.1 173.8 90.2 20.8 534.4 EBITDA Margin (%) 10.3 362.7 373.0 8.6 1.7 9.8 373.5 383.3 PAT 23.4 54.0 143.2 23.7 198.7 0.3 102.3 99.7 Source: Company, Varhad Research 2
Competition analysis Table 4: Peer comparison CMP (INR) Mcap (INRm) Rev (INRm) NPM (%) EPS(INR) PE(x) Prag Bosimi Synthetics Ltd * 5.6 413.6 16.0 2,311.6 5.0 1.1 Alok Industries Ltd 7.1 9,806.5 221,307.2 1.1 1.8 3.9 Konark Synthetics Ltd 16.2 94.1 1,142.6 0.5 1.0 15.7 Jaybharat Textiles & Real Estate Ltd 25.0 9,551.8 6,602.4 33.7 5.8 4.3 Note: (*) Details for Prag Bosimi are for 18 months and for others 12 months; Source: BSE Financial snapshot Chart 1: Sales trend Chart 2: Margin trend 1,200 1,000 800 600 400 200 Sales (INRm) Jan12 Jan13 Jan14 Sales (% YoY, RHS) Jan15 20,000 15,000 10,000 5,000 (5,000) (20) (40) (60) (80) Jan12 EBITDA (INRm) Jan13 Jan14 EBITDA mgn (%, RHS) Jan15 (200.0) (400.0) (600.0) (800.0) (1,000.0) (1,200.0) (1,400.0) Chart 3: EPS trend Chart4: Working Capital Profile EPS (INR) EPS Growth(% YoY, RHS) Debtors TO Stock TO Creditors TO (1.0) (2.0) (3.0) (4.0) (5.0) (6.0) Jan12 Jan13 Jan14 Jan15 150 100 50 6,000 5,000 4,000 3,000 2,000 1,000 Jan12 Jan13 Jan14 Jan15 Source: Company, Varhad Research 3
Financial Summary Profit and loss (INR m) Balance sheet (INR m) Year ending Mar 12 Sep 13 # Mar 15 # Year ending Mar 12 Sep 13 # Mar 15 # Revenue 5.6 1,001.0 16.0 Net Block 2,250.7 2,197.2 2,084.8 Direct Expense 14.3 868.6 13.1 Investments 1.2 1.2 1.2 Staff Cost 38.8 58.6 26.6 Cash and Banks Balance 4.4 3.0 1.8 Other Expenditure 53.3 78.5 33.6 Inventory 112.6 110.9 111.8 Total Cost 77.8 1,005.6 73.4 Sundry Debtors 3.8 420.4 2.5 EBITDA 72.2 4.6 57.4 Loans and Advances 199.5 194.9 194.5 EBITDA margin (%) 1,293.8 0.5 358.8 Other Current Assets 0.0 0.9 1.9 Depreciation 35.4 79.4 119.6 Other 48.0 24.3 21.5 EBIT 107.5 83.9 177.0 Total Assets 2,620.2 2,952.8 2,419.8 Interest Expenses 137.3 187.6 193.1 Gross Debt 1,261.2 1,418.0 1,427.8 Nonoperating Income 7.4 4.8 0.1 Trade Payables 30.2 364.7 10.6 PBT 237.4 266.7 370.0 Provisions & other curr lia 74.9 38.2 38.7 Provision for Tax 0.0 0.0 0.0 Others 27.2 172.2 202.3 PAT 237.4 266.7 370.0 Equity Capital 1,558.5 743.8 743.8 Growth % 67.4 12.3 38.7 Reserves & Surplus 331.7 215.8 3.5 PAT margin (%) 4,255.8 26.6 2,312.7 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 116.5 0.5 0.2 Shareholders' funds 1,226.8 959.6 740.3 PAT (Reported) 120.9 267.2 369.8 Total Liabilities 2,620.2 2,952.8 2,419.8 Cash Flow Metrics Ratios, growth and per share analysis Mar 12 Sep 13 # Mar 15 # YoY % change Mar 12 Sep 13 # Mar 15 # Net Profit before tax 237.3 266.7 370.0 Revenue * 17,842.7 98.4 Operating Cash Flow 128.6 136.9 113.5 EBITDA 45.5 93.6 1,154.1 Investing Cash Flow 120.5 21.2 6.8 Recurring EPS 67.0 135.5 38.7 Financing Cash Flow 172.6 156.8 119.0 Ratios (%) Net Change in Cash 76.5 1.3 1.3 ROE 18.5 24.4 43.5 Op.cash and Equivalent 80.9 4.4 3.0 ROCE 4.1 3.3 7.8 Cl.cash and Equivalent 4.4 3.0 1.8 EBITDA Margin 1,290.6 0.5 358.8 Ratio Du Pont Analysis Net Debt/Equity (x) 102.4 147.3 192.5 Mar 12 Sep 13 # Mar 15 # Net Debt/ EBITDA (x) 17.4 308.9 24.8 Net Profit Margins (%) 4,252.6 26.6 2,312.7 Inventory days 5,411.7 40.7 2,540.3 Total Assets Turnover 0.0 0.4 0.0 Debtors days 250.9 77.3 4,823.5 Leverage Multiplier 1.9 2.3 2.9 Payables day 3,304.0 72.0 4,281.6 ROAE (%) 18.5 24.4 43.5 Total Asset TO ratio 0.0 0.4 0.0 Valuation Fixed Asset TO Ratio 0.0 0.5 0.0 Mar 12 Sep 13 # Mar 15 # Per share data (INR) EV/Sales 380.4 1.8 114.9 EPS reported (diluted) 1.5 3.6 5.0 EV/EBITDA 29.5 399.2 32.0 Recurring EPS (diluted) 1.5 3.6 5.0 P/E (x) 3.7 1.6 1.1 DPS 0.0 0.0 0.0 P/B(x) 0.7 0.4 0.4 Book Value(basic) 8.0 15.2 12.7 Dividend yield (%) 0.0 0.0 0.0 Wtd avg ord shares (m) 155.8 74.4 74.4 FCF yield (%) 3.2 2.5 3.4 Wtd avg dil shares (m) 155.8 74.4 74.4 Note: (#) Value for 18 months; (*) Not Applicable; Source: BSE, Company, Varhad research 4
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