BUY CMP 55.50 Target Price 64.00 NEO CORP INTERNATIONAL LTD Result Update (PARENT BASIS): Q1 FY16 AUGUST 20 th 2015 ISIN: INE851C01014 Index Details Stock Data Sector Containers & Packaging BSE Code 523820 Face Value 10.00 52wk. High / Low (Rs.) 58.40/17.65 Volume (2wk. Avg. Q.) 333000 Market Cap (Rs. in mn.) 2110.11 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales 7439.10 9075.70 10527.81 EBITDA 859.90 1043.71 1210.70 Net Profit 302.10 367.71 426.69 EPS 7.95 9.67 11.22 P/E 6.98 5.74 4.95 Shareholding Pattern (%) As on June-15 As on March-15 OTHERS 75.87 75.87 DIIs 0.02 0.02 FIIs 0.00 0.00 PROMOTER 24.11 24.11 1 Year Comparative Graph SYNOPSIS Neo Corp International Ltd is a manufacturer & exporter of the plastic woven & Knitted products. The company s net sales registered a growth of 46.07% y-o-y and stood at Rs. 2116.90 million in 1 st quarter of FY16 when compared to Rs. 1449.20 million in the corresponding quarter of previous year. In Q1 FY16, Net profit stood to Rs. 95.50 million an increase of 48.29% against Rs. 64.40 million in Q1 FY15. Operating profit is Rs. 245.30 million in Q1 FY16 as against Rs. 169.80 million in the corresponding period of the previous year, registering a growth of 44.46%. Profit before tax (PBT) at Rs. 119.40 million in Q1 FY16 compared to Rs. 90.50 million in Q1 FY15, registered a growth of 31.93% y-o-y. NEO CORP INTERNATIONAL LTD BSE SENSEX EPS of the company stood at Rs. 2.51 in Q1 FY16 against Rs. 1.69 in the corresponding quarter of the previous year, grew by 48.29%. Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 28% over 2014 to 2017E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Neo Corp International Ltd 55.50 2110.11 7.95 6.98 0.74 0.00 Tinplate Company of India Ltd 68.05 7122.60 5.42 12.56 1.23 16.00 Uflex Ltd 187.50 13539.70 21.73 8.63 0.80 27.00 Essel Propack Ltd 161.30 25340.40 3.73 43.24 5.30 80.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q1 FY16, Rs. In million June-15 June-14 % Change Net Sales 2116.90 1449.20 46.07 PAT 95.50 64.40 48.29 EPS 2.51 1.69 48.29 EBITDA 245.30 169.80 44.46 The company has achieved a turnover of Rs. 2116.90 million for the 1 st quarter of the financial year 2016 as against Rs. 1449.20 million in the corresponding quarter of the previous year. EBITDA of Rs. 245.30 million in Q1 FY16, an increase of 44.46% against the corresponding period of last year. In Q1 FY16, net profit of Rs. 95.50 million compared to Rs. 64.40 million in Q1 FY15. The company has reported an EPS of Rs. 2.51 for the 1 st quarter of FY16 against Rs. 1.69 in the corresponding quarter of the previous year. Break up of Expenditure (Rs. in million) Break up of Expenditure Q1 FY16 Q1 FY15 % CHNG Cost of Material Consumed Employee Benefit Expenses Depreciation & Amortization Expenses 1814.20 1118.50 62% 54.70 42.90 28% 22.50 20.00 13% Other Expenses 81.80 83.60-2%
COMPANY PROFILE Neo Corporation International (NCIL), since its inception in 1986, is dedicated in making tailor designed products under Packtech. NCIL has reached the status of a fore-runner internationally as a reliable supplier of Packtech products. The current growth initiative, the company has entered into other technical textile segments like Geotech and Agrotech. As the barriers of the trade have come down, strong markets like India have become the cynosure of industries worldwide. To encash these opportunities, the company has endeavored to reinvent itself with planned capital investment and management culture. NCIL is renewing its customer relationship by providing value-added solutions. Efforts are made to embrace information technology in the quest of efficient and faster processes throughout the demand and supply chain. It is also balancing the growth aspirations with social concerns for sustainable growth and environment friendliness. Products Packtech: Manufactured with state-of-the-art manufacturing facilities, the wide range of Packtech Products provide costeffective solutions for storage, carriage and protection requirements of industrial, agricultural and their goods. Agrotech: Applications for technical textiles in the Agrotech sector include all activities concerned with the growing and harvesting of crops and animals. The principle function of most agricultural textiles relates to the protection of food produce, animals or land. Geotech: NCIL has Geotextiles having wide range of end-uses in pavements/roads/ railroad beds/airfields, retaining wall earth embankment, concrete revetment, drain construction, waterways, coastal engineering/defence, landfill, industrial and contaminated land reclamation. Subsidiaries Sacos Indigo Pvt Ltd Europlast Limited Net flex Infracon Ltd Poly base (HK) Ltd Poly logic International Pvt Ltd. Prism Flexible Solutions Pvt Ltd.
Global Footprints: Astria Belgium Canada Denmark France Germany Uruguay Greece Italy Netherland NewZealand Spain Dubai Syria Sweden UAE United Kingdom United states Djibouti Muscut Iraq
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March31, 2014-2017E FY14A FY15A FY16E FY17E I. EQUITY AND LIABILITIES: A. Shareholders Funds a) Share Capital 380.20 380.20 380.20 380.20 b) Reserves and Surplus 2184.75 2479.20 2846.91 3273.59 Sub-Total-Net worth 2564.95 2859.40 3227.11 3653.79 B. Non-Current Liabilities: a) Long-term borrowings 722.88 1076.60 1270.39 1460.95 b) Deferred Tax Liabilities [Net] 97.70 106.30 113.74 119.43 c) Long Term Provisions 9.18 9.80 10.39 10.91 Sub-Total-Long term liabilities 829.76 1192.70 1394.52 1591.28 C. Current Liabilities: a) Short-term borrowings 1404.82 1353.70 1299.55 1260.57 b) Trade Payables 974.08 1746.30 2182.88 2619.45 c) Other Current Liabilities 452.55 647.30 744.40 833.72 d) Short Term Provisions 111.74 70.80 59.47 51.15 Sub-Total-Current Liabilities 2943.19 3818.10 4286.29 4764.88 TOTAL-EQUITY AND LIABILITIES (A+B+C) 6337.90 7870.20 8907.92 10009.96 II. ASSETS: D. Non-Current Assets: a) Fixed Assets 1618.92 1564.00 1627.31 1724.07 b) Non Current Investments 608.75 877.70 1009.36 1130.48 c) Long Term Loans and Advances 379.98 525.50 630.60 744.11 Sub-Total-Non-Current Assets 2607.65 2967.20 3267.27 3598.66 E. Current Assets: a) Inventories 2320.17 3077.10 3538.67 4070.67 b) Trade Receivables 527.12 1055.70 1266.84 1444.20 c) Cash and Bank Balances 412.06 237.70 251.96 272.12 d) Short Term Loans and Advances 110.17 134.70 153.56 168.91 e) Other Current Assets 360.73 397.80 429.62 455.40 Sub-Total-Current Assets 3730.25 4903.00 5640.65 6411.30 TOTAL-ASSETS (D+E) 6337.90 7870.20 8907.92 10009.96
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 6140.60 7439.10 9075.70 10527.81 Other Income 0.00 0.00 0.00 0.00 Total Income 6140.60 7439.10 9075.70 10527.81 Expenditure -5436.00-6579.20-8032.00-9317.12 Operating Profit 704.60 859.90 1043.71 1210.70 Interest -283.30-429.90-494.39-563.60 Gross profit 421.30 430.00 549.32 647.10 Depreciation -76.80-80.80-89.69-98.66 Profit Before Tax 344.50 349.20 459.63 548.44 Tax -147.30-47.10-91.93-121.75 Net Profit 197.20 302.10 367.71 426.69 Equity capital 380.20 380.20 380.20 380.20 Reserves 2184.75 2479.20 2846.91 3273.59 Face value 10.00 10.00 10.00 10.00 EPS 5.19 7.95 9.67 11.22 Quarterly Profit & Loss Statement for the period of 31 st Dec, 2014 to 30 th Sep, 2015E Value(Rs.in.mn) 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15E Description 3m 3m 3m 3m Net sales 1946.30 2130.50 2116.90 2413.27 Other income 0.00 0.00 0.00 0.00 Total Income 1946.30 2130.50 2116.90 2413.27 Expenditure -1741.50-1860.50-1871.60-2135.74 Operating profit 204.80 270.00 245.30 277.53 Interest -97.40-207.90-103.40-113.74 Gross profit 107.40 62.10 141.90 163.79 Depreciation -25.10-15.60-22.50-22.95 Profit Before Tax 82.30 46.50 119.40 140.84 Tax -1.30 22.30-23.90-28.45 Net Profit 81.00 68.80 95.50 112.39 Equity capital 380.20 380.20 380.20 380.20 Face value 10.00 10.00 10.00 10.00 EPS 2.13 1.81 2.51 2.96
Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) 5.19 7.95 9.67 11.22 EBITDA Margin (%) 11.47 11.56 11.50 11.50 PBT Margin (%) 5.61 4.69 5.06 5.21 PAT Margin (%) 3.21 4.06 4.05 4.05 P/E Ratio (x) 10.70 6.98 5.74 4.95 ROE (%) 7.69 10.57 11.39 11.68 ROCE (%) 16.65 17.78 19.55 20.54 Debt Equity Ratio 0.83 0.85 0.80 0.74 EV/EBITDA (x) 5.43 5.00 4.24 3.77 Book Value (Rs.) 67.46 75.21 84.88 96.10 P/BV 0.82 0.74 0.65 0.58 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 55.50, the stock P/E ratio is at 5.74 x FY16E and 4.95 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.9.67 and Rs.11.22 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 28% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 4.24 x for FY16E and 3.77 x for FY17E. Price to Book Value of the stock is expected to be at 0.65 x and 0.58 x for FY16E and FY17E respectively. 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.64.00 for Medium to Long term investment. 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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