Comm. Trading & Distribution l SME Research Ricoh India Ltd. CMP: INR945.25 Stock data BSE code 517496 BSE ID RICOHQ Face value (INR) 10 No of shares (m) 39.8 Market cap (INRm) 37,590.9 3m avg. daily vol (No) 25,356.4 Free float (INRm) 9,924.0 Dividend yield FY15 (%) 0.1 S&P BSE Sensex 26,145.7 Stock performance (%) 52week H/L 1,072.3/264.0 1M 3M 12M Absolute (%) 6.1 32.7 208.7 Relative (%) 7.6 30.9 217.2 Shareholding pattern (%) Promoters FIIs DIIs Others 73.60% 0.20% 3.07% 23.13% Relative stock movement Company Overview Ricoh is a global technology company specializing in office imaging equipment, production print solutions, document management systems and IT services. Headquartered in Tokyo, Ricoh Group operates in about 200 countries and regions. In the financial year ending March 2015, Ricoh Group had worldwide sales of approx. USD18.5 bn. Ricoh India Limited has been an ISO certified organisation since 1994, and is currently certified under ISO 9001:2008, ISO 14001:2004 and ISO 27001:2005 standards. The company also holds CMMI Level 4 certification. FY15 and recent performance Net sales in FY15 increased by 56.2% on YoY basis to INR16,738.2m d. EBITDA also increased to INR1,404.9m in FY15 as against INR761.7m in FY14. It was mainly due to higher sales. Company declared dividend of INR1.0 per share for FY15. Ricoh India Ltd. reported net profit of INR339.0m in FY15 compared to INR172.3m in FY14 due to higher sales and increase in non operating income. Company declared dividend of INR1/ per share. In balance sheet, net block assets decreased from INR738.7m in FY14 to INR642.3m in FY15. Loans and advance and cash and cash bank balance was reported at INR1,206.6m and INR703.9m in FY15 respectively compared to INR807.4m and INR383.4m in FY14 respectively. In Q1FY16, revenue has increased by 95.5% YoY to INR4,428.6m. Ricoh India Ltd. earned EBITDA of INR284.1m during the said period. Company reported PAT of INR4.1m in Q1FY16, YoY increase by 102.7%. Table 1: Key financials Source: BSE (Y/e March) FY13 FY14 FY15 Sales (INRm) 6,331.2 10,486.5 16,378.2 YoY Growth (%) 46.1 65.6 56.2 EBITDA (INRm) 205.7 761.7 1,404.9 EBITDA Margin (%) 3.2 7.3 8.6 PAT (INRm) 13.2 172.3 339.0 Dec 2015 EPS (INR) 0.3 4.3 8.5 YoY Growth (%) 49.2 1,404.1 96.8 RoE (%) 1.1 13.1 22.0 P / E (x) 2,845.6 218.2 110.9
Industry Overview The printer and cartridge industry is linked to the performance of the economy. With domestic economy performing better than its peers, the industry is poised to perform better. Make in India initiative by the Government of India, the manufacturing sector are having bright spot in the economy. The ITBPM sector in India grew at a compound annual growth rate (CAGR) of 15% over 201015, which is 34 times higher than the global ITBPM spend, and is estimated to expand at a CAGR of 9.5% to USD300bn by 2020. The ink and toner cartridge market size in India is estimated to be over USD300m and is growing at a rate of over 20%. The toner industry in India is dominated by nonoem cartridges which have seen a turn around with OEM cartridges now available at lower price, warranty terms and several awareness campaigns. Board of Director Table 2: Composition of Board Name Director type Business relationship with company Mr. T. Takano Director Non Executive Chairman Mr. Manoj Kumar Director Managing Director & CEO Mrs. U. P. Mathur Director Non Executive and Independent Director Mr. R. K. Pandey Director Non Executive and Independent Director Ms. Ashish Garg Director Non Executive and Independent Director Mr. H. Kitada Director Non Executive Director Source: Company Key Strength and growth drivers Company continues to focus on providing value to the customers and strengthen its position as a total solution provider. This shall be done by further enhancing the IT services business along with the core business of the Company. To strengthen the above approach company will have dedicated teams for handling vertical specific customers and going through the consulting approach to the customers. Company intend to maintain its No. 1 position in the A3 multifunction printers. Further, strengthening the channel network will be one of the key priority area to increase the market share and reach of Ricoh Laser Printers in India. Company intend to expand the distributor program to more cities across India. Risk and concern MacroEconomic conditions do affect a Company's operations. Low demand, inflation, economic slowdown, depressive sentiments, political instability etc. may affect business of a Company. Business therefore, cannot be risk free. What is therefore important is to correctly assess the potential risk area wise and take necessary steps well in advance so as to mitigate the risk to a large extent before in fact it becomes a potential hazard. Interim Performance During Q1FY16, revenue has increased by 95.5% YoY to INR4,428.6m. Operating profit of the company increased by 3.6 times YoY to INR284.1m in Q1FY16. Company reported net profit of INR4.1m in Q1FY16 against net loss of INR153.0m in Q1FY15. Table 3: Summary of year to date performance (INRm) Q1FY16 Q1FY15 YoY % Q4FY15 QoQ% FY15 FY14 YoY % Revenue 4,428.6 2,265.1 95.5 6,280.8 29.5 16,738.2 10,486.5 59.6 EBITDA 284.1 60.8 367.4 813.2 65.1 1,404.9 761.7 84.4 EBITDA Margin (%) 6.4 2.7 3.7 12.9 6.5 8.4 7.3 1.1 PAT 4.1 153.0 102.7 414.8 99.0 339.0 172.3 96.7 2
Competition analysis Table 4: Peer comparison CMP (INR) Mcap (INRm) Rev (INRm) NPM (%) EPS(INR) PE(x) Ricoh India Ltd 945.3 37,590.9 16,378.2 2.1 8.5 110.9 State Trading Corporation of India Ltd 163.5 9,810.0 147,028.8 0.2 4.4 37.5 Kothari Products Ltd 274.7 5,465.4 46,481.6 1.1 24.8 11.1 Sakuma Exports Ltd 85.8 1,408.5 10,808.5 0.8 5.3 16.1 Source: BSE Financial snapshot Chart 1: Sales trend Chart 2: Margin trend 20,000 15,000 10,000 Sales (INRm) Sales (% YoY, RHS) 80 60 40 1,500 1,000 EBITDA (INRm) EBITDA mgn (%, RHS) 10.0 8.0 6.0 5,000 20 500 4.0 2.0 Chart 3: EPS trend Chart4: Working Capital Profile EPS (INR) EPS Growth(% YoY, RHS) Debtors TO Stock TO Creditors TO 10.0 8.0 6.0 4.0 2.0 500 (500) (1,000) 120 100 80 60 40 20 (2.0) (1,500) 3
Financial Summary Profit and loss (INR m) Balance sheet (INR m) Year ending 31 March FY13 FY14 FY15 Year ending 31 March FY13 FY14 FY15 Revenue 6,331.2 10,486.5 16,378.2 Net Block 403.7 738.7 642.3 Direct Expense 4,344.6 7,370.7 12,503.7 Investments 519.2 391.7 377.1 Staff Cost 787.5 890.2 1,010.5 Cash and Banks Balance 720.0 383.4 703.9 Other Expenditure 993.4 1,463.9 1,459.0 Inventory 1,550.1 2,064.1 1,959.6 Total Cost 6,125.5 9,724.8 14,973.3 Sundry Debtors 1,842.3 3,191.8 6,619.0 EBITDA 205.7 761.7 1,404.9 Loans and Advances 704.3 807.4 1,206.6 EBITDA margin (%) 3.2 7.3 8.6 Other Current Assets 1,716.7 1,025.7 1,440.3 Depreciation 80.9 161.5 214.4 Other 0.0 0.0 0.0 EBIT 124.8 600.2 1,190.5 Total Assets 7,456.3 8,602.8 12,948.8 Interest Expenses 136.1 317.2 853.5 Gross Debt 2,622.3 3,677.3 2,034.3 Nonoperating Income 15.3 18.2 168.0 Trade Payables 2,251.1 3,061.4 3,416.5 PBT 3.9 301.2 504.9 Provisions & other 1,357.3 466.2 682.8 current liabilities Provision for Tax 17.1 128.9 165.9 Others 0.0 0.0 5,129.2 PAT 13.2 172.3 339.0 Equity Capital 397.7 397.7 397.7 Growth % 49.2 1,404.1 96.8 Reserves & Surplus 827.9 1,000.2 1,288.3 PAT margin (%) 0.2 1.6 2.1 Share Application money 0.0 0.0 0.0 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' funds 1,225.6 1,397.9 1,686.0 PAT (Reported) 13.2 172.3 339.0 Total Liabilities 7,456.3 8,602.8 12,948.8 Cash Flow Metrics Ratios, growth and per share analysis FY13 FY14 FY15 YoY % change FY13 FY14 FY15 Net Profit before tax 3.9 301.2 504.9 Revenue 46.1 65.6 56.2 Operating Cash Flow 966.7 588.5 2,224.5 EBITDA 90.4 270.3 84.5 Investing Cash Flow 147.2 502.0 142.6 Recurring EPS 49.2 1,404.1 96.8 Financing Cash Flow 1,269.7 721.1 2,650.6 Ratios (%) Net Change in Cash 155.8 369.4 283.5 ROE 1.1 13.1 22.0 Op.cash and Equivalent 506.2 662.0 293.5 ROCE 4.8 11.0 27.1 Cl.cash and Equivalent 662.0 292.6 577.0 EBITDA Margin 3.2 7.3 8.6 Ratio Du Pont Analysis Net Debt/Equity (x) 112.8 207.6 56.5 FY13 FY14 FY15 Net Debt/ EBITDA (x) 6.7 3.8 0.7 Net Profit Margins (%) 0.2 1.6 2.1 Inventory days 65.8 62.9 44.8 Total Assets Turnover 2.0 2.4 2.4 Debtors days 81.1 87.6 109.3 Leverage Multiplier 2.6 3.4 4.5 Payables day 91.0 92.5 72.2 ROAE (%) 1.1 13.1 22.0 Total Asset TO ratio 2.0 2.4 2.4 Valuation Fixed Asset TO Ratio 16.3 18.4 23.7 FY13 FY14 FY15 Per share data (INR) EV/Sales 6.2 3.9 2.4 EPS reported (diluted) 0.3 4.3 8.5 EV/EBITDA 189.5 53.2 27.4 Recurring EPS (diluted) 0.3 4.3 8.5 P/E (x) 2,845.6 218.2 110.9 DPS 0.0 0.0 1.0 P/B(x) 30.7 26.9 5.5 Book Value(basic) 30.8 35.1 171.4 Dividend yield (%) 0.0 0.0 0.1 Wtd avg ord shares (m) 39.8 39.8 39.8 FCF yield (%) 34.9 34.6 16.0 Wtd avg dil shares (m) 39.8 39.8 39.8 Source: BSE, Company, Varhad research 4
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