Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Shri Jagdamba Polymers Ltd. CMP: 44.2 January 15, 216 Stock Details BSE code 512453 BSE ID SHRJAGP Face value ( ) 1 No of shares (m).88 52 week H/L 525./255. Market cap ( m) 354 3 day avg. vol (No) 4 Free float ( m) 96 Stock performance (%) 1M 3M 12M Absolute 14.1% -16.% 35.1% Rel. to Sensex 17.5% -6.5% 48.% Shareholding Pattern* (%) Promoters FIIs DIIs Others 73.25%.% 4.67% 22.8% *As of September 215 Relative Chart 6 5 Shri Jagdamba Polymers (LHS) Sensex 32, 3, Company Overview Based in Ahmedabad, India, Shri Jagdamba Polymers Ltd. (SJPL) manufactures technical fabrics. The company has an installed capacity of 1 MT per month to process woven polypropylene/ polyethylene fabrics. Majority of production is exported to various countries. Industry Overview India is one of the largest producers of textile fibres and yarns, and apparel. The country is the largest producer of jute, second largest producer of silk and cotton, and third largest in cellulosic fibre, according to Indian brand equity foundation (IBEF). India has the highest loom capacity, accounting for 63% of global capacity. According to IBEF, domestic textile and apparel industry in India is estimated to reach US$141 billion by 221 from US$67 billion in 214, driven by increased penetration of organised retail, favourable demographics, and rising income levels. Financial Performance Revenues increased 25% in FY15 to 1125 million compared to 91 million in FY14. In Q2 FY16, revenues jumped 29% YoY to 357 million. SJPL reported a net profit of 33.4 million or 38.2 per share in FY15, compared to a net profit of 31.4 million or 35.9 per share. In Q2 FY16, net profit increased 27% YoY to 11.5 million. Table1: Key Financials 4 28, (Y/e March) Q2 FY15 Q2 FY16 3 26, Sales ( m) 739.6 91. 1,125.2 277.4 356.6 2 24, YoY Growth (%) 38% 22% 25% 34% 29% 1 22, EBITDA ( m) 78. 96.7 112.2 29.8 35.1 2, EBITDA Margin 11% 11% 1% 11% 1% PAT ( m) 31.6 31.4 33.4 9.1 11.5 Source: Bloomberg EPS ( ) 36.1 35.9 38.2 1.3 13.1 YoY Growth (%) 91% -1% 6% -73% 27% Source: Company, Karvy Investment Advisory 1
Background and Business Description Based in Ahmedabad, India, Shri Jagdamba Polymers Ltd. (SJPL) manufactures technical fabrics primarily for export. The company has an installed capacity of 1 MT per month to process woven polypropylene/ polyethylene fabrics. Majority of production (8$) is exported to various countries including Europe, USA, and other countries. The company specializes in providing customised products from its large product portfolio. Over the next five years, the company plans to double the capacity to 2 MT per month by installing additional higher end products to meet demand in other parts of the world. The company is also planning to set up captive wind power generation, an inhouse additive unit and machinery workshop. Products PP Woven Bags Siltfence Fabric Geotextile FIBC Ground cover Box bag Lumber cover Key Strengths and Future Prospects SJPL specializes in providing complete solutions in woven polypropylene market by using high technology machines that produce best quality products. The company plans to double the capacity to 2 MT per month by installing additional higher end products to meet demand in other parts of the world. Risks & Concerns Polymers are petrochemical products and fluctuations in crude prices may increase the cost of polymer production. Competition from domestic and international players could result in reduced orders/and or prices. Board of s Table 2: Composition of Board Name Kantilal Ishwarbhai Patel Ramakant Bhojnagarwalla Ashish Ashokkumar Bhaiya Kiranbhai Bhailalbhai Patel Vikas Srikishan Agarwal Mudra Source: Company Relation with Company Managing director Whole-time director 2
Industry Overview India is one of the largest producers of textile fibres and yarns, and apparel. The country is the largest producer of jute, second largest producer of silk and cotton, and third largest in cellulosic fibre, according to Indian brand equity foundation (IBEF). India has the highest loom capacity, accounting for 63% of global capacity. According to IBEF, domestic textile and apparel industry in India is estimated to reach US$141 billion by 221 from US$ 67 billion in 214, driven by increased penetration of organised retail, favourable demographics, and rising income levels are likely to drive demand for textiles. Technical textiles which are the core focus of SJPL is still in its infancy as it contributes only 3% of total textiles consumption in India. Manufactured primarily for their technical performance and functional properties rather than aesthetic and decorative characteristics, technical textiles are forecast to witness rapid growth over the next decade. Currently, the technical textile market in India is estimated at $17 billion and India is touted as the next hub for both manufacturing and consumption of these textiles. Growing middle class, young and educated population, and growing awareness portray a rosy picture for these textiles. The Working Group on Technical Textiles for 12th Five Year Plan projected the market size to reach Rs158,54 crore by 216-17 at an annual growth rate of 2%. In terms of apparel exports, India is the world's second largest exporter of textiles and clothing. India s textile and apparel exports are expected to reach US$82 billion by 221 from US$4 billion in 214. Readymade garments remain the largest segment, accounting for 4% of all textile and apparel exports in FY15. Cotton and man-made textiles were the other major segments, accounting for 31% and 16%, respectively. According to the Annual Report 21-11 of the Ministry of Textiles, textiles account for 17% to the country s export earnings. Government continues to support the textiles and clothing industry through favourable policies, as the industry is a key contributor to the overall industrial production and employment. According to the Ministry of Textiles, Foreign direct investment (FDI) in the textile sector reached US$1,588 million in FY15 from US$1,425 million in FY14. To encourage investments, the Ministry of Textiles is focusing on schemes such as Technology Up-gradation Fund Scheme (TUFS). To promote apparel exports, the government has approved 12 locations to set up apparel parks for exports. The Government plans to provide a budgetary support of US$4.25 billion to textiles in per the 12 th Five Year Plan. Free trade agreements with ASEAN countries and proposed agreement with European Union will also help boost exports. Competition analysis Company CMP ( ) Mcap ( m) Rev ( m) OPM (%) EPS ( ) PE (x) Shri Jagdamba Polymers 44.2 354 1,122.3 9.7% 38.17 1.6 UFLEX 156.1 11,269 33271.7 13.1% 19.66 7.9 SRF Limited 129.2 69,433 9,138.9 22.6% 15. 8.6 Source: BSE 3
Financial Analysis SJPL reported a 25% rise in revenues for FY15 to 1125 million. However, the company s EBITDA margins declined marginally to 1% in FY15 from 11% in FY14. Hence net profit registered only 6% growth to 33.4 million. The company paid a dividend of 1. per share for FY15. Year end March Income statement ( million) Revenue 739.6 91. 1125.2 % growth 38.% 21.8% 24.9% EBITDA 78. 96.7 112.2 % EBITDA margin 11% 11% 1% Depreciation and amortisation 19.7 22.5 27.3 EBIT 58.3 74.1 84.9 Interest 22.5 32.3 38.3 PBT 35.8 41.9 46.6 Tax 4.2 1.4 13.2 Net profit 31.6 31.4 33.4 % growth net profit 91.% -.6% 6.4% Balance sheet ( million) Shareholder fund 132.9 163.3 169.4 Long term liab 151.2 228.7 217.9 Current liab 22.5 256.3 288.7 Fixed assets 213.8 39.1 277.5 Current assets 256.3 312.8 386.5 Cash & cash equi 7.8 15.6 23.2 Cash flow statement Cash flow operations.5 32.8 76.28 Cash flow from investing -18.4-117.5-35.1 Cash flow from financing 12.2 92.49 33.59 Per share data EPS ( ) 36.9 35.89 38.17 CEPS ( ) 58.2 61.3 68.94 DPS ( ) 1. 1. 1. BVPS ( ) 151.75 186.5 193.4 Financial Ratios % ROE 23.8% 19.2% 19.7% ROCE 43.9% 13.2% 14.9% Debt/Equity.% 242.9% 235.9% Interest coverage ratio 2.6 2.3 2.2 Current ratio 1.3 1.2 1.3 Cash ratio..1.1 Source: Company, Karvy Investment Advisory 4
Financial Snapshot Revenue growth (%) EBITDA margin (%) 1,5 4% 15 11% 1, 5 3% 2% 1% % 1 5 11% 1% 1% Revenue ( m) % growth EBITDA ( m) % EBITDA margin 34 33 32 31 3 Net Profit Margin (%) 5% 4% 3% 2% 1% % 3 2 1 BVS & EPS Book value per share ( ) EPS diluted ( ) 39 38 37 36 35 34 Net Profit ( m) % net profit margin Liquidity ratios Profitability ratios 1.4.1 5.% 1.3 4.% 1.3 1.2 1.2 Current ratio Cash ratio.1. 3.% 2.% 1.%.% ROE ROCE Source: Karvy Investment Advisory 5
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