Lahoti Overseas Ltd. BSE Scrip Code: 531842 Comm, Trading and Distribution January 29, 2016 Current Market Price Rs. 52 Week High/Low Rs. Market Capitalisation Free Float Dividend Yield % Equity Statistics Rs. Crores Rs. Crores One Year Regression Beta Times 0.7 BSE Volumes Trend - Average = 11.69 Thousand 170 150 130 110 90 70 300 250 200 150 100 50 0 Relative Returns Lahoti Overseas Ltd. Returns 1M 3M 6M 1Y Absolute -15% 18% -8% 24% Rel. to Sensex -11% 27% 2% 48% Shareholding Pattern 100% 80% 60% 40% 20% 0% Source: CARE, BSE and ACE Equity Sensex Dec `14 Mar `15 Jun `15 Sep `15 Promoter DII FII Others 11.4 16.0/7.0 33.1 8.5 3.5 Business Summary Lahoti Overseas Ltd. (LOL) was established in 1990 with a single objective: to specialize in the export of quality Cotton Yarns from India's leading spinning mills. Starting with OE yarns, Lahoti's range today covers a wide variety of Cotton Yarns including carded & combed ring spun yams of coarse & fine counts, ply yarns, special yarns and grey fabrics. Lahoti Overseas reliability reflects itself in its exports to countries across the seven continents. Growing demands from the existing customers speak volumes about Lahoti Overseas' credibility. The Company is professionally managed by Ujwal Lahoti and Umesh Lahoti under the able guidance of an industrious & professional Board of Directors. With a sound footing in the global market for Indian Cotton Yarns, Lahoti Overseas is set to spin faster, in time. LOL is an ISO 9001:2008 certified Company and is mainly engaged in the export trading of cotton yarn in all coarser and fine counts, where the Company has strong presence and leadership. The Company is mainly targeting the export of cotton yarn to Far East Asian countries like South Korea, China, Japan, Hong Kong, Malaysia, and Vietnam and also caters to Gulf, Meditarian, European, North and South American markets. Business is dependent on the availability/supply and cost of raw materials which we source from domestic suppliers. Any significant increase in the prices of these raw materials or decrease in the availability of the raw materials, could adversely affect results of operations. Business is subject to regulation by several authorities, which could have an adverse effect on business and results of operations. Lahoti Overseas Ltd. is currently trading at 0.38 times FY15 EPS and 32.34 times FY15 adjusted book value. Board of Directors Person Role Qualification Mr. Umesh R. Lahoti MD NA Mr. Ujwal R. Lahoti Chairman / ED NA Mr. Aadhitiya U. Lahoti JED NA Mr. Prakash R. Bang INED NA Mr. Vijay D. Ajgaonkar INED NA Mr. Prem S. Malik INED NA Mrs. Meghna Vijay Panchal Additional Director NA Source: AR and CARE Research Note: MD: Managing Director, WTD: Whole time Director ED: Executive Director, NED: Non Executive Director, 1 Initiative of the BSE Investors Protection Fund
Background Lahoti Overseas Ltd. (LOL) was established in 1990 with a single objective: to specialize in the export of quality Cotton Yarns from India's leading spinning mills. Starting with OE yarns, Lahoti's range today covers a wide variety of Cotton Yarns including carded & combed ring spun yams of coarse & fine counts, ply yarns, special yarns and grey fabrics. Lahoti Overseas reliability reflects itself in its exports to countries across the seven continents. Growing demands from the existing customers speak volumes about Lahoti Overseas' credibility. The Company is professionally managed by Ujwal Lahoti and Umesh Lahoti under the able guidance of an industrious & professional Board of Directors. Business overview Lahoti Overseas Ltd. (LOL) was established in 1990 with a single objective: to specialize in the export of quality Cotton Yarns from India's leading spinning mills. Starting with OE yarns, Lahoti's range today covers a wide variety of Cotton Yarns including carded & combed ring spun yams of coarse & fine counts, ply yarns, special yarns and grey fabrics. Lahoti Overseas reliability reflects itself in its exports to countries across the seven continents. Growing demands from the existing customers speak volumes about Lahoti Overseas' credibility. The Company is professionally managed by Ujwal Lahoti and Umesh Lahoti under the able guidance of an industrious & professional Board of Directors. With a sound footing in the global market for Indian Cotton Yarns, Lahoti Overseas is set to spin faster, in time. Strengths and growth drivers Lahoti Overseas Limited is an ISO 9001:2008 certified Company and is mainly engaged in the export trading of cotton yarn in all coarser and fine counts, where the Company has strong presence and leadership. The Company is mainly targeting the export of cotton yarn to Far East Asian countries like South Korea, China, Japan, Hong Kong, Malaysia, and Vietnam and also caters to Gulf, Meditarian, European, North and South American markets. Risk and concerns Business is dependent on the availability/supply and cost of raw materials which we source from domestic suppliers. Any significant increase in the prices of these raw materials or decrease in the availability of the raw materials, could adversely affect results of operations. Business is subject to regulation by several authorities, which could have an adverse effect on business and results of operations. Future strategy and expansion plans The company does not have any expansion plans. Industry outlook The Textile Industry in India accounts for 14% of the total Industrial production leading to 4% of the GDP of the Country which is one of the significant contributors to the Indian economy. During the year 2014-2015, the Cotton Textile Industry has been under stress because of changing market trends. After witnessing challenges during the year 2013 and for most part of 2014 given unfavorable economic conditions, the Indian textiles and garments sector has seen reversal of trends in second half of 2014. The steep decline in exports of cotton yarn to China has created over supply and price decline in the domestic market. With domestic and global economic conditions gradually improving along with the focused efforts made by Ministry of Textiles, Indian textiles, the garments sector is set for growth, buoyed by revival in domestic consumption and export demand. 2 Initiative of the BSE Investors Protection Fund
Peer comparison Year ended March 31, 2015 Income statement (Rs. crore) Lahoti State Trading Sicagen Coastal Total income 598.45 14752.76 670.26 278.61 Net sales 588.05 14494.01 654.55 277.76 EBITDA 21.99 213.69 21.33 27.88 Ordinary PAT 7.52 26.19 6.58 9.82 Adjusted PAT 7.52 26.19 6.58 9.82 Per share data (Rs.) Adjusted BVPS 31.71 23.57 120.88 141.27 Diluted EPS* 2.58 4.37 1.66 38.62 Growth (Y-o-Y) (%) Growth in Total income -17.64-5.87 3.29 20.95 Growth in Net sales -18.37-6.18 5.59 20.74 Growth in EBITDA -31.61-8.66-40.15 19.23 Growth in Adjusted PAT -43.21-105.32-61.09-9.87 Growth in EPS* -43.21-105.32-61.09-9.87 Profitability ratio (%) EBITDA margin 3.74 1.47 3.26 10.04 Adjusted PAT margin 1.28 0.18 1.01 3.53 Valuation ratios (Times) Price/EPS (P/E) 3.26 33.56 7.52 0.00 Price/Book value (P/BV) 0.26 6.22 0.10 0.00 Enterprise value (EV)/EBITDA 5.35 10.33 3.58 2.79 Note: Lahoti: Lahoti Overseas Ltd., State Trading: State Trading Corporation Of India Ltd., Sicagen: Sicagen India Ltd., Coastal: Coastal Corporation Ltd. Quarterly financials Quarter ended September 30, 2015 Income statement (Rs. crore) Q2FY16 Q1FY16 Q4FY15 Q3FY15 Q2FY15 Total income 107.39 118.15 177.82 185.25 123.93 Net sales 103.53 114.16 166.00 180.07 119.28 EBITDA 5.26 4.35 7.78 6.55 4.45 Ordinary PAT 1.11 0.71 3.20 2.46 1.71 Adjusted PAT 1.11 0.71 3.20 2.46 1.71 Growth (Q-o-Q) (%) Growth in net sales -9.31-31.23-7.81 50.96 14.30 Profitability ratio (%) EBITDA margin 5.08 3.81 4.68 3.64 3.73 Adjusted PAT margin 1.08 0.62 1.93 1.37 1.44 3 Initiative of the BSE Investors Protection Fund
Financial analysis In FY15, LOL reported net sales of Rs. 588.05 crore down 18.37% y-o-y. Total income witnessed a decline of -17.64% during the same period. Raw materials form the largest portion of cost for LOL. In FY15, raw materials cost as a percentage of net sales was at around 9*4.02%. The company reported EBITDA margins and adjusted PAT margins of 3.74% and 1.28%, respectively in FY15. LOL had high levels of leverage as on March 31, 2015. The total debt as on March 31, 2015 was at Rs. 101.71 crore compared to an adjusted net worth of Rs. 92.51 crore. LOL exhibited a cash conversion cycle of around 68 days in FY15. Operating cash flows for the company is positive in FY15. The company has paid a dividend of Re.0.40 per share for FY15, resulting in a dividend yield of 3.5% at the current market price of Rs. 11.4 per share. Annual financial statistics FY11 FY12 FY13 FY14 FY15 Income statement (Rs. crore) Total income 310.57 235.25 537.33 726.63 598.45 Net sales 308.46 233.55 533.18 720.41 588.05 EBITDA 14.13 13.42 22.58 32.16 21.99 Depreciation and amortization 2.04 1.97 1.69 3.96 2.66 EBIT 12.09 11.44 20.89 28.20 19.34 Interest 2.19 1.98 4.48 9.95 8.95 PBT 9.90 9.47 16.40 18.25 10.39 Ordinary PAT 6.31 6.97 13.43 13.23 7.52 Adjusted PAT 6.31 6.97 13.43 13.23 7.52 Balance sheet (Rs. crore) Adjusted net worth 56.58 62.58 74.64 86.51 92.51 Total debt 22.83 14.68 60.44 92.76 101.71 Cash and bank 0.93 3.97 3.63 4.02 8.55 Investments 24.03 18.22 16.92 15.71 25.02 Net fixed assets (incl. CWIP) 12.73 11.18 26.86 22.90 41.85 Net current assets (excl. cash, cash equivalents) 22.18 26.84 23.64 39.63 13.35 Per share data (Rs.) Adjusted BVPS 19.36 21.41 25.59 29.66 31.71 Diluted EPS* 2.16 2.38 4.60 4.54 2.58 DPS 0.40 0.40 0.40 0.40 0.40 Growth (Y-o-Y) (%) Growth in total income 16.71-24.25 128.40 35.23-17.64 Growth in net sales 16.58-24.28 128.29 35.12-18.37 Growth in EBITDA 39.28-5.08 68.29 42.44-31.61 Growth in adjusted PAT 9.95 10.45 92.76-1.47-43.21 Growth in EPS* 9.95 10.45 93.14-1.47-43.21 Key financial ratio EBITDA margin (%) 4.58 5.74 4.23 4.46 3.74 Adjusted PAT margin (%) 2.05 2.98 2.52 1.84 1.28 RoCE (%) 15.33 14.61 19.67 17.94 10.35 RoE (%) 11.66 11.70 19.58 16.42 8.40 Gross debt - equity (times) 0.40 0.23 0.81 1.07 1.10 Net debt - equity (times) 0.00 0.00 0.01 0.01 0.01 Interest coverage (times) 5.51 5.79 4.66 2.83 2.16 Current ratio (times) 2.46 2.54 1.33 1.42 1.19 Inventory days 9.33 12.61 7.24 3.53 3.26 Receivable days 40.11 44.63 37.91 50.00 66.52 4 Initiative of the BSE Investors Protection Fund
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