BUY CMP 71.65 Target Price 85.00 CAPRIHANS INDIA LTD Result Update (PARENT BASIS): Q1 FY16 SEPTEMBER 9 th 2015 ISIN: INE479A01018 Index Details Stock Data Sector Plastic Products BSE Code 509486 Face Value 10.00 52wk. High / Low (Rs.) 100.60/61.15 Volume (2wk. Avg.) 3632 Market Cap (Rs. in mn.) 941.05 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales 2555.83 2734.74 2953.52 EBITDA 143.22 161.21 177.01 Net Profit 70.52 81.26 90.31 EPS 5.37 6.19 6.88 P/E 13.34 11.58 10.42 Shareholding Pattern (%) As on June-15 As on March-15 PROMOTER 71.93 71.93 FIIs 0.00 0.00 DIIs 3.72 3.72 OTHERS 24.35 24.35 1 Year Comparative Graph SYNOPSIS Caprihans India Limited incorporated in 1946 is a subsidiary of Bilcare Research GMBH and is one of the largest manufacturers of PVC Films. In Q1 FY16, Net profit jumps to Rs. 22.85 million an increase of 7.13% against Rs. 21.33 million in the corresponding quarter of previous year. The company s net sales stood at Rs. 607.52 million in Q1 FY16 from Rs. 657.89 million over the corresponding quarter of previous year. During the quarter operating profit is Rs. 42.39 million as against Rs. 40.05 million in the corresponding period of the previous year, an increase of 5.84%. Reported earnings per share of the company stood at Rs. 1.74 in Q1 FY16 as against Rs. 1.62 in Q1 FY15, registered a growth of 7.13%. CAPRIHANS INDIA LTD S&P BSE SENSEX During the quarter Profit before tax stood at Rs. 35.35 million as against Rs. 33.04 million over the corresponding quarter of previous year, an increase of 6.99%. Net Sales and PAT of the company are expected to grow at a CAGR of 7% each 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 (%) Caprihans India Ltd 71.65 941.05 5.37 13.34 0.83 15.00 Arrow Coated Products Ltd 420.80 4940.20 6.03 69.78 19.36 25.00 Shaily Engineering Plastics Ltd 382.90 3185.10 17.45 21.94 4.07 20.00 Signet Industries Limited 33.50 9777.60 0.44 76.14 14.89 0.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results Updates- Q1 FY16 Caprihans India Limited incorporated in 1946 is a subsidiary of Bilcare Research GMBH and is one of the largest manufacturers of PVC Films has reported its financial results for the quarter ended 30 th June, 2015. Months June-15 June-14 % Change Net Sales 607.52 657.89-7.66% PAT 22.85 21.33 7.13% EPS 1.74 1.62 7.13% EBITDA 42.39 40.05 5.84% The company s net profit jumps to Rs. 22.85 million against Rs. 21.33 million in the corresponding quarter ending of previous year, an increase of 7.13%. Revenue for the quarter decreased by 7.66% to Rs. 607.52 million from Rs. 657.89 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 1.74 a share during the quarter as against Rs. 1.62 over previous year period. Profit before interest, depreciation and tax is Rs. 42.39 million as against Rs. 40.05 million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Cost of material consumed Employee benefits expense Depreciation & amortization expense (Rs in millions) Q1 FY16 Q1 FY15 % CHNG 428.84 449.21-5% 53.06 48.12 10% 7.03 7.00 0% Power, fuel & Water 46.68 46.28 1% Other expenses 63.76 61.91 3%
COMPANY PROFILE Caprihans India Limited incorporated in 1946 is a subsidiary of Bilcare Research GmbH. Caprihans India Limited is one of the largest manufacturers of PVC Films in India and has got expertise of more than 35 years in this field. The company manufactures and sells rigid and flexible PVC films, and plastic extruded products in India. It offers rigid PVC films, including pharmaceutical packaging films for packing tablets, capsules, ampoules, suppositories, and medical devices; other packaging films for food, cosmetics, gifts, blisters, and other technical and specialized packaging under the Sunblis and Sunplex names; specialty films for use in posters, decorative articles, labels and price tags, calendars, sequins, filing systems, indexes and dividers, albums, folding boxes, windows, sliding covers, playing and ID cards, lamp shades, cooling towers, etc. under the Sunvic name; and PVDC coated PVC films for packing hygroscopic pharmaceutical products under the Sundene name. The company also provides flexible PVC films under the Sunflex name for table covers, shower curtains, office stationery systems, shopping bags, toilet kits, wardrobe bags and linings, photo lamination, glass lamination and photo albums, raincoats and windsheeters, toys, balloons, play pools and beach articles, urine bags, hospital sheetings, air circulation beds, and insulation tapes and cable wraps. In addition, it offers plastic corrugated boards used in advertising industry for POP displays, danglers, light diffusers, and folio cases under the Sunpac name; rigid PVC foam boards and sheets for use in exhibition panels, partitions for interiors, false ceilings, advertising signs, and hoardings under the SunBoard name; ABS sheets for vacuum formed luggage shells, auto accessories, refrigerator linings, interiors of luxury coaches and railway coaches, and executive chair backs under the Sunlac name; and PP sheets that are used as construction material in textile, sugar, pharmaceutical, and chemical industries under the Sunlene name.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, 2014-2017E FY14A FY15A FY16E FY17E SOURCES OF FUNDS Shareholder's Funds Share Capital 131.34 131.34 131.34 131.34 Reserves and Surplus 955.83 999.32 1080.58 1170.89 1. Sub Total - Net worth 1087.17 1130.66 1211.92 1302.23 Non Current Liabilities Other Long term Liabilities 5.10 4.90 5.19 5.45 Long term Provisions 17.10 20.64 23.53 26.35 2. Sub Total - Non Current Liabilities 22.20 25.54 28.72 31.81 Current Liabilities Trade Payables 178.46 203.35 223.69 241.58 Other Current Liabilities 121.24 102.11 114.36 124.66 Short Term Provisions 41.72 46.55 50.74 54.29 3. Sub Total - Current Liabilities 341.42 352.01 388.79 420.53 Total Liabilities (1+2+3) 1450.79 1508.21 1629.43 1754.56 APPLICATION OF FUNDS Non-Current Assets a) Fixed Assets 172.65 161.34 169.41 176.18 b) Long Term loans and advances 18.34 36.15 42.66 48.20 c) Other non-current assets 26.89 27.15 28.78 30.22 d) Deferred Tax Assets (Net) 1.00 11.51 13.35 15.22 1. Sub Total - Non Current Assets 218.88 236.15 254.19 269.82 Current Assets Inventories 366.68 274.96 286.04 290.56 Trade receivables 573.63 606.16 636.47 687.39 Cash and Bank Balances 207.64 315.50 365.98 409.90 Short-terms loans & advances 50.67 26.03 29.93 33.83 Other current assets 33.31 49.41 56.82 63.07 2. Sub Total - Current Assets 1231.92 1272.06 1375.24 1484.74 Total Assets (1+2) 1450.79 1508.21 1629.43 1754.56
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 2451.11 2555.83 2734.74 2953.52 Other Income 2.04 2.47 2.59 2.75 Total Income 2453.15 2558.30 2737.33 2956.27 Expenditure -2336.74-2415.08-2576.12-2779.26 Operating Profit 116.41 143.22 161.21 177.01 Interest -0.03-0.03-0.03-0.04 Gross profit 116.38 143.19 161.17 176.97 Depreciation -35.33-34.47-36.54-39.10 Profit Before Tax 81.05 108.72 124.64 137.87 Tax -28.50-38.20-43.37-47.57 Net Profit 52.55 70.52 81.26 90.31 Equity capital 131.34 131.34 131.34 131.34 Reserves 955.83 999.32 1080.58 1170.89 Face value 10.00 10.00 10.00 10.00 EPS 4.00 5.37 6.19 6.88 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 647.32 567.78 607.52 637.90 Other income 0.65 0.65 0.50 0.54 Total Income 647.97 568.43 608.02 638.43 Expenditure -609.90-542.00-565.63-599.62 Operating profit 38.07 26.43 42.39 38.81 Interest -0.01-0.01-0.01-0.01 Gross profit 38.06 26.42 42.38 38.80 Depreciation -7.73-11.61-7.03-8.01 Profit Before Tax 30.33 14.81 35.35 30.78 Tax -10.90-4.90-12.50-10.71 Net Profit 19.43 9.91 22.85 20.07 Equity capital 131.34 131.34 131.34 131.34 Face value 10.00 10.00 10.00 10.00 EPS 1.48 0.75 1.74 1.53
Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) 4.00 5.37 6.19 6.88 EBITDA Margin (%) 4.75 5.60 5.89 5.99 PBT Margin (%) 3.31 4.25 4.56 4.67 PAT Margin (%) 2.14 2.76 2.97 3.06 P/E Ratio (x) 17.91 13.34 11.58 10.42 ROE (%) 4.83 6.24 6.71 6.93 ROCE (%) 13.96 15.72 16.32 16.59 EV/EBITDA (x) 6.30 4.37 3.57 3.00 Book Value (Rs.) 82.78 86.09 92.27 99.15 P/BV 0.87 0.83 0.78 0.72 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 71.65, the stock P/E ratio is at 11.58 x FY16E and 10.42 x FY17E respectively. Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs. 6.19 and Rs. 6.88 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 7% each over 2014 to 2017E. On the basis of EV/EBITDA, the stock trades at 3.57 x for FY16E and 3.00 x for FY17E. Price to Book Value of the stock is expected to be at 0.78 x and 0.72 x for FY16E and FY17E respectively. We recommend BUY in this particular scrip with a target price of Rs. 85.00 for Medium to Long term investment. INDUSTRY OVERVIEW The Indian plastics industry made a promising beginning in 1957 with the production of polystyrene. Thereafter, significant progress has been made, and the industry has grown and diversified rapidly. The industry spans the country and hosts more than 2,000 exporters. It employs about 4 million people and comprises more than 30,000 processing units, 85-90 per cent of which are small and medium-sized enterprises. Steady Growth in Exports India is one of the most promising exporters of plastics among developing countries. The plastics industry produces and exports a wide range of raw materials, plastic-moulded extruded goods, polyester films, laminates, moulded/soft luggage items, writing instruments, plastic woven sacks and bags, polyvinyl chloride (PVC), leather cloth and sheeting, packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/medical surgical ware, tarpaulins, laminates, fishnets, travel ware, and others. Demand from original equipment manufacturers (OEMs) has led to producers focusing more on delivering products customised in line with end-user needs. Moreover, the Indian plastics industry has started manufacturing specific items to meet customer requirements. Design, style, and pattern are set based on the requirements of customers in export markets. The Indian plastics industry offers excellent potential in terms of capacity, infrastructure and cheap labour availability. It is supported by a large number of polymer producers, and plastic process machinery and mould manufacturers in the country. Among the industry s major strengths is the availability of raw materials in the
country. Thus, plastic processors do not have to depend on imports. These raw materials, including polypropylene, high-density polyethylene, low-density polyethylene and PVC, are manufactured domestically. Outlook The Indian plastics industry has excellent potential in terms of capacity, infrastructure and the availability of cheap labour. It is supported by the large number of polymer producers, and plastic process machinery and mould manufacturers in the country. Among its major strengths is the fact that the raw material used for manufacturing plastics is produces in the country itself and plastic processors do not have to depend upon imports. Raw materials such as PP, HDPE, low-density polyethylene and PVC are manufactured locally and imports of these products are negligible. 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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