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SHARETIPSINFO >>Research Reports >>EID PARRY (INDIA) (16-02-2009)
LISTING |
|
|
Rs142 |
|
Rs268/Rs126 |
|
Rs2 |
PE |
2 |
P/BV |
2.42 |
COMPANY OVERVIEW:
The Company got established in 1788. EID Parry is now the part of Murugappa Group. It is engaged in the manufacture and marketing of a wide range of product that can be broadly divided into the following groups:
SUGAR
BIO-PESTICIDES
NEUTRACEUTICALS
SUGAR: E.I.D. Parry (India) Limited, is a pioneer in the manufacture of plantation white sugar from sugarcane. Parry set up the first Sugar Factory in 1842 at Bandipalayam, now at Nellikuppam. With the course of time, three other plants at Pugalur, Pudukottai and Pettavaithallai were established to manufacture sugar. Today, the integrated sugar complex, situated in Nellikuppam has a crushing capacity of 5,000 Metric Tons of cane per day (TCD). The Nellikuppam plant holds the distinction of being one of the largest sugar plants in India.
BIO PRODUCT: EID Parry Bio products division developed in-house technology for extraction of Azadirachtin from neem seeds. The facility is located at Thyagavalli produces and exports nearly 2000 kilograms of Azadirachtin every year. In a similar fashion, the bio-fertilizers unit at Nelikuppam produces eco-friendly fertilizers under the commercial name of Farm Boon and Garden Bloom.
NEUTRACEUTICALS: The logo of the Parry Neutraceuticals division is a stylized depiction of the sun, water, and the plant – three vital components that go into the making of one of the world’s richest natural neutrients – Spirulina. The Oonaiyur facility not only manufactures Spirulina, but also the microscopic alga, called Dunaliella salina, the richest natural beta carotene source, known in nature.
SECTORAL OUTLOOK:
The prices of sugar have risen 5%, 8%and 7% in Kolkata, Mumbai and Delhi, respectively since the beginning of January this year. The prices of sugar in fact have been registering big jumps both for the wholesale and the retail consumer countrywide since January last year. The rise in wholesale price was as high as 50% in some parts of the country since January 2008.
The jump in wholesale sugar price in run-up period to January 1, 2009, and since then up to January 9, 2009, in Kolkata was about 120 per quintal. In Mumbai the hike is Rs156 per quintal. In Delhi, the hike is Rs40 per quintal.
Much of the price hike towards 2008-end and early-2009 was driven by lower output estimates-only 180 lakh tones in the 2008-09 sugar year-compared to earlier estimates of 220 lakh tones.
SUPPLY AND DEMAND SITUATION IN INDIA:
SHAREHOLDING PATTERN:
|
|
NO. OF SHAES |
% OF TOTAL |
PROMOTERS |
40983370 |
|
45.92% |
INSTITUTION |
27232373 |
|
30.52% |
GENERAL PUBLIC |
21030781 |
|
23.56% |
GRAND TOTAL |
89246524 |
|
100.00% |
FINANCIAL:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
TOTAL INCOME |
819.13 |
1030.44 |
738.69 |
729.32 |
EXPENDITURE |
-660.2 |
-852.78 |
-537.6 |
-710.34 |
OPERATING PROFIT |
158.93 |
177.66 |
201.09 |
18.98 |
DEPRECIATION |
-28.17 |
-29.17 |
-32.87 |
-44.03 |
PBIT |
|
130.76 |
148.49 |
168.22 |
-25.05 |
INTEREST |
|
-3.5 |
-7.39 |
-2.11 |
-13.45 |
PBT |
|
127.26 |
141.1 |
166.11 |
-38.5 |
TAX |
|
-23 |
-25.28 |
-42.91 |
21.92 |
PAT |
|
104.26 |
115.82 |
123.2 |
-16.58 |
KEY HIGHLIGHTS:
TOTAL INCOME IN 2008 HAS DECLINED FROM THE PEAK IN 2006 BY 29.23%.
OPERATING INCOME IN 2008 HAS DECLINED FROM THE PEAK IN 2006 BY 89.3%.
NET PROFIT IN 2008 HAS DECLINED FROM THE PEAK IN 2006 BY 114%.
RATIO:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
|
EPS |
11.67525 |
12.96976 |
13.79619 |
-1.85666 |
|
OPM |
19.40229 |
17.24118 |
27.22252 |
2.602424 |
|
NPM |
12.72814 |
11.23986 |
16.67817 |
-2.27335 |
INTEREST COVERAGE |
37.36 |
20.06622 |
79.72512 |
-1.86245 |
KEY HIGHLIGHTS:
EPS DECLINED FROM Rs 13.79 TO -1.85.
OPM DECLINED FROM 27% TO 2.6.
NPM DECLINED FROM 16.6 TO -2.27.
INTEREST COVERAGE TOO TURNED NEGATIVE FROM 79 IN 2007 TO -1.86 IN 2008.
COMPARISION OF Q3FY2009 WITH Q3FY2008:
|
|
31/12/07 |
%CHG |
31/12/08 |
TOTAL INCOME |
233.07 |
-62.70% |
86.92 |
EXPENDITURE |
-238.36 |
|
-93.48 |
OPERATING INCOME |
-5.29 |
-24% |
-6.56 |
DEPRECIATION |
-11.03 |
|
-12.62 |
PBIT |
|
-16.32 |
|
-19.18 |
INTEREST |
|
-6.85 |
|
-2.2 |
PBT |
|
-23.17 |
|
-21.38 |
TAX |
|
-0.16 |
|
4.93 |
PAT |
|
-23.33 |
29.40% |
-16.45 |
KEY HIGHLIGHTS:
TOTAL INCOME DECREASED BY 62.7%.
OPERATING INCOME DECREASED BY 24%.
PAT SHOWED A INCREASSE BY 29.4% THOUGH PAT STILL REMAINED NEGATIVE FOR THE QUARTER ENDED.
VALUATION:
We expect EPS for 2010E to be around Rs14 per share. This is because of the uptrend in the sugar cycle. At CMP of Rs142 stock is trading at 10.9X to 2010E earning. We value the company at 15X to 2010E earning on the view of good outlook for the sector. The price we reach is of Rs210. The company in good time also pays dividend of Rs 4 per share. EID Parry has recently sold its sanitary ware business and Rs81 per share cash it is expected to receive. Company also holds 69% stake in Coromondel fertilizer. These are icying on the cake for investors. At current market price one is getting the business for free. It is value for money investment.
CONCLUSION:
Investors with long term at least one year time horizon should start accumulating the stock. Sugar cycle showing uptrend and is expected to continue till 2011.
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