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SHARETIPSINFO >>Research Reports >>VISAKA INDUSTRIES (09-12-2009)
COMPANY OVERVIEW:
Visaka Industries was established in the year 1981. Company is into the business of manufacturing corrugated cement fiber sheets. First factory was commenced in Patancheru, Andhra Pradesh with capacity of 36000 tons in 1985. At present company is the second largest sheet manufacturer in India.
Visaka has seven factories spread across India. The production capacity is 650000 tons of corrugated sheets per year.
Company diversified into textile yarn manufacturing in 1992. It produces about 9000 tons of yarn per annum.
The non-asbestos and fiber board & panel division was established in 2009 to cater to the needs of modern construction. This division has the capacity of producing 30000 tons of sheets per year.
PRODUCT MIX:
Product |
Sales (In crore) |
% of total |
Asbestos Products |
Rs 479.6 crore |
79.10% |
Textile Yarn |
Rs 117.35 crore |
19.35% |
Boards |
Rs 9.33 crore |
1.53% |
INDUSTRY OUTLOOK:
Asbestos Cement Sheets is 70 year old industry. The total capacity in India is around 3 million tons. There are four major players in the market catering to 60% of the total demand. Industry is growing at rate of 18% per annum.
INVESTMENT RATIONAL:
Company is good play on rural infrastructure.
With increase in demand for affordable housing in the rural area, company is expected to do brisk business.
As the global economy is showing sign of recovery. Its textile yarn manufacturing division is expected to perform better in the coming quarters.
At current market price stock is giving dividend yield of 3.5%.
Stock is trading at PE multiple of 4x to trailing twelve month earning whereas industry average is 8x.This makes the stock undervalued at current price.
SHAREHOLDING PATTERN:
|
|
NO. OF SHARES |
% OF TOTAL |
PROMOTERS |
5987530 |
|
37.70% |
INSTITUTION |
401303 |
|
2.53% |
GENERAL PUBLIC |
9492119 |
|
59.77% |
GRAND TOTAL |
15880952 |
|
100.00% |
FINANCIAL:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
TOTAL INCOME |
307.59 |
406.9 |
439.58 |
585.38 |
EXPENDITURE |
-257.44 |
-347.36 |
-395.02 |
-492.46 |
PBDITA |
|
50.15 |
59.54 |
44.56 |
92.92 |
DEPRECIATION |
-10.6 |
-13.48 |
-15.66 |
-16.6 |
PBIT |
|
39.55 |
46.06 |
28.9 |
76.32 |
INTEREST |
|
-10.45 |
-11.5 |
-15.72 |
-17.02 |
PBT |
|
29.1 |
34.56 |
13.18 |
59.3 |
TAX |
|
-9.83 |
-10.92 |
-5.52 |
-19.49 |
PAT |
|
19.27 |
23.64 |
7.66 |
39.81 |
Key Highlights:
CAGR IN TOTAL INCOME IS 23.9%
CAGR IN PBDITA IS 22.8%
CAGR IN NET PROFIT IS 27.3%
RATIOS:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
EPS |
|
12.13476 |
14.88665 |
4.823678 |
25.06927 |
PBDITA MARGIN |
16.30417 |
14.63259 |
10.13695 |
15.87345 |
NPM |
|
6.264833 |
5.809781 |
1.742572 |
6.800711 |
INTEREST COVER |
3.784689 |
4.005217 |
1.840764 |
4.489412 |
Key Highlights:
EPS is increasing at CAGR of 27.3%.
PBDITA margin remained stable at 16% except for the year FY08 where it took dip to 10%. The hit in margin was because of the increase in the cost of raw materials in the FY08.
NPM also remained almost flat at 6% except for the year FY08 where it took dip to 1.74%.
Interest cover is comfortable over the years at around 4 except for a dip it has seen in FY08 to 1.8.
COMPARISION OF Q2FY2010 WITH Q2FY2009:
|
|
Q2FY09 |
%CHANGE |
Q2FY10 |
TOTAL INCOME |
126 |
-4% |
120.9 |
EXPENDITURE |
-107.03 |
|
-98.13 |
PBDITA |
|
18.97 |
20% |
22.77 |
DEPRECIATION |
-4.34 |
|
-5.21 |
PBIT |
|
14.63 |
|
17.56 |
INTEREST |
|
-3.82 |
|
-2.14 |
PBT |
|
10.81 |
|
15.42 |
TAX |
|
-3.81 |
|
-4.64 |
PAT |
|
7 |
54% |
10.78 |
Key Highlights:
Total Income for Q2FY10 decline by 4% to Rs 120.9 crore on YoY basis.
PBDITA for Q2FY10 surged by 20% to Rs 22.7 crore on YoY basis.
PAT for Q2FY10 moved up by 54% to Rs 10.78 crore on YoY basis. Spectacular increase in PAT is due to the lower base of last year.
VALUATION &OUTLOOK:
At cmp of Rs 127, it is trading at 3.6X to FY10E EPS. We expect Rs 35 to be the EPS for FY10. The industry average PE is 8X, so if we value the company at conservative PE of 6X the price comes at Rs 210. The stock seems to be undervalued and there is still good room for appreciation.
Company also has good dividend paying track record. At current price the dividend yield comes out at 3.5%. This limits the downside on the counter.
CONCLUSION:
The stock is for investors with at least 8 to 12 month investment horizon. The downside on the counter is limited. Stock is undervalued with favorable risk reward ratio.
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