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Emkay Global Financial Services Ltd. January 06, 2010 |1
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Contents
Equity Advisory August 11, 2014
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Emkay Global Financial Services Ltd. 1
Financial Snapshot (Consolidated) (Rsmn)
YE- Net EBITDA EPS EPS RoE EV/
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
FY13A 58,553 8,891 15.2 4,573 15.7 8.6 18.5 46.0 27.3 8.1
FY14A 80,998 21,320 26.3 13,751 47.2 200.7 43.3 15.3 11.6 5.6
FY15E 124,113 23,207 18.7 14,651 50.3 6.5 33.3 14.3 10.7 4.2
FY16E 143,156 26,634 18.6 17,277 59.3 17.9 29.6 12.2 9.1 3.2
Aurobindo Pharma
Solid future providing an opportunity to accumulate
August 11, 2014
Rating
Buy
Previous Reco
Hold
CMP
Rs721
Target Price
Rs890
EPS Chg FY15E/FY16E (%) 15.5/13.1
Target Price change (%) 41.3
Nifty 7,569
Sensex 25,329
Price Performance
(%) 1M 3M 6M 12M
Absolute -2 21 42 348
Rel. to Nifty -1 7 15 232
Source: Bloomberg
Relative price chart
150
275
400
525
650
775
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
0
50
100
150
200
250%
Aurobindo Pharma (LHS) Rel to Nifty (RHS) Source: Bloomberg
Stock DetailsSector Pharmaceuticals
Bloomberg ARBP IB
Equity Capital (Rs mn) 291
Face Value(Rs) 1
No of shares o/s (mn) 291
52 Week H/L 787/ 154
Market Cap (Rs bn/USD mn) 210/ 3,434
Daily Avg Volume (No of sh) 2,123,110
Daily Avg Turnover (US$mn) 23.5
Shareholding Pattern (%)
Jun'14 Mar'14 Dec'13
Promoters 54.3 54.6 54.7
FII/NRI 27.6 23.7 21.2
Institutions 7.7 9.9 10.4
Private Corp 1.6 2.1 3.0
Public 8.8 9.7 10.7
Source: Bloomberg
n Aurobindos Q1FY15 results (vs expectation)- Revenues at
Rs29.1bn (vs Rs28.9bn), EBITDA Rs6.6bn (vs Rs6.5bn) and
APAT at Rs4.1bn (vs Rs4.2bn)
n Consolidation of Actavis acquired European business led to
lower margins. 1Q15 was the last quarter of high
contribution from gCymbalta. API business growth low at 4%
n Long term scale benefits outweigh near term consolidation
challenges. US base business excluding gCymbalta remains
strong and EU turnaround to add to the bottom line in FY16
n Tepid financial performance in FY15E provides an
opportunity to accumulate for long term solid returns.
Upgrade to BUY; TP of Rs 890 (15x FY16E EPS of Rs 59.3)
EU consolidated numbers smooth; US continues to be strongBeing the last quarter with gCymbalta exclusivity, US business continued to deliver solid
growth of 79% yoy (in Dollar terms, up 67% yoy to USD 186mn). Aurolife and
Auromedics continued healthy growth with Aurolife generating revenues of USD 26mn
(FY14 full year revenues ~USD 75mn). Europe & RoW business were up 229% yoy as
the quarter saw consolidation of the acquired business of Actavis. The acquired
business contributed Rs 6.2bn sales in the quarter. ARVs business was up 17% during
the quarter. API business was up 4% yoy (high value non-betalactam business was up
5% yoy, and SSPs was up 7% yoy). During the quarter, the company filed 40 ANDAs
including 8 filings for injectables. Till date, it has filed a total 376 ANDAs, of which 194
have been approved, out of which 29 have received Tentative Approvals and balance
are pending for approval.
US base business strong growth ahead; Opportunity to accumulate
Aurobindo has come a long way from its FY13 sales of Rs 58bn to ~Rs125bn in FY15E(
29bn already in 1Q15). Profitability has also improved sharply from 13% in FY13 to base
business EBITDA margins of 22.5% in the current quarter. We believe even excluding
one-off opportunities like gCymbalta, Aurobindo has been able to build a strong base
business in the US. Also, the leverage on the books today is sharply lower from ~USD
600mn in FY13 to USD 448mn in 1Q15 with D/E now below 1x. We believe going ahead
the pipeline in US launches remains strong (especially injectable space) and EU
turnaround possibilities give the company an excellent platform to achieve strong top
line and bottom line performance. We are building in 22% CAGR growth in the US
market for Aurobindo from FY14-16E. Taking confidence from managements reiteration
of an EU business turnaround we are building in an EBITDA neutral performance in
FY16E. From a near term perspective we believe financials for the company couldremain suppressed, however the same today provides a good opportunity to accumulate
a high quality growth stock at a good discount (12x FY16E EPS) to peer pharma names.
Valuation
We are upgrading our target multiple on the stock to 15x FY16E EPS factoring the
strong growth ahead (24% CAGR FY16E-FY18E). We upgrade the stock to a BUY with
a TP of Rs 890 (630 earlier) at 15x on our FY16E EPS of Rs 59.3.
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Aurobindo Pharma Result Update
Emkay Research August 11, 2014 2
Exhibit 1: Quarterly financial
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 yoy (%) qoq (%) FY14 FY13
Revenue 17,156 19,139 21,406 23,298 29,111 69.7 24.9 80,998 58,553
Expenditure 14,079 14,755 14,968 15,869 22,529 60.0 42.0 59,670 49,661
as % of sales 82% 77% 70% 68% 77% 74% 85%
Consumption of RM 8,913 9,192 8,977 8,978 13,806 54.9 53.8 36,060 29,908
as % of sales 52% 48% 42% 39% 47% 45% 51%
Employee Cost 1,889 1,960 2,134 2,336 3,084 63.2 32.0 8,319 6,633
as % of sales 11% 10% 10% 10% 11% 10% 11%
Other expenditure 3,277 3,603 3,856 4,554 5,639 72.1 23.8 15,290 13,120
as % of sales 19% 19% 18% 20% 19% 19% 22%
EBITDA 3,077 4,384 6,438 7,430 6,582 113.9 -11.4 21,328 8,892
Depreciation 719 766 760 880 908 3,125 2,487
EBIT 2,358 3,617 5,678 6,549 5,673 140.6 -13.4 18,203 6,405
Other Income 39 51 36 107 108 232 285
Interest 254 246 237 342 189 1,079 1,313
PBT 2,143 3,423 5,477 6,314 5,593 161.0 -11.4 17,356 5,377
Total Tax 589 501 1,331 1,565 1,464 3,986 827PAT before MI 1,554 2,922 4,145 4,749 4,129 165.7 -13.1 13,370 4,550
Minority interest (MI) 11 11 14 2 12 38 25
Adj. PAT before extraordinary 1,565 2,932 4,159 4,751 4,140 164.5 -12.9 13,407 4,574
Extraordinary expenses 1,379 583 -16 -267 -14 1,679 1,636
Reported PAT 186 2,350 4,175 5,018 4,154 2133.5 -17.2 11,728 2,939
AEPS (Rs) 5.4 10.1 14.3 16.3 14.2 164.5 -12.9 46.1 15.7
Margins (%) (bps) (bps)
EBIDTA 17.9 22.9 30.1 31.9 22.6 467 -928 26.3 15.2
EBIT 13.7 18.9 26.5 28.1 19.5 574 -862 22.5 10.9
PBT 12.5 17.9 25.6 27.1 19.2 672 -789 21.4 9.2
Adj. PAT 9.1 15.3 19.4 20.4 14.2 510 -617 16.5 7.8
Effective Tax rate 27.5 14.6 24.3 24.8 26.2 -132 140 23.0 15.4
Source: Company, Emkay Research
Exhibit 2: Quarterly segmental break-up
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 yoy (%) qoq (%) FY14 FY13
Formulations
USA 6,248 7,308 9,312 11,160 11,157 78.6 0.0 34,028 17,526
ARVs 1,918 2,331 2,204 1,949 2,242 16.9 15.0 8,402 7,503
Europe & Row 2,839 2,644 2,845 3,026 9,351 229.4 209.0 11,354 8,843
Total formulations 11,005 12,283 14,361 16,135 22,750 106.7 41.0 53,784 33,872
APISSPs
Cephs 2,222 2,429 2,583 2,544 2,385 7.3 -6.3 9,778 7,652
Non-Pen Non -Cephs 2,163 2,067 2,175 2,350 2,120 -2.0 -9.8 8,755 9,373
Total API 2,084 2,684 2,687 2,654 2,198 5.5 -17.2 10,109 8,337
Sale of Dossiers 6,469 7,180 7,445 7,548 6,703 3.6 -11.2 28,642 25,362
Source: Company, Emkay Research
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Aurobindo Pharma Result Update
Emkay Research August 11, 2014 3
Conference Call Highlights
Guidance (FY14E)
Management guided to maintain Rs 4.0bn PAT for the quarter as the base PAT goingahead
Base EBITDA margin to be maintained at 22-23% Capex- Rs 6.0bn
Business Highlights
US
gCymbalta sales expected to decline going ahead on account of entry of competitionand price erosion
ANDA filings During the quarter, the company has filed 40 ANDAs, 18 of which areinjectables
Management expects limited approvals in the near terms but sees strong number ofapprovals in FY16E
Both Aurolife and Auromedics part of business to grow stronger. Aurolife posted USD26mn sales during the quarter
Other highlights
Actavis acquired EU business was consolidated for the 1st time in this quarter. Thesame contributed Rs 6.24 bn to top line
Management has guided for EUR 10mn EBITDA loss from the acquired business inthe year FY15E and expects to break even on the same in FY16E
As on date, net debt has been reduced from to USD 448mn. Full year ECB debtrepayment is estimated to be ~USD 17mn
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Aurobindo Pharma Result Update
Emkay Research August 11, 2014 4
Key Financials (Consolidated)
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net Sales 58,553 80,998 124,113 143,156
Growth (%) 26.5 38.3 53.2 15.3
Expenditure 49,662 59,678 100,906 116,521Raw Materials 29,908 36,060 63,682 73,575
Employee Cost 6,633 8,319 12,584 14,316
Other Exp 13,122 15,299 24,640 28,631
EBITDA 8,891 21,320 23,207 26,634
Growth (%) 45.7 139.8 8.9 14.8
EBITDA mar gin (%) 15.2 26.3 18.7 18.6
Depreciation 2,487 3,125 3,599 3,962
EBIT 6,403 18,195 19,608 22,672
EBIT marg in (%) 10.9 22.5 15.8 15.8
Other Income 285 232 412 409
Interest expenses 1,313 1,079 762 644
PBT 5,375 17,348 19,258 22,437Tax 827 3,635 4,607 5,161
Effective tax rate (%) 15.4 21.0 23.9 23.0
Adjusted PAT 4,548 13,713 14,651 17,277
Growth (%) 8.2 201.5 6.8 17.9
Net Margin (%) 7.8 16.9 11.8 12.1
(Profit)/loss from JVs/Ass/MI -25 -38 0 0
Adj. PAT After JVs/Ass/MI 4,573 13,751 14,651 17,277
E/O items -1,634 -2,022 26 0
Reported PAT 2,939 11,729 14,677 17,277
PAT after MI 4,573 13,751 14,651 17,277
Growth (%) 8.6 200.7 6.5 17.9
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Equity share capital 291 291 291 291
Reserves & surplus 25,766 37,210 50,097 66,011
Net worth 26,058 37,501 50,388 66,302Minority Interest 110 257 257 257
Long Term Debt 12,253 14,940 15,290 12,881
Short Term Debt 22,361 23,546 22,935 19,321
Loan Funds 34,614 38,485 38,225 32,202
Other Liabilities 0 0 0 0
Total Liabilities 60,781 76,243 88,869 98,761
Gross Block 37,635 41,830 47,830 52,830
Less: Depreciation 11,246 14,613 18,212 22,174
Net block 26,389 27,217 29,618 30,656
Capital work in progress 2,185 3,097 0 0
Other Assets 409 382 3,479 3,479
Current Assets 43,796 64,202 84,466 97,762Inventories 19,236 23,675 37,404 43,143
Sundry debtors 15,970 26,366 34,004 39,221
Cash & Cash Equivalents 2,085 1,786 482 737
Loans & advances 5,749 11,662 10,201 11,766
Other current assets 756 713 2,376 2,896
Current liabilities 11,997 18,655 28,694 33,136
Accounts Payable 9,687 13,512 20,937 24,189
Other Current Liabilities 2,310 5,143 7,757 8,947
Net current assets 31,799 45,548 55,772 64,626
Misc. exp 0 0 0 0
Total Assets 60,781 76,244 88,870 98,761
Cash Flow
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
PBT (Ex-Other income) 5,090 17,115 18,846 22,028
Depreciation 2,487 3,125 3,599 3,962
Interest Provided 1,313 1,079 762 644
Other Non-Cash items 0 0 0 0
Chg in working cap -9,956 -14,048 -11,529 -8,599
Tax paid -827 -3,635 -4,607 -5,161
Operating Cashflow -3,408 2,538 6,839 12,875
Capital expenditure -2,661 -4,865 -2,903 -5,000
Free Cash Flow -6,069 -2,327 3,936 7,875
Other income 285 232 412 409Investments -155 27 -3,097 0
Investing Cashflow -2,530 -4,606 -5,588 -4,591
Equity Capital Raised 0 0 0 0
Loans Taken / (Repaid) 8,805 3,871 -260 -6,023
Interest Paid -1,313 -1,079 -762 -644
Dividend paid (incl tax) -363 -1,023 -1,533 -1,362
Income from investments 0 0 0 0
Others 0 0 0 0
Financing Cashflow 7,128 1,769 -2,555 -8,029
Net chg in cash 1,190 -299 -1,304 255
Opening cash position 895 2,085 1,786 482
Closing cash position 2,085 1,786 482 737
Key Ratios
Y/E Mar FY13A FY14A FY15E FY16E
Profitability (%)
EBITDA Margin 15.2 26.3 18.7 18.6
Net Margin 7.8 16.9 11.8 12.1
ROCE 12.2 26.9 24.3 24.6
ROE 18.5 43.3 33.3 29.6
RoIC 13.1 28.6 25.2 25.3
Per Share Data (Rs)
EPS 15.7 47.2 50.3 59.3
CEPS 24.3 58.0 62.7 73.0
BVPS 89.5 128.8 173.1 227.7DPS 1.2 3.5 5.3 4.7
Valuations (x)
PER 46.0 15.3 14.3 12.2
P/CEPS 29.8 12.5 11.5 9.9
P/BV 8.1 5.6 4.2 3.2
EV / Sales 4.1 3.0 2.0 1.7
EV / EBITDA 27.3 11.6 10.7 9.1
Dividend Yield (%) 0.2 0.5 0.7 0.6
Gearing Ratio (x)
Net Debt/ Equity 1.2 1.0 0.7 0.5
Net Debt/EBIDTA 3.6 1.7 1.6 1.2
Working Cap Cycle (days) 185.2 197.2 162.6 162.9
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Emkay Global Financial Services Ltd. 1
Financial Snapshot (Consolidated) (Rsmn)
YE- Net EBITDA EPS EPS RoE EV/
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
FY13A 19,230 14,091 73.3 7,096 18.0 2.4 25.8 23.3 11.4 5.7
FY14A 22,236 15,097 67.9 7,480 19.0 5.4 24.6 22.1 10.6 5.2
FY15E 24,239 16,470 67.9 7,625 19.3 1.9 22.8 21.7 9.6 4.7
FY16E 27,123 18,743 69.1 9,326 23.7 22.3 25.1 17.7 8.2 4.2
Sun TV Network
Muted quarter
August 08, 2014
Rating
Accumulate
Previous Reco
Accumulate
CMP
Rs420
Target Price
Rs461
EPS Chg FY15E/FY16E (%) -9 / -6
Target Price change (%) -6
Nifty 7,569
Sensex 25,329
Price Performance
(%) 1M 3M 6M 12M
Absolute -11 14 14 1
Rel. to Nifty -10 1 -8 -25
Source: Bloomberg
Relative price chart
300
335
370
405
440
475
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
-40
-30
-20
-10
0
10%
Sun TV Network (LHS) Rel to Nifty (RHS) Source: Bloomberg
Stock DetailsSector Media & Entertainment
Bloomberg SUNTV IB
Equity Capital (Rs mn) 1,970
Face Value(Rs) 5
No of shares o/s (mn) 394
52 Week H/L 488/ 324
Market Cap (Rs bn/USD mn) 164/ 2,671
Daily Avg Volume (No of sh) 745,015
Daily Avg Turnover (US$mn) 5.1
Shareholding Pattern (%)
Jun'14 Mar'14 Dec'13
Promoters 75.0 75.0 75.0
FII/NRI 16.8 16.0 15.5
Institutions 1.9 2.0 2.1
Private Corp 1.0 1.3 1.9
Public 5.3 5.7 5.6
Source: Bloomberg
n Weak on quality- Revenue at Rs6.3bn (+5.3% yoy), EBITDA at
Rs3.7bn (+4% yoy) with EBITDA margin at 58% (-72bps yoy).
PAT at Rs1.7bn (+1% yoy)
n Advt. growth of 0.5% yoy (vs estimate of 5%) disappointed.
Broadcast fees decline of 23% yoy was on expected lines.
IPL losses expanded to Rs435mn vs Rs308mn in Q1FY14
n Subscription growth decelerates with cable revenue declining
6% qoq while growing 15.7% yoy to Rs480mn; DTH revenue at
Rs1.3bn grew 20% yoy and 6% qoq
n Cut estimates for FY15/16E by 9%/6% due to disappointing
ad growth and deceleration in subscription revenue growth.
Maintain Accumulate with revised target price of Rs461
Revenue below expectations, lower costs aided EBITDA Reported revenue at Rs6.3bn was below estimates, largely on account of sub-par
ad growth. Broadcast fees decline of 23% yoy was on expected lines. Decline has
been on account of reduction in number of minutes retained by Sun for ad sales.
EBITDA at Rs3.6bn was up 4% yoy, 3% below our estimate. Programming cost waskept under control as it declined by 7% yoy and 4% qoq. Other expenses (Excluding
IPL) declined 28% yoy. It declined as there was provision for doubtful debts to the
tune of Rs100mn in Q1FY14. Lower cost led to EBITDA margin (Excl. IPL)
expansion of 266bps. PAT at Rs2.1bn increased 7% yoy yoy.
Ad revenue disappoints
Ad revenue was flattish yoy and declined marginally qoq, management attributed
weakness was on account of general elections. Weak ad growth was despite higherinventory utilization as company has not implemented 10+2ad cap/min. Smaller
channels continue to face pressure. The management expects advertising growth to pick
up from H2FY15E. Our estimates factor 9%/12% ad growth for FY15E/16E. The
company expects ad revenue growth to bounce back to 15-17% in FY16E.
Subscription growth to decelerate, weakness to continue in FY15E
Subscription revenue growth of 18% yoy was driven by 15.7% yoy growth in cable TV
revenues and 20% growth in DTH. However, cable revenue declined 6% qoq as
Q4FY14 revenue was higher on account of catch up revenue from Rest of India region.
Management expects it to be in the range of Rs480-500mn on a quarterly basis in
FY15E, implying FY15E growth at ~3%.
Outlook and valuationsAd growth disappointed despite increase in ad minutes and higher rates. Further,
deceleration in subscription growth and weak commentary on growth in FY15E has led
to cut in our estimates. Continued challenges in Telegu market, sub-par ad growth
(despite increase in ad minutes and realization) and substantial increase movie
acquisition cost would keep stock price under pressure in near-term. Nevertheless,
given the promising growth drivers and potential revenue triggers from ongoing
digitization remain the structural positive for long term. At CMP of Rs420, stock trades at
22x FY15E and 18x FY16E EPS with dividend yield of 2.4%.
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Sun TV Network Result Update
Emkay Research August 8, 2014 2
Exhibit 1: Quarterly financials
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Net Sales 6,019 4,664 5,083 5,202 6,336 5.3 21.8
Programming Cost 450 440 527 435 419 (7.0) (3.8)
as % of sales 7.5 9.4 10.4 8.4 6.6
Employee Expenses 442 483 494 506 458 3.5 (9.6)
as % of sales 7.3 10.3 9.7 9.7 7.2
SG&A and IPL expenses 1,590 365 342 260 1,782 12.1 585.2
as % of sales 26.4 7.8 6.7 5.0 28.1
Total operating expenditure 2482 1287 1363 1202 2659 7.1 121.3
EBITDA 3537 3377 3720 4000 3677 4.0 (8.1)
Depreciation 1,174 1,176 1,061 1,123 1,390 18.4 23.7
EBIT 2363 2201 2660 2877 2287 (3.2) (20.5)
Other Income 133.9 378.0 148.5 131.7 197.0 47.1 49.6
Interest 7 9 23 6 8
PBT 2489 2570 2785 3003 2476 (0.5) (17.5)
Tax 845 879 927 1,027 820 (3.0) (20.2)PAT 1644 1692 1858 1976 1656 0.7 (16.2)
Margins (%) (bps) (bps)
EBIDTA 58.8 72.4 73.2 76.9 58.0 (72) (1,886)
EBIT 39.3 47.2 52.3 55.3 36.1 (315) (1,921)
EBT 41.4 55.1 54.8 57.7 39.1 (228) (1,864)
PAT 27.3 36.3 36.5 38.0 26.1 (118) (1,184)
Effective Tax rate 33.9 34.2 33.3 34.2 33.1 (84) (110)
Source: Company, Emkay Research
Exhibit 2: Comparable abridged financials
Q1FY14 Q1FY15
Total Media and SunRisers Total Media and SunRisers
Particulars Entertainment Broadcasting Hyderabad Entertainment Broadcasting Hyderabad
Revenues 6019 5033 985 6335.8 5202 1134
Operating costs 3663 1189 1293 2658.6 1090 1569
EBITDA 3537 3844 -308 3677.2 4112 -435
EBITDA % 58.8 76.4 58.04 79.02
Source: Company, Emkay Research
Exhibit 3: Segmental revenue break-up
Rs mn Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
Ad Revenue 2,351 2,442 2,350 2,428 2,445 2,930 2,694 2,790 2,336 2,720 2,820 2,804
YoY Growth 2.2% -6.4% -8.9% 5.1% 4.0% 20.0% 14.6% 14.9% -4.5% -7.2% 4.7% 0.5%
Broadcast 390 410 450 370 370 340 360 350 347 310 260 270
YoY Growth 10.1% -2.4% 21.6% -5.1% -5.1% -17.1% -20.0% -5.4% -6.2% -8.8% -27.8% -22.9%
Total ad Revenue 2,741 2,852 2,800 2,798 2,815 3,270 3,054 3,140 2,683 3,030 3,080 3,074
Subscription Revenue
Analog 470 290 310 300 340 370 380 415 492 540 510 480
YoY Growth -13.0% -45.3% -44.6% -46.4% -27.7% 27.6% 22.6% 38.3% 44.8% 45.9% 34.2% 15.7%
DTH 790 840 860 890 900 940 1,000 1,068 1,084 1,130 1,210 1,280
YoY Growth 12.9% 20.0% 4.9% 6.0% 13.9% 11.9% 16.3% 20.0% 20.5% 20.2% 21.0% 19.9%
International 180 240 220 260 260 260 260 290 323 330 310 330
YoY Growth 11.7% 19.9% 29.4% 30.0% 44.4% 8.3% 18.2% 11.5% 24.3% 26.9% 19.2% 13.8%
Total 1,440 1,370 1,390 1,450 1,500 1,570 1,640 1,773 1,900 2,000 2,030 2,090
Source: Company, Emkay Research
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Sun TV Network Result Update
Emkay Research August 8, 2014 3
Exhibit 4: Quarterly financials (Ex-IPL)
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Net Sales 5,033 4,609 5,083 5,202 5,202 3.3 (0.0)
Cost of revenues 450 440 527 435 419 (7.0) (3.8)
as % of sales 8.9 9.5 10.4 8.4 8.0
Employee expenses 442 483 494 506 458 3.5 (9.6)
as % of sales 8.8 10.5 9.7 9.7 8.8
SG&A expenses 297 365 342 260 214 (28.0) (17.8)
as % of sales 5.9 7.9 6.7 5.0 4.1
Total operating expenditure 1,189 1,287 1,363 1,202 1,090 (8.3) (9.3)
EBITDA 3,844 3,322 3,720 4,000 4,112 7.0 2.8
Depreciation 1,174 1,176 1,061 1,123 1,390 18.4 23.7
EBIT 2,671 2,146 2,660 2,877 2,722 1.9 (5.4)
Other Income 133.9 378.0 148.5 131.7 197.0 47.1 49.6
Interest 7.1 9.0 23.4 5.9 8.1 14.1 37.3
PBT 2,797 2,515 2,785 3,003 2,911 4.1 (3.1)
Tax 845 879 927 1,027 820 (3.0) (20.2)
PAT 1,952 1,637 1,858 1,976 2,091 7.1 5.8
Margins (%) (bps) (bps)
EBIDTA 76.4 72.1 73.2 76.9 79.0 266 214
EBIT 53.1 46.6 52.3 55.3 52.3 (73) (298)
PBT 55.6 54.6 54.8 57.7 56.0 38 (177)
PAT 38.8 35.5 36.5 38.0 40.2 141 222
Effective Tax rate 30.2 34.9 33.3 34.2 28.2 (204) (604)
Source: Company, Emkay Research
Exhibit 5: Ad revenue trend
2,428 2,4452,930 2,694 2,790
2,3362,720 2,820 2,804
5% 4%
20%15%
15%
-4%
-7%
5%1%
0
500
1,000
1,500
2,000
2,500
3,0003,500
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Rsmn
-10%
-5%
0%
5%
10%
15%
20%25%
Ad Revenue YoY Growth
Source: Company, Emkay Research
Revision in estimates
Disappointing ad growth and deceleration in subscription revenue is resulting in 2%/3% cut
in revenue assumption for FY15/16E. However, lower cost assumption is restricting
EBITDA decline to 2% each for FY15/16E. Higher amortization charges have impacted the
profitability. Our revised EPS stands at Rs19.3 and Rs23.7 for FY15E and FY16E,
respectively.
Exhibit 6: Revision in estimates
FY15E FY16E
Particulars Old New % Chg. Old New % Chg.
Revenue 2,474 2,424 -2.0 2,790 2,712 -2.8
EBITDA 1,676 1,647 -1.7 1,913 1,874 -2.0EBITDA Margin % 67.7 67.9 21 bps 68.6 69.1 52 bps
PAT 837 762 -8.9 996 933 -6.3
EPS 21.2 19.3 -8.9 25.3 23.7 -6.3
Source: Company, Emkay Research
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Sun TV Network Result Update
Emkay Research August 8, 2014 4
Concall highlights
Ad revenues
Ad growth was muted as advertisers migrated to news channels on account of generalelections. Weak ad growth was despite higher inventory utilization as company has not
implemented 10+2ad cap/min. It has been broadcasting 14min/hr of advertising on its
GEC and movie channels while for key programmes and smaller channels ad/hrextends to upto 15-16min/hr. As per management, implementation of 10+2ad cap
would not happen anytime soon.
Overall ad rates have remained consistent, in some cases they have been revisedupwards (GECs and movie channels) but for smaller channels ad rates have been
under pressure.
Management firmly believes that if 10+2ad cap/min is implemented then it would beeasily able to take ad rate hike. Advertising revenue growth to be in low double digits in
FY15E. Expect advertising revenues to bounce back to 15-17% in FY16E, led by
improved macro environment.
IPL
Losses increased during the quarter due to a) increase in player costs by Rs200mn b)Shift in venue entailed additional logistics cost c) Reduction in one playing team led to
loss of sponsorship revenue, d) lower gate receipts, e) Drop in overall rankings to 6 led
to loss in prize money of ~Rs60mn and f) failure to qualify for champions league led to
additional loss of sponsorship revenue. Further, BCCI has not indicated about
reimbursement of additional exp incurred by franchisees due to change in venue.
Management expects losses to reduce meaningfully in FY16E
Subscription revenue
Cable TV subscription revenues: Management expects it to be in the range ofRs480-500mn on a quarterly basis in FY15E. Pick-up in revenue would not happen
until digitization is implemented in Phase III and IV. Preceding quarters revenue was
higher as there was a lot of catch up revenue from Rest of India region.
DTH subscribers for the quarter stood at 10.5mn vs 10.2mn in the last quarter. TRAI mandated increase in tariff ceiling (+15%) has not been recorded in the books as
the management awaits the final verdict. Higher rate is being charged to the
distributors and incremental revenue is kept in the escrow account as matter is sub-
Judice
International subscription revenue is expected to growth ~10% in FY15 Nevertheless, management expects subscription revenue would reach Rs15-20bn
once the digitization across the country is complete. In FY14, subscription revenue
(DTH + Cable) was at Rs6.44bn
TRAI regulation for vertically integrated entities should help in making Sun Direct awholly owned subsidiary of Sun TV. The management is still awaiting the final
regulation.
Radio
Revenues grew 24% yoy to Rs380mn with PAT of Rs100mn (+120% yoy).Management intends to be conservative in phase III auctions and focus mainly on
metros and cities where there are operational synergies.
Expenses
Operating expenses (excluding IPL) declined yoy as there was one-time provision fordoubtful debts to the tune of Rs100mn in Q1FY14. Expenses are lower as company
has reduced investments for non-fiction content in Telegu genre
Investment in Telegu genre continues as company is striving to gain back lost marketshare in non-movie/fiction content
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Sun TV Network Result Update
Emkay Research August 8, 2014 5
The management indicated movie spends to be ~Rs4.5-5bn vs Rs4.2bn in FY14. Thecompany spends ~Rs20-25mn on acquiring movie right and ~Rs100-150mn for
blockbuster movies. It acquires right for ~150 movies in a year
Amortization during the quarter has increased due to rise in movie acquisition cost.Depreciation in Q1FY15: Rs190mn, Amortization: Rs1200mn. There is no impact on
depreciation due to change in policy as per revised companies act.
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Sun TV Network Result Update
Emkay Research August 8, 2014 6
Key Financials (Consolidated)
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net Sales 19,230 22,236 24,239 27,123
Growth (%) 4.1 15.6 9.0 11.9
Expenditure 5,139 7,139 7,769 8,379Employee Cost 1,994 2,190 2,308 2,532
Other Exp 1,844 2,158 2,339 2,541
SG&A 1,301 2,791 3,122 3,307
EBITDA 14,091 15,097 16,470 18,743
Growth (%) -0.4 7.1 9.1 13.8
EBITDA mar gin (%) 73.3 67.9 67.9 69.1
Depreciation 4,417 4,783 5,878 5,734
EBIT 9,674 10,314 10,592 13,010
EBIT marg in (%) 50.3 46.4 43.7 48.0
Other Income 722 866 821 1,001
Interest expenses 49 46 68 68
PBT 10,347 11,134 11,345 13,943Tax 3,306 3,682 3,773 4,681
Effective tax rate (%) 31.9 33.1 33.3 33.6
Adjusted PAT 7,096 7,480 7,625 9,326
Growth (%) 3.1 5.8 1.6 22.3
Net Margin (%) 36.6 33.5 31.2 34.1
(Profit)/loss from JVs/Ass/MI -25 -88 -23 -28
Adj. PAT After JVs/Ass/MI 7,096 7,480 7,625 9,326
E/O items 0 0 0 0
Reported PAT 7,096 7,480 7,625 9,326
PAT after MI 7,096 7,480 7,625 9,326
Growth (%) 2.4 5.4 1.9 22.3
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Equity share capital 1,970 1,970 1,970 1,970
Reserves & surplus 26,907 30,007 33,021 37,276
Net worth 28,878 31,977 34,991 39,246Minority Interest 318 318 318 318
Secured Loans 0 0 0 0
Unsecured Loans 0 0 0 0
Loan Funds 0 0 0 0
Net deferred tax liability 284 284 284 284
Total Liabilities 29,480 32,580 35,594 39,848
Gross Block 36,002 39,882 43,762 47,642
Less: Depreciation 22,234 26,739 31,577 36,729
Net block 13,768 13,143 12,185 10,913
Capital work in progress 28 28 28 28
Investment 2,437 7,437 7,437 7,437
Current Assets 16,253 15,302 19,520 25,622Inventories 5 5 2 2
Sundry debtors 5,835 5,740 7,143 7,719
Cash & bank balance 4,260 5,110 7,528 12,207
Loans & advances 5,580 3,784 4,125 4,887
Other current assets 573 663 722 808
Current lia & Prov 3,006 3,330 3,576 4,152
Current liabilities 3,006 3,330 3,576 4,152
Provisions 0 0 0 0
Net current assets 13,247 11,972 15,944 21,471
Misc. exp 0 0 0 0
Total Assets 29,480 32,580 35,594 39,848
Cash Flow
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
PBT (Ex-Other income) 9,625 10,268 10,524 12,942
Depreciation 4,417 4,783 5,878 5,734
Interest Provided 49 46 68 68
Other Non-Cash items 0 0 0 0
Chg in working cap -98 2,126 -1,554 -848
Tax paid -3,306 -3,682 -3,773 -4,681
Operating Cashflow 10,688 13,541 11,142 13,214
Capital expenditure -5,702 -4,158 -4,920 -4,462
Free Cash Flow 4,986 9,383 6,222 8,752
Other income 722 866 821 1,001Investments -193 -5,000 0 0
Investing Cashflow -5,172 -8,292 -4,099 -3,461
Equity Capital Raised 0 0 0 0
Loans Taken / (Repaid) 0 0 0 0
Interest Paid -49 -46 -68 -68
Dividend paid (incl tax) -4,357 -4,380 -4,611 -5,072
Income from investments 0 0 0 0
Others 3,150 4,288 5,163 7,593
Financing Cashflow -1,256 -139 485 2,453
Net chg in cash 4,260 5,110 7,528 12,207
Opening cash position 3,072 4,260 5,110 7,528
Closing cash position 4,260 5,110 7,528 12,207
Key Ratios
Y/E Mar FY13A FY14A FY15E FY16E
Profitability (%)
EBITDA Margin 73.3 67.9 67.9 69.1
Net Margin 36.6 33.5 31.2 34.1
ROCE 37.0 36.0 33.5 37.1
ROE 25.8 24.6 22.8 25.1
RoIC 43.8 48.2 52.2 63.8
Per Share Data (Rs)
EPS 18.0 19.0 19.3 23.7
CEPS 29.2 31.1 34.3 38.2
BVPS 73.3 81.1 88.8 99.6DPS 9.5 9.5 10.0 11.0
Valuations (x)
PER 23.3 22.1 21.7 17.7
P/CEPS 14.4 13.5 12.3 11.0
P/BV 5.7 5.2 4.7 4.2
EV / Sales 8.4 7.2 6.5 5.7
EV / EBITDA 11.4 10.6 9.6 8.2
Dividend Yield (%) 2.3 2.3 2.4 2.6
Gearing Ratio (x)
Net Debt/ Equity -0.1 -0.2 -0.2 -0.3
Net Debt/EBIDTA -0.3 -0.3 -0.5 -0.7
Working Cap Cycle (days) 170.6 112.6 126.7 124.7
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Your success is our success
Emkay
Res
ultUpdate
Emkay Global Financial Services Ltd. 1
Financial Snapshot (Standalone) (Rsmn)
Y/E Net Net EPS ABV RoA RoE PE P/ABV
Mar Income Profit (Rs) (Rs) (%) (%) (x) (x)
FY13A 603,662 141,280 206.5 1,124.6 1.0 15.4 11.7 2.2FY14A 678,347 108,912 145.9 1,167.8 0.6 10.0 16.6 2.1
FY15E 766,198 137,511 184.2 1,198.5 0.7 11.1 13.1 2.0
FY16E 902,019 163,144 218.5 1,342.2 0.7 12.1 11.1 1.8
State Bank of India
Ability to combat NPAs stays compromised
August 08, 2014
Rating
Reduce
Previous Reco
Reduce
CMP
Rs2,418
Target Price
Rs1,940
EPS Chg FY13E/FY14E (%) NA
Target Price change (%) NA
Nifty 7,569
Sensex 25,329
Price Performance
(%) 1M 3M 6M 12M
Absolute -6 16 58 45
Rel. to Nifty -5 2 27 8
Source: Bloomberg
Relative price chart
1450
1715
1980
2245
2510
2775
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
-20
-10
0
10
20
30%
State Bank of India (LHS) Rel to Ni fty (RHS) Source: Bloomberg
Stock DetailsSector Banking & Financial Services
Bloomberg SBIN IB
Equity Capital (Rs mn) 7,466
Face Value(Rs) 10
No of shares o/s (mn) 747
52 Week H/L 2,835/ 1,453
Market Cap (Rs bn/USD mn) 1,805/ 29,451
Daily Avg Volume (No of sh) 2,528,485
Daily Avg Turnover (US$mn) 105.0
Shareholding Pattern (%)Jun'14 Mar'14 Dec'13
Promoters 58.6 58.6 62.3
FII/NRI 13.1 11.8 11.3
Institutions 20.7 20.9 17.9
Private Corp 2.2 2.2 1.8
Public 5.4 6.6 6.7
Source: Bloomberg
n SBIs Q1FY15 NII/PPOP at Rs132.5/87.9bn were inline with
estimates. With marginally lower than estimated provisions,
the PAT at Rs33.5bn was 3% higher than estimatesn Stressed assets addition remains high at Rs135bn (4.4%
annualised). Adj. NIMs* contract 20bp yoy to 210bp. Asset
sale to ARC/write offs aid flat GNPA/ NNPA ratio
n Cost controls continue with Opex growth at just +3.3% yoy.
Even non-discretionary spends grow slower. We expect staff
costs and Opex to grow much slower in FY15
n Expect 0.7% RoA with weak bias. Retain REDUCE with TP of
Rs1940
*Adjusted NIMs: calculated NIMs adjusted for provision costs **stressed assets = slippages + fresh restructuring
Results in line; asset sale + write offs drive stable asset quality
SBIs Q1FY15 NII/PPOP at Rs132.5/87.9bn were in line with consensus estimates
driven by 13%yoy growth in loans, stable NIMs at 2.9% and modest 3.3% yoy growth in
Opex. It was commendable that the bank could continue to drive cost controls even over
relatively non-discretionary spends also like lighting, stationary, insurance and
depreciation too. Consequently, the operating profit grew by 16.4% yoy.
Asset quality optically remained stable with GNPA/NNPA remaining flat at 4.9%/2.7%
vs. 5/2.6% respectively. It was largely driven by asset sale to ARC and higher write offs.
The bank sold off asset worth Rs55.6bn to ARC, of which Rs23.3bn was accounted in
recovery and Rs30bn as write off. Stressed assets additio ns, remained elevated at
Rs135bn for Q1FY15, 4.4% annualized, thoug h low er than average of Rs15.5bn for
preceding two quarters.
Exhibit 1: Yield analysis
YoY QoQ% Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
(bps) (bps)
Yield on advances* 9.1 9.4 9.3 9.1 9.2 10 1
Yield on investments* 7.6 8.0 8.0 8.0 8.1 46 12
Yield on assets* 8.0 8.2 8.2 8.1 8.1 13 -3
Cost of funds* 5.1 5.3 5.2 5.2 5.2 8 -5
Cost of deposits* 5.9 6.0 6.1 6.0 6.6 73 66
NIM* 2.9 3.0 3.0 2.9 2.9 5 2
NIM (Reported) 3.2 3.2 3.2 3.17 3.1 -4 -5
Source: Company, Emkay Research * calculated
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State Bank of India Result Update
Emkay Research August 8, 2014 2
Exhibit 2: Key financials - Quarterly
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Net Interest Income 115,119 122,514 126,406 129,028 132,522 15.1 2.7
Other Income 44,743 32,778 41,903 65,857 42,521 -5.0 -35.4
Fee Income 25,580 26,146 29,713 44,671 28,372 10.9 -36.5
Net Income 159,862 155,292 168,309 194,884 175,043 9.5 -10.2
Total Operating Expenses 84,349 92,175 92,124 88,606 87,166 3.3 -1.6
As % Of Net Income 52.8 59.4 54.7 45.5 49.8
Employee Expenses 55,395 58,185 58,671 52,792 55,646 0.5 5.4
As % Of Net Income 34.7 37.5 34.9 27.1 31.8
Other Expenses 28,955 33,990 33,452 35,815 31,520 8.9 -12.0
As % Of Net Income 18.1 21.9 19.9 18.4 18.0
Operating Profit 75,513 63,116 76,186 106,278 87,877 16.4 -17.3
As % Of Net Income 47.2 40.6 45.3 54.5 50.2
Provisions 28,659 30,287 41,496 58,911 34,967 22.0 -40.6
Prov for NPA 22,658 26,454 34,286 58,838 39,034 72.3 -33.7
PBT 46,854 32,829 34,690 47,367 52,910 12.9 11.7
Total Tax 14,443 9,079 12,345 16,960 19,419 34.5 14.5Adjusted PAT 32,411 23,750 22,344 30,407 33,491 3.3 10.1
Extra Ordinary Items 0 0 0 0 0
Reported PAT 32,411 23,750 22,344 30,407 33,491 3.3 10.1
Reported EPS 47.4 34.7 32.7 40.7 44.9 -5.3 10.1
Source: Company, Emkay Research
Key highlights
Operating income growth doesnt suffice for provisions
We have been highlighting that the weaker operating matrix of SBI wouldnt be able to
suffice for the credit costs that the bank may have to take on. Even as, SBIs operatingprofit grew by 16.5% yoy for Q1FY15, driven by (1) similar NII growth (2) 11% yoy growth in
fee income and (3) slower growth in staff expenses, the NIMs adjusted for credit costs have
in fact declined by 20bp yoy.
We do not see much improvement in the adjusted NIMs over FY15-16 given that the
stressed assets additions have continued to remain high and provision cover still remains
around 47% on calculated basis. Key risk to our assump tions wil l be aggressive asset
sale to asset recons truction companies.
Exhibit 3: NIMs adjusted for provisions
2.9 2.9 3.0 3.0 2.9 2.9 2.9 2.9
1.9
2.3 2.32.2
1.6
2.1 2.1 2.1
1.0
0.6 0.60.8
1.3
0.8 0.8 0.8
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 FY14 FY15E FY16E
Calculated NIMs NIMs adjusted for provisions Provisions
Source: Company, Emkay Research
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State Bank of India Result Update
Emkay Research August 8, 2014 3
Networth impairment improves however still on the higher side
Though the NNPA/net worth ratio of SBI improved to 26.2% from 34%, two quarters back, it
still is on the higher side and also driven by significant asset sale to ARCs. The position of
subsidiary banks too continued to remain precarious with provision cover being modest at
44% for all subs put together and NNPA/Net worth ratio at 33%. At consolidated level the
NNPA/net worth stood at 27.5%.
Exhibit 4: Impairment ratio Q1FY15: Group companies
Associates and subsidiaries
Rs mn SBI SBM SBBJ SBP SBH SBT Total subs Total group
Gross NPLs 604,342 24,899 23,314 33,750 61,741 32,824 176,528 780,871
Net NPLs 318,838 12,820 13,575 21,177 31,968 20,047 99,586 418,424
Gross NPLs (%) 4.9 5.1 3.6 4.4 6.3 4.7 5.0 4.9
Net NPLs (%) 2.7 2.7 2.1 2.8 3.4 2.9 3.0 2.7
Net NPLs/Net worth (%) 26.2 27.0 24.4 33.8 37.2 40.0 33.0 27.5
Provision cover (%) 47.2 48.5 41.8 37.3 48.2 38.9 43.6 46.4
TTM RoE (%) 12.9 7.7 18.3 10.0 15.4 7.6
Source: Companies, Emkay Research # SBP numbers pertain to Q4FY13
International NIMs saw sharp decline
While the domestic NIMs remain stable at 3.54%, banks international NIMs declined
sharply by 34bps qoq to 1.08%. The management attributes MTN raising of $1.25bn in last
quarter as the reason behind the fall. This was quite surprising as it would explain only 12-
13bps of decline as the capital raising was just 3% of the international book.
Stress asset addition remains high
Though asset quality optically remained stable with GNPA/NNPA at 4.9%/2.7% vs.
5%/2.6% qoq, it was largely driven by asset sale to ARC and higher write off. The bank
sold off asset worth Rs55.6bn to ARC, of which Rs23.3bn was accounted in recovery and
Rs30bn as write off.
Of Rs99bn of slippages, Rs19.6bn were from agriculture, of which Rs6bn were from
Andhra Pradesh. Bank also had to classify another Rs1.5bn of retail loans as slippages,
which were given to same borrowers.
The stressed asset additions showed only marginal moderation and stood at Rs135bn, vs.
Rs155bn on average for past two quarters. The outstanding restructured pool now stands
at Rs422.4bn, 3.5% of advances. The total restructuring pipeline (CDR) stood at
Rs37bn.
Exhibit 5: Portfolio wise stress
Rs bn Total loans Restructured GNPA Total stressed % of total loans
SME 1,730 60 154 214 12.4
Mid corporate 2,161 231 246 477 22.1
Large corporate 2,262 113 14 127 5.6
Source: Company, Emkay Research
Tighter cost controls help Core PPOP show healthy growth
SBIs core operating profit growth turned positive for the third consecutive quarter after five
straight quarters of declines. However, the growth doesnt still seem to have stronger
footboard for few reasons:
Commissions on letter of credit and bank guarantees have grown by 7% yoy. Thiswould add to risks if its volume led growth.
Transaction fees has seen 37% growth with similar growth in ATM transaction fees
paid to other banks for its own customers Gains on foreign exchange transactions stood at Rs4.3bn, almost 16% increase over
last year
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State Bank of India Result Update
Emkay Research August 8, 2014 4
Commendably, SBI has controlled other Opex quite tightly with even some of the non-
discretionary spends like lighting, depreciation, and insurance, and communication
charges.
Exhibit 6: Core operating profit
Rs mn Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
Reported operating profit 77,908 77,602 75,513 63,116 76,186 106,278 87,877Add: Pension/gratuity/revision 7,430 18,500 16,560 17,150 18,080 14,219 14,050
Adjusted operating profit 73,729 75,310 63,503 60,754 73,804 120,497 101,927
Less: Treasury gains 4,178 2,292 12,010 2,362 2,382 4,011 5,868
Core operating profit 81,159 93,810 80,063 77,904 91,674 116,486 96,059
% yoy change -11.4 -12.1 -5.4 -0.6 13.0 24.2 20.0
Source: Company, Emkay Research
CASA ratio saw marginal drop
Deposits grew by 12.8%yoy aided by 15.1%yoy growth in term deposits and 9.8%yoy
growth in CASA. The growth in CASA deposits is entirely driven by saving deposits as
current account deposits remained flat yoy. CASA ratio declined by 92bps qoq to 43.5%.
Foreign loans, large corporate and Agri drive loan growth
SBIs loan book grew at 13% yoy driven by 20% growth in foreign loan book, 33% growth in
large corporate loans and 23% growth in agri loan. Retail and SME growth remain lower at
12%/ 6% respectively.
CET 1 at 9.77%+ a silver lining but impaired ratio still high at 26%
Post capital infusion by GOI of Rs20bn and QIP issuance of Rs80bn, SBIs core equity tier
I has now improved to a comfortable 9.77% . However, adjusted for NNPA/net worth of
26.2%, the same would stand at 7.1%.
Valuation and view
We estimate SBIs core operating profit to average assets to stay at 195bp for FY14-16E vsaverage 228bp for FY11-13. In our previous result updates, we have been highlighting that
weaker operating matrix would jeopardize SBIs ability to sustain continued asset quality
shock. FY14 results vindicate our view. The pressure also arises from the impairment of net
worth in the subsidiaries which warrants for lower consolidated banking ABV (including
associate banks). Retain REDUCE with a target price of Rs1940.
Exhibit 7: Loan portfolio
Rs bn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%) % of total
Foreign 1,862 1,892 2,177 2,143 2,238 20.2 4.4 18.7
SME 1,639 1,579 1,600 1,798 1,730 5.6 -3.8 14.4
Agriculture 1,261 1,216 1,234 1,547 1,558 23.5 0.7 13.0
Retail 2,166 2,242 2,308 2,377 2,425 12.0 2.0 20.2
Housing 1,247 1,300 1,351 1,407 1,442 15.6 2.5 12.0
Others 3,680 4,103 4,169 4,711 4,423 20.2 -6.1 36.9
Total 10,607 11,031 11,489 12,098 11,989 13.0 -0.9 100.0
Source: Company, Emkay Research
Exhibit 8: Deposit mix
Rs bn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Current Deposits 890 809 866 1,109 897 0.8 -19.1
Saving deposit 4,386 4,454 4,658 4,693 4,894 11.6 4.3
CASA 5,276 5,263 5,524 5,802 5,791 9.8 -0.2
Term deposits 7,298 7,662 7,976 8,142 8,398 15.1 3.1
Total Deposits 12,574 12,925 13,499 13,944 14,189 12.8 1.8
CASA (%) of domestic deposits 44.7 43.6 43.9 44.4 43.5 -116 -92
Source: Company, Emkay Research
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State Bank of India Result Update
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Exhibit 9: Non-interest income breakup
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Fee/Commission income 25,580 26,146 29,713 44,671 28,372 10.9 -36.5
Trading gains/(losses) 12,010 2,362 2,382 4,011 5,868 -51.1 46.3
Forex gains/(losses) 3,734 2,706 6,038 6,475 4,330 16.0 -33.1
Dividend income 330 38 83 4,514 199 NA -95.6
Other 69 0 427 8 1 -99.1 -92.2
Total 44,743 32,778 41,903 65,857 42,521 -5.0 -35.4
Source: Company, Emkay Research
Exhibit 10: Asset quality
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Gross NPAs 608,915 642,063 677,993 616,054 604,342 -0.8 -1.9
Net NPAs 299,898 321,514 371,574 310,961 318,838 6.3 2.5
Gross NPAs (%) 5.6 5.6 5.7 5.0 4.9 -0.05
Net NPAs (%) 2.8 2.9 3.2 2.6 2.7 0.09
Net NPAs/Net worth (%) 28.8 29.7 34.1 26.3 26.2
Provision cover (%) 50.7 49.9 45.2 49.5 47.2Provision cover (incl tech w/off) 60.6 60.2 58.3 62.2 62.7
Slippages (Rs bn) 137.7 83.7 114.4 79.5 99.3
Slippage rate (Annualised %) 5.2 3.0 4.0 2.6 3.3
Source: Company, Emkay Research
Exhibit 11: Trend in stress asset addition
Rs bn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
Slippages 82 59 138 84 114
Restructuring (calc) 20 81 53 86 39
Total stress assets 102 140 191 170 153
Total loans 9,781 10,456 10,607 11,031 11,489% of loans 1.0 1.3 1.8 1.5 1.3
Source: Company, Emkay Research
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Emkay Research August 8, 2014 6
Key Financials
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net interest income 443,313 493,067 562,248 668,476
Other income 160,348 185,280 203,951 233,543
Net income 603,662 678,347 766,198 902,019Operating expenses 292,844 357,254 384,513 448,118
Pre provision profit 310,817 321,093 381,685 453,901
PPP excl treasury 299,798 300,328 366,675 438,891
Provisions 111,308 159,354 176,444 210,402
Profit before tax 199,509 161,739 205,241 243,499
Tax 58,459 52,827 67,729 80,355
Tax rate 29% 33% 33% 33%
Profit after tax 141,050 108,912 137,511 163,144
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Liabilities
Equity 6,840 7,466 7,466 7,466
Reserves 981,997 1,175,357 1,282,297 1,410,503Net worth 988,837 1,182,822 1,289,763 1,417,969
Deposits 12,027,396 13,944,085 16,985,319 20,028,147
Borrowing & Others 2,671,257 2,795,438 3,039,612 3,334,736
Total liabilities 15,687,489 17,922,346 21,314,694 24,780,853
Assets
Cash and bank 1,148,202 1,325,496 1,614,668 1,903,913
Investments 3,218,722 3,750,267 4,721,343 5,474,070
Customer assets 10,746,716 12,331,102 14,445,267 16,859,279
Others 573,850 515,481 533,416 543,590
Total assets 15,687,489 17,922,346 21,314,694 24,780,853
Key Ratio (%)
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
NIM 3.1 2.9 2.9 2.9
Non-II/avg assets 1.1 1.1 1.0 1.0
Fee income/avg assets 0.8 0.8 0.8 0.8
Opex/avg assets 2.0 2.1 2.0 1.9
Provisions/avg assets 1.1 1.3 1.2 1.2
PBT/avg assets 1.3 0.9 1.0 1.0
Tax/avg assets 0.4 0.3 0.3 0.3
RoA 1.0 0.6 0.7 0.7
RoAE 15.4 10.0 11.1 12.1
GNPA (%) 4.9 5.1 5.2 4.8
NNPA (%) 2.1 2.6 2.8 2.5
Valuation Table
Y/E Mar FY13A FY14A FY15E FY16E
Net profit (Rs mn) 141,280 108,912 137,511 163,144
Shares in issue (mn) 684 747 747 747
EPS (Rs) 206.5 145.9 184.2 218.5
PER (x) 11.7 16.6 13.1 11.1
FDEPS(Rs) 206.5 145.9 184.2 218.5
FDPER (x) 11.7 16.6 13.1 11.1
Book value (Rs) 1,445.6 1,584.3 1,727.6 1,899.3
P/BV (x) 1.7 1.5 1.4 1.3
Adj book value (Rs) 1,124.6 1,167.8 1,198.5 1,342.2
P/ABV (x) 2.2 2.1 2.0 1.8
P/PPP (x) 5.3 5.6 4.7 4.0
Dividend yield (%) 1.9 1.5 1.7 1.9
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Emkay Global Financial Services Ltd. 1
Financial Snapshot (Consolidated) (Rsmn)
YE- Net EBITDA EPS EPS RoE EV/
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
FY13A 11,422 2,746 24.0 2,309 25.8 -5.0 9.7 10.1 10.6 0.9
FY14A 17,276 4,728 27.4 2,963 33.2 28.4 11.4 7.9 8.1 0.9
FY15E 17,368 3,922 22.6 2,359 26.4 -20.4 8.3 9.9 12.3 0.8
FY16E 27,960 9,037 32.3 2,246 25.1 -4.8 7.4 10.4 5.4 0.7
Nava Bharat Ventures
Ahead of estimates, however need clarity on Zambia
August 08, 2014
Rating
Hold
Previous Reco
Hold
CMP
Rs223
Target Price
Rs300
EPS Chg FY15E/FY16E (%) NA
Target Price change (%) NA
Nifty 7,649
Sensex 25,589
Price Performance
(%) 1M 3M 6M 12M
Absolute -19 36 42 33
Rel. to Nifty -17 19 13 -3
Source: Bloomberg
Relative price chart
150
180
210
240
270
300
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
-30
-20
-10
0
10
20%
Nava Bharat Ventures (LHS) Rel to Nifty (RHS) Source: Bloomberg
Stock DetailsSector Power
Bloomberg NBVL IB
Equity Capital (Rs mn) 179
Face Value(Rs) 2
No of shares o/s (mn) 89
52 Week H/L 300/ 148
Market Cap (Rs bn/USD mn) 20/ 325
Daily Avg Volume (No of sh) 43,034
Daily Avg Turnover (US$mn) 0.2
Shareholding Pattern (%)
Jun'14 Mar'14 Dec'13
Promoters 43.4 43.3 43.3
FII/NRI 32.7 32.8 32.7
Institutions 0.5 0.3 0.3
Private Corp 1.6 1.7 1.7
Public 21.8 22.0 22.0
Source: Bloomberg
n Q1FY15 earnings were ahead of our estimates due to higher
volumes and realisations at the power segment. APAT
(Standalone+150MW) Rs827mn vs expectation of Rs528mn
n Paloncha (150MW) reported PLF of 94% (85% QoQ), tariff of
~Rs5.2/u, PBT of Rs275mn implying generation cost of
~Rs4.2/u. Off-take tie up for AP plat at Rs5.2/u till May-15
n Renewed PPA for the 150MW Paloncha plant in AP till May-
15, provides comfort for earnings in FY15E. Further, Zambia
commissioning in FY16E provides stability to earnings,
against the likely fall in profitability of southern region plant
n We maintain our Hold rating and PT of Rs300 (10% discount
to FY15 book). Would wait for visibility on Zambia before
taking a call on the stock. The key risks to our call would be
a significant up-tick in merchant prices (unlikely in our view)
Better than expected profitability in Q1
Nava Bharat Ventures (NBVL) Q1FY15 operational performance was ahead of our
estimates with total APAT (standalone + 150MW Paloncha) at Rs827mn (Rs528mn exp)
as profitability at power segment was better due to higher than expected volumes and
realizations. The EBIT-margins at the Ferro-alloys segments declined to 2.6% vs 6.9%
YoY and 2.7% QoQ, while the same for sugar segment was at 8.1% vs 9.2% YoY and
6.0% QoQ. The overall profitability at both these segments was better than our
expectation. The 150MW plant at Paloncha (AP) reported better than expected sales
volume of 277MU, average realization of ~Rs5.2/unit and PBT of Rs275mn; implying
generation cost ~Rs4.2/unit. On a standalone basis, the depreciation was much lower at
Rs82mn vs Rs110mn YoY and Rs275mn QoQ, on account of change in depreciationpolicy (impact of Rs52mn) and a deferred tax impact of Rs16mn on the same.
Retain our FY15/16 earnings
Despite better than expected performance in Q1, we retain our FY15/16 earnings
estimates as we would wait for one more quarter before revising them. With PPA for
150MW Paloncha plant in AP renewed till May-15, provides comfort for earnings in
FY15E. Further, commissioning of Zambia in FY16E will provides stability to earnings
against the likely fall in profitability of southern region plant.
Need visibility on power plants/Zambia; Maintain Hold
We are relatively positive on NBVL vs JSWE, considering the valuation discount at
~30%. However, we are not structurally positive on the merchant power business model.Our key concerns for NBVL would be: 1) fuel supply for its 214MW capacity - AP
(150MW) and Odisha (64MW), 2) off-take for all its plants in the long-term and ,3) delays
and back-ended earnings profile from its huge investments planned in Zambia. We
maintain a Hold rating on the stock and would wait for visibility on Zambia to take a call
on the stock. We value the stock at Rs300/share based on a 10% discount to FY15E
book value (for uncertainties with respect to Orissa plants). The key risks to our call
would be a significant up-tick in merchant prices, though unlikely in our view.
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Nava Bharat Ventures Result Update
Emkay Research August 08, 2014 2
Exhibit 1: Standalone results snapshot
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Revenue 2,524 2,475 2,863 3,144 3,062 21.3 -2.6
Expenditure -1,997 -1,884 -2,216 -2,375 -2,377 19.0 0.1
as % of sales -79.1% -76.1% -77.4% -75.5% -77.6%
Consumption of RM -1,538 -1,360 -1,637 -1,554 -1,785 16.1 14.9
as % of sales -60.9% -55.0% -57.2% -49.4% -58.3%
Employee Cost -158 -160 -177 -253 -182 15.4 -28.2
as % of sales -6.2% -6.5% -6.2% -8.1% -5.9%
Other expenditure -302 -364 -402 -568 -410 35.7 -27.8
as % of sales -12.0% -14.7% -14.0% -18.1% -13.4%
EBITDA 526 591 647 769 685 30.1 -10.9
Depreciation -110 -111 -119 -275 -82 -25.9 -70.3
EBIT 416 479 528 494 603 45.0 22.1
Other Income 93 66 62 259 75 -19.5 -71.1
Interest -36 -34 -32 -81 -76 109.0 -6.3
PBT 473 511 558 672 602 27.4 -10.4
Total Tax -49 -52 -56 -139 -51Adjusted PAT 424 460 502 533 552 30.1 3.4
Extra ordinary items 79 12 -8 -71 11 -86.1 -115.5
Reported PAT 503 472 494 463 562 11.9 21.5
Adjusted EPS 4.2 4.6 5.0 6.0 5.4 27.4 -10.4
Margins (%) (bps) (bps)
EBIDTA 20.9 23.9 22.6 24.5 22.4 151 -209
EBIT 16.5 19.4 18.4 15.7 19.7 321 399
EBT 22.5 21.3 19.1 18.8 20.1 -238 135
PAT 16.8 18.6 17.5 17.0 18.0 122 105
Effective Tax rate 11.5 10.4 9.9 21.5 8.6 -280 -1287Source: Company, Emkay Research
Exhibit 2: Standalone segmental analysis
Segment analysis Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Revenues
Ferro Alloys 963 1,195 1,506 1,589 1,495 55.2 -5.9
Power 1,577 1,544 1,608 1,790 1,748 10.8 -2.4
Sugar 299 317 405 526 450 50.5 -14.5
Others 0 0 0 0 0
Total 2,839 3,056 3,518 3,906 3,692 30.1 -5.5
Less:Intersegment revenue -316 -580 -656 -762 -630 99.8 -17.2
Net Revenues 2,524 2,475 2,863 3,144 3,062 21.3 -2.6EBIT
Ferro Alloys 66 62 49 43 39 -40.5 -7.8
Power 492 460 538 590 614 24.9 4.2
Sugar 27 28 -24 32 36 32.7 14.2
Others -1 -1 -1 0 -1 -16.5 158.3
Total 584 549 562 664 689 17.9 3.8
EBIT Margins (%) (bps) (bps)
Ferro Alloys 6.9 5.2 3.3 2.7 2.6 -424 -5
Power 31.2 29.8 33.5 32.9 35.2 396 222
Sugar 9.2 8.8 -5.9 6.0 8.1 -109 203
Others - - - - -
Source: Company, Emkay Research
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Exhibit 3: AP-III (150MW) plant quarterly performance
Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Capacity 150 150 150 150 150
Generation (MU) 260 213 285 275 308 18 12
Sales (MU) 229 193 253 244 277 21 13
Realisation (Rs/unit) 5.8 5.8 5.8 5.8 5.2 -10.0 -10.3
Generation cost (Rs/unit) 5.0 5.2 4.8 4.6 4.2 -15.3 -8.3
Source: Company, Emkay ResearchType text here
Exhibit 4: Cash flow analysis
Rsmn FY09-12 FY13 FY14 FY15E FY16E
Opening Cash In Hand 2,366 6,439 7,305 3,608 3,669
Equity Requirement 10,887 3,160 3,022 4,231 1,813
AP II 83 0 0 0 0
Orissa II 2,300 0 0 0 0
AP III 1,632 1,088 0 0 0
Zambia 3,022 0 3,022 4,231 1,813
Others 3,850 2,072 0 0 0
Cash flow from Operations 16,466 2,776 684 4,211 4,956
Debt Repayment 6,000 107 107 447 -3,784
Other Debt 1,939 151 378 115 768
Others 2,555 1,205 -1,629 412 -3,596
Closing Cash 6,439 7,305 3,608 3,669 7,767
Source: Emkay Research, Company
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Nava Bharat Ventures: Investment summary
Earnings forecast - Emkay vs. Consensus
(Rs mn) Emkay Consensus Variance
FY15E 2,359 2,530 -6.8%
FY16E 2,246 3,493 -35.7%
Source: Emkay Research, Bloomberg
Company description:
Nava Bharat Ventures Ltd (fka Nava Bharat Ferro Alloys Ltd),
incorporated in 1972, is a diversified player with presence in ferro
alloys, power generation, coal mining and agri business. It owns andoperates 442MW of generation capacity with another 300MW is
under-construction. It also owns coal mine in Zambia with 120MT of
reserves. The company got listed in 1987.
Consolidated PAT
2,4302,198
2,9452,359 2,246
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FY12 FY13 FY14 FY15E FY16E
Rsmn
Source: Company, Emkay Research
Recent update
Merchant based capacities in AP have contracts tied-up till May-15 at Rs5.2/unit
150MW in AP declared COD 64MW in Odisha commissioned, but awaiting COD Sale of coal from Zambia mines started in Jun12 Started construction at Zambian 300MW power plant from
May12
Promoters
Promoted by Dr D Subba Rao, Doctorate in Metallurgy, Late Sri P Punnaiah and A.S. Chowdhri in 1972
Investment rationale
NBVL is a better story vis--vis JSWE, in terms of southern region (PPA for 150MW Paloncha plant in AP renewed till May-15 ), highmerchant tariffs in the near-to-mid term as its earnings are likely to be more stable with: 1) Zambia kicking in from FY15/FY16, 2) part
coal supplies from CIL and 3) natural hedge from Ferro alloys business and long coal in Zambia.
With PPA for the 150MW Paloncha plant in AP renewed till May-15, we remain reasonably confident on its earnings in FY15E.Further, Zambia commissioning in FY16E to provide stability in earnings, against the likely fall in its southern region plant profitability.
We are relatively positive on NBVL vs JSWE, considering the valuation discount at ~30%. However, we are not structurally positiveon the merchant power business model.
Key concerns: 1) fuel supply for its 214MW capacity - AP (150MW) and Odisha (64MW), 2) off-take for all its plants in the long-termand ,3) delays and back-ended earnings profile from its huge investments planned in Zambia.
Valuations
Stock trades 9.9xFY15E EPS & 0.8xFY15E book. We maintain a Hold rating on the stock and would wait for visibility on Zambia totake a call on the stock.
We value the stock at Rs300/share based on a 10% discount to FY15E book value (for uncertainties with respect to Orissa plants).
Investment risk
The key risks to our call would be a significant up-tick in merchant prices, though unlikely in our view.
Top Institutional holdings
Name Holding %
Highfields Capital 9.5
James Caird Asset Management 6.0
Deutsche Securities Mauritius 2.1
Copthall Mauritius 1.9
Wellington 1.6
Source: Bloomberg
Shares pledge
PeriodPromoters
holding
Pledge % of
promoter equity
Pledge % of
total equity
Jun-13 43.2% 0.0% 0.0%
Sep-13 43.3% 0.0% 0.0%
Dec-13 43.3% 0.0% 0.0%
Mar-14 43.3% 0.0% 0.0%
Jun-14 43.4% 0.0% 0.0%
Source: BSE
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Key Financials (Consolidated)
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net Sales 11,422 17,276 17,368 27,960
Growth (%) 14.8 51.3 0.5 61.0
Expenditure 8,676 12,547 13,447 18,923Employee Cost 955 1,042 0 0
Other Exp 3,822 2,253 5,500 6,132
SG&A 0 0 0 0
EBITDA 2,746 4,728 3,922 9,037
Growth (%) 58.0 72.2 -17.1 130.4
EBITDA mar gin (%) 24.0 27.4 22.6 32.3
Depreciation 588 1,119 947 3,018
EBIT 2,158 3,609 2,975 6,019
EBIT marg in (%) 18.9 20.9 17.1 21.5
Other Income 783 935 586 1,021
Interest expenses 189 1,263 612 3,248
PBT 2,752 3,282 2,949 3,792Tax 641 355 590 758
Effective tax rate (%) 23.3 10.8 20.0 20.0
Adjusted PAT 2,309 2,963 2,359 2,246
Growth (%) 0.2 38.6 -19.4 28.6
Net Margin (%) 18.5 16.9 13.6 10.9
(Profit)/loss from JVs/Ass/MI -197 -37 0 788
Adj. PAT After JVs/Ass/MI 2,309 2,963 2,359 2,246
E/O items -405 -164 0 0
Reported PAT 1,903 2,799 2,359 2,246
PAT after MI 2,309 2,963 2,359 2,246
Growth (%) -5.0 28.4 -20.4 -4.8
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Equity share capital 179 179 179 179
Reserves & surplus 24,428 27,148 29,078 31,324
Net worth 24,606 27,327 29,257 31,503Minority Interest -497 -876 2,042 3,465
Secured Loans 13,118 18,721 28,426 32,978
Unsecured Loans 0 0 0 0
Loan Funds 13,118 18,721 28,426 32,978
Net deferred tax liability 339 263 263 263
Total Liabilities 37,566 45,436 59,988 68,208
Gross Block 15,582 22,382 22,382 64,978
Less: Depreciation 4,030 5,149 5,893 8,911
Net block 11,553 17,233 16,489 56,067
Capital work in progress 13,630 16,452 33,023 -3,529
Investment 202 146 146 146
Current Assets 17,293 15,618 15,791 21,381Inventories 4,603 5,387 5,128 5,721
Sundry debtors 953 1,111 1,482 2,381
Cash & bank balance 7,305 3,608 3,669 7,767
Loans & advances 1,741 2,780 2,780 2,780
Other current assets 2,691 2,732 2,732 2,732
Current lia & Prov 5,112 4,014 5,462 5,857
Current liabilities 5,112 4,014 5,462 5,857
Provisions 0 0 0 0
Net current assets 12,182 11,604 10,329 15,524
Misc. exp 0 0 0 0
Total Assets 37,566 45,436 59,988 68,208
Cash Flow
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
PBT (Ex-Other income) 1,969 2,346 2,363 2,771
Depreciation 588 1,119 947 3,018
Interest Provided 189 1,263 612 3,248
Other Non-Cash items 0 0 0 0
Chg in working cap 896 -3,195 1,335 -1,097
Tax paid -641 -355 -590 -758
Operating Cashflow 3,001 1,179 4,667 7,182
Capital expenditure -6,529 -9,622 -16,774 -6,044
Free Cash Flow -3,528 -8,443 -12,107 1,138
Other income 783 935 586 1,021Investments 52 56 0 0
Investing Cashflow -5,694 -8,630 -16,188 -5,023
Equity Capital Raised 0 0 0 0
Loans Taken / (Repaid) 4,433 5,603 9,705 4,552
Interest Paid -189 -1,263 -612 -3,248
Dividend paid (incl tax) 402 447 447 447
Income from investments 0 0 0 0
Others -283 -138 2,934 1,081
Financing Cashflow 3,559 3,755 11,581 1,939
Net chg in cash 866 -3,696 60 4,098
Opening cash position 6,439 7,305 3,608 3,669
Closing cash position 7,305 3,608 3,669 7,767
Key Ratios
Y/E Mar FY13A FY14A FY15E FY16E
Profitability (%)
EBITDA Margin 24.0 27.4 22.6 32.3
Net Margin 18.5 16.9 13.6 10.9
ROCE 8.5 10.9 6.8 11.0
ROE 9.7 11.4 8.3 7.4
RoIC 13.4 17.3 12.3 13.8
Per Share Data (Rs)
EPS 25.8 33.2 26.4 25.1
CEPS 32.4 45.7 37.0 58.9
BVPS 275.4 305.8 327.4 352.6DPS 4.5 5.0 5.0 5.0
Valuations (x)
PER 10.1 7.9 9.9 10.4
P/CEPS 8.1 5.7 7.1 4.4
P/BV 0.9 0.9 0.8 0.7
EV / Sales 2.6 2.2 2.8 1.7
EV / EBITDA 10.6 8.1 12.3 5.4
Dividend Yield (%) 1.7 1.9 1.9 1.9
Gearing Ratio (x)
Net Debt/ Equity 0.2 0.6 0.8 0.8
Net Debt/EBIDTA 2.1 3.2 6.3 2.8
Working Cap Cycle (days) 155.8 168.9 140.0 101.3
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Emkay Global Financial Services Ltd. 1
Financial Snapshot (Consolidated) (Rsmn)
YE- Net EBITDA EPS EPS RoE EV/
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
FY13A 18,645 5,483 29.4 2,172 22.1 5.5 10.5 19.1 9.8 1.9
FY14A 21,734 6,025 27.7 2,350 24.0 8.2 10.6 17.7 9.0 1.8
FY15E 25,628 6,957 27.1 2,708 27.6 15.2 11.3 15.3 8.1 1.7
FY16E 27,856 7,710 27.7 3,122 31.8 15.3 12.0 13.3 7.3 1.5
Sobha
Weak Performance, may improve in rest FY15E
August 08, 2014
Rating
Accumulate
Previous Reco
Accumulate
CMP
Rs424
Target Price
Rs475
EPS Chg FY15E/FY16E (%) -17/-19
Target Price change (%) NA
Nifty 7,569
Sensex 25,329
Price Performance
(%) 1M 3M 6M 12M
Absolute -7 17 55 50
Rel. to Nifty -6 3 25 12
Source: Bloomberg
Relative price chart
200
275
350
425
500
575
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
-30
-14
2
18
34
50%
Sobha Developers (LHS) Rel to Nifty (RHS) Source: Bloomberg
Stock DetailsSector Real Estate
Bloomberg SOBHA IB
Equity Capital (Rs mn) 981
Face Value(Rs) 10
No of shares o/s (mn) 98
52 Week H/L 584/ 213
Market Cap (Rs bn/USD mn) 42/ 678
Daily Avg Volume (No of sh) 249,275
Daily Avg Turnover (US$mn) 1.9
Shareholding Pattern (%)
Jun'14 Mar'14 Dec'13
Promoters 60.6 60.6 60.6
FII/NRI 32.2 33.0 32.7
Institutions 3.6 2.9 2.8
Private Corp 1.1 0.8 1.1
Public 2.5 2.7 2.8
Source: Bloomberg
n Sells 0.75msf for Rs 4.8bn, down 20% QoQ & YoY. Achieves
18% of sales booking target of Rs 27bn. Cashflows too
remain weak with net cash from RE lowest in last 6 quarters
n Gross debt inches up to Rs 16.5bn vs. Rs 13.5bn QoQ.
Increase in debt is mainly due to payments of Rs 2.9bn to
acquire land in Kochi, Pune & Bangalore
n Operational and financial performance boils down to
launches. Sobha plans to launch 4msf+ in rest of FY15E to
attain its sales guidance as well as correct its debt levels
n Maintain Accumulate rating with TP of Rs 475. Uncertainty
towards sales booking run-rate would keep the stock under
pressure
Weak sales booking in Q1; would be a challenge to meet FY15 guidanceSobha Ltd. reported sales booking of 0.75msf for Rs 4.8bn, down 20% QoQ & YoY, was
worst ever quarterly run-rate in the recent history. The decrease was mainly due to weak
sales booking in Bangalore markets, attributed to no launches. Company has achieved
18% of its target sales booking of Rs 27bn for FY15E, which is much lower than 26% of
FY14 run-rate the company achieved in Q1FY14. To meet its target of Rs 27bn,
company will have to sell on an average Rs 7.4bn worth of sales booking every quarter,
which is 10% higher than the highest quarterly sales booking of Rs 6.7bn it achieved in
Q4FY13. Hence, to achieve the target would be quite a challenge
Balance sheet and cashflows to remain under pressure
Sobhas gross debt increased by Rs 3bn QoQ to Rs 16.5bn, the level which the
company was at post its QIP. The increase in debt is mainly due to outflow of Rs 2.85bn
towards land acquisition in Kochi, Pune and Bangalore. The debt also increased due to
lower collections from real estate business on back of lower sales booking. Going
forward, with no committed cash outflows towards land acquisitions and higher
collections seen from higher expected sales bookings, the gross debt level should
subside to ~Rs 15bn. As the pressure on sales booking run-rate would mount, it will be
seen in cashflows and hence on balance sheet
Performance boils down to aggressive launch pipeline
Sobhas sales bookings have always suffered when company is not able to launch
projects. With lower sales bookings, the cashflows and hence debt levels come under
pressure leading to more compelling reason for company to acquire land to launch. The
company with land acquisition in place is planning aggressive launch pipeline for
balance nine months of FY15E. The company has already launched 0.95msf across two
projects in Q2FY15 and expects another atleast 4.2msf of launches for other part of the
financial year. Launches in Q2FY15 have already led to an up-tick in the sales booking
run-rate, and company is quite confident of achieving the target of FY15E
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Sobha Result Update
Emkay Research August 08, 2014 2
Exhibit 1: Sales Booking Trend
0
2000
4000
6000
8000
Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115
Source: Company, Emkay Research
Exhibit 2: Collections Trend
0
1500
3000
4500
6000
Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115
Source: Company, Emkay Research
Exhibit 3: Quarterly Summary (Consolidated)
Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%) FY13 FY14 YoY (%)
Revenue 4,616 5,408 5,443 6,267 5,777 25.2 (7.8) 18,645 21,734 16.6
Expenditure 3,226 3,975 3,953 4,555 4,243 31.5 (6.8) 13,162 15,709 19.4as % of sales 69.9 73.5 72.6 72.7 73.4 100.0 100.0
Cost of Sales 2,122 2,928 2,799 3,311 3,053 9,583 11,160 16.5
as % of sales 46.0 54.1 51.4 52.8 52.8 72.8 71.0
Employee Cost 490 408 503 464 461 (5.9) (0.6) 1,635 1,865 14.1
as % of sales 10.6 7.5 9.2 7.4 8.0 12.4 11.9
Other expenditure 614 639 651 780 729 18.7 (6.5) 1,944 2,684 38.1
as % of sales 13.3 11.8 12.0 12.4 12.6 14.8 17.1
EBITDA 1,390 1,433 1,490 1,712 1,534 10.4 (10.4) 5,483 6,025 9.9
Depreciation 165 172 172 181 181 9.7 - 594 690 16.2
EBIT 1,225 1,261 1,318 1,531 1,353 10.4 (11.6) 4,889 5,335 9.1
Other Income 14 37 12 40 49 250.0 22.5 56 103 83.9
Interest 396 434 446 458 499 1,705 1,734
PBT 843 864 884 1,113 903 7.1 (18.9) 3,240 3,704 14.3
Total Tax 342 298 301 427 332 1,068 1,368
Adjusted PAT 501 566 583 686 571 14.0 (16.8) 2,172 2,336 7.6
(Profit)/loss from JV's/Ass/MI 0 0 2 -16 1 0 -14
APAT after MI 501 566 581 702 570 13.8 (18.8) 2,172 2,350 8.2
Extra ordinary items 0 0 0 0 0 0 0
Reported PAT 501 566 581 702 570 13.8 (18.8) 2,172 2,350 8.2
Reported EPS 5.1 5.8 5.9 7.2 5.8 22.1 24.0
Margins (%) (bps) (bps) (bps)
EBIDTA 30.1 26.5 27.4 27.3 26.6 (356) (76) 41.7 38.4 (330)
EBIT 26.5 23.3 24.2 24.4 23.4 (312) (101) 37.1 34.0 (318)
EBT 18.3 16.0 16.2 17.8 15.6 (263) (213) 24.6 23.6 (104)
PAT 10.9 10.5 10.7 11.2 9.9 (99) (133) 16.5 15.0 (154)
Effective Tax rate 40.6 34.5 34.0 38.4 36.8 (380) (160) 33.0 36.9 396
Operating Cashflows 1190 1181 1395 1959 591 (50.3) (69.8) 4,528 5,725 26.4
Land Monetisation Value 0 0 0 0 0 1,021 0 (100.0)
Gross Debt 13011 13513 13948 13498 16538 27.1 22.5 54,067 53,970 (0.2)
Net Debt 12295 12681 13030 12342 15315 24.6 24.1 50,037 50,348 0.6
Sales Bookings (msf) 0.92 1.00 0.74 0.92 0.75 (18.0) (18.1) 3.76 3.58 (4.5)
Sales Bookings (Rs mn) 6028 6323 5023 6051 4822 (20.0) (20.3) 22,147 23,425 5.8Source: Company, Emkay Research
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Sobha Result Update
Emkay Research August 08, 2014 3
Key Financials (Consolidated)
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net Sales 18,645 21,693 25,628 27,856
Growth (%) 32.4 16.3 18.1 8.7
Expenditure 13,162 15,709 18,671 20,146Employee Cost 1,635 1,865 2,044 2,249
Other Exp 0 0 0 0
SG&A 1,944 2,684 3,139 3,412
EBITDA 5,483 6,025 6,957 7,710
Growth (%) 17.5 9.9 15.5 10.8
EBITDA mar gin (%) 29.4 27.7 27.1 27.7
Depreciation 594 690 765 842
EBIT 4,889 5,335 6,193 6,868
EBIT marg in (%) 26.2 24.5 24.2 24.7
Other Income 56 103 0 0
Interest expenses 1,705 1,734 1,862 1,890
PBT 3,240 3,704 4,330 4,978Tax 1,068 1,368 1,572 1,806
Effective tax rate (%) 33.0 36.9 36.3 36.3
Adjusted PAT 2,172 2,350 2,708 3,122
Growth (%) 3.4 7.6 18.1 15.0
Net Margin (%) 11.6 10.7 10.8 11.4
(Profit)/loss from JVs/Ass/MI 0 14 -50 -50
Adj. PAT After JVs/Ass/MI 2,172 2,350 2,708 3,122
E/O items 0 0 0 0
Reported PAT 2,172 2,350 2,708 3,122
PAT after MI 2,172 2,350 2,708 3,122
Growth (%) 5.5 8.2 15.2 15.3
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Equity share capital 981 981 981 981
Reserves & surplus 20,386 21,933 23,838 26,156
Net worth 21,366 22,913 24,818 27,137Minority Interest 102 88 138 188
Secured Loans 12,924 12,997 15,438 15,474
Unsecured Loans 100 789 100 100
Loan Funds 13,024 13,786 15,538 15,574
Net deferred tax liability 638 1,010 1,190 1,383
Total Liabilities 35,130 37,797 41,684 44,282
Gross Block 6,053 6,650 7,450 8,050
Less: Depreciation 2,752 3,442 4,207 5,049
Net block 3,301 3,208 3,243 3,002
Capital work in progress 0 550 550 1,070
Investment 2 0 0 0
Current Assets 45,294 51,337 54,696 58,035Inventories 19,018 24,273 27,437 30,276
Sundry debtors 1,661 2,584 2,584 2,584
Cash & bank balance 670 1,055 750 750
Loans & advances 18,671 19,556 20,056 20,556
Other current assets 5,274 3,869 3,869 3,869
Current lia & Prov 13,467 17,298 16,806 17,825
Current liabilities 12,030 15,832 15,353 16,279
Provisions 1,437 1,466 1,452 1,546
Net current assets 31,827 34,039 37,891 40,210
Misc. exp 0 0 0 0
Total Assets 35,130 37,797 41,684 44,282
Cash Flow
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
PBT (Ex-Other income) 3,184 3,601 4,330 4,978
Depreciation 594 690 765 842
Interest Provided 1,705 1,734 1,862 1,890
Other Non-Cash items 0 0 0 0
Chg in working cap -1,300 -1,455 -3,977 -2,126
Tax paid -1,068 -1,368 -1,572 -1,806
Operating Cashflow 3,115 3,202 1,408 3,777
Capital expenditure -1,043 -1,147 -800 -1,120
Free Cash Flow 2,072 2,055 608 2,657
Other income 56 103 0 0Investments -2 2 0 0
Investing Cashflow -989 -1,042 -800 -1,120
Equity Capital Raised 0 0 0 0
Loans Taken / (Repaid) 616 762 1,752 36
Interest Paid -1,705 -1,734 -1,862 -1,890
Dividend paid (incl tax) -803 -803 -803 -803
Income from investments 0 0 0 0
Others -253 0 0 0
Financing Cashflow -2,145 -1,775 -913 -2,657
Net chg in cash -19 385 -305 0
Opening cash position 690 670 1,055 750
Closing cash position 670 1,055 750 750
Key Ratios
Y/E Mar FY13A FY14A FY15E FY16E
Profitability (%)
EBITDA Margin 29.4 27.7 27.1 27.7
Net Margin 11.6 10.7 10.8 11.4
ROCE 14.5 14.9 15.6 16.0
ROE 10.5 10.6 11.3 12.0
RoIC 14.6 15.1 16.2 16.6
Per Share Data (Rs)
EPS 22.1 24.0 27.6 31.8
CEPS 28.2 31.0 35.4 40.4
BVPS 217.9 233.7 253.1 276.7DPS 7.0 7.0 7.0 7.0
Valuations (x)
PER 19.1 17.7 15.3 13.3
P/CEPS 15.0 13.7 12.0 10.5
P/BV 1.9 1.8 1.7 1.5
EV / Sales 2.9 2.5 2.2 2.0
EV / EBITDA 9.8 9.0 8.1 7.3
Dividend Yield (%) 1.7 1.7 1.7 1.7
Gearing Ratio (x)
Net Debt/ Equity 0.6 0.6 0.6 0.5
Net Debt/EBIDTA 2.3 2.1 2.1 1.9
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Your success is our success
Emkay
Res
ultUpdate
Emkay Global Financial Services Ltd. 1
Financial Snapshot (Consolidated) (Rsmn)
YE- Net EBITDA EPS EPS RoE EV/
Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV
FY13A 33,464 3,712 11.1 2,184 6.3 21.1 25.1 50.8 30.8 11.7
FY14A 38,697 4,314 11.1 2,494 7.2 14.1 24.1 44.5 26.3 9.9
FY15E 45,114 5,392 12.0 3,095 8.9 24.1 25.6 35.9 21.0 8.5
FY16E 53,800 6,662 12.4 3,882 11.2 25.4 27.2 28.6 16.8 7.2
Berger Paints
Growth remains Buoyant; Retain Accumulate
August 08, 2014
Rating
Accumulate
Previous Reco
Accumulate
CMP
Rs306
Target Price
Rs355
EPS Chg FY15E/FY16E (%) NA
Target Price change (%) 27
Nifty 7,569
Sensex 25,329
Price Performance
(%) 1M 3M 6M 12M
Absolute 1 27 46 49
Rel. to Nifty 2 12 17 11
Source: Bloomberg
Relative price chart
150
185
220
255
290
325
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Rs
-20
-12
-4
4
12
20%
Berge r Paints (LHS) Rel to Ni ft y (RHS) Source: Bloomberg
Stock DetailsSector Consumers
Bloomberg BRGR IB
Equity Capital (Rs mn) 693
Face Value(Rs) 2
No of shares o/s (mn) 346
52 Week H/L 328/ 193
Market Cap (Rs bn/USD mn) 106/ 1,732
Daily Avg Volume (No of sh) 212,640
Daily Avg Turnover (US$mn) 1.0
Shareholding Pattern (%)
Jun'14 Mar'14 Dec'13
Promoters 75.0 75.0 75.0
FII/NRI 11.9 11.7 11.8
Institutions 2.6 2.7 2.7
Private Corp 1.7 1.5 1.5
Public N/A 9.1 9.1
Source: Bloomberg
n Healthy topline, but misses PAT estimatesConsolidated
Revenues at Rs 10.6bn, up 17% yoy, EBIDTA at Rs 1.1bn, up
28% yoy and APAT at Rs 554mn, up 17% yoy
n Decorative business posted healthy growth with volume
growth of ~9%. Improved growth in Automotive & Powder
Coating segments, but protective coatings stays muted
n Outlook for FY15 is buoyant with healthy growth in domestic
business and improved growth in industrial segment
n Remain buoyed by healthy outlook on decorative business
and revival in Auto & Powder Coating. Retain Accumulate
with revised price target of Rs 355
Revenues in line; but misses PAT estimates
Berger Paints consolidated revenues were in line led by healthy performance indomestic as well as international operations, but missed PAT estimates. Key highlights
are (1) Revenues at Rs 10.6bn, up 16.8% yoy (2) Ebidta at Rs 1.1bn, up 27.8% yoy;
EBIDTA margins up 90bps yoy to 10.8%, led by gross margins which improved 80bps
yoy to 39.6% (3) APAT grew 17% yoy to Rs 575m owing to higher tax outgo (expiry of
80IB income tax benefit for a unit in Jammu plant)
Decorative continue to do well; industrial segment sees revival
Domestic operations reported growth of 15% yoy to Rs 9.4bn with underlying volume
growth at about 9%, but were below our estimate of 12% yoy. Decorative business
continued to show steady progress led by Tier 2 & Tier 3 towns and some pick up in Tier
1 cities. Advertised and premium products continued to grow ahead of the category.
Automotive and Powder coating segments of industrial business witnessed improvement
in growth rates, but growth in protective coatings continued to be sluggish.
Gross margin improvement fuels standalone EBITDA performance
Standalone EBITDA was in line with expectation at Rs 1.1bn, up 24% yoy with EBITDA
margins improving 90bps yoy to 11.9%. Large part of EBITDA margins increase was
driven by gross margins improvement, which rose 100bps yoy to 40.1%; function of
price increases and mix improvement in favour of decorative segment. Other operating
costs were largely under control.
Outlook for FY15 remains buoyant
Domestic decorative business is expected to report higher growth in FY15 led by
sustained off-take in Tier 2/3 cities and gradual revival in Tier 1 cities. Industrial segment
is expected to improve further, while recovery in Protective coatings might come with a
lag. Raw material price outlook remains a concern, but price increase & better product
mix to ensure healthy margins.
Growth remains buoyant; Retain ACCUMULATE
Strong growth in domestic decorative business coupled with improving growth profile in
Tier 1 cities and Auto & Powder Coating business, expect growth momentum to sustain.
Our core arguments remain intact (1) gains from scale & size (2) shift in product portfolio
and (3) retaining market shares. We retain Accumulate with revised price target of Rs
355/share.
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Berger Paints Result Update
Emkay Research August 08, 2014 2
Exhibit 1: Consolidated Quartely Performance at a Glance
Y/E, Mar (Rs. m) Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 YoY (%) QoQ (%)
Revenue 9,078 9,662 10,298 9,660 10,605 16.8 9.8
Expenditure 8,181 8,620 8,982 8,600 9,458 15.6 10.0
Consumption of RM 5,557 5,837 6,231 5,829 6,402 15.2 9.8
as % of sales 61.2 60.4 60.5 60.3 60.4
Employee Cost 569 571 578 535 657 15.6 22.8
as % of sales 6.3 5.9 5.6 5.5 6.2
Other expenditure 2,055 2,213 2,174 2,235 2,399 16.7 7.3
as % of sales 22.6 22.9 21.1 23.1 22.6
EBITDA 897 1,042 1,315 1,060 1,147 27.8 8.1
Depreciation 152 165 183 208 213 40.0 2.3
EBIT 745 877 1,132 853 934 25.3 9.6
Other Income 86 83 83 107 105 21.7 -1.8
Interest 94 123 119 130 126 33.9 -3.1
PBT 738 837 1,097 829 913 23.8 10.1
Total Tax 247 210 274 275 338 37.3 22.9
Adjusted PAT 491 627 823 554 575 17.0 3.7(Profit)/loss from JV's/Ass/MI 0 0 0 0 0 - -
APAT after MI 491 627 823 554 575 17.0 3.7
Extra ordinary items 0 0 0 0 0 - -
Reported PAT 491 627 823 554 575 17.0 3.7
Adjusted EPS 1.4 1.8 2.4 1.6 1.7 17.0 3.7
Margins (%) Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 (bps) (bps)
EBIDTA 9.9 10.8 12.8 11.0 10.8 90 -20
EBIT 8.2 9.1 11.0 8.8 8.8 60 0
EBT 8.1 8.7 10.7 8.6 8.6 50 0
PAT 5.4 6.5 8.0 5.7 5.4 0 -30Effective Tax rate 33.4 25.1 25.0 33.2 37.1 360 390
Source: Company, Emkay Research
International operations posts revenue growth, but posts net loss
International operations reported another quarter of stellar growth posting 34% yoy growth
led by sustained growth in Nepal, India JV operations (Berger Becker Coatings) and
improvement in Bolix S.A., Poland. Bolix growth was led by shorter winter and better
weather conditions for paints in northern Europe. However, EBITDA was below expectation
at Rs 28mn and net loss of Rs 51mn due to higher interest and tax outgo due to continued
losses in Bolix, but the extent of loss has reduced. BJN India (erstwhile Sherwin Williams)
is gradually picking up and will take another 6 months to improve performance.
Exhibit 2: Revision in Earnings Estimates
FY15E FY16E
Y/E, Mar (Rs. mn) Earlier Revised % Chg. Earlier Revised % Chg.
Revenues 44687 45,114 1.0 53180 53,800 1.2
EBITDA 5381 5,392 0.2 6627 6,662 0.5
EBITDA Margin (%) 12.0 12.0 -10 bps 12.5 12.4 -10 bps
APAT 3096 3,095 0.0 3866 3,882 0.4
EPS 8.9 8.9 0.0 11.2 11.2 0.4
Source: Company, Emkay Research
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Berger Paints Result Update
Emkay Research August 08, 2014 3
Key Financials (Consolidated)
Income Statement
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Net Sales 33,464 38,697 45,114 53,800
Growth (%) 13.5 15.6 16.6 19.3
Expenditure 29,753 34,384 39,722 47,138Employee Cost 1,872 2,252 2,519 2,962
Raw material cost 20,586 23,454 27,213 32,456
SG&A 7,295 8,678 9,991 11,721
EBITDA 3,712 4,314 5,392 6,662
Growth (%) 19.9 16.2 25.0 23.6
EBITDA mar gin (%) 11.1 11.1 12.0 12.4
Depreciation 567 707 874 950
EBIT 3,144 3,607 4,518 5,712
EBIT marg in (%) 9.4 9.3 10.0 10.6
Other Income 314 360 360 360
Interest expenses 377 466 478 478
PBT 3,082 3,500 4,400 5,594Tax 898 1,006 1,305 1,712
Effective tax rate (%) 29.1 28.7 29.7 30.6
Adjusted PAT 2,184 2,494 3,095 3,882
Growth (%) 21.3 14.2 24.1 25.4
Net Marg in (%) 6.5 6.4 6.9 7.2
(Profit)/loss from JVs/Ass/MI 0 0 0 0
Adj. PAT After JVs/Ass/MI 2,184 2,494 3,095 3,882
E/O items 0 0 0 0
Reported PAT 2,184 2,494 3,095 3,882
PAT after MI 2,184 2,494 3,095 3,882
Growth (%) 21.3 14.2 24.1 25.4
Balance Sheet
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
Equity share capital 693 693 693 693
Reserves & surplus 8,839 10,514 12,339 14,840
Net worth 9,532 11,207 13,032 15,533Minority Interest 0 0 0 0
Secured Loans 2,615 1,933 2,615 2,615
Unsecured Loans 2,882 3,349 2,879 2,879
Loan Funds 5,497 5,282 5,494 5,494
Net deferred tax liability 408 538 501 501
Total Liabilities 15,436 17,027 19,027 21,528
Gross Block 9,795 13,472 14,272 15,272
Less: Depreciation 3,806 4,513 5,387 6,337
Net block 5,989 8,958 8,884 8,935
Capital work in progress 1,725 1,013 1,013 1,013
Investment 108 907 907 907
Current Assets 14,045 15,071 16,752 20,306Inventories 6,364 6,957 7,566 8,772
Sundry debtors 4,114 4,857 5,177 6,134
Cash & bank balance 2,270 1,841 2,470 3,729
Loans & advances 1,194 1,301 1,423 1,555
Other current assets 103 116 116 116
Current lia & Prov 6,436 8,921 8,529 9,633
Current liabilities 5,514 7,840 7,448 8,551
Provisions 922 1,081 1,081 1,081
Net current assets 7,609 6,149 8,223 10,674
Misc. exp 5 0 0 0
Total Assets 15,436 17,027 19,027 21,528
Cash Flow
Y/E Mar (Rsmn) FY13A FY14A FY15E FY16E
PBT (Ex-Other income) 2,768 3,140 4,040 5,234
Depreciation 567 707 874 950
Interest Provided 377 466 478 478
Other Non-Cash items -326 -5 0 0
Chg in working cap -1,299 1,161 -1,481 -1,192
Tax paid -858 -1,006 -1,305 -1,712
Operating Cashflow 1,206 4,693 3,002 4,118
Capital expenditure -2,463 -2,964 -800 -1,000
Free Cash Flow -1,258 1,729 2,202 3,118
Other income 314 360 360 360Investments -68 -799 0 0
Investing Cashflow -2,041 -3,763 -800 -1,000
Equity Capital Raised 12 0 0 0
Loans Taken / (Repaid) 2,087 -215 212 0
Interest Paid -377 -466 -478 -478
Dividend paid (incl tax) -484 -884 -1,10