astec lifesciences ltd. -...
TRANSCRIPT
Astec LifeSciences Ltd.
BUY
- 1 of 22 - Mondayy 30th
March, 2015
This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.
ST
OC
K P
OIN
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Target Price `210 CMP `140 FY17E PE 7.9x
Index Details Astec LifeSciences Ltd. (ASL) is an Indian manufacturer of agrochemical active ingredients, formulations and intermediate products. Until FY12 Astec operated only in one segment i.e. Enterprise Sales where it produced and sold active ingredients and bulk formulations. The company stepped up its expansion journey in FY13 when it broadened its business activities by venturing into two new verticals viz, Contract Manufacturing Operations and Enterprise Sales.
Contract Manufacturing Operations (CMO): Under this segment Astec manufactures key Fungicide and Herbicides outsourced by other major companies. It is a high margin segment and Astec expects this segment to drive the growth in coming years. Sales from CMO are expected to grow at 63.4% CAGR from 35.4 crores in FY14 to 153.48 crores by FY17E.
Enterprise Sales (ES): Contributing 75% of the Total Revenue, ES is currently the mainstay of ASL. The revenue from ES is expected to grow steadily at 9.3% CAGR on higher base as company expects to develop and market technically advanced products in coming years
Expansion of business activities coupled with margin improvement leads us to believe that the growth momentum of Astec LifeSciences will continue. We expect Astec LifeSciences to report three year net revenue CAGR of 23.4% to `388.8 crores by FY17. We expect PAT to increase at a 3 year CAGR of 54.5% to `32.0 crore in FY17 and the company to report an EPS of `17.8 in FY17. We initiate coverage on Astec LifeSciences as a BUY with a Price Objective of Rs. 210 representing a potential upside of ~50% over a period of 24 months. The target price is arrived at by assigning a PE multiple of 12x on FY17 EPS of `17.8. At the CMP of Rs. 140, the stock is trading at a PE multiple of 7.9x FY17E.
Sensex 27,975
Nifty 8,492
Industry Agrochem
Scrip Details
MktCap (` cr) 260.9
BVPS (`) 61.3
O/s Shares (Cr) 1.9
AvVol (Lacs) 1.1
52 Week H/L 32/161
Div Yield (%) 0.9
FVPS (`) 10.0
Shareholding Pattern
Shareholders %
Promoters 58.1
DIIs 1.5
FIIs 0.2
Public 40.2
Total 100.0
Astec vs. Sensex
0
50
100
150
200
250
300
350
400
Astec Life BSE Sensex
Key Financials (` in Cr)
Y/E Mar Net
Sales EBITDA PAT
EPS (`)
EPS Growth (%)
RONW (%)
ROCE (%)
P/E (x)
EV/EBITDA (x)
2014 207.0 34.8 8.7 4.7 - 7.6 10.0 29.9 10
2015E 254.9 47.0 16.0 8.6 82.9 12.7 14.5 16.2 7.5
2016E 311.0 60.1 21.6 11.7 36.0 15.2 17.5 12.0 6.1
2017E 388.8 78.8 32.9 17.8 52.1 19.8 20.9 7.9 4.8
- 2 of 22- Monday 30h March, 2015
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Company Background
Established in 1994, Astec LifeSciences is an Indian manufacturer of
agrochemical active ingredients, formulations and intermediate products. Astec
has a portfolio of fungicide and herbicide technical products and is a leader in
Triazole fungicides for Indian and global markets. Astec is a signatory to the
International Council of Chemical Association’s Responsible Care Initiative for
standards in Quality, Safety and Environment parameters.
Robust facilities at disposal: The Company has 2 multiproduct plants in Mahad, Maharashtra and an R&D site, manufacturing and pilot plant in Dombivli near Mumbai. The sites are certified to ISO 9001 (Quality), ISO 14001 (Environment) and OHSAS 18001 (Safety) standards.
Astec LifeSciences Ltd.
Enterprise Sales Revenue Share: 75% EBITDA Margin: 19.5%
Contract Manufacturing Operations Revenue Share: 75% EBITDA Margin: 20.2%
Branded Formulations: Revenue Share: 9% EBITDA Margin: 7%
Sale of active ingredients and bulk formulations to Agrochemical companies worldwide
Outsourced manufacturing services of key herbicides and fungicides for global companies
Sale of branded formulations in India through its subsidiary Astec Crop Care Pvt. Ltd.
Mahad and Dombivli plant
Source:Excel Cropcare Ltd., Ventura Research
Mahad I and Mahad II Plant Plant
Dombivli R&D centre and pilot plant
- 3 of 22- Monday 30h March, 2015
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Key Investment Highlights
Robust growth on the cards:
We expect Astec’s revenue to grow from 206.9 crores in FY14 to 388.8
crores by FY17. This growth is expected to be guided by its CMO business,
where it has added marquee clients to its portfolio. We expect CMO segment
to grow at CAGR of 63% to Rs. 153.5 crores by FY17 and constitute around
40% of sales. Meanwhile the Enterprise Sales is expecte to grow from 167.4
crores to 218.4 crores by FY17 at CAGR of 9.3%. The newly formed
Branded Formulations business is experiencing high growth but on a low
base. This division should experience significant growth as company builds
its PAN India foot print.
Past performance:
Astec LifeSciences’ topline grew at CAGR of 45% over FY06 to FY10 as its
Net Sales soared from merely 26 crores to 112 crores over same period
while PAT rocketed to 13.8 crores from just 3.4 crores. However FY11 came
as a challenging year for the company as its sales declined by 2% and
EBITDA margin tumbled by as much as 800 bps to 14.4% as against 22.4%
in FY09. PAT plummeted to 4.9 crores in FY11 and further down to 1.4 crores
in FY12 from 13.8 crores in FY10.
Astec LifeSciences past performance:
0.0
50.0
100.0
150.0
200.0
250.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Sales (RHS) PAT Margin % (LHS) EBITDA Margin % (LHS)
Consolidation
% Rs. in crs
Source:Astec LifeSciences., Ventura Research
- 4 of 22- Monday 30h March, 2015
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The key reasons for this slump were:
The slack in the overall market conditions and unfavorable weather
conditions in certain parts of the world that led to destocking of
inventories by their main consumers.
There was over production that took place globally in 2010 and 2011
which put downward pressure on the pricing. This led to fall in margins
especially for the smaller players.
The negative sentiment continued in FY2012 and this coupled with
increase in Raw material prices further led to reduced profitability.
Astec experienced severe capacity constraints until 2012, as it operated
only one plant at Mahad and a R&D center at Dombivli
Until 2013 company kept its forex exposures open leaving it unhedged
resulting into forex losses. In FY12 alone Astec face forex loss of 1.8
crores.
Astec’s performance during the slump period was in line
with peers:
The plight of other small players in Agrochemical and organics industry
was similar in FY11 and FY12.
Over supply of pesticides and Agrochemicals globally, fall in crop sales in
domestic market, lower realizations and higher input prices caused
depletion of margins as companies started to destock their inventories at
low prices.
- 5 of 22- Monday 30h March, 2015
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Astec LifeSciences Ltd.
-
5.0
10.0
15.0
20.0
25.0
30.0
-
50.0
100.0
150.0
200.0
250.0
FY09 FY10 FY11 FY12 FY13 FY14
Net Sales Operating Margin (RHS)
Rs. in crs %
Source: Astec LifeSciences, Ventura Research
Excel Crop Care Ltd.
0
2
4
6
8
10
12
14
0
200
400
600
800
1000
1200
FY09 FY10 FY11 FY12 FY13 FY14
Net Sales Operating Margin (RHS)
Rs. in crs %
Source:Excel Cropcare Ltd., Ventura Research
Meghmani Organics Ltd.
0
2
4
6
8
10
12
14
16
0
100
200
300
400
500
600
700
800
900
1000
FY09 FY10 FY11 FY12 FY13 FY14
Net Sales Operating Margin (RHS)
Rs. in crs %
Source: Meghmani Organics, Ventura Research
Monsanto India Ltd..
0
5
10
15
20
25
30
0
100
200
300
400
500
600
700
FY09 FY10 FY11 FY12 FY13 FY14
Net Sales Operating Margin (RHS)
Rs. in crs %
Source:Monsanto, Ventura Research
- 6 of 22- Monday 30h March, 2015
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Learnings from slump period to bolster future growth:
The learnings from the slump period led to some radical changes in Astec’s
business strategy. Year 2012-13 was a turnaround for the company as it
eliminated its bottleneck and resumed its growth journey after two years of
consolidation. The remedial measures initiated in the latter half of the year
2011-12 and carried through in the year 2012-13 led to significant progress in
the year 2012-13 in various critical areas of Company performance.
Company identified two new business lines namely, Contract
Manufacturing Operations (CMO) and the Retail business for Branded
Formulations.
Astec continued to focus on product registrations and received many
registrations taking its overall registered product portfolio to 214 across 32
countries including 139 registrations in India.
It invested heavily on Capex for buying another land parcel at Mahad and
setting up an effluent treatment plant in order to reduce effluent treatment
cost and address environmental regulatory needs.
In FY14 Astec tied up with a foreign exchange company and framed its
forex policy, whose effect will be visible FY15 onwards.
Astec LifeSciences Capex over the years.
0
5
10
15
20
25
30
35
40
45
50
FY09 FY10 FY11 FY12 FY13 FY14
Rs. in crs
Source: Astec LifeSciences, Ventura Research
- 7 of 22- Monday 30h March, 2015
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Path ahead: Capacity expansion and new lines of business to
bolster growth:
The optimism for Company’s growth raises from the following events:
In its Enterprise Sales segment, Astec is aiming at developing 2-3 new
technically advanced products every year. Their product selection strategy
will remain geared towards new generation, high growth molecules which
present a large opportunity in India and overseas territories. Astec has
also entered into exclusive product supply agreements with global
customers which provide committed volumes and high visibility on future
revenue. It intends to commercialize 5-6 of its registered products over
coming years. Presently, ASL is the leading producer of Triazole products
which has an estimated market size of 650 crores in India and 12,000
crores globally. The catalogue business of the company, which currently
contributes to 75% of top line, is expected to grow at 9.3% CAGR.
Estimated growth of Enterprise Sales segment
(10.00)
-
10.00
20.00
30.00
40.00
50.00
FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Enterprise Sales growth
%
Source: Astec LifeSciences, Ventura Research
- 8 of 22- Monday 30h March, 2015
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The newly commenced Contract Manufacturing Operations vertical is
expected to grow strongly. Astec currently has two major deals, one with
Nufarm Australia Ltd. an Australian MNC for 10 years and another one
with a Japanese giant Sumitomo Chemicals. ASL expects combined
revenue of 110 crores from these two contracts by 2016. Both the
contracts are ‘take or pay’ contracts and thus the business from these
contracts is secluded from volatile demand or bad weather conditions.
Going ahead Astec expects this segment to be their growth engine, it has
already started having dialogues with prospective client to get them on
board and management is confident that something will come through and
they expect pipeline of growth from this segment. Astec is well positioned
to capitalize from opportunity in this segment as multinationals are moving
manufacturing from high cost western economies to India and China
Major part of Astec’s revenue will be driven by CMO and Retail
businesses. CMO is expected to grow at a CAGR of 63.4% and is
expected to comprise 40% of total revenue by 2017.
Estimated sales from CMO and Branded drugs
(20.00)
-
20.00
40.00
60.00
80.00
100.00
FY14 FY15E FY16E FY17E
CMO Retail
Source: Astec LifeSciences, Ventura Research
- 9 of 22- Monday 30h March, 2015
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Commenced in 2011-12, the Branded Formulations or the Retail division
of Astec is a small business but is growing rapidly. In this segment,
company sells drugs under its brand name. Until FY14 Company operated
in only 6 states, Gujarat, Maharashtra, Karnataka, Himachal, Punjab and
Haryana but now it is scaling up its business to 4 more states, Andhra
Pradesh, Telangana, Uttar Pradesh and Madhya Pradesh. Over next five
years Astec expect to have a Pan India presence. The current market size
of this segment is 10,000 crores and is expected to reach 25,000 crores
by 2019.
Retail business is expected to clock revenue growth of 35.1% CAGR over
FY14 to FY17 period and by FY17 it will account for 10% of Astec’s total
revenue
Margin expansion on the cards:
Company’s margins were on free fall as it almost halved from 25.2% in FY09
to merely 13.7% in FY12. Since then company’s focus has been on recouping
its margin to a sustainable level.
Enterprise Sales:
Astec has a strong pipeline of products under development and
intends to launch 2 – 3 new products annually with an emphasis on
process innovation and IP generation to create a sustainable, ‘first
mover’ advantage and deliver strong revenue and margin growth.
It incurred capex to set up its effluent treatment plant and make it
more efficient and cost effective. At its plant at Mahad Astec started
manufacturing certain components for captive consumption which
further helped them to reduce costs.
Contract Manufacturing Operations (CMO)
Under CMO, the two major deals with Nufarm and Sumitomo are
contracted on ‘cost plus profit’ basis. Thus company’s margins are
insulated against any escalation in input prices.
Company’s weighted average margins for CMO and Enterprise Sales
are expected to be in range of 20-22%.
- 10 of 22- Monday 30h March, 2015
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Branded Formulations:
Margins for this segment are on lower side primarily because of high
employee cost. However Astec intends to scale up its business to
four new states by mobilizing its existing employee strength.
Astec seeks to introduce new products and create brand leadership
in select segments.
Employee costs are expected to be contained during the expansion
period as Astec will be mobilizing its current manpower.
Weighted average margin for CMO and ES
-
5.0
10.0
15.0
20.0
25.0
FY12 FY13 FY14 FY15E FY16E FY17E
CMO and ES Margin
%
Source: Astec LifeSciences, Ventura Research
Branded Formulations’ margin expected to grow steadily
(25.0)
(20.0)
(15.0)
(10.0)
(5.0)
-
5.0
10.0
15.0
FY12 FY13 FY14 FY15E FY16E FY17E
BF margin
%
Source: Astec LifeSciences, Ventura Research
- 11 of 22- Monday 30h March, 2015
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Leverage set to improve:
Astec’s Long term borrowings comprises of ECB of Rs. 13 crores, which
will exhaust by FY16 and INR loan to the tune of Rs. 18 crores which will
last 3.5 years. Company’s current D/E is 0.8 expected to come down
marginally to 0.7 by FY17.
Company is experiencing higher collection period of 8 months for its Retail
Branded business. However, it aims to undertake some measures to bring
down this period to 4 months by FY17. The overall working capital cycle is
expected to improve from 154 days in FY14 to 136 days by FY17.
Astec LifeSciences Efficiency Chart
-
50.00
100.00
150.00
200.00
250.00
FY12 FY13 FY14 FY15E FY16E FY17E
Debtors Days Inventory Days Working Capital cycle
No. of days
Source: Astec LifeSciences, Ventura Research
- 12 of 22- Monday 30h March, 2015
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Strong customer retention record:
Astec has a unique distinction of not losing a single client since its inception
and it has been regularly adding clients to its portfolio.
Agrochemical product Volume (Kl/ MT) Rs. In crs
Tricylazole (F) 2,000.0 210.0
Propiconazole (F) 2,500.0 187.5
Hexaconazole SC (F) 7,500.0 211.5
Glyphosate (H) 10,000.0 324.0
Pendimethlin (H) 4,000.0 124.0
Metribuzin (H) 1,000.0 110.0
Acephate (I) 20,000.0 780.0
Buprofezin (I) 4,000.0 300.0
Acetamiprid (I) 2,000.0 210.0
Market share of major Agrochemicals in which company deals
F- Fungicide; H- Herbicides; I- Insecticides
Source: Ventura Research
Share of largest customer
25
19
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY13 FY14
Largest client
%
Source: Astec LifeSciences, Ventura Research
Share of top 3 customers
46
39
34.0
36.0
38.0
40.0
42.0
44.0
46.0
48.0
FY13 FY14Top 3 clients
%
Source: Astec LifeSciences, Ventura Research
- 13 of 22- Monday 30h March, 2015
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Robust Global Outlook augurs well for Astec:
The global crop protection industry has registered a CAGR of 5% p.a. from
FY06 to reach $53Bn in FY13. This market is expected to grow further at a
CAGR of 6% p.a. to reach ~$ 71.3 Bn by FY18.
Global distribution of Agrochemicals market
29%
25%
23%
19%
4%
Europe Asia North America Latin America RoW
Source: FICCI, Ventura Research
Astec has diverse Geographic presence
65.00%
22%
7%5%
1%
India Europe Ameracas Asia (Ex India) Others
Source: Astec LifeSciences, Ventura Research
State wise consumption
24%
13%
11%7%7%
38%
AP (incl Telangana) Maharashtra Punjab Karnataka Gujarat Others
Source: FICCI, Ventura Research
Astec’s presence in Branded Retail business
Source: FICCI, Ventura Research
Areas of expansion
- 14 of 22- Monday 30h March, 2015
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Indian agrochemical industry to grow at a faster pace than the
global average:
The Indian Agrochemical Industry is estimated at Rs. 263Bn in 2014 with
exports accounting for nearly 50% of the total market. It is expected to grow
at a CAGR of 12% between 2014 and 2019 to reach a size of ~ Rs. 463Bn.
Fungicides and herbicides are expected to drive future growth due to rapidly
growing demand for fruits and vegetables and rising cost of agricultural labor.
Product wise categorization- Global Market
44%
27%
22%7%
Pesticides Herbicides Fungicides Others
Source: FICCI, Ventura Research
Product wise categorization- Indian Market
65%
15%
15%
4%
Pesticides Herbicides Fungicides Others
Source: FICCI, Ventura Research
- 15 of 22- Monday 30h March, 2015
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Key Growth Drivers:
Increasing demand for food grains: India has 16% of the world's population
and less than 2% of the total landmass.
Emphasis on yield maximization due to limited farmland availability:
India has ~190 Mn hectares of gross cultivated area and the scope for
bringing new areas under cultivation is severely limited.. The pressure is
therefore to increase yield per hectare which can be achieved through
increased usage of agrochemicals.
Potential for improving Productivity: India has low crop productivity as
compared to other countries. Average productivity in India stands at 2 MT/ha
as compared to 6 MT/ha in USA and world average of 3 MT/ha. At the same
time, India's pesticide consumption is also low at 0.60kg/ha as compared to
the world average of 3 kg/ha. Hence, increased usage of pesticides could
help the farmers to improve crop productivity.
Increasing exports: Indian companies have successfully expanded into
other geographies for exports and this trend has been increasing in recent
times. The export market is expected to grow at 15%
Patent cliff augurs well for the Indian industry: Between 2009 and 2014
many molecules got off patent throwing the market open for generic players.
The total viable opportunity through patent expiry is estimated at over USD 3
Bn. Astec is currently working on a Triazole product for which patent was
earlier held by Bayer CropScience.
Per capita consumption of pesticides
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
USA China India France UK Korea
Kg/Ha
Source: FICCI, Ventura Research
- 16 of 22- Monday 30h March, 2015
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Key Risks:
Vagaries of monsoons: Agrochemicals industry has strong linkage with
agriculture sector which is affected by irrational monsoon. In India, 64%of the
cultivated land depends on rains. A weak monsoon leads to poor harvest
which in turn also impacts the Agrochemicals industry negatively, further it
creates a situation of oversupply leading to pricing war.
Low focus on R&D by domestic manufacturers due to high costs: R&D
to develop a new agrochemical molecule takes an average of 9 years and
~Rs. 1,000 Cr. Indian companies typically have not focused on developing
newer molecules and will face challenges in building these capabilities, while
continuing to remain cost competitive.
Working Capital intensive industry structure: The industry suffers from
high inventory (owing to seasonal and irregular demand on account of
monsoons) and long credit periods to farmers, thus making operations
'working capital' intensive.
Threat from Genetically Modified (GM) seeds: Genetically modified seeds
possess self immunity towards natural adversaries which have the potential to
negatively impact the business of agrochemicals.
Longer period for registration of innovative products: In India,
registration of new products takes 3-5 years which discourages domestic
manufacturers.
- 17 of 22- Monday 30h March, 2015
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Financial Performance:
In Q3FY15, Astec reported almost 13% YoY increase in Net Sales to Rs. 57.3
crores mainly led by CMO segment. Quarterly EBITDA grew by 37% YoY to
Rs. 12.2 crores and for 9MFY15 it grew by 33.8% YoY and stood at Rs. 36.4
crores. Margin improvements have been remarkable, for 9MFY15 EBITDA
margin increased by 380 bps to 20.8% while for Q3 EBITDA margins were
21.2% vs. 17.6% YoY. PAT for Q3 grew at 66.7% YoY to Rs. 3.5 crores and
for 9MFY15 PAT grew at 62.5% to Rs. 11.7 crores vs. 7.2 crores YoY. PAT
margin expanded by 220 bps boosted by increase in operating margins.
Quarterly Financial Performance ( Rs. In crores)
Particulars Q3FY15 Q3FY14 9MFY15 9MFY14
Net Sales 57.3 50.7 174.5 160.2
Growth % 12.9 8.9
Total Expenditure 45.3 41.8 138.6 132.5
EBITDA (ex OI) 12.2 8.9 36.4 27.2
EBITDA Margin % 21.2 17.6 20.8 17.0
Depreciation 3.9 3.8 11.7 11.0
EBIT 8.2 5.1 24.7 16.4
Other Income 0.0 0.0 0.0 0.2
EBIT 8.2 5.1 24.7 16.2
Margin % 14.3 10.1 14.2 10.1
Interest 3.6 2.7 9.6 7.2
Exceptional items 0.0 0.0 0.0 0.0
PBT 4.6 2.4 15.1 9.0
Margin % 8.0 4.8 8.6 5.6
Provision for Tax 1.1 0.3 3.4 1.8
PAT 3.5 2.1 11.7 7.2
PAT Margin % 6.2 4.2 6.7 4.5
Source: Astec LifeSciences, Ventura Research
- 18 of 22- Monday 30h March, 2015
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Financial Outlook:
A combination of fresh product launches, addition of new clients and scaling
up of Retail business are expected to add to the growth momentum of the
company. We expect Astec Lifesciences to report 3 year Net Sales CAGR of
23.4% to Rs. 389 crore and Consolidate PAT CAGR of 53.7% to Rs. 31.5
crores in FY17. We expect the company to sustain margins
Consolidated Sales
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Astec LifeSciences, Ventura Research
Consolidated PAT
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Astec LifeSciences, Ventura Research
EBITDA and PAT Margin
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
-
5.0
10.0
15.0
20.0
25.0
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
EBITDA Margin (LHS) PAT Margin (RHS)
Source: Astec LifeSciences, Ventura Research
- 19 of 22- Monday 30h March, 2015
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Valuation:
We initiate coverage on Astec LifeSciences as a BUY with a price objective of
Rs. 210 representing a potential upside of ~62% over a period of 24 months.
We have used price multiple approach to value Astec. Our target price implies
an FY17 P/E of 12x.
Astec LifeSciences P/E Band
0
50
100
150
200
250N
ov-
09
Mar
-10
Jul-
10
No
v-1
0
Mar
-11
Jul-
11
No
v-1
1
Mar
-12
Jul-
12
No
v-1
2
Mar
-13
Jul-
13
No
v-1
3
Mar
-14
Jul-
14
No
v-1
4
Mar
-15
CMP 4x 8x 12x 16x 20x
Source: Astec LifeSciences, Ventura Research
- 20 of 22- Monday 30h March, 2015
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Peer Comparison ( Rs. In crores)
Y/E March Sales EBITDA PAT
EBITDA
Margin
PAT
Margin ROE(%) P/E P/BV EV/EBITDA
Astec LifeSciences
2014 207.0 34.8 8.7 16.8% 4.2% 7.6% 29.9 2.3 10.0
2015E 254.9 47.0 16.0 18.4% 6.3% 12.7% 16.2 2.1 7.5
2016E 311.0 60.1 21.6 19.3% 6.9% 15.2% 12.0 1.8 6.1
2017E 388.8 78.8 32.9 20.3% 8.5% 19.8% 7.9 1.6 4.8
Excel Cropcare
2014 955.7 111.5 66.5 11.7% 7.0% 24.1% 14.1 3.1 8.6
2015E 1183.4 130.2 83.4 11.0% 7.0% 25.0% 11.1 2.5 7.3
2016E 1420.0 156.2 100.2 11.0% 7.1% 24.8% 9.3 2.1 6.1
2017E 1704.1 187.4 120.7 11.0% 7.1% 24.6% 7.7 1.7 5.1
Bayer CropScience
2014 3146.2 426.7 289.5 13.6% 9.2% 15.8% 42.9 7.1 22.7
2015E 3794.5 528.9 386.1 13.9% 10.2% 19.1% 32.9 5.9 22.9
2016E 4452.9 653.1 465.4 14.7% 10.5% 17.0% 27.4 4.9 18.6
2017E 5182.2 773.8 570.4 14.9% 11.0% 20.0% 23.0 4.1 15.7
PI Industries
2014 1586.9 294.2 188.0 18.5% 11.8% 30.7% 48.6 13.2 31.5
2015E 1892.9 364.8 240.6 19.3% 124.7% 29.7% 37.4 10.3 25.4
2016E 2309.6 456.7 305.6 19.8% 13.2% 29.5% 29.6 8.0 20.3
2017E 2802.1 570.5 387.2 20.4% 13.8% 29.1% 23.4 6.2 16.2
Rallis India
2014 1725.7 273.0 151.9 15.8% 8.8% 22.7% 33.1 7.0 18.6
2015E 1893.0 281.8 169.0 14.9% 8.9% 21.0% 30.6 6.1 18.1
2016E 2204.5 349.1 214.8 15.8% 9.7% 23.2% 24.2 5.2 14.6
2017E 2518.6 416.4 254.5 16.5% 10.1% 24.3% 19.8 4.4 12.2
Source: Astec LifeSciences, Ventura Research
Comparison with Peers (FY 14)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0.0 5.0 10.0 15.0 20.0 25.0
Rallis
PI Ind
Excel
Bayer
Astec
ROI (%)
RO
E (%
) Rallis
PI Ind
Excel
Bayer
Astec
ROI (%)
RO
E (%
) Rallis
PI Ind
Excel
Bayer
Astec
ROI (%)
RO
E (%
) Rallis
PI Ind
Excel
Bayer
Astec
ROI (%)
RO
E (%
)
Source: Ventura Research
2 Year Fwd PEG Comparison
0.0
5.0
10.0
15.0
20.0
25.0
30.0
0.0 10.0 20.0 30.0 40.0 50.0
2 Y
r Fw
d P
/E
2 Year EPS growth
Astec
PI IndBayer
Rallis
Excel
Source: Ventura Research
- 21 of 22- Monday 30h March, 2015
This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.
Financials and Projections
Y/E March, Fig in ` Cr FY14 FY5E FY6E FY17Ee Y/E March, Fig in ` Cr FY14 FY5E FY6E FY17Ee
Profit & Loss Statement Per Share Data (Rs)
Net Sales 207.0 254.9 311.0 388.8 Adj. EPS 4.7 8.6 11.7 17.8
% Chg. 23% 22% 25% Cash EPS 12.7 16.9 21.0 28.5
Total Expenditure 172.2 207.9 250.9 309.9 DPS 1.0 1.8 2.4 3.7
% Chg. 21% 21% 24% Book Value 61.3 67.9 76.7 90.1
EBDITA 34.8 47.0 60.1 78.8 Capital, Liquidity, Returns Ratio
EBDITA Margin % 17% 18% 19% 20% Debt / Equity (x) 0.8 0.8 0.7 0.7
Other Income 0.4 0.4 0.4 0.5 Current Ratio (x) 1.2 1.1 1.1 1.2
PBDIT 35.2 47.4 60.5 79.3 ROE (%) 8% 13% 15% 20%
Depreciation -14.8 -15.3 -17.4 -19.9 ROCE (%) 10% 15% 17% 21%
Interest -9.2 -9.8 -10.8 -12.1 Dividend Yield (%) 0.0 0.0 0.0 0.0
Exceptional items 0.0 0.0 0.0 0.0 Valuation Ratio (x)
PBT 11.1 22.3 32.3 47.3 P/E 27.6 14.9 11.1 7.3
Tax Provisions 2.5 6.3 10.7 14.4 P/BV 2.1 1.9 1.7 1.4
Reported PAT 8.7 16.0 21.6 32.9 EV/Sales 1.6 1.3 1.1 0.9
PAT Margin (%) 4% 6% 7% 8% EV/EBIDTA 9.5 7.1 5.7 4.5
Adj. PAT 8.7 16.0 21.6 32.9 Efficiency Ratio (x)
Manpower cost / Sales (%) 5.5% 5.4% 5.3% 5.0% Inventory (days) 175.2 170.5 161.4 153.0
Other opr Exp / Sales (%) 1.2% 1.2% 1.2% 1.1% Debtors (days) 94.6 87.3 89.1 84.8
Tax Rate (%) 20.2% 20.2% 20.2% 20.2% Creditors (days) 115.0 109.6 110.3 101.7
Balance Sheet Cash Flow statement
Share Capital 18.5 18.5 18.5 18.5 Profit After Tax 8.65 15.97 21.58 32.89
Reserves & Surplus 95.0 107.0 123.3 148.2 Depreciation 25.43 24.73 27.78 31.56
Minority Interest 0.0 0.0 0.1 0.1 Working Capital Changes -13.89 -3.23 -14.47 -11.31
Long term Borrowings 49.7 37.4 36.1 36.0 Others -2.38 -3.25 -7.18 -10.50
Deferred Tax Liability 3.7 3.8 4.2 4.8 Operating Cash Flow 17.82 34.21 27.70 42.64
Long term Provisions 1.2 1.3 0.6 0.5 Capital Expenditure -19.04 -22.49 -22.45 -30.47
Total Liabilities 168.1 168.1 182.8 208.1 Change in Investment 0.36 0.37 0.42 0.51
Gross Block 187.2 209.7 232.1 262.6 Cash Flow from Investing -18.68 -22.12 -22.03 -29.97
Less: Acc. Depreciation 55.0 70.3 87.7 107.6 Proceeds from equity issue 1.24 0.00 0.00 0.00
Net Block 132.2 139.4 144.5 155.0 Issue Exp 0.00 0.00 0.00 0.00
Capital Work in Progress 5.8 6.4 7.2 8.3 Dividend and DDT -2.17 -3.93 -5.31 -8.09
Investments 0.0 0.0 0.0 0.0 Cash Flow from Financing 0.19 -7.84 -4.88 -5.92
Net Current Assets 18.6 14.7 22.3 31.7 Net Change in Cash -0.67 4.25 0.80 6.75
Long term Loans & Advances 11.5 7.6 8.8 13.0 Opening Cash Balance 5.14 4.47 8.72 9.52
Total Assets 168.1 168.1 182.8 208.1 Closing Cash Balance 4.47 8.72 9.52 16.27
- 22 of 22- Monday 30h March, 2015
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