heg ltd. - myirisbreport.myiris.com/skpsec/heg_20130603.pdfeps (inr) 14.1 25.1 25.2 36.7 bvps ......
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June 3, 2013
HEG Ltd.
Passion to Excel...
CMP INR 172.5 Target INR 214.4 Initiating Coverage - BUY
SKP Securities Ltd www.skpmoneywise.com Page 1 of 12
Key Share Data
Face Value (INR) 10.0
Equity Capital (INR Mn) 399.6
52 Week High/Low (INR) 262.5 / 159.6
6 months Avg. Daily Volume (NSE) 19,448
BSE Code 509631
NSE Code HEG
Reuters Code HEG IN
Bloomberg Code HEGL.BO
Shareholding Pattern (as on 31st Mar. 2013)
Promoter 58.27%
FII's, 0.92%
Others, 30.14%
DII's, 10.67%
Source: Company
Particulars FY12 FY13P FY14E FY15E
Net Sales 14,239.9 16,226.1 15,263.8 17,291.1
Growth (%) 27.9 13.9 -5.9 13.3
EBITDA 2,418.2 2,931.1 2,503.3 3,051.9
PAT 572.3 1,004.1 1,008.3 1,465.9
Growth (%) -52.8 75.5 0.4 45.4
EPS (INR) 14.1 25.1 25.2 36.7
BVPS (INR) 212.6 236.5 252.4 277.4
Key Financials (INR Million)
Particulars FY12 FY13P FY14E FY15E
P/E (x) 15.3 6.8 6.8 4.7
P/BVPS (x) 1.0 0.7 0.7 0.6
Mcap/Sales (x) 0.6 0.4 0.5 0.4
EV/EBITDA (x) 8.2 6.4 7.4 5.7
ROCE (%) 9.3% 10.7% 8.1% 10.4%
ROE (%) 6.7% 10.6% 10.0% 13.2%
EBITDA Mar (%) 17.0% 18.1% 16.4% 17.7%
PAT Mar (%) 4.0% 6.2% 6.6% 8.5%
Debt - Equity (x) 1.3 1.3 1.2 1.0
Key Financials Ratios
Source: Company, SKP Research
1 Yr price performance HEG vis-à-vis BSE Small Cap
-40%
-20%
0%
20%
40%
May-12 Aug-12 Oct-12 Jan-13 Mar-13 May-13
HEG BSE Small Cap
Company Background
HEG Limited (HEG) incorporated in 1977, is a part of LNJ Bhilwara group. The company is engaged in the manufacturing of graphite electrode having a capacity of 80,000 metric tonnes along with power generation capacity of 77 MW. It has one of the largest integrated graphite electrode plants in South-East Asia, processing the sophisticated UHP (Ultra High Power) Electrodes.
Investment Rationale
Unalleviated demand from the steel industry
� Steel manufacturing companies with electric arc furnace (EAF) are the only consumers of graphite electrodes. To comply with better environment standards (low emission of carbon dioxide) many global steel giants are converting their existing conventional steel production facilities into EAF plants.
� The EAF route for steel production is gaining ground globally, with
the share of steel produced via the EAF process expected to contribute over 50% of global steel production by 2020 from the current level of 31%.
Enhanced capacity to meet the growing demand
� HEG has increased its installed capacity from 24,000 metric tonnes in FY01 to 80,000 metric tonnes in FY12 for a cumulative investment of ~INR 8.25 billion.
� The company currently stands as the world’s largest single-site
manufacturer of graphite electrodes besides being one of the most competitive manufacturers globally. Such a large single-site facility benefits HEG’s significantly, owing to better cost containment, greater quality control and easier operations management.
Intrinsic Value of Investments
� HEG holds 25.8% stake in Bhilwara Energy Limited (BEL), which is the principal holding company for all the power ventures of the Bhilwara group. BEL currently has two hydro projects (278 MW) and one wind power project (34.5 MW) operational and is executing ~1,350 MW of power projects, which are under various stages of implementation, expected to be fully executed by CY17.
� In FY11, BEL had raised INR 2.27 billion through a ~11% equity
dilution to IFC, a member of World Bank Group, and India Clean Energy III Limited, Mauritius. The above said deal values BEL at ~INR 21 billion and HEG’s 25.8% stake valued at ~INR 5.5 billion. The management further plans to raise equity for BEL and is waiting for the better market conditions.
Valuation
We rate a BUY rating on HEG with a price target of INR 214.4/share, implying an upside potential of 24.3% from current levels. Our target price is based on SOTP basis valuing HEG core business at 5.5x FY15E EV/EBITDA and giving a 30% discount to its stake in BEL.
A Analyst: Nikhil Saboo
Ph: +91 33 4007 7027, M: +91 9330186643
Email: [email protected]
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 2 of 12
Majority of this capacity however, is
currently located in high cost regions
like US, Europe and Japan
The EAF route comprises more than
60% of all steel produced in the US
and over 40% of all steel
manufactured in Western Europe
In India the demand is expected to
grow at 5.9% to 75.8 mt in CY2013
and 7.0% in CY2014 on account of
reform measures by government to
stimulate infrastructure investments
Industry Overview
� Graphite electrodes are used in electric arc furnace (EAF) based
steel mills and is a consumable item for the steel industry. The
graphite electrode industry is highly consolidated with the top five
major global players accounting for 75% of the high end UHP
electrode capacity. The manufacturing process, for the high end
UHP electrodes is technology intensive and is a significant barrier
for the entry of new players.
� The EAF method of manufacturing steel is becoming increasingly
attractive due to its low capital costs, lower breakeven tonnage,
and flexibility in locating plants closer to consumption points and
significantly lower pollution levels than in the blast furnace steel
plants.
� During Q1 CY2013, the global crude steel production increased by
3.0% to 389 mt. CY2012 has been a challenging year for the steel
industry (growth of 1.3%) due to the continued macroeconomic
uncertainty, which has impacted the key sectors of economy
including the automobile, power generation, construction and
infrastructure sectors. Recovery in the US remains on track,
however, industrial activity in the Euro Zone continues to be weak.
� According to the World Steel Association, global steel consumption
is expected to increase by 2.9% to 1,454 mt in CY2013 and by
3.2% to 1,500 mt in CY2014. Steel demand in China is expected to
grow by 3.5% in CY2013 to 668.8 mt and 2.5% in CY2014. In India
the demand is expected to grow at 5.9% to 75.8 mt in CY2013 and
7.0% in CY2014 on account of reform measures by government to
stimulate infrastructure investments.
Exhibit: World Crude Steel Production
Mar-13 Mar-12 Y-o-Y (%) Dec-12 Q-o-Q (%) Mar-13 Mar-12 Y-o-Y (%)
Asia 259.82 241.97 7.38 241.95 7.38 1000.56 955.49 4.72
- China 191.89 174.20 10.16 174.22 10.14 726.48 684.88 6.07
- India 19.83 18.65 6.33 19.60 1.15 77.90 72.85 6.92
South America 11.13 11.81 (5.78) 11.66 (4.55) 46.25 48.43 (4.51)
North America 29.71 31.49 (5.66) 29.18 1.81 120.08 121.21 (0.93)
European Union 41.47 44.06 (5.88) 39.73 4.37 166.84 175.86 (5.13)
Middle East & Others 46.57 48.11 (3.19) 45.84 1.60 187.75 191.25 (1.83)
Total 388.70 377.44 2.98 368.36 5.52 1,521.48 1,492.24 1.96
Source: World Steel Association
CountryQuarter Ended Year Ended
Figs in Million Tons
Note: Above figures includes 63 countries accounting for approximately 98% of total world crude steel production.
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 3 of 12
Going forward, capacity utilizations
are expected to remain below 80%
until 2014 and to reach 83% by 2015-
16
HEG ltd has the largest graphite
electrode plant in the world at single
location besides being one of the
most competitive manufacturers
globally
The company’s client base is
impressive and spread across more
than 35 countries
� Steel demand in Europe is expected to contract further by 0.5% in
CY2013 and return to growth of 3.3% in CY2014 to reach 144.1 mt.
In US the demand is forecasted to grow by 2.7% in CY2013 and by
2.9% in CY2014 as a result of positive momentum from the
construction sector.
� The average capacity utilization in 2012 was 78.8% compared to
80.7% in 2011. Going forward, capacity utilizations are expected to
remain below 80% until 2014 and to reach 83% by 2015-16.
Margins are expected to remain under pressure in CY2013 as steel
prices are likely to remain flat and costs are expected to remain at
current levels.
� Going ahead, the global economic growth and steel demand will be
significantly dependent on the growth of Europe and China. With
Chinese economic growth expected in single digits against the
double-digit growth clocked in the last decade and the euro zone
debt crisis remaining a key global concern, CY13 projections are
cautiously optimistic. Company Profile
� HEG Limited (HEG), incorporated in 1977, is a part of LNJ Bhilwara
group. The company is engaged in the manufacturing of graphite
electrode and power generation. It has one of the largest integrated
graphite electrode plants in South-East Asia, processing the
sophisticated UHP (Ultra High Power) Electrodes, enjoying ~9% of
industry market share. It was established in technical and financial
collaboration with Societe Des Electrodes Et Refractaires Savoie
(SERS), a subsidiary of Pechiney of France.
� The company has total installed graphite electrode manufacturing
capacity of 80,000 metric tons and power generation capacity of 77
MW. Its graphite electrode plant along with two captive thermal
power plants having rated capacities of 30 MW and 33 MW
respectively is located at Mandideep, near Bhopal. Its hydroelectric
power plant with a rated capacity of 13.5 MW is located at Tawa
near Itarsi, District Hoshangabad (Madhya Pradesh).
� The company is a leading exporter of graphite electrodes with a
marketing footprint across the US, Europe, Russia, the Middle
East, South-east Asia, South America and Africa. Its products are
exported to more than 35 countries, which contribute ~69% of its
revenues.
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 4 of 12
LNJ Bhilwara Group is a diversified
conglomerate with business interests
in power, graphite electrodes, textiles
and IT services sector
Source: Company, SKP Research
Exhibit: Segment Revenue
36.4%
63.6%
FY2010
Domestic Exports
31.1%
68.9%
FY2012
Domestic Exports
� HEG ltd is a premier company of the INR 50 billion LNJ Bhilwara
Group, which is a diversified conglomerate with business interests
in power, graphite electrodes, textiles and IT services sector having
5 listed companies in the Indian bourses.
Textile
Graphite
Electrodes
&
IT Services
Power
Exhibit: Bhilwara Group of Companies
Source: Company, SKP Research
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 5 of 12
The demand for graphite electrodes
is sensitive not to steel prices but to
steel production volumes through the
EAF route, which accounts for 31% if
the world’s steel production
The demand for graphite electrodes
used in steel manufacturing via the
EAF route is expected to rise further
in the coming years
Economies of scale and low cost
production are the key points by
which the company benefits
HEG is the largest single-site
graphite electrodes manufacturer in
the world
Investment Rationale
Unalleviated demand from the steel industry
� Graphite electrodes are used in electric arc furnace (EAF) based
steel mills and is a consumable item for the steel industry. The EAF
method of manufacturing steel is becoming increasingly attractive
due to its low capital costs, higher production flexibility, lower
breakeven tonnage and significantly lower pollution levels than in
the blast furnace steel plants. To comply with better environment
standards (low emission of carbon dioxide) many global steel
giants are converting their existing conventional steel production
facilities into EAF plants.
� However, due to ongoing global economic uncertainty, specifically
Europe, the near term global steel demand is expected to remain
subdued, placing pressure on graphite electrode. Thus, short term
outlook for demand of graphite electrode remains bleak, while the
longer term dynamics of the industry remain positive on account of
its various advantages.
� The EAF route for steel production is gaining ground globally, with
the share of steel produced via the EAF process expected to
contribute over 50% of global steel production by 2020 from the
current level of 31%. With the increase in the adoption of EAF
method to produce steel and limited number of graphite electrodes
manufacturing companies, the demand for graphite is expected to
rise in future, thereby ensuring constant growth in revenues and
profitability for the company.
Enhanced capacity to meet the growing demand
� HEG Ltd has increased its installed capacity from 24,000 metric
tonnes in FY01 to 80,000 metric tonnes in FY12 for a cumulative
investment of ~INR 8.25 billion. It added at an average of ~4,650
metric tonnes every year across the last twelve years and
enhanced its capacity by 3.3x, one of the fastest capacity additions
in the sector.
� Last capacity of 14,000 metric tonnes was added in FY12 at a
capex of INR 2.25 billion. With this expansion, the company has
become the world’s largest single-site manufacturer of graphite
electrodes besides being one of the most competitive
manufacturers globally. Such a large single-site facility benefits
HEG’s significantly, owing to better cost containment, greater
quality control and easier operations management.
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 6 of 12
Three power plants under operation
with a total capacity of around 77
MW provide reliability and self-
sufficiency
Needle coke and Indian coke pricing
expected to be favourable; expect to
benefit from low costing of needle
coke from H2 FY14 onwards
HEG is having an impressive and
diversified client base geographically
spread across more than 35
countries
HEG diverse customers include few
of the most respected and discerning
names in the steel industry
� HEG installed power capacity stands at 77 MW, which is self
sufficient to meet its power requirement. As power is a critical input
for manufacturing graphite electrodes, in-house power generation
provides a huge competitive advantage while surplus power is sold
to SEBs. Exhibit: Graphite Electrodes capacity over years
Source: Company, SKP Research
33
,60
0
52
,00
0
60
,00
0
66
,00
0
80
,00
0
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
FY
05
FY
07
FY
09
FY
11
FY
13
Fig
s. in
Me
tric
T
on
ne
s
� Capacity utilization in FY13 stood at 75% and is expected to remain
at same levels in the near term due to subdued demand from the
steel industry. Though, the situation is likely to get reversed after
H1FY14 in the backdrop of signs of recovery in the global
economy, thereby fuelling demand from the steel industry.
� Given, the bleak scenario there is a short-term downward bias in
prices of graphite electrodes which is down by 12% y-o-y.
However, prices of needle coke, which is the key raw material,
have seen a similar trend (down 15% y-o-y). Thus, benefits of
reduced pricing of needle coke are likely to be largely offset due to
lower pricing of graphite electrodes during FY14E, but going
forward we expect HEG to hold on to a steady level of margins.
Strong clientele base
� The Company is a leading exporter of graphite electrodes with a
marketing footprint across the US, Europe, Russia, the Middle
East, South-east Asia, South America and Africa. HEG is having an
impressive and diversified client base, geographically spread
across more than 35 countries.
� HEG diverse customers include few of the most respected and
discerning names in the steel industry, such as Posco (Korea),
Arcelor Mittal Group, Nucor (US), Megasa (Spain), Evraz, Severstal
(Russia), Ezz group (Egypt), Hyundai Steel (South Korea),
Severstal, Tata Steel, SAIL, Jindal Group among others. HEG
continues to build relations with these clients over last few years,
which has helped the company in increasing its export turnover.
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 7 of 12
BEL currently has two hydro projects
(278 MW) and one wind power
project (34.5 MW) operational
Source: Company, SKP Research
Exhibit: Exports as a %age on Net Sales
2905
4919
72688324 8073
8543
11286
45.7%
50.3%
66.9%
72.4%
63.6% 65.8%68.9%
30%
40%
50%
60%
70%
80%
2,500
4,500
6,500
8,500
10,500
12,500
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
Fig
s In
IN
R M
illio
n
Exports As a %age of Sales
Intrinsic Value of Investments
� HEG holds 25.8% stake in Bhilwara Energy Limited (BEL), which is
the principal holding company for all the power ventures of the
Bhilwara group. BEL currently has two hydro projects (278 MW)
and one wind power project (34.5 MW) operational.
� Among the key investments of BEL, is a 51% stake in Malana
power hydro project (currently running 86 MW in Himachal
Pradesh), 44.9% stake AD hydro power project through Malana
power (currently running 196 MW in Himachal Pradesh), 100%
stake in Bhilwara Green Energy Ltd (currently running 34.5 MW
wind power in Maharashtra) etc.
Exhibit: BEL Group Structure
Source: Company, SKP Research
Bhilwara Energy Ltd (BEL)
Chango Project
(Himachal Pradesh) 180
MW
Bhilwara Project
(Maharashtra) 49.5 MW
NJC Project (Arunachal
Pradesh) 780 MW
Green Ventures Project (Nepal) 120 MW
Balephi Jalvidyut Project (Nepal) 50 MW
MalanaProject
(Arunachal Pradesh) 286
MW
Indo Canadian
Consultancy Services Limited
AD Hydro Project
(Arunachal Pradesh) 192
MW
100%
10
0%
100%75.71% 51.0%
42.0%
51.0%5
1%
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 8 of 12
HEG’s 25.8% stake in BEL is valued
at ~INR 5.5 billion
For FY13, the company has paid a
dividend of 80% (INR 8/share),
thereby delivering a current dividend
yield of ~4.5%
� BEL is currently executing ~1,350 MW of power projects, which are
under various stages of implementation, expected to be fully
executed by CY17. In FY11, the company had raised INR 2.27
billion through a ~11% equity dilution to International Finance
Corporation (IFC), a member of World Bank Group, and India
Clean Energy III Limited, Mauritius. The above said deal values
BEL at ~INR 21 billion and HEG’s 25.8% stake valued at ~INR 5.5
billion. The management further plans to raise equity for BEL and is
waiting for the better market conditions.
Delivering value to share holders
� The company has delivered value to its shareholders in the form of
higher dividends. The company has a track record of paying
continuous dividends, despite the cyclical nature of the business.
� For FY13, the company has paid a dividend of 80% (INR 8/share),
thereby delivering a current dividend yield of ~4.5%. Going forward,
we believe the company would continue to pay higher dividends,
which would enhance overall returns of the shareholders
Source: Company, SKP Research
Exhibit: Dividend Yield
0%
1%
2%
3%
4%
5%
6%
7%
0
2
4
6
8
10
12
FY
10
FY
11
FY
12
FY
13
FY
14E
FY
15E
Dividend Per Share Dividend Yield (%)
Key Concerns
� Export contributes ~69% of HEG’s total revenues; there is a
perennial risk of foreign exchange currency fluctuations which
could negatively affect the company's margins going forward.
� The uncertainty in the euro zone due to the sovereign debt crisis
and relative softening in emerging economies could further impact
global steel growth and the demand for graphite electrodes,
thereby impacting HEG’s revenues and margins.
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 9 of 12
We maintain a BUY rating with a
price target of INR 214.4/share,
reflecting an upside potential of
24.3% from current levels
HEG historically traded in a narrow
band of 6x to 10x on the one year
forward EV/EBITDA basis, despite
the cyclacity of the steel sector
At CMP, HEG is trading at 6.8x and
4.7x its FY14E and FY15E earnings,
respectively
� Other major concern pertains to the supply shortage of basic raw
material i.e. needle coke as it could hamper the growth potential of
the company.
Valuations
At current market price of INR 172.5/share, HEG is trading at an
EV/EBITDA 5.7x FY15E EBITDA and P/E 4.7x FY15E EPS of INR
36.7/share respectively.
We valued HEG on SOTP basis valuing HEG core business at 5.5x
FY15E EV/EBITDA and giving a 30% discount to its stake in BEL.
Thus, we arrived at a price target of INR 214.4/share, implying an
upside potential of 24.3% in 18 months.
One Year Forward EV/EBITDA Band
Exhibit: One Year Forward EV/EBITDA Band
Source: Company, SKP Research
5
10
15
20
25
30
35
Mar-
09
Jul-
09
Oct-
09
Jan-1
0
Apr-
10
Jul-
10
Oct-
10
Jan-1
1
Apr-
11
Jul-
11
Oct-
11
Jan-1
2
Apr-
12
Jul-
12
Oct-
12
Jan-1
3
Apr-
13
Jul-
13
Oct-
13
Jan-1
4
Fig
s. In
IN
R B
illio
n
10x 9x 8x 7x 6x
One Year Forward P/E Band
Exhibit: One Year Forward P/E Band
Source: Company, SKP Research
0
100
200
300
400
500
600
700
Mar-
09
Jul-
09
Oct-
09
Jan-1
0
Apr-
10
Jul-
10
Oct-
10
Jan-1
1
Apr-
11
Jul-
11
Oct-
11
Jan-1
2
Apr-
12
Jul-
12
Oct-
12
Jan-1
3
Apr-
13
Jul-
13
Oct-
13
Jan-1
4
14x 12x 10x 8x 6x
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 10 of 12
At CMP, HEG is trading at 0.68x and
0.62x its FY14E and FY15E book
value, respectively
PAT Margin to improve by 187 basis
points over FY14E-15E mainly due to
higher sales realization and better
capacity utilization on account of
recovery in the global economy
Debt/Equity ratio to decline over
FY13-15E owing to lower capex
One Year Forward P/Bv Band
Exhibit: One Year Forward P/BV Band
Source: Company, SKP Research
50
100
150
200
250
300
350
400
450
Mar-
09
Jul-
09
Oct-
09
Jan-1
0
Apr-
10
Jul-
10
Oct-
10
Jan-1
1
Apr-
11
Jul-
11
Oct-
11
Jan-1
2
Apr-
12
Jul-
12
Oct-
12
Jan-1
3
Apr-
13
Jul-
13
Oct-
13
Jan-1
4
1.4x 1.2x 1x 0.8x 0.6x
Financial Outlook
EBITDA margins to improve by 125 basis over FY14E-FY15E
Exhibit: EBITDA & PAT Margins
Source: Company, SKP Research
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
FY10 FY11 FY12 FY13 FY14E FY15E
EBITDA Margins PAT Margins
Debt at comfortable levels
Exhibit: CFO & D/E Ratio
Source: Company, SKP Research
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FY
11
FY
12
FY
13
P
FY
14
E
FY
15
E
Fig
s. in
IN
R m
illio
n
Cash Flow from Operations (CFO) D/E (x)
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 11 of 12
Exhibit: Balance Sheet
Particulars FY12 FY13P FY14E FY15E Particulars FY12 FY13P FY14E FY15E
Net Sales 14,239.9 16,226.1 15,263.8 17,291.1 Share Capital 399.6 399.6 399.6 399.6
Growth (%) 27.9 13.9 -5.9 13.3 Reserve & Surplus 8,094.2 9,051.1 9,685.4 10,683.8
Expenditure 11,821.7 13,295.0 12,760.6 14,239.2 Shareholders Funds 8,493.8 9,450.7 10,085.0 11,083.4
Material Consumed 6,989.2 7,865.5 7,494.5 8,386.2 Total Debt 11,434.3 12,151.3 11,651.3 10,651.3
Power & Fuel Cost 1,053.5 1,128.3 1,099.0 1,167.2 Deferred Tax (Net) 786.6 813.8 813.8 813.8
Employee Cost 471.6 557.8 549.5 622.5 Total Liabilities 20,714.7 22,415.8 22,550.1 22,548.5
Admin & Other Exp. 3,307.5 3,743.4 3,617.5 4,063.4
EBITDA 2,418.2 2,931.1 2,503.3 3,051.9 Net Block 7453.705 9324.7 9447.9634 9745.3407
EBITDA Margin (%) 17.0 18.1 16.4 17.7 Capital WIP 1,283.5 - - -
Depreciation 579.3 626.4 676.8 702.6 Investments 1,558.3 1,522.1 1,522.1 1,522.1
EBIT 1,838.9 2,304.7 1,826.4 2,349.3 Non-Current Asset 12.6 213.9 213.9 213.9
Other Income 167.9 136.0 139.4 142.9 Current Assets 14,148.0 15,936.6 16,397.7 16,896.9
Interest Expense 406.8 636.0 636.7 591.0 Inventories 6,188.1 6,076.7 6,292.8 6,465.2
Profit Before Tax (PBT) 1,599.9 1,804.7 1,329.1 1,901.1 Sundry Debtors 4,906.8 5,985.6 6,183.6 6,322.8
Exceptional Items 928.5 552.0 0.0 0.0 Cash & Bank Balance 180.2 146.6 143.4 261.6
Income Tax 48.2 194.8 265.8 380.2 Other Non Current Assets 629.6 765.7 725.0 752.2
Reported PAT 623.2 1,057.9 1,063.3 1,520.9 Loans & Advances 2,243.4 2,961.9 3,052.8 3,095.1
Growth (%) -52.8 75.5 0.4 45.4 Current Liabilities & Prov 3,741.4 4,581.5 5,031.5 5,829.7
(+) Share in Asso. Profits -50.9 -53.8 -55.0 -55.0 Current Liabilities 3204.827 4121.8 4573.6001 5310.9955
Adjusted PAT 572.3 1,004.1 1,008.3 1,465.9 Provision 536.6 459.7 457.9 518.7
PAT Margins (%) 4.4 6.5 7.0 8.8 Net Working Capital 10,406.6 11,355.1 11,366.1 11,067.2
Diluted EPS 14.1 25.1 25.2 36.7 Total Assets 20,714.7 22,415.8 22,550.1 22,548.5
Particulars FY12 FY13P FY14E FY15E Particulars FY12 FY13P FY14E FY15E
PBT 671.4 1,252.7 1,329.1 1,901.1 Earning Ratios (%)
Depreciation 579.3 626.4 676.8 702.6 EBITDA Margin (%) 17.0% 18.1% 16.4% 17.7%
Interest Provided 406.8 636.0 636.7 591.0 PAT Margins (%) 4.0% 6.2% 6.6% 8.5%
Chg. in Working Capital (1,326.6) (1,152.9) (14.4) 417.2 ROCE (%) 9.3% 10.7% 8.1% 10.4%
Direct Taxes Paid (48.2) (194.8) (265.8) (380.2) ROE (%) 6.7% 10.6% 10.0% 13.2%
Other Charges (12.1) 471.0 (55.0) (55.0) Per Share Data (INR)
Operating Cash Flows 270.6 1,638.4 2,307.5 3,176.7 Diluted EPS 14.1 25.1 25.2 36.7
Capital Expenditure (2,004.0) (1,213.9) (800.0) (1,000.0) Cash EPS (CEPS) 28.8 40.8 42.2 54.3
Investments 350.3 (165.2) (0.0) (0.0) BVPS 212.6 236.5 252.4 277.4
Others 4.6 - - - Valuation Ratios (x)
Investing Cash Flows (1,649.1) (1,379.0) (800.0) (1,000.0) P/E 15.3 6.8 6.8 4.7
Equity Capital Raised (675.0) - - - Price/BVPS 1.0 0.7 0.68 0.62
Inc / (Dec) in Debt 2,978.8 717.0 (500.0) (1,000.0) EV/Sales 1.4 1.2 1.2 1.0
Dividend Paid (inc tax) (456.5) (374.0) (374.0) (467.5) EV/EBITDA 8.2 6.4 7.4 5.7
Interest Paid (406.8) (636.0) (636.7) (591.0) Dividend Yield (%) 2.3% 4.7% 4.6% 5.8%
Financing Cash Flows 1,440.4 (293.0) (1,510.7) (2,058.5) Balance Sheet Ratios
Chg. in Cash & Cash Eqv 61.9 (33.6) (3.2) 118.2 Debt - Equity 1.3 1.3 1.2 1.0
Opening Cash Balance 118.3 180.2 146.6 143.4 Current Ratio 4.4 3.9 3.6 3.2
Closing Cash Balance 180.2 146.6 143.4 261.6 Fixed Asset Turn. Ratios 2.0 1.9 1.6 1.8
Source: Company Data, SKP Research
Exhibit: Income Statement Figures in INR Million Figures in INR Million
Exhibit: Cash Flow Statement Figures in INR Million Exhibit: Ratio Analysis
HEG Ltd.
SKP Securities Ltd www.skpmoneywise.com Page 12 of 12
Notes:
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INB/INF: 230707532, BSE INB: 010707538, CDSL IN-DP-CDSL-132-2000, DPID: 021800, NSDL IN-DP-NSDL: 222-2001, DP ID: IN302646, ARN: 0006, NCDEX: 00715, MCX: 31705, MCX-SX: INE 260707532