CMP 95.50

Target Price 105.00

ISIN: INE323C010130

June 13th

, 2013

INDIAN HUME PIPE CO.LTD Result Update: Q4 FY13

BUYBUYBUYBUY

Stock Data

Sector Cement Products

BSE Code 504741

Face Value 2.00

52wk. High / Low (Rs.) 146.70 / 86.25

Volume (2wk. Avg ) 600

Market Cap ( Rs in mn ) 2313.49

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY13A FY14E FY15E

Net Sales 6957.91 8001.60 8961.79

EBITDA 661.74 774.17 894.07

Net Profit 228.44 287.26 357.06

EPS 9.43 11.86 14.74

P/E 10.13 8.05 6.48

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX INDIAN HUME PIPE CO. LTD

SYNOPSIS

Indian Hume Pipe Ltd is manufacturing,

popularizing and marketing Hume Pipes and

allied products.

Indian Hume Pipe supplies concrete Railway

sleepers to Indian Railways.

Indian Hume Pipe Company Ltd has have

recommended Dividend of Rs. 2.20/- per

share on Equity Shares of the Company of

the face value of Rs. 2/- each for the

financial year ended March 31, 2013.

The company’s National Rifle Division at

Ahmedabad introduced 2 models i.e., 0.177

Compressed Air Rifle & 0.177 Compressed Air

Pistol.

Indian Hume purchased land near Dhule,

Maharashtra for setting up pipe

manufacturing factory and the production

commence during the year.

During the year, the plants produced 41.78

Kms of BWSC pipes valued at Rs.3,019.49 Lacs

and the total number of factories of the

Company as at the end of period stands at 22.

Net Sales and PAT of the company are

expected to grow at a CAGR of 20% and 59%

over 2012 to 2015E respectively.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Indian Hume Pipe Co. Ltd 95.50 2313.49 9.43 10.13 0.98 110.00

Everest Industries 171.00 2597.00 34.57 4.95 0.86 70.00

Visaka Industries Ltd 93.00 1476.90 31.92 2.91 0.45 50.00

HIL 344.75 2572.70 81.26 4.24 0.65 185.00

Investment Highlights- Standalone

Results updates- Q4 FY13,

The Indian Hume Pipe Co. Ltd manufacturing,

popularizing and marketing Hume Pipes and allied

products, reported its financial results for the

quarter ended 31st, ,March 2013. The fourth quarter

witnesses a healthy increase in overall sales as well

as profitability of the company.

Months Mar-13 Mar-12 % Change

Net Sales 2026.14 1544.59 31.18%

PAT 48.04 29.89 60.72%

EPS 1.98 1.23 60.72%

EBITDA 164.43 120.72 36.21%

The company’s net profit jumps to Rs. 48.04 million against Rs. 29.89 million in the corresponding quarter

ending of previous year, an increase of 60.72 %. Revenue for the quarter rose 31.18 % to Rs. 2026.14 million

from Rs. 1544.59 million, when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 1.98 a share during the quarter, registering 60.72 % increase over previous year period.

Profit before interest, depreciation and tax is Rs. 164.43 millions as against Rs. 120.72 millions in the

corresponding period of the previous year.

Expenditure :

Break up of Expenditure

Rs in millions

Q4 FY13 Q4 FY12

Cost of Material Consumed 279.08 190.54

Construction Expenses 1324.90 886.23

Other manufacturing Expenses 18.26 26.48

Works & Office Establishment 68.06 65.30

Employee Benefit Expenses 100.52 91.91

Depreciation & Amortization 20.89 17.83

Other Expenses 102.39 116.87

Segment Revenue

Latest Updates

Indian Hume Pipe Company Ltd has have recommended Dividend of Rs. 2.20/- per share (110%) on

2,42,23,585 Equity Shares of the Company of the face value of Rs. 2/- each for the financial year ended March

31, 2013 and Books of the Company will remain closed from July 12, 2013 to July 25, 2013 for the purpose of

Payment of Dividend & 87th Annual General Meeting of the Company to be held on July 25, 2013.

• Railway Sleepers

The Company has manufactured 82,828 sleepers amounting to Rs.1104.39 Lacs against the order received

from Ministry of Railway Board, New Delhi.

• Bar Wrapped Steel Cylinder (BWSC) pipes

The Company has received orders worth Rs.17, 798 Lacs for BWSC pipes and orders worth Rs.4, 291 Lacs for

PCCP pipes along with other civil works.

• National Rifle Division

The National Rifle Division at Ahmedabad has introduced two models namely 0.177 Compressed Air Rifle &

0.177 Compressed Air Pistol enable shooters to acquire efficiency in target shooting and gain recognition in

the State, National and International shooting competitions.

The Company has purchased land near Dhule, Maharashtra for setting up pipe manufacturing factory will

commence production during the current financial year.

Company Profile

The Indian Hume Pipe Co. Ltd is established in the year 1926 with object of manufacturing, popularizing and

marketing Hume Pipes and allied products. Over a period of time, it has developed Prestressed Concrete Pipes

(Non-Cylinder), Prestressed Concrete Cylinder Pipes, Bar Wrapped Steel Cylinder Pipes, Hume Steel Pipes,

Welded Steel Penstocks, Prestressed Concrete Railway Sleepers and specialized in execution of Turnkey Water

Supply and Sewerage Projects.

The Company has wide network of over 20 factories and over 100 projects under execution in India. It has

earned a reputation for excellence through employing modern technology, stringent quality control measures,

timely execution and continuous Research and Development. As a result the company's products have found

acceptance in highly competitive markets. The company's Expertise is at work right from designing of custom

made pipes to the company's total engineering packages for pipeline projects.

The Company is actively involved in the strengthening of the nation's infrastructure in varied fields viz. Water

Supply, Irrigation, Drainage, Power Generation and Rail transport by executing numerous turnkey pipeline

projects for Water Supply, Sewerage and Hydroelectric Power Generation and supplying millions of Concrete

Sleepers for the track modernization of Railways in India. IHP has also executed projects in neighboring

countries like Nepal, Srilanka, Burma, Malaysia and Republic of Iraq.

� Products

• Prestressed Concrete pipe

• Prestressed concrete cylinder pipe

• Bar wrapped steel cylinder pipe

• Steel pipe

• Reinforced cement concrete pipe

• Penstock pipe

• Prestressed concrete monoblock sleeper for railways

• Air rifles & pistols

� Projects

• Water Supply

The business of executing turnkey projects for the supply of drinking water and irrigation water to many

parts of India has completed & are executing a number of prestigious turnkey projects involving various

components such as intake wells, electrical transmission lines, pumping stations with pumping machineries,

water treatment plants, water transmission mains, ground level reservoirs, elevated service reservoirs along

with supplying, laying, jointing, testing, commissioning of various pipe materials along with allied civil works

• Drainage /Sewerage

The setting up sewer and drainage pipelines for cities and towns has completed and are executing a number

of projects involving various components of such schemes such as pumping stations with pumping

machineries, manhole construction, supplying and installing of sewer pipeline along with allied civil works,

pipe jacking. During the last eight decades, it supplied precast concrete pipes to 80 such projects undertaken

by us around the country and 65,000 km to various projects taken up by other civil contractors.

The pipe material, because of its inherent qualities such as durability, strength, economy etc. soon found

acceptance and still enjoys the confidence of government authorities. These pipes have been used for water

supply, sewerage, drainage, irrigation road culverts, etc.

• Power

The company is contributing to the power sector by designing, fabricating and installing, penstock pipes for

hydro electric projects and cooling water pipelines for thermal power plants.

Hydro Power Projects

A high pressure steel pipeline that conveys water from storage reservoir to the turbines to generate Hydro

power which is one of the vital sections of a hydro electric power project. The design, fabrication and

erection of penstock pipes demand a high degree of skill & quality control. Penstocks and even the

technicians had to be brought from abroad but however in 1937 the company decided to take up the

challenge of manufacturing penstock in India and offered its services to the madras government for the

prestigious Papanasam Hydel Project.

Thermal Power Projects

The Company installs and fabricates cooling water pipelines for Thermal & Combined cycle power plants has

successfully designed, fabricated & installed cooling water pipelines for Asea Brown Boveri Ltd for Anta and

Gandhar Combined Cycle power plant, for Tata Electric Companies for Trombay Thermal Power station unit

6 and Trombay Combined Cycle Power Plant

• Manufacturing

The company has successfully managed operations overseas and delivered concrete pipes and sleepers in

Iraq and Burma.

� Customers

• Central Government

� Indian Railways

� Indian Railway Construction Company (IRCON)

� Rail India Technical And Engineering Services (RITES)

� Bharat Heavy Electricals Limited (BHEL)

� National Hydro Power Corporation (NHPC)

� National Thermal Power Corporation (NTPC)

� Indian Farmers Fertiliser Co Operative Limited (IFFCO)

� Satlaj Jal Vidyut Nigam Limited (SJVN)

� Private sector

Financial Highlight- Standalone

Balance sheet as at March31st, 2013

INDIAN HUME PIPE CO. LTD. (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at 31st March, 2012. FY-12A FY-13 FY-14E FY-15E

SOURCES OF FUNDS

Shareholder's Funds

Capital 48.45 48.45 48.45 48.45

Reserves and Surplus 2156.05 2322.17 2461.50 2584.58

Sub-Tota-l Net worth 2204.50 2370.62 2509.95 2633.03

Non Current Liabilities

Differed Tax Liabilities 0.05 11.45 12.60 13.22

Other Long term liabilities 156.78 230.86 288.58 331.86

Long term Provisions 13.03 16.72 19.06 20.59

Sub-Total- Non Current liabilities 169.86 259.03 320.23 365.67

Current Liabilities

Short term borrowings 1485.10 1763.74 2028.30 2231.13

Trade payables 1204.50 1483.78 1632.16 1730.09

Other Current liabilities 1666.11 1550.89 1473.35 1547.01

Short term Provisions 90.40 94.43 92.54 93.47

Total Liabilities (a + b + c) 6820.47 7522.49 8056.53 8600.40

APPLICATION OF FUNDS

Non-Current Assets

Fixed Assets 738.59 806.01 854.37 880.00

Non- Current Investments 15.19 17.81 19.41 20.38

Long Term loans and advances 69.51 84.37 92.81 88.17

Other non-current investments 181.60 232.98 291.23 334.91

Sub-Total-Non-Current Assets (d) 1004.89 1141.17 1257.82 1323.46

Current Assets

Inventories 2920.40 3152.79 3310.43 3409.74

Trade receivables 1395.18 1631.58 1839.70 2119.13

Cash and Bank Balances 266.45 212.24 180.40 162.36

Short-terms loans & advances 1227.67 1381.96 1464.88 1582.07

Other current assets 5.88 2.75 3.30 3.63

Sub-Total- Current Assets (e) 5815.58 6381.32 6798.71 7276.93

Total Assets (d+e ) 6820.47 7522.49 8056.53 8600.39

Annual Profit & Loss Statement for the period of 2012 to 2015E

Value(Rs.in.mn) FY12 FY13 FY14E FY15E

Description 12m 12m 12m 12m

Net Sales 5171.69 6957.91 8001.60 8961.79

Other Income 85.56 52.02 67.63 94.68

Total Income 5257.25 7009.93 8069.22 9056.46

Expenditure -4815.53 -6348.19 -7295.06 -8162.40

Operating Profit 441.72 661.74 774.17 894.07

Interest -236.80 -253.67 -268.89 -279.65

Gross profit 204.92 408.07 505.28 614.42

Depreciation -69.44 -73.99 -76.21 -80.78

Profit Before Tax 135.48 334.08 429.07 533.64

Tax -46.89 -105.64 -141.81 -176.58

Profit After Tax 88.59 228.44 287.26 357.06

Extraordinary Items 70.66 0.00 0.00 0.00

Net Profit 159.25 228.44 287.26 357.06

Equity capital 48.45 48.45 48.45 48.45

Reserves 2156.10 2322.17 2461.50 2584.58

Face value 2.00 2.00 2.00 2.00

EPS 6.57 9.43 11.86 14.74

Quarterly Profit & Loss Statement for the period of 30th September, 2013 to 30th June, 2013E

Value(Rs.in.mn) 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13E

Description 3m 3m 3m 3m

Net sales 1739.77 1638.67 2026.14 1985.62

Other income 5.62 6.91 5.16 15.74

Total Income 1745.39 1645.58 2031.30 2001.36

Expenditure -1570.63 -1492.96 -1866.87 -1811.08

Operating profit 174.76 152.62 164.43 190.27

Interest -65.73 -66.06 -67.16 -65.82

Gross profit 109.03 86.56 97.27 124.46

Depreciation -17.42 -20.09 -20.89 -18.80

Profit Before Tax 91.61 66.47 76.38 105.66

Tax -22.38 -22.30 -28.34 -33.76

Net Profit 69.23 44.17 48.04 71.90

Equity capital 48.45 48.45 48.45 48.45

Face value 2.00 2.00 2.00 2.00

EPS 2.86 1.82 1.98 2.97

Ratio Analysis

Particulars FY12 FY13 FY14E FY15E

EPS (Rs.) 6.57 9.43 11.86 14.74

EBITDA Margin (%) 8.54% 9.51% 9.68% 9.98%

PBT Margin (%) 2.62% 4.80% 5.36% 5.95%

PAT Margin (%) 1.71% 3.28% 3.59% 3.98%

P/E Ratio (x) 14.53 10.13 8.05 6.48

ROE (%) 4.02% 9.64% 11.44% 13.56%

ROCE (%) 13.85% 17.80% 18.74% 20.04%

Debt Equity Ratio 0.67 0.74 0.81 0.85

EV/EBITDA (x) 8.00 5.84 5.38 4.90

Book Value (Rs.) 91.00 97.86 103.61 108.69

P/BV 1.05 0.98 0.92 0.88

Charts

Outlook and Conclusion

� At the current market price of Rs.95.50, the stock P/E ratio is at 8.05 x FY14E and 6.48 x FY15E respectively.

� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.11.86 and Rs.

14.74 respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 59% over 2012 to 2015E

respectively.

� On the basis of EV/EBITDA, the stock trades at 5.38 x for FY14E and 4.90 x for FY15E.

� Price to Book Value of the stock is expected to be at 0.92 x and 0.88 x respectively for FY14E and FY15E.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs.105.00 for Medium to Long term

investment.

Industry Overview

Cement is one of the core industries which plays a vital role in the growth and development of a nation. The

industry occupies an important place in the Indian economy. India ranks as the second largest producer of

quality cement in the world.

There are 139 large cement plants and over 365 mini cement plants in India. The country has a total of 40

players in the industry currently.

The demand for cement, being a derived one, depends mainly on the industrial activities, real estate business,

construction activities and investment in the infrastructure sector. With the ever-increasing requirement for

infrastructure, in addition to the onset of various Special Economic Zones (SEZs) being developed across the

country, there is a huge demand for cement. India's 330 million tonne (MT) cement industry grew by 6.4 per cent

in FY12, on back of robust demand revival in the second half of the year. The industry sold 223.02 MT of the

building material, compared with 209.5 MT in FY11.

"India's cement market is expected to see demand growth rate double and pricing power improve in FY13-14,"

as per a research report by Anand Rathi.

Market Size

The cement and gypsum products sector has attracted foreign direct investments (FDI) worth US$ 2,618.30

million between April 2000 to August 2012, according to the data published by the Department of Industrial

Policy and Promotion (DIPP).

The demand for cement is expected to grow at 10 per cent over 2011, as per ACC Ltd's annual report. India's total

installed capacity of cement stood at 320 million tonnes per annum (MTPA).

The cement industry plans to add new capacity of about 71 MT in the next two financial years. At present, it has

an installed capacity of over 315 MT to cater to the demand of about 230 MT.

"It is anticipated that the cement industry players will continue to increase their annual cement output in coming

years and the country's cement production will grow at a compound annual growth rate (CAGR) of around 12 per

cent during 2011-12 - 2013-14 to reach 303 MMT," according to a RNCOS report titled 'Indian Cement Industry

Forecast to 2012'.

Investments

• Cement Corporation of India (CCI) plans to set up a cement grinding unit with an installed capacity of 82,500

tonnes per annum, on a single shift basis at a cost of Rs 39.68 crore (US$ 7.18 million) in district of Cachar,

Assam

• German cement major Heidelberg and domestic firms including Ultratech and Reliance Cements have evinced

interest to be the joint venture (JV) partner in the state-run Rashtriya Ispat Nigam's proposed Rs 1,000 crore

(US$ 180.31 million) 3 MTPA cement plant at Vizag

• Reliance Cement Company Pvt Ltd (RCC), a subsidiary of Reliance Infrastructure Ltd, has commenced

production of cement from its first manufacturing unit at Butibori, Nagpur in Maharashtra. RCC is building

two cement plants with a total capacity of 10 MT in Madhya Pradesh and Maharashtra with associated

grinding plants

• India Cements has started the paper work on a brownfield expansion to add over three MT at two of its

cement plants in Tamil Nadu

• Kolkata-based real estate company Roofers Group will commission a 200 tonnes-a-day cement plant this

week at Lodhasuli in the Midnapore district of the State

• Total operational capacity of the North-East region's cement units is likely to exceed 7 MT in 2013-14 from 6

MT now. The projected compound annual cement demand growth rate for the region is around 20 per cent

for the next few years

• Ambuja Cements' integrated plant unit at Chandrapur, in Maharashtra, the Maratha Cement Works (MCW)

has bagged the gold award for the best safety systems at the Safety Excellence System Awards

Government Initiatives

India would require overall cement capacity of around 480 MT. This would mean the industry will have to add

another 150 MT of capacity during the period, according to the latest report from the working group on the

industry for the 12th Five Year Plan (2012-17).

Road Ahead

Indian cement majors, including ACC Ltd, Shree Cement Ltd and Ultratech, have signed a co-operation pact to

support low-carbon investments in India. The pact was signed in Geneva with member companies of the World

Business Council (WBC) for Sustainable Development's Cement Sustainability Initiative and International

Finance Corporation (IFC). The roadmap will pave a possible transition path for the Indian cement industry to

reduce its direct emissions by 18 per cent by 2050. This is the first roadmap to focus on one specific industrial

sector in a single country, as per a WBC release.

The initiatives taken by the Government of India to various infrastructure projects, road network and housing

activities has provided the required stimulus for growth of the cement industry in India.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

C.V.S.L.Kameswari Pharma

U. Janaki Rao Capital Goods

A.Nagaraju Cement, Reality & Infra, Oil & Gas

Ashish.Kushwaha IT, Consumer Durable & Banking

Anil Kumar Diversified

First call India also provides

Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover

Offers, Offer for Sale and Buy Back Offerings.

Corporate Finance Offerings include Foreign Currency Loan Syndications,

Placement of Equity / Debt with multilateral organizations, Short Term Funds

Management Debt & Equity, Working Capital Limits, Equity & Debt

Syndications and Structured Deals.

Corporate Advisory Offerings include Mergers & Acquisitions (domestic and

cross-border), divestitures, spin-offs, valuation of business, corporate

Restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &

Execution, Project Financing, Venture capital, Private Equity and Financial

Joint Ventures

Firstcall India also provides Financial Advisory services with respect to raising

of capital through FCCBs, GDRs, ADRs and listing of the same on International

Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and

other international stock exchanges.

For Further Details Contact:

3rd Floor, Sankalp, the Bureau, Dr.R.C.Marg, Chembur, Mumbai 400 071

Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089

E-mail: info@firstcallindiaequity.com

www.firstcallindiaequity.com