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| India Infoline Research Team / 16:36 , Jul 17, 2012 |
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CMP Rs133, Target Rs142, Upside 6.8%
- Total operating income for Q1 FY13 stood at Rs15.5bn, a jump of 24.5% on yoy basis and a growth of 7% sequentially. The sales volumes were higher on back of the continued growth in volumes in the replacement market and a strong performance in the industrial segment. The demand from auto-OEM remained subdued in the quarter. Total volumes for 4-Ws grew by 10%, while the 2-Ws segment witnessed 28% surge. Volumes in the industrial segment reported 19% growth yoy during Q1 FY13. Notably effective from June 1, the company has taken price hikes in the automotive battery segment.
- OPM at 15% contracted by 285 bps on yoy basis, while sequentially there was an improvement of 33 bps. Net profit for the company declined by 6.9% on yoy basis, while sequentially it was up by 6.7%.
- The material costs continued to decline on a sequential basis (180 bps down qoq), on back of lower lead prices, but were partly offset by a weaker currency observed in the quarter. The other overheads were higher due to a foreign exchange loss of Rs103mn in the quarter (-70bps impact on OPM) vis-a-vis a gain of Rs61mn in Q4FY12 (+40bps effect on OPM). Notably, excluding the foreign exchange gain/losses, the OPM was at 15.6% as against 14.2% recorded in Q4FY12.
- We expect the company to report 15.7% revenue CAGR over FY12-14. On the margin front, we foresee 216bps and 52bps expansion in OPM for FY13 and FY14 respectively. The company has announced a budgeted capital expenditure of Rs2.7bn for FY13.
- We value standalone business at 15x FY14E EPS, and add to it Rs12 for 50% stake in ING Vysya and Rs8 for its subsidiaries. We maintain our recommendation of Market Performer and price target of Rs142 for the consolidated entity.
Results table
| (Rs m) |
Q1 FY13 |
Q1 FY12 |
% yoy |
Q4 FY12 |
% qoq |
| Net sales |
15,536 |
12,482 |
24.5 |
14,537 |
6.9 |
| Material costs |
(10,114) |
(7,941) |
27.4 |
(9,726) |
4.0 |
| Personnel costs |
(841) |
(720) |
16.8 |
(746) |
12.7 |
| Other overheads |
(2,254) |
(1,596) |
41.2 |
(1,935) |
16.5 |
| Operating profit |
2,328 |
2,225 |
4.6 |
2,130 |
9.3 |
| OPM (%) |
15.0 |
17.8 |
(285) bps |
14.7 |
33 bps |
| Depreciation |
(276) |
(237) |
16.5 |
(273) |
1.3 |
| Interest |
(14) |
(14) |
(4.2) |
(14) |
- |
| Other income |
147 |
308 |
(52.1) |
147 |
0.5 |
| PBT |
2,185 |
2,282 |
(4.2) |
1,990 |
9.8 |
| Tax |
(665) |
(650) |
2.4 |
(565) |
17.7 |
| Effective tax rate (%) |
30.4 |
28.5 |
197 bps |
28.4 |
204 bps |
| Reported PAT |
1,520 |
1,633 |
(6.9) |
1,425 |
6.7 |
| Adj. PAT margin (%) |
9.8 |
13.1 |
(329) bps |
9.8 |
(2) bps |
| Ann. EPS (Rs) |
7.2 |
7.7 |
(6.9) |
6.7 |
6.7 | Source: Company, India Infoline Research
Cost Analysis
| As a % of net sales |
Q1 FY13 |
Q1 FY12 |
bps yoy |
Q4 FY12 |
bps qoq |
| Material costs |
65.1 |
63.6 |
148 |
66.9 |
(180) |
| Personnel Costs |
5.4 |
5.8 |
(35) |
5.1 |
28 |
| Other overheads |
14.5 |
12.8 |
172 |
13.3 |
119 |
| Total costs |
85.0 |
82.2 |
285 |
85.3 |
(33) | Source: Company, India Infoline Research
Financial Summary
| Y/e 31 Mar (Rs m) |
FY11 |
FY12 |
FY13E |
FY14E |
| Revenues |
45,535 |
49,691 |
57,885 |
66,568 |
| yoy growth (%) |
20.0 |
9.1 |
16.5 |
15.0 |
| Operating profit |
8,787 |
6,576 |
8,914 |
10,598 |
| OPM (%) |
19.3 |
13.2 |
15.4 |
15.9 |
| Pre-exceptional PAT |
6,194 |
4,309 |
5,879 |
6,906 |
| Reported PAT |
6,663 |
4,309 |
5,879 |
6,906 |
| yoy growth (%) |
24.1 |
(35.3) |
36.5 |
17.5 |
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| EPS (Rs) |
7.3 |
5.1 |
6.9 |
8.1 |
| P/E (x) |
17.6 |
25.3 |
18.5 |
15.8 |
| Price/Book (x) |
4.0 |
3.6 |
3.1 |
2.7 |
| EV/EBITDA (x) |
12.4 |
16.5 |
12.1 |
10.1 |
| Debt/Equity (x) |
0.0 |
0.0 |
0.0 |
0.0 |
| RoE (%) |
25.0 |
14.9 |
18.1 |
18.5 |
| RoCE (%) |
34.7 |
20.8 |
26.4 |
27.3 | Source: Company, India Infoline Research
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