tag:blogger.com,1999:blog-82964238245430861642024-03-19T00:59:10.905+05:30BHAVIKK SHAH's BLOGBlog, for those who don't understand how to trade in stock markets, market terms & market jargon's. Visit this blog to update your knowledge on stock market & Economics of the World. Also add on your comments and upload your knowledge of finance on to it, even your stock tips are invited.Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.comBlogger371125tag:blogger.com,1999:blog-8296423824543086164.post-54528716984444377802017-04-04T05:37:00.008+05:302022-03-25T15:00:15.544+05:30MY BIRTHDAY TODAY: BIDDING ADIEU TO ALL _/\_ !!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; font-style: italic; font-weight: bold;">Hello Friends!! </span><br />
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"> It’s my Birthday today .. and wishing you all a Very Happy Ram Navami too...</span></i></b><br />
<i><span style="color: #38761d; font-family: "gabriela"; line-height: 27px;"><b style="font-size: 13.5pt;">I am very emotional in breaking this news to you all, that after 9 long years of blogging, I am finally bidding adieu to my Blog. I started blogging as fun and later it become blogging for a purpose, for a cause - cause to help. I blogged about stocks, about my views, stories about markets - my intention was </b><span style="font-size: 18px;"><b>purely</b></span><b style="font-size: 13.5pt;"> to educate & provide an advantage to investors, to make every citizen of my country an Investor & not a speculator.. my </b><span style="font-size: 18px;"><b>endeavor</b></span><b style="font-size: 13.5pt;"> was to educate and make investors aware... I gave my views on stocks in every 10 days i.e. on every 3rd, 13th & 23rd of every month, that too for 9 long years, there were times when it became difficult for me to cope up with my blogging, </b><span style="font-size: 18px;"><b>professional</b></span><b style="font-size: 13.5pt;"> and personal time, but somehow I managed it....believe me, this decision is as hard for me as hard it is for you lovely people to hear it. </b></span></i><br />
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"> </span></i><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">Friends,
its been 9 long years since I started this blog and it has been an amazing journey ( <a href="https://bhavikkshah.blogspot.com/2008/10/silver-lining-indian-markets-on-day-of.html" target="_blank">My First Post</a> ) and as I write
this, it is becoming more difficult for me..but I have to do it, all these
years you all have showered me with immense love, appreciations and support and
I am very much thankful for all. During this journey, I have learned so many valuable lessons,
found new truths about myself, made good friends, and also had an opportunity to
meet many new people along the way. Stock markets made me humble, interacting with
readers made me mature. Some of you who have still been with me since the
beginning, & still with me - I am so grateful for that. Markets have taught me a lot and I am still
learning, a student for life. But, after 372 published posts with more than 570+ followers, now it
is becoming difficult for me to blog, some instances which happened in my
personal life made me more determined towards my decision, now there's nothing
left and no one for whom I motivate myself to write, I have started feeling
that my blogging is not serving its purpose it should be.. </span></i></b><b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;">those who know me knows this well that </span></i></b><i style="font-weight: bold;"><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">I never wrote for
fame or for money never - money-making was not my intentions ever. I received blessings, appreciation from you all wonderful readers,<span class="apple-converted-space"> </span></span></i><i style="font-weight: bold;"><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">THANK YOU guys, Thank you so much</span></i><i><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b style="font-size: 13.5pt;">, my intentions were pure
& clear... I never expected anything from anyone, I always want that
my readers get benefited and make wealth for </b><span style="font-size: 18px;"><b>themselves</b></span><b style="font-size: 13.5pt;"> and be a part of India
Growth story. I selflessly </b><span style="font-size: 18px;"><b>intended</b></span><span style="font-size: 13.5pt;"><b> good for all my readers, I never intended to make money from my blog....but nothing inspires me anymore, there's </b></span></span></i><b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;">no one for whom I motivate myself to write anymore</span></i></b><i style="font-weight: bold;"><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">, I can say that my<span class="apple-converted-space"> </span></span></i><i style="font-weight: bold;"><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">Karma</span></i><i><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><span style="font-size: 13.5pt;"><b> towards
my readers ends here... People close to me know very well that I am not very expressive, I cannot express myself and you all can imagine how difficult it is for me to convey this emotion to you all. This is very shattering for me and is breaking me
as well, but I have to DO IT.. I </b></span><span style="font-size: 18px;"><b>don't</b></span><b style="font-size: 13.5pt;"> know whether I will come back again to
blogging or not - I </b><span style="font-size: 18px;"><b>don't</b></span><b style="font-size: 13.5pt;"> know - I may or I may not, but as of now, </b></span><span style="font-family: "gabriela"; font-size: 13.5pt; font-weight: bold; line-height: 150%;"><span style="color: #990000;">Yes it's a
sad BYE :( _/\_</span></span></i><br />
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<tr><td class="tr-caption" style="text-align: center;"><b style="font-size: medium; text-align: justify;"><i><span style="font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"><span style="color: #990000;">A previous version of the blog</span></span></i></b></td></tr>
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<i><span style="color: #38761d; font-family: "gabriela"; line-height: 27px;"><span style="font-size: 13.5pt;"><b>One wise man</b></span><b style="font-size: 13.5pt;"> </b><span style="font-size: 18px;"><b>truly</b></span><b style="font-size: 13.5pt;"> said, </b></span><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt; font-weight: bold; line-height: 27px;">Once a Market men always a market men</span><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; font-weight: bold; line-height: 27px;">, I am the learner, and markets have given me lots and taught me many lessons. I still have more to learn from markets. L</span></i><b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;">earning is the journey and not the destination,</span></i></b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; font-weight: bold; line-height: 27px;"> Markets is my Passion & I can never quit markets, I am just stopping my blogging journey here. Guys, I will be available to all on stocks topics and markets on Email - </span><span style="font-family: "gabriela"; line-height: 27px;"><span style="color: #990000; font-size: 13.5pt; font-weight: bold;">montyuu@yahoo.com,</span><span style="color: #38761d;"><span style="font-size: 13.5pt;"><b> and all the posts & comments will be available online. I am optimistic about markets and I do </b></span><span style="font-size: 18px;"><b>believe</b></span><span style="font-size: 13.5pt;"><b> in India Growth Story, the consumption theory, the demographic dividend that our nation enjoys, encash it, please do participate in the growth of our nation by investing in stock markets with proper study and strict stop loss - </b></span></span><span style="color: #38761d; font-size: 13.5pt; font-weight: bold;">look at the companies with better Revenue growth -</span><span style="color: #990000; font-size: 13.5pt; font-weight: bold;"> Revenue is the Economic engine that drives a company without which the company cannot earn Profit. Constant revenue growth of at least 10 % or more every year for each of the last 10 years indicates that the company is able to expand its business operation and is growing, (</span><span style="color: #bf9000; font-size: 13.5pt; font-weight: bold;">f</span><span style="color: #bf9000; font-size: 13.5pt; font-weight: bold;">or banks and financial institutions take net loan growth instead of revenue growth</span><span style="color: #990000; font-size: 13.5pt; font-weight: bold;">); </span></span></i><b><i><span style="font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"><span style="color: #990000;">Look at company's Return on Capital Employed (ROCE) This ratio measures the company's profitability and the efficiency with which its capital is employed. Look at companies whose ROCE was at least 15 % for each of the last 10 years (</span><span style="color: #bf9000;">for banks and financial institutions take pre-tax ROE of more than 20 % for each of the last 10 years instead of ROCE</span><span style="color: #990000;">). </span></span></i></b><b><i><span style="font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"><span style="color: #990000;">Revenue growth creates shareholder's value via stock price increases, only if ROCE remains high. Hence it is a very important metric in assessing a firm's performance; also look at companies with</span></span></i></b><i><span style="font-family: "gabriela"; line-height: 27px;"><span style="color: #990000;"><span style="font-size: 13.5pt;"><b> great net profit margins, less debt - try to have a stock whose debt is not more than 3 times its net profit, companies with greater ROCE, ROE, wonderful </b></span><span style="font-size: 18px;"><b>consistent </b></span><span style="font-size: 13.5pt;"><b>cashflows & best management. </b></span></span></span></i><b><i><span style="font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;"><span style="color: #bf9000;">BE INVESTED GUYS </span><span style="color: #38761d;">- wonderful days for Indian Equities are yet to come. Lastly, I would like to thank all of you wonderful people, for being there</span></span></i></b><b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">, with me all these years, I take this opportunity to give Thanks to all my reader friends.. TAKE CARE !! </span></i></b></div>
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> </span><span style="color: #38761d; font-family: "gabriela"; font-size: large; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> </span><span style="color: #38761d; font-family: "gabriela";"><span style="font-size: medium;"><span style="color: #990000; font-size: x-large;">God Bless You All !!!</span></span></span></i></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Thanks to my parents who made me what I am here today And </span></i></b><b style="line-height: 18pt;"><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Thanks God for all of it !!!</span></i></b></div>
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"><br />Warm Regards,</span></i></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><i><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Bhavikk Shah.</span></i></b><b><span style="font-family: "gabriela"; font-size: 13.5pt;"> </span><span style="font-size: 13.5pt;"><span style="font-family: "times new roman" , serif;"> </span></span></b></div>
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<span style="font-size: large;"><b><i><span style="color: #990000; font-family: "gabriela"; line-height: 27px;">There are many stocks but some of my fav picks:</span><span style="color: #38761d; font-family: "gabriela"; line-height: 27px;">- <a href="https://bhavikkshah.blogspot.com/search/label/ADANI%20PORT" target="_blank">Adani Ports</a> ; </span></i></b><b><i><span style="color: #38761d; font-family: "gabriela"; line-height: 27px;"><a href="https://bhavikkshah.blogspot.com/search/label/BERGER%20PAINTS" target="_blank">Berger Paints</a> ;</span></i></b><b><i><span style="color: #38761d; font-family: "gabriela"; line-height: 27px;"> <a href="https://bhavikkshah.blogspot.com/search/label/MCX" target="_blank">MCX</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/PVR%20LTD" target="_blank">PVR</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/CERA%20SANITARYWARE%20LTD" target="_blank">Cera sanitaryware</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/CCL%20PRODUCTS%20LTD" target="_blank">CCL Products</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/NILKAMAL%20LTD" target="_blank">Nilkamal</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/SYMPHONY%20LTD" target="_blank">Symphony Ltd</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/UNION%20BUDGET%20OF%20INDIA?m=0" target="_blank">Union Budget</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/HUHTAMAKI%20PAPER%20PRODUCTS%20LTD" target="_blank">HPPL</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/HINDUSTAN%20UNILEVER%20LTD" target="_blank">HUL</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/COLGATE%20PALMOLIVE%20%28INDIA%29%20LTD" target="_blank">Colgate Palmolive</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/ULTRATECH%20CEMENTS" target="_blank">Ultratech Cement</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/ADITYA%20BIRLA%20NUVO%20LTD" target="_blank">AB NUVO </a>; <a href="http://bhavikkshah.blogspot.com/search/label/BSE" target="_blank">BSE LTD</a> ; <a href="https://bhavikkshah.blogspot.com/search/label/IPO" target="_blank">IPO's</a></span></i></b></span><br />
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE ON STOCK MARKET STORIES -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://bhavikkshah.blogspot.com/search/label/STOCK%20MARKET%20STORIES" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b><br />
<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"><br /></span></b></span></b>
<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com30tag:blogger.com,1999:blog-8296423824543086164.post-37626047306428967072017-03-24T12:24:00.003+05:302017-04-13T13:57:45.189+05:30NAIL THE FENCE - NAIL THE ANGER STORY !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAU0GS5aHPZMkGlfMlLmQu0jHtY02DwAz0ySzuXEaVBRIXLXWh0-1FLrUWksoYB6lemD7DsZ9egPj4VJSxqXrVGZYrZTZBgb4HhXrMtLVyJfBoOi1vdQCtuHh8LW_QpEpUpq_jJI_qtxIE/s1600/fence.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAU0GS5aHPZMkGlfMlLmQu0jHtY02DwAz0ySzuXEaVBRIXLXWh0-1FLrUWksoYB6lemD7DsZ9egPj4VJSxqXrVGZYrZTZBgb4HhXrMtLVyJfBoOi1vdQCtuHh8LW_QpEpUpq_jJI_qtxIE/s320/fence.jpg" width="239" /></a></div>
<span style="color: #38761d;"><b><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">Once upon a time there was a
little boy who was talented, creative, handsome, and extremely bright. A
natural leader. The kind of person everyone would normally have wanted on their
team or project. But he was also self-centered and had a very bad temper. When
he got angry, he usually said, and often did, some very hurtful things. In
fact, he seemed to have little regard for those around him. Even friends. So,
naturally, he had few. “But, arrogantly, he told himself<span id="more-532"></span>, that how stupid most people are!”</span><span style="color: #444444; font-family: "gabriela";"><o:p></o:p></span></b></span></div>
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<a href="https://www.blogger.com/blogger.g?blogID=8296423824543086164" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><a href="https://www.blogger.com/blogger.g?blogID=8296423824543086164" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><span style="color: #38761d;"><b><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">As he grew, his parents became
concerned about this personality flaw, and pondered long and hard about what
they should do. Finally, the father had an idea. And he struck a bargain with
his son. He gave him a bag of nails, and a BIG hammer. “Whenever you lose your
temper,” he told the boy, “I want you to really let it out. Just take a nail
and drive it into the oak boards of that old fence out back. Hit that nail as
hard as you can!”</span><span style="color: #444444; font-family: "gabriela";"><o:p></o:p></span></b></span></div>
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<span style="color: #38761d;"><b><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">Of course, those weathered oak
boards in that old fence were almost as tough as iron, and the hammer was
mighty heavy, so it wasn’t nearly as easy as it first sounded. Nevertheless, by
the end of the first day, the boy had driven 37 nails into the fence (<em>That was one angry young man!</em>).
Gradually, over a period of weeks, the number dwindled down. Holding his temper
proved to be easier than driving nails into the fence! Finally the day came
when the boy didn’t lose his temper at all. He felt mighty proud as he told his
parents about that accomplishment.</span><span style="color: #444444; font-family: "gabriela";"><o:p></o:p></span></b></span></div>
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<span style="color: #38761d;"><b><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">“<span style="color: #990000;">As a sign of your success,”
his father responded, “you get to PULL OUT one nail. In fact, you can do that
each day that you don’t lose your temper even once</span>.”</span><span style="color: #444444; font-family: "gabriela";"><o:p></o:p></span></b></span></div>
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<span style="color: #38761d;"><b><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"><span style="color: #38761d;">Well, many weeks passed.
Finally one day the young boy was able to report proudly that all the nails
were gone.</span><span style="color: #444444;"> </span></span></b></span><b style="font-family: gabriela;"><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"><span style="color: #38761d;">At that point, the father asked
his son to walk out back with him and take one more good look at the fence.
“You have done well, my son,” he said. </span><em><span style="color: #38761d;">“But
I want you to notice the holes that are left. No matter what happens from now
on, this fence will never be the same. </span><span style="color: #bf9000;">Saying or doing hurtful things in anger
produces the same kind of result. There will always be a scar. It won’t matter
how many times you say you’re sorry, or how many years pass, the scar will
still be</span></em></span><span style="color: #bf9000;"><span class="apple-converted-space"><i><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"> </span></i></span><em><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">there. And a verbal wound is as
bad as a physical one. People are much more valuable than an old fence. They
make us smile. They help us succeed. Some will even become friends who share
our joys, and support us through bad times. And, if they trust us, they will
also open their hearts to us. That</span></em><span class="apple-converted-space"><i><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"> </span></i></span><em><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;">means</span></em><span class="apple-converted-space"><i><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"> </span></i></span></span><em><span style="border: 1pt none; font-family: "gabriela"; padding: 0cm;"><span style="color: #bf9000;">we need to treat everyone with
love and respect. We need to prevent as many of those scars as we can</span><span style="color: #38761d;">.”</span></span></em></b></div>
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<a href="https://www.blogger.com/blogger.g?blogID=8296423824543086164" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://www.blogger.com/blogger.g?blogID=8296423824543086164" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><span style="color: #990000;"><b style="font-family: gabriela;"><i>A most valuable lesson learned. Everyone gets angry occasionally. The real test is what we DO or how we react when we are angry. If we are wise, we will spend our time building bridges rather than barriers in our relationship. This story is probably not new and you might have read or heard it before. But everytime when you read this it brings a fresh perspective and each time reminds us the side effects of not keeping our anger in control</i>. </b></span></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com2tag:blogger.com,1999:blog-8296423824543086164.post-10781986498256402132017-03-23T14:09:00.002+05:302022-06-06T16:23:04.343+05:30KNOWLEDGE PAYS THE BEST INTERESTS !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidgjIvhrX-emA-nOQERDf6PifEFeqNAv1MEW1FnNtMkLJbaoKc9LAuPjr2CCKZ6NhXdNtibOpBzHJr3WTkVjcA2ApqzB1OLClTkkI_zMOfeYRVC1gYWYwOxY52r2Er8exp548xIPQ7ydoY/s1600/we-three-kings.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidgjIvhrX-emA-nOQERDf6PifEFeqNAv1MEW1FnNtMkLJbaoKc9LAuPjr2CCKZ6NhXdNtibOpBzHJr3WTkVjcA2ApqzB1OLClTkkI_zMOfeYRVC1gYWYwOxY52r2Er8exp548xIPQ7ydoY/s400/we-three-kings.jpg" width="600" /></a></div>
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<b style="background-color: white; color: #38761d; font-family: gabriela; text-align: justify;"><br /></b>
<b style="background-color: white; color: #38761d; font-family: gabriela; text-align: justify;">Friends , many times in our markets invetors or traders always strive to understand whats happening with particular stock or the markets as a whole, here comes the experience, knowledge and wisdom to the rescue. I came across many stories on markets and one such is </b><b style="background-color: white; color: #38761d; font-family: gabriela; text-align: justify;">articulated here about the power of training and wisdom. </b><br />
<b style="background-color: white; text-align: justify;"><span style="color: #38761d;"><span style="font-family: "gabriela"; line-height: 150%;"><br />
</span></span></b> <b style="background-color: white; text-align: justify;"><span style="color: #38761d;"><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;">This story is in Arabic context where an arab sheik, father of three sons left 17 Camels as an Asset after his death. His will was read to his three sons</span><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;">. T</span><span style="font-family: "gabriela"; line-height: 150%;"><span style="color: #38761d;">he Will of the Sheik were Father stated that the </span><span style="color: #bf9000;">Eldest son should get half of 17 camels, t</span></span><span style="color: #bf9000; font-family: "gabriela"; line-height: 150%;">he middle son should be given 1/3rd of 17 camels, the y</span><span style="font-family: "gabriela"; line-height: 150%;"><span style="color: #bf9000;">oungest son should be given 1/9th of the 17 camels</span><span style="color: #38761d;">.</span></span></span></b><br />
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<b><span style="color: #38761d;"><span style="font-family: "gabriela"; line-height: 150%;">As it is not possible to divide 17 into half or 17 by 3 or 17 by 9, the sons started to fight with each other. S</span><span style="font-family: "gabriela"; line-height: 150%;">o, they decided to go to Cadi (judge) a wise man. T</span><span style="font-family: "gabriela"; line-height: 150%;">he wise man listened patiently about the Will. The wise man, after giving this thought, brought one camel of his own & added the same to 17. That increased the total to 18 camels.</span></span></b></div>
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<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b>Now, he started reading the deceased father’s will again.<o:p></o:p></b></span></div>
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #990000;">Half of 18 to eldest son = 9.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b></b></span><br />
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<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b><span style="line-height: 150%;">So he gave 9 camels </span><span style="line-height: 150%;">to the eldest son.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b> <o:p></o:p></b></span></div>
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #990000;">1/3rd of 18 to middle son = 6.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b></b></span><br />
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<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b><span style="line-height: 150%;">So he gave 6 camels t</span><span style="line-height: 150%;">o the middle son.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b> <o:p></o:p></b></span></div>
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #990000;">1/9th of 18 to youngest son = 2.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b></b></span><br />
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<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b><span style="line-height: 150%;">So he gave 2 camels t</span><span style="line-height: 150%;">o the youngest son.</span></b></span></div>
<span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"><b> <o:p></o:p></b></span></div>
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #990000;">Now add this up:</span></b></span></div>
<span style="font-family: "gabriela"; line-height: 150%;"><b></b></span><br />
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="line-height: 150%;"><span style="color: #990000;">9 + 6 + 2 = 17 &</span></span></b></span></div>
<span style="font-family: "gabriela"; line-height: 150%;"><b> </b></span><br />
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #bf9000;"><i><span style="line-height: 150%;">This leaves 1 camel, w</span><span style="line-height: 150%;">hich the wise man took back.</span></i></span></b></span></div>
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<span style="font-family: "gabriela"; line-height: 150%;"><b><span style="color: #38761d;"><o:p></o:p></span></b></span></div>
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<b><span style="font-family: "gabriela"; line-height: 150%;"><span style="color: #38761d;">MORAL of the story: </span><span style="color: #990000;">Training or wisdom is that 18th camel that we bring to the table to solve any problem! H</span></span><span style="font-family: "gabriela"; line-height: 150%;"><span style="color: #990000;">owever, to reach a solution, the first step is to believe that there is a solution. If we think that there is no solution, we won’t be able to reach any! </span></span></b><span style="background-color: transparent; font-family: "gabriela";"><span style="color: #38761d;"> </span></span><b style="background-color: transparent; font-family: gabriela;"><span style="color: #38761d;">- </span><a href="http://bhavikkshah.blogspot.com/search/label/STOCK%20MARKET%20STORIES" target="_blank"><span style="color: #660000;">READ SUCH STORIES HERE</span></a></b></div>
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</b><b style="color: #38761d; font-family: gabriela;"> </b><b style="font-family: gabriela;"><span style="color: #bf9000;"> <span style="font-size: large;">!! HAPPY INVESTING !!</span></span></b><br />
<b style="font-family: gabriela;"><span style="color: #bf9000;"><span style="font-size: large;"><br />
</span></span></b><b style="font-family: gabriela;"><span style="color: #bf9000;"><span style="font-size: large;"><br />
<span style="color: #990000;">MORE SUCH SHORT STORIES - <a href="http://bhavikkshah.blogspot.in/search/label/STOCK%20MARKET%20STORIES" target="_blank">here</a></span></span></span></b> <b style="font-family: gabriela;"><span style="color: #bf9000;"><span style="font-size: large;"><br />
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">Reader Friends, </b></span></span></span></i></b><b style="background-color: white; font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valuable thoughts in comment box...</b></span></span></span></i></b><br />
<b style="background-color: white; font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br />
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<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br />
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<b style="background-color: white; line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These information's are sourced from publicly available data. </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-75180997461835949252017-03-23T05:19:00.001+05:302021-01-15T21:23:57.340+05:30ESCORTS LTD: GROWTH ON FUNDAMENTALS !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifnuoIVDE3CN2YOw0RVT2UkuopsDTvEOlZCJGJPX8fq5AxmLR5rS5XVZkc0p8kI5apQp0zbWlGW4GyH6XqRa9wT5vSAoh-E7mXHLc_OXb6lhNjYoXvF7JSzDT2a0EozkIzT_Gsm20sr-Ga/s1600/Escorts-Logo.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="165" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifnuoIVDE3CN2YOw0RVT2UkuopsDTvEOlZCJGJPX8fq5AxmLR5rS5XVZkc0p8kI5apQp0zbWlGW4GyH6XqRa9wT5vSAoh-E7mXHLc_OXb6lhNjYoXvF7JSzDT2a0EozkIzT_Gsm20sr-Ga/s200/Escorts-Logo.jpg" width="200" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=500495"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">500495</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=ESCORTS&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">ESCORTS</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 521.75; Market Cap: Rs. 6,395.44 Cr; 52 Week High/Low: Rs. 531.40 /
Rs. 130.40</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 12,25,76,878 shares; Promoters : 5,26,93,738 shares – 42.99 %; Total Public holding : 6,98,83,140
shares – 57.01 %; <span class="apple-style-span">Book Value: Rs. 150.05;
Face Value: Rs. 10.00; EPS: Rs. 9.58; Dividend: 12.00 % ; P/E: 54.46 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 49.08;
EV/EBITDA: 25.05.</span></span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 354.79 Cr;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 6,719.08 Cr.</span></b><strong><span face=""verdana" , sans-serif" lang="EN-US" style="font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">ESCORTS LIMITED:
</span></b><span lang="EN-US" style="color: #38761d;">ESCORTS Ltd
was incorporated on December 21, 1944 in Lahore and then after partition it
shifted to Delhi, India. The company was earlier known as Escorts (Agents) Pvt.
Ltd and changed its name to Escorts Ltd in 1959. The company, gave its first
bonus shares in May 1968, in ratio of 1 new for every 5 equity shares held, then
in May 1974 in ratio of 1 new for every 2 shares held, then in May 1977 in
ratio of 3 new for every 5 shares held, in May 1979 in ratio of 3 new for every
5 shares held, in May 1987 in ratio of 3 new for every 5 shares held. Company
has not declared any split in face value of its shares. <span style="background: white;">Escorts Limited is an engineering company, which offers agricultural
tractors and construction equipment. The Company's segments are Agri Machinery,
Auto Ancillary Products, Railway Equipment, Construction Equipments and Others.
It is engaged in the business of manufacturing of engines for agricultural
tractors, earth moving and material handling equipment, round and flat tubes,
heating elements, double acting hydraulic shock absorbers for railways coaches,
center buffer couplers, automobile shock absorbers, telescopic front fork and
Mcpherson struts, brake block, internal combustion engine and various types of
brake used by railways. </span></span><span style="color: #38761d;">Its brands of tractors include Escort, Farmtrac and Powertrac. The Jai Kisan
Series of tractors comes in five new categories– ValueMaxx, LoadMaxx, AgMaxx,
InfraMaxx and SuperMaxx. It also manufactures diverse range of equipment like
cranes, loaders, vibratory rollers and forklifts. </span><span lang="EN-US" style="background: white; color: #38761d;">Escorts, in the over six
decades of inception, has sold over a million tractors and over 16,000
construction and material handling equipment that have rolled out from the
facilities. </span><span lang="EN-US"><span style="color: #38761d;">Escorts
have</span><span style="background: white; color: #38761d;"> over 1600 sales and service outlets and in
over 40 countries. </span><span style="color: #38761d;">ESCORTS Limited is locally compared with </span><span style="color: #bf9000;">Mahindra & Mahindra, Sonalika Tractors,
Eicher Motors, Tractors And Farm Equipment Ltd</span><span style="color: #38761d;"> and globally compared with </span><span style="color: #bf9000;">John Deere Tractors of USA, New Holland
Tractors of Pennsylvania, Kubota Tractors of USA, Mccormick Tractor of USA,
Class Tractors of Germany, Kioto Tractors of South Korea, Belarus Tractors of
Belarus, Allis Chalmers tractors of Europe, Indo Farm Equipment of Poland,
Yanmar of Japan, Millat Tractors Ltd of Pakistan, Maruyama Manufacturing
Company Incorporated of Japan, Thor Industries Inc, Mitubishi Motor Corp of
Japan, Bayer Motoren Werke AG (BMW) of Germany, Piaggio & C. SpA of France,
Porsche Automobil Holding SE of Germany, Renault Societe of France, Volkswagen
Aktiengesellschaft of Germany.</span></span><span style="color: #38761d;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US">Investment
Rationale:</span></b><span lang="EN-US"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5E9R66EXkBqSTkKhKiHVgHVceVbCuYQSr3A4vq3crctrLaeaeGzDEnQRHeNQNNuf7XQrZ5q4KKNNJ7cTpO2Uz-POCUJeooa0BNtSsMSl8C2fEEqRgOSkMOI6s9uslV-bwcpRgxsricIh-/s1600/tractor_wheels.gif" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5E9R66EXkBqSTkKhKiHVgHVceVbCuYQSr3A4vq3crctrLaeaeGzDEnQRHeNQNNuf7XQrZ5q4KKNNJ7cTpO2Uz-POCUJeooa0BNtSsMSl8C2fEEqRgOSkMOI6s9uslV-bwcpRgxsricIh-/s400/tractor_wheels.gif" width="400" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ESCORTS Ltd is one
of the largest tractor and agri Machinery Company, established in 1944. It is engaged
in the manufacturing of agri-machinery, construction & material handling
equipment, railway equipment and auto components. The ESCORTS GROUP is among India's leading engineering
conglomerates operating in high growth sectors of Agri Machinery, Material
Handling & Construction Equipment, Railway Equipment and Auto Components.
The Group has earned the trust of over five million customers by way of product
and process innovations over six decades of its existence. Escorts has further
unveiled its new 'Jai Kisan Series' of tractors, which focuses on maximizing farmer
productivity by providing differentiated products that are well suited to
agricultural, haulage, infrastructure as well as specialized applications. Escorts
Ltd also manufactures and markets a diverse range of equipment like cranes,
loaders, vibratory rollers and forklifts. Today, the company is the world's
largest Pick 'n' Carry Hydraulic Mobile Crane manufacturer. Faridabad is home
to all its manufacturing facilities, which include Agri-Machinery; Construction
Equipment; Railways; Auto Parts. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">The Indian Tractor industry has always been a barometer
for the state of rural economy. It is relatively young but now has become the
largest market worldwide (excluding sub 20 HP belt driven tractors used in
China), accounting for one-third of the global production. The other major
tractor markets in the world are China and US. In India till 1960, the demand
for tractor was met entirely through imports. Indigenous manufacturing of
tractors began in 1961 in India and the industry has come a long way since
then. The production output of the Indian Tractor industry has grown from 50,000
units in the early 1980’s to over 6,00,000 units in FY16. Volume grew at a CAGR
of 10.9 % over the past decade, despite seasonal vagaries. Industry volume is
expected to go up by 16 %-18 % on an annual basis in FY17 to nearly 6,96,000 units.
The long term growth fundamentals of industry are strong owing to lowering of
the replacement cycle, expectation of increase in MSP for key crops, scarcity
of labour and ease of credit availability from Government. Also, pace of the
central & state Government’s policy roll out and the final monsoon behaviour
governs the short term industry performance. ICRA continues to be positive over
tractor sales and believes domestic market can achieve a CAGR of 8 % to 9 % in
the long term. The tractor industry sales is classified into four parts
according to the tractor’s power as < 30HP, 31-40 HP, 41-50 HP and >50
HP. The 41-50 HP category holding 45.4 % market share is the most popular
segment in India followed by 31-40 HP category which has 37.8 % market share as
these tractors is suitable for average farmer who owns approximately 5 acres
agricultural land. The > 50 HP category has market share of 6.1 % with 23,692
units. The domestic construction industry is set to become a driving force in
'Make in India' initiative.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> The Indian Construction Equipment Manufacturers Association
(ICEMA) pegs the Construction Equipment Industry at USD 2.8 billion and expects
it to grow to over USD 5 billion by 2020 on back of infrastructure growth. After
facing a prolonged decline in sales since past 5 years, the industry has now witnessed
a growth of 4 % during 9M FY16 due to commencement of infrastructural projects.
India Union ministry expects that there would be huge opportunities for
equipment manufacturers as at least 10 new express highways will be built soon.
Also, highways worth at least Rs. 5 lakh cr will be built in 2016 and National Highways
strength would be taken to 1.5 lakh km by March 2016 from the present 96,000 km.
The Indian auto-components industry has experienced healthy growth over the
last few years. Some of the factors attributable to this include: a buoyant
end-user market, improved consumer sentiment and return of adequate liquidity
in the financial system. The auto-components industry accounts for almost 7 %
of India’s GDP and employs as many as 2 Cr people, both directly and
indirectly. The industry can be broadly classified into the organised and
unorganised sectors. The organised sector caters to the Original Equipment Manufacturers
(OEMs) and consists of high-value precision instruments while the unorganised
sector comprises low-value products and caters mostly to the after-market
category. Revenues of the Indian auto-components industry grew by 11 % over the
past year to Rs. 2.34 trillion in FY 16. This growth was primarily driven by
healthy recovery for major OEMs in the medium and heavy commercial vehicles
(M&HCV) and Passenger Vehicle (PV) segment. According
to the Automotive Component Manufacturers Association of India (ACMA), the
Indian auto-components industry is expected to register a turnover of USD 66 billionn
by FY17 with the likelihood to touch USD 115 billion by FY21 and USD 200 billion
by FY26. In addition, industry exports are projected to reach USD 12 billion by
FY17 and add up to USD 30 billion by FY21, further rising to USD 80 billion by
CY 2026. The sector’s contribution to manufacturing GDP is expected to double
from 5 % in 2015 to 10 % in 2026. The
Indian auto components industry is set to become the third largest in the world
by 2025 and auto-component makers are well positioned to benefit from the
globalisation of the sector. Tractor Industry is all set for a comeback. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">The monsoon
deficit years in over last 30 years were 1982, 1986, 1987, 2002, 2004 and 2009.
India experienced two years of consistent monsoon deficit in 1986 & 87 followed
by a monsoon surplus year in 1988. Historical data suggests a direct correlation
between monsoon level and tractor sales During 9M FY16, the Tractor Industry
registered sales decline over 20 % y-o-y as the Agriculture sector struggled
with second consecutive year monsoon deficit at 14 %. Deficient monsoon,
worsening water reservoir, lower wholesale prices resulted in lower disposable
income in rural areas impacting rural demand negatively. It is expected that, India
to have adequate monsoon in FY17. Considering historical trend, it is expected
that the sale of tractors to bounce back sharply post satisfactory monsoon and
can register a growth of 10 % in FY17. The launch of new products by ESCORTS
under the Farmtrac and Powertrac brands like XP series, Classic series, Euro
series and Anti-Lift Tractor (ALT) are creating pull-based market demand
amongst the prospective buyers. The new products have stunning looks backed by
enhanced engine power fuel efficiency & reliability. Despite of declining
tractor sales, Escorts 9M FY16 market share stands at 10.1 % as compared to
10.3 % last year. Escorts’
sales are mainly in the 31-40 HP and 41-50 HP categories. Both these segments
have stiff competition and constitute over 93 % of overall tractor sales. In
the 31-40 HP category Escorts, over the last few years, has at best managed to maintain
its market share at 13 %</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">. While in the northern states of UP and Bihar it has
marginally ceded its share, it has made handsome gains in MP. In the 41-50 HP categories,
Escorts performance has been less than satisfactory as it has lost market share
3 % since FY13 in virtually all markets except UP, where it has retained market
share. Taking cognizance of its lack lustre performance, Escorts has embarked
on a three pronged strategy to improve sales growth, boost market share and
improve profitability.<b> </b>With a view to
focus on improving sales and market share, Escorts has carved a separate dealer
network to spearhead growth of the power brands Farmtrac and Powertrac. This
new dealer network will help sharpen focus on these power brands, which
constitute a bulk of the sales. Further, with a view to enhance market share in
the south and west, where it has a small presence, the company is stepping up
dealership additions. The company has 760+ dealerships PAN India with 65 % of
these concentrated in the six states of MP, UP, Bihar, Punjab, Rajasthan and
Haryana. While the company is not looking to beef up the overall dealer strength
there is a conscious effort to retain dealerships in existing markets while
adding some in the incumbent markets. The aim is to bring this ratio to 60:40,
in favour of the established markets<b> </b>Escorts
believes that there is substantial head room for improving profitability and
has targeted RM cost reduction and employee force rationalization as immediate
amelioration areas to boost margins. With a view to lower RM costs the vendor strength
has been reduced to 250 from the erstwhile 400 and there is intent to further
lower the vendor list. Hard bargaining with vendors to reduce costs in lieu of
higher business volumes should help boost margins. It is also undertaking
several value engineering projects to lower RM costs. Currently, RM costs have
reduced by 2.00 % to 69.1 % and eventually the aspiration is to bring it to 67 %.
Escorts (ESC) improved its market share by 0.60 % in 9MFY17, driven by key
strategic initiatives planned and executed in the last 3‐4 years. It would continue to focus on increasing its share through
deeper penetration and creating a parallel channel of Farmtrac and Powertrac in
its strong markets. Reduction in employee cost would be a key lever to expand
margins. Also, the management believes there is further room for reduction in raw
material cost. Construction equipment business is on a strong footing and this
should aid growth as well as margin expansion. Escorts’ tractor volumes saw
robust growth of 23 % in FY17 YTD driven by normal monsoon and key strategic initiatives.
During this period, its market share improved from 9.5 % to 10.1 %. Escorts would
continue to focus on market share gain through tractor seeding program in
untapped regions in its strong markets and increasing the pace of parallel
channel creation for Farmtrac and Powertrac. To improve its visibility, Escorts
has also piloted a rental model through e‐up with the government, which provides capital subsidy for farm
equipment. The company is currently testing the model and would gradually scale
up if it finds the model right. Exports would be a key area of focus in FY18; Escorts
has new higher HP models that meet regulatory requirements. The key regions it
intends to tap are Africa, Middle East and US. The management
has highlighted that 450 blue collar employees are due for retirement in the
next three years. It also plans to offer VRS to a similar number of employees.
Since the cost of blue collar employees is high, reduction of 900 employees
over the next three years would result in significant savings on employee cost.
Escorts has also entered into a long‐term
settlement with the labour union, wherein productivity improvement would result
in employee costs remaining constant in absolute terms, even if VRS doesn’t go
through. The expected 2.00 % saving in employee costs would drive EBITDA margin
higher. In the construction equipment business, Escorts is confident of
achieving 20 % to 25 % growth. At this pace of growth, the company expects to
achieve 5 % to 6 % EBITDA margin in the long run. In the railways business, it
has an order book of Rs. 1.3 billion executable over 5‐6 months. The three new products bogey and axle‐mounted disc brakes, and automated door systems it has
launched offer a market opportunity of Rs. 5 billion. Escorts are also open to an
inorganic acquisition in the railways business. In last Union Budget, Government had proposed and presented its
vision to double farmers’ income by 2022 and to support its vision, the
Government has undertaken significant measures. Pradhan Mantri Fasal Bima
Yojana to stabilize farmers income and has replaced the NAIS, which provides
crop insurance to farmers on liberal terms. This should go a long way in
raising farmers’ income security. Rs 5,500 crore has been
allocated under the PMFBY. This scheme aims at supporting sustainable
production in the agriculture sector. <span lang="EN-US" style="background: white;">Escorts is
rightly placed to be the dependable outsourcing partner of world's leading
engineering corporations looking at outsourcing manufacture of engines, transmissions,
gears, hydraulics, implements and attachments to tractors, and shock absorbers
for heavy trailers.</span> In today's Global Market Place, Escorts is fast on
the path of an internal transformation, which will help it to be a key driver
of manufacturing excellence in the global arena. For this they are going beyond
just adhering to prevailing norms, & are setting their own standards and
relentlessly pursuing them to achieve our desired benchmarks of excellence.
Escorts surely a best bet looking at the factors and is a best stock in the
sector.<o:p></o:p></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and
Valuation: </span></span></b><br />
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US">ESCORTS LTD. is one of the largest
players in the tractor and agri machinery business with humble beginning in 1944.</span> The Company operates
in the sectors of agri-machinery, construction & material handling
equipment, railway equipment and auto components. Its products include Agri
Machinery, Construction Equipment, Auto Products such as shock absorbers,
struts and telescopic front, and Railway Products. The Company offers more than
45 variants of tractors from 25 to 80 HP. <span lang="EN-US" style="background: white;">Escorts Ltd, for</span><span lang="EN-US"> </span><b>Agri Machinery</b> they have Four
plants: Farmtrac, Powertrac, Component, Crankshaft & Hydraulic covering
manufacturing area of 1,34,000 sq.m., with production capacity of 100,000
tractors p.a. It also has Poland plant, a 100 % subsidiary, has an installed
manufacturing capacity of 2,500 tractors p.a Escorts Agri Machinery offers a comprehensive
range of tractors with more than 45 Variants starting from 25 to 80 HP. Escorts
Agri Machinery segment has positioned itself as a change leader in the
agriculture sector having rolled out over 1 million tractors, ranging from
hi-capacity engines to modern rugged transmissions and multi-utility taking
capabilities. <b>Escorts construction Equipment</b>: Escorts Construction
Equipment is a leading materials handling and construction equipment manufacturer.
It manufactures and markets a diverse range of equipment like cranes, loaders, vibratory
rollers and forklifts. Escorts, is the world largest Pick’n’ Carry Hydraulic
Mobile Crane manufacturer. State-of-the-art manufacturing and assembly facility
sprawling 250,000 sq.ft. of space, Capacity of 14,000 units p.a. <b>Escorts Railway Products</b>: Escorts Ltd has played a major role in
the modernization of Indian Railways with over 40 years of rich experience in manufacturing
of critical railway systems. The manufacturing plant spread across an area of over
12,500 sq. meters, Houses superior production and testing facilities, inclusive
of a research and development centre; ISO 9001:2008. Product offerings include
brakes, couplers, shock absorbs, rail festering systems, composite brake blocks
and vulcanized rubber parts. <b>Escorts Auto Products (EAP)</b>: Pioneered the manufacturing of
automotive shock absorbers in India and it continues to be one of the leading
manufacturers of auto suspension products. Plant spread across in an area of
2,25,000 sq.ft., Capacity to produce 3.2 million shock absorbers & struts and
0.3 million front forks. <span lang="EN-US" style="background: white;">It also trades in oils and lubricants, implements, trailers,
tractors, compressor accessories and spares, construction and aero business. It
offers Euro Series under Powertrac; Classic Series in 41-50 HP under Farmtrac
brand, and FT 6055 Xtra Torque Tractor with approximately 20 speed transmission.</span><span lang="EN-US"> </span>Engineering And Maintainace contributes the largest
chuck to the company’s top-line at 79 % of total sales. Though it is not their
most profitable segment it is the highest contributor to the company’s profit
at 7.6 % at operating level. ECE is the company’s second biggest top-line
contributor at 13 % but currently suffers loss at operating level. A much smaller
segment, Railway Equipment’s at 6 % of top-line contribution is the company’s
second most profitable business at 13 % at operating level. Over the period FY12 -15, policy paralysis had led to a severe logjam,
bringing infrastructure development to a screeching halt. As a result, Escorts’
construction equipment segment revenues de-grew at a 3-year CAGR of 19 % during
FY12-FY16 and there were losses at the EBIT level. With the monsoon progressing
well and government spending on infrastructure projects at an all-time high,
the fortunes of this segment have started to look up. This should lead to a
recovery in the demand for construction equipment. Escorts’ railway segment
revenues have de-grown at a 3 year CAGR of 8 % Rs. 205 crore in FY16. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">With the
Railways being a thrust area for the government which is expected to spend Rs 1
lakh crore per annum over the next five years and 100 % allowance in FDI, this segment
opens a huge opportunity for Escorts as it is one of the major vendors to the Railways.
Escorts supplies manufactured products like brakes, couplers and shockers which
has combined market size of Rs. 500 crore to the Railways. It has introduced
two new products – Bogey Mounted Brake System (completed testing) and Axle
Mounted Brake System (ongoing testing), which are in advanced stages of
deployment and are Rs. 300 crore opportunity.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> Escorts’ has a presence only in
three categories, viz., Earthmoving-Backhoe Loaders, Material Handling - Pick
and Carry cranes and Road Building-Compactors. And it is expected that all the
segments to do well in the short to medium term. Escorts by virtue of being a
dominant player in all these segments is expected to be one of the biggest
beneficiaries. The ECE segment expected to
breakeven by FY17. The ECE volumes stood at 698 units in 3Q FY16. ECE is
required to sell 750 units in a quarter in order to achieve its break-even
point, The team is confident of breaking even from FY17 onwards due to
initiatives like realizing better Average Selling Price (ASP), inclination
towards higher contributing model and cost reduction. ERP new products to
further enhance profitability Escorts has over 40 years of rich experience in manufacturing
of critical railway systems (Safety and comfort) and has played a major role in
the modernization of Indian Railways. ERP’s existing products contributes about
Rs. 1,837 mn towards Escorts revenue in FY15. ERP team received a development
order for Axel Mounted Disc Brakes in 2Q FY16 and company expects to execute
the order by end of FY16. The new segment has a market potential of Rs. 3 billion
with only one competitor. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">Escorts scouting for strategic partner to divest
& reducing losses in EAP segment EAP pioneered the manufacturing of
automotive shock absorbers in India. Its key customers are BEML, Tata Motors,
TVS, Maruti Suzuki, Eicher Motors, Piaggio, Polaris and Yamaha. Escorts
Management is actively scouting for strategic partner to divest EAP segment. The
Company is looking forward to reduce its losses in EAP segment through cost saving
from VRS and better sales portfolio rationalization in FY17. These measures are
expected to yield positive results in FY17. Escorts
exhibited strong volume growth of 29.5 % YoY with 4,247 units in February. This
growth comes on the back of 16.3 % YoY growth in January & 27.4 % YoY growth
in Q3FY17. On a YTD basis April-February, Escorts’ domestic tractor volumes
have grown at 23 % YoY to 51,581 units against industry growth of 18 % YoY. The
management expects to end FY17 at a growth rate of 23 % YoY. In Q1FY8E, the
company expects growth to taper down to 10-15 % due to base effect. Pre-demonetisation,
the industry was growing a high rate of 20 % YoY. In November, the domestic tractor
industry witnessed de-growth of 13 % YoY & single digit growth of 8 % YoY
in December. In the same period, Escorts outperformed the industry with flat
performance in November & 12 % YoY growth in December. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">As per the
management, the outperformance is attributable to poor winter rains in southern
India, where Escorts does not have a strong presence. After a year of strong
20.2 % growth in FY14, domestic tractor sales fell 13 % YoY in FY15 due to poor
Kharif harvest & lower Rabi sowing due to dipping reservoir levels. A
second consecutive year of deficient rainfall which was 14 % lower than normal impacted
agriculture output and led to a decline of the tractor industry by 11 % in
2015-16. In the same period of FY14-16, Escort’s volumes declined at 28 % CAGR.
The primary reasons for Escort’s underperformance were gaps in the product
portfolio and lack of focus on growing markets like the south & west region
that together contribute 47 % of the total market. However, in YTD FY17,
Escort’s volumes have outpaced industry volumes, growing 23 % YoY vs. industry growth
of 18 %, with market share gain of 0.30 %. This strong growth is on the back of
new products launched like 10 new models launched in the last two years, increased
focus on opportunity markets of south & west region and separate Powertrac
which is its economy brand & Farmtrac brand which is its premium brand in
its strong northern market. The management expects industry growth of 18-20 %
in FY17E & 6-8 % in FY18E.And can have a tractor volume CAGR OF 10 % in
FY17-19E. To improve
its visibility, Escorts has also piloted a rental model through tie‐up with the government, which provides capital subsidy for farm
equipment. The company is currently testing the model and would gradually scale
up if it finds the model right. Exports would be a key area of focus in FY18;
ESC has new higher HP models that meet regulatory requirements. The key regions
it intends to tap are Africa, Middle East and US. The management believes there
is further room of 1.00 % reduction in raw material cost through value
engineering. Going ahead in FY18, the monsoon is likely to play a critical
role. Yet, as sowing in most regions is healthy, the season would begin on a
strong note. Margin expansion through employee cost savings would be a strong
lever for earnings growth. EBITDA margin is likely to expand from 4.1 % in FY16
to 10.3 % in FY19 as a result of cost rationalizing. Escorts are taking initiatives
to lower raw material costs to 68 % of sales in FY19 from 71 % in FY15 through
vendor rationalizing and value engineering. It targets to reduce employee cost
to 8.9 % of sales through VRS in the next three years from 12.3 % of sales in
FY16. It is expected that the revenue/PAT CAGR of 12 %/40 %, driven by EBITDA
margin expansion of 2.80 % to 10.3 % over FY17‐19. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 521.75, the stock is trading at a PE of 23.93 x FY17E and 15.90 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 21.80 in FY17E and Rs. 32.80 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 3,537.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4,118.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4,680.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5,170.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">77.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">138.20</span></td><td>269.10</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">349.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 11.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.80</span></td><td>32.80</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">42.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>44.80</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">31.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 6.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 11.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.70</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, "times new roman", serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="https://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, "times new roman", serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.com/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> ESCORTS LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-13924749968661293972017-03-13T12:33:00.001+05:302020-07-09T20:24:19.977+05:30CERA SANITARYWARE LIMITED: THE BEST ONE !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2aW2nX4aQgpAZik5eHWe5Q3TMITpd60w5OuBT7BpsMK_VUG9MIwQexjjSL8tdPofnR-iq-joJQWNp165hlxtncJArKvgbV4oepWpEedEW-7ZW6Krb3cDgh7RutSH0bxHDfHLmLHV8uAbV/s1600/CERA+LOGO+SMALL.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="117" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2aW2nX4aQgpAZik5eHWe5Q3TMITpd60w5OuBT7BpsMK_VUG9MIwQexjjSL8tdPofnR-iq-joJQWNp165hlxtncJArKvgbV4oepWpEedEW-7ZW6Krb3cDgh7RutSH0bxHDfHLmLHV8uAbV/s320/CERA+LOGO+SMALL.png" width="320" /></a></div>
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<b><span lang="" style="color: #bf9000; font-family: georgia, serif; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang=""><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=532443"><b><span style="font-family: georgia, serif; font-size: 13.5pt;">532443</span></b></a></span><span class="apple-converted-space"><b><span lang="" style="color: #bf9000; font-family: georgia, serif; font-size: 13.5pt;"> </span></b></span><b><span lang="" style="color: #bf9000; font-family: georgia, serif; font-size: 13.5pt;">/ </span></b><span lang=""><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=CERA&cName=cmtracker_nsedef.css"><b><span style="font-family: georgia, serif; font-size: 13.5pt;">CERA</span></b></a></span></div>
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<b><span lang="" style="color: #bf9000; font-family: georgia, serif; font-size: 13.5pt;">CMP:
Rs. 2,532.50 <span class="apple-style-span">;</span> Market Cap: Rs. 3,293.74 Cr; 52
Week High/Low: Rs. 2,780.00 / Rs. 1,709.95</span></b><span lang="" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="" style="color: #bf9000; font-family: georgia, serif; font-size: 13.5pt;">Total
Shares: 1,30,05,874 shares; Promoters : 71,20,639 shares –54.75 %; Total Public
holding : 58,85,235 shares – 45.25 %; <span class="apple-style-span">Book
Value: Rs. 323.71; Face Value: Rs. 5.00; EPS: Rs. 75.98; Dividend: 180.00 % ;
P/E: 33.46 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 35.08; EV/EBITDA: 18.85.</span></span></b><span lang="" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="" style="color: #38761d; font-family: georgia, serif; font-size: 13.5pt;">Total
Debt: Rs. 35.08 Cr;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 3,269.43 Cr.</span></b><strong><span lang="" style="font-family: verdana, sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="font-family: georgia, "times new roman", serif;"><b style="color: #38761d;"><span lang="">CERA SANITARYWARE LIMITED: </span></b><span lang=""><span style="color: #38761d;">Cera Sanitaryware Limited was incorporated
in 1980,</span><span style="background: white; color: #38761d;"> and is headquartered in Kadi, India.
The company was formerly known as Madhusudan Oils and Fats Limited and changed
its name to Cera Sanitaryware Limited in November 2002.</span> <span style="background: white; color: #38761d;">Cera Sanitaryware Limited manufactures and sells
sanitary ware and faucet ware products in India. The company offers sanitary
ware products, including EWC’s, kids range products, wash basins, urinals,
cisterns, seat covers, sensors, and bath accessories; special needs products
consisting of cranes, shower chairs, wall mounted and U shaped rails, wall
mounted inverted rails, and corner and wall mounted grab bars; and faucets,
such as fittings, basin mixers, showers, bath tub spouts, flush valves and
cocks, angle cocks, taps, and accessories. The company announced its bonus
shares last July 2010 in ratio of 1:1. It also provides wellness products
comprising steam shower rooms, shower rooms and cubicles, shower partitions,
indoor swimming pools, bath tubs, shower panels, and pressure pumps; kitchen
sinks and mirrors; and personal care products comprising hand dryers, perfume
sprayers with remote control, automatic soap dispensers, and hair dryers, as
well as wall and floor tiles.</span><span style="color: #38761d;"> Cera has emerged as the third largest
player in the sanitary ware industry in India. The company enjoys 24 % market
share in the organised segment. It has installed manufacturing capacity of 2.7
mn pieces p.a. in sanitary ware and 2,500 pieces per day in faucet ware in Kadi
(Gujarat). As of May 2016, Cera has 1,000 distributors - dealers, 14,000
retailers and 12 major stock points across India. CERA’s subsidiary includes
Madhusudan Industries Ltd; Madhusudan Holdings Ltd; Madhusudan Fiscal Ltd;
Vikram Investment Co. Ltd; Cera Foundation; Swadeshi Fan Ind. Ltd. CERA SANITARYWARE </span><span style="background: white;"><span style="color: #38761d;">is locally compared with </span><span style="color: #bf9000;">Kajaria Ceramics,
Grindwell Norton, Acrysil India Ltd, La Opala RG, Asian granite India Ltd, Euro Ceramics,
Hindustan Sanitaryware India Ltd, Morganite Crucible India Ltd, Murudeshwar
Ceramics, Nitco tiles Ltd, Orient Bell Ltd, Regency Ceramics, Restile Ceramics,
Somany Ceramics, Kisan mouldings Ltd, </span><span style="color: #38761d;"> and Globally compared with </span><span style="color: #bf9000;">China Ceramics Co
Ltd of China, Ziyang Ceramics of China, Topps Tiles of China, China GengSheng
Minerals Inc of China, INTL DE Ceramica Com of USA, EGE Seramik of Turkey, Dynasty
Ceramics of Thailand, Ceramica San Lorenzo, CARBO Ceramics Inc of USA,
Fairmount Santrol Holdings Inc. of USA, Compagnie De Saint Gobain SA of France,
U.S. Silica Holdings, Inc of USA, Arab Ceramics Co of Saudi Arabia, Al Anwar
Ceramic Tiles Co of Saudi Arabia, Saudi Ceramics Co of Saudi Arabia, Saudi
Vitrified Clay Pipes Company of Saudi Arabia, General Comapany for Ceramic and
Procelain Products SAE, Forage Orbit Garant Inc of Canada,Ceramika Nowa Gala Sa
of Turkey, Usak Seramik Sanayi As of Turkey, Dvarcioniu Keramika AB of
Lithuania, Goh Ban Huat Berhad of Malaysia, Chang Yih Ceramic JSC of Vietnam,
Royal Ceramics Lanka Ltd of Sri Lanka, Konoshima Chemical Co Ltd of Japan, Roy
Ceramics Se of Germany, Troax Corp Publ AB of Sweden, Expedit AS of Denmark,
Exel Composites Oyi of Finland, Royal Ceramic Industry Public Co Ltd of
Thailand, CMC Joint Stock Co of Vietnam, Shabir Tiles & Ceramics ltd of
Pakistan, Onex Corporaion of Japan, Sapura Industrial Berhad of Malaysia,
Nansin Company Ltd of Japan, Masonite International Corp of USA, Owens Corning
of USA, Nci Building Systems Inc of New York, Masco Corp of USA.</span><span style="color: #38761d;"><o:p></o:p></span></span></span></span></div>
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<span style="color: #38761d; font-family: georgia, "times new roman", serif;"><b><span lang="">Investment Rationale:</span></b><span lang=""> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbvl3fadHC6Gk8qVkLkuVD2zQ5ZNviEZgOk5MOnk19uNHIWCB_uy2E9CFoquUfoOArRGoaUcFcYdHRJMgiuxXVEGsjtvlBhkv5uzh4RJUb2azpPM2f_A8lmycx19D-CMWm2V7ho9mjiQ6K/s1600/CERA-01.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="265" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbvl3fadHC6Gk8qVkLkuVD2zQ5ZNviEZgOk5MOnk19uNHIWCB_uy2E9CFoquUfoOArRGoaUcFcYdHRJMgiuxXVEGsjtvlBhkv5uzh4RJUb2azpPM2f_A8lmycx19D-CMWm2V7ho9mjiQ6K/s400/CERA-01.jpg" width="400" /></a></div>
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<span style="color: #38761d; font-family: georgia, "times new roman", serif;">Cera Sanitaryware
incorporated in the year 1998 is a pioneer in the sanitary ware segment in
India. Cera Sanitaryware Limited, India’s fastest growing company in the
sanitary ware segment in India. It has an extensive product portfolio that
includes high end showers, steam cubicles, and whirlpools, besides
sanitary-ware and faucets, such extensive product ranges has made CERA the
primary choice of customers looking for stylish products in a contemporary
lifestyle. It’s also the first sanitary ware company to use natural gas, for
its commercial needs, Cera has been on the forefront of launching a new and versatile
colour range and introducing the bath suite concept. CERA’s constant
innovations have given several path breaking contributions to the industry. Some
of its innovations have become benchmarks for the industry- like water-saving
twin-flush coupled WCs, 4-litre flush WCs, and one-piece WCs. Advanced
technology has been the forte of CERA. Its state-of-the-art manufacturing plant
has been following the highest standards of quality with an emphasis on
sustainability since its inception in 1980.</span><span style="font-family: georgia, "times new roman", serif;"><span style="color: #bf9000;"> The
total size of the Indian sanitary ware and bathroom fittings industry is at Rs.
9,500 Cr in FY16, of which the sanitary ware accounts for roughly Rs. 3,500 Cr and
is growing at an average rate of 20 %. The remaining Rs. 6,000 Cr is attributed
to bathroom fittings, also growing at an average rate of 18 %. The outlook for
the industry is robust on the back of country’s very low sanitation coverage,
housing shortage and potential for the replacement market. The contribution
from the replacement is very low at 8 % in comparison to 80 % in the developed
economies. In the sanitary ware industry, the organized market is 65 % while
the unorganized market is about 35 % and in the bathroom fittings, the
organized market share is around 45 % and the unorganized market is about 55 %.
According to the report on world health statistic by World Health Organization
(WHO), the sanitation coverage in India is very low at 36 %. This in itself
shows the growth potential for the industry in a country which has a population
of over 121 Cr and is expected to grow to 135 Cr by 2021, as per census 2011.
Further, the growth would be boosted by the government initiatives such as
affordable housing, Swachh Bharat Abhiyan and development of 100 smart cities.
In Union Budget for 2015-16, the finance minister has announced 100 %
sanitation by October 2019 with a provisional amount of Rs. 3,625 Cr, including
Rs. 1,000 Cr for urban sanitation. It has also allocated Rs. 10,025 Cr for
rural housing and Rs. 4,150 Cr for Urban housing with an objective of providing
housing for all by 2022. In the recent union cabinet meeting, the government
has approved development of 100 smart cities along with the new urban renewal
mission with a planned outlay of Rs. 100 lakh Cr. <span lang="">The Indian tile Industry is expected to
witness better days over the medium-term. This optimism is based on important
realities. Over the last two decades, India’s urban population increased from
21.7 Cr to 37.7 Cr and this is expected to reach 60 Cr, or 40 % of the
population by 2031. By then, India is expected to have 68 cities with
population of more than one million – driving housing demand. </span>India is one of the
few countries with a third-quartile median age of 27 years, which represents a
younger, ambitious and forward-looking population. As the internet penetration
deepens, consumption is seen to increase. The proportion of people employed in
the country's workforce will continue to rise. By 2030, India is expected to
constitute 28 % of the world's workforce with the worker-to-dependent ratio
expected to be 2.1 (14 in 1990). Besides, steady urbanisation will graduate
labour markets from low paying agricultural jobs to better-paying manufacturing
and service engagements. <span lang="">India’s sanitaryware and bathroom
fittings industry is undergoing a transition phase. The consumers are now
moving from low-end basic product to middle and high end premium segments. This
is in conjunction with the growing urbanization and ever increasing
middle-income segment. As per the National Council for Applied Economic
Research (NCAER), the middle-income segment has grown from 1.1 Cr households in
2001-02 to 3.1 Cr household by 2010-2011 and is expected to grow to 5.3 Cr by
2015-16 and 11.4 Cr by 2025-2026. This shift will benefit the industry players
in terms of higher margin and ability to pass on the cost increase to the
consumers. </span></span><span lang=""><span style="color: #bf9000;">The
recent reduction in interest rates augurs well for the housing sector. Beside,
declining commodity prices are expected to reduce inflationary pressure on the
Indian economy, creating a foundation for further interest rate reduction. This
should improve housing demand.</span><span style="color: #38761d;"> Reduction in international crude prices should
optimise the energy bill strengthening business profitability. Cera in the
sanitary ware segment has strong positioning and over the years has gradually
increased its market share in the sanitary ware from 18 % in FY09 to 23 % in
FY15. The company is also growing higher than most of its peers and industry.
The company started the faucet business by trading activity and today it has
built-up huge capacity to encash the opportunity in the under-penetrated faucet
ware market. The revenue contribution from the faucet business has increased
from 14 % in FY13 to 17 % in FY17E, with the increasing capacity the
contribution is expected to increase further. Recently, the company has also
expanded its business activities in the tiles business through contract
manufacturing with the unorganized players. The products launched by the
company in the tiles business have been widely accepted and as a result, the
contribution from the tiles business has also increased from just 2 % in FY13
to 13 % in FY15. The diverse product offering has helped the company to achieve
higher revenue growth, even when the economy and the industry were under
pressure. Lately, the company is also evaluating opportunities for entering into
a joint venture for the manufacturing of sanitary ware and Tiles. Faucet ware
industry size at Rs. 6,000 Cr is double the size of sanitary ware, showing huge
growth potential going forward. The contribution of the organized market is 45 %
and is growing rapidly. The company already supplies to the industry in the
mass segment through outsourcing but now the company is targeting the premium
segment and in this direction, the company has increased its production
capacity by 166 % to 24.3 Cr pcs p.a i.e approx. 6,658 pcs. per day from 91 lakhs
pcs p.a i.e 2,500 pcs per day. The plant located at kadi, Gujarat is further
expandable to 10,000 pcs per day. Currently, jaguar has dominating in this
segment with almost 40 % market share. The company is going aggressively on
branding and expects to garner 3 % market share in the near future. </span></span><span style="color: #38761d;">Meanwhile, CERA has
also expanded the sanitary ware production capacity from 27 lakhs pcs p.a to 30
lakhs pcs p.a in FY15. The company is also planning to increase the sanitary
ware capacity to 33 lakhs pcs by FY16E. In the last couple of years, the
company has reported healthy growth in its sanitary ware business and has
gained market share from 18 % in FY09 to 23 % at the end of FY15. The industry
has huge opportunity as the organized sanitary ware market is growing faster
than the unorganized market and now account for 65 % of the total industry size
of Rs.3,500 Cr. For the additional capacity, for both faucet ware and sanitary ware,
the total capex is approx Rs. 100.30 Cr, which would be funded from the amount
raised through preferential issue and remaining from internal accruals.
Recently, the company has raised Rs. 70.6 Cr by way of preferential allotment
of 3,51,000 equity share at Rs. 2,011.5 per shares. The company has been using
full utilization of its existing capacity and post expansion, and is expected
that the company to make full utilization of its increased capacity in the due
course. Company’s Brand loyalty and strategic marketing network have paid
dividend to the company in terms of robust revenue growth of 36 % CAGR in the
last four years. The company has strong pan India presence with 1400 dealers
and 14000 retailers targeting both its retail and institutional customers. And
to supplement its network the company also has 20 stock points across the
country. The company has also initiated touch and feel experience to its
customers by setting up bath studios. In order to target premium and luxury
customers, the company has exclusive display centre, cera style studio which
are located in the prime locations across the major cities. Cera style
gallaries are the display and sales touch points owned and managed by its
trading partners. Cera style centres are the display centres targeting smaller
trade retail parners. The company has increased its Cera style studios from
just one at Ahmedabad in FY06 to ten by the end of FY15. The company is also
fast growing its Cera style gallaries and expects to touch 200 gallaries in the
near future. With cera style centres, the company is penetrating into the tier
2 cities such as North-East and West Bengal. In South, the company has dominant
position in Kerala and is now building up its positioning in Tamil Nadu and
Andhra Pradesh. T</span><span lang="" style="color: #38761d;">he
Sanitary ware industry is generally growing at average rate of 14 % to 16 %,
annually. The FY 2015-16 was exceptionally subdued due to various economic
reasons more for the entire realty and construction industry across pan India
with growth percentage coming down drastically. Despite this, 'CERA' during FY
2015-16 registered top line growths of around 13.63 % amidst subdued business
conditions. The efforts are on not only to sustain CAGR last 3 years but also
to improve upon. The industry structure remains unchanged viz. Indian
manufacturers in organized and unorganized sectors; International brands with
or without manufacturing in India and imports from countries like China. The
growth of the Company has been much above the market growth and is largely on
account of its continued efforts in leveraging the high brand value and product
optimization besides deeper penetration in tier 2 markets. These efforts are
further fortified by strong and structured marketing efforts, good product
quality and after-sales service, and backed by a very loyal distribution
network across India. CERA has been growing despite of the threats like international
brands and slowdown in housing construction. The demand in mid-segment housing
is less affected and the Company’s ability to pitch in the mid-segment will
help maintain the growth rate. The announcement by Central Government about
launch of 100 smart cities across India, can give a boost to construction
industry and thereby for demand for sanitary ware. Another significant action
plan by Central Government, "Swachh Bharat Abhiyan", can also be a
booster to sanitary ware in general. Also, the newly introduced real estate
regulatory authority bill is likely to help streamline the housing construction
activities.</span><span style="color: #38761d;"><o:p></o:p></span></span></div>
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<b><span lang=""><span style="color: #38761d; font-family: georgia, "times new roman", serif;">Outlook and Valuation:</span></span></b></div>
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<span style="font-family: georgia, "times new roman", serif;"><span lang="" style="text-align: left;"><span style="color: #38761d;">Cera
Sanitaryware is a complete building solution provider and have raised itself
from a provider of single sanitaryware product in the 1980’s to now vast range
of product portfolio and today it has become a complete building product
solutions provider by offering products like sanitaryware, faucetware, wellness
& allied products and tiles. In the sanitaryware segment, the company has
strong positioning in the mass segment which accounts of almost 60 % of the
organized sanitaryware market. The company has in-house manufacturing facility
for sanitaryware and faucetware at Kadi, Gujarat. Launched in 1980, 'CERA' is a
pioneer in the Sanitaryware segment in India. The first Sanitaryware Company to
use natural gas, 'CERA' has been on the forefront of launching a versatile
colour range and introducing the bath suite concept. It also launched
innovative designs and water-saving products. In 2011-12, the company ventured
into commissioning its state-of-the-art faucet ware manufacturing facility
where only quality products, new designs and innovation are the focal points.
During last quarter of FY 2012-13, 'CERA' forayed into ceramic, vitrified and
digital tiles for floor as well as for walls. Company’s initiative to provide
touch and feel experience to its customers through its CERA Style Studios, has
paid off well. CERA Style Studios are located in up market locations in
Ahmedabad, Mumbai, Kochi, Bengaluru, Hyderabad, Gurgaon, Chandigarh, Chennai,
Thiruvananthapuram and Kolkata. CERA Style Galleries, display and sales touch
points of CERA, owned and managed by its trade partners, are increasing month
after month. For smaller trade retail partners, CERA encourages display in the
form of CERA Style Centre. This will help further penetrate into smaller towns
and outlets, thereby increasing the visibility of brand CERA. CERA also
launched CERA Style Studios on Wheels, a novel concept to take CERA products to
the doorsteps of key decision makers like architects, developers, etc. The
Company also strengthened CERA Care, its after-sales division with induction of
technicians for taking care of its services in all key cities of the country. Currently,
the facility has an installed capacity to produce 3 million pcs of sanitaryware
and 2.34 million pcs of faucetware. The company is also engaged in contract
manufacturing for sanitaryware and faucetware and outsourcing activities for
wellness & allied products, Vitrified and Ceramic Tiles. Over the years,
the company has built-up strong marketing network to promote and sell its
products. As on March 2015, it has 1400 dealers and 14000 retailers. All the
products of the company are sold under single brand ‘CERA’, and it enjoys
strong positioning in the mass segment. It has strong positioning in the
southern market, with 40 % of its total revenue coming from south. Over the
years, it has gradually increased its market share in the sanitaryware from 18 %
in FY09 to 23 % in FY16. The company is also growing higher than most of its
peers and industry. The company started the faucet business by trading activity
and today it has built-up huge capacity to encash the opportunity in the
under-penetrated faucetware market. India’s sanitaryware and bathroom fittings
industry is undergoing a transition phase. The consumers are now moving from
low-end basic product to middle and high end premium segments. This is in
conjunction with the growing urbanization and ever increasing middle-income
segment. As per the National Council for Applied Economic Research (NCAER), the
middle-income segment has grown from 1.1 Cr households in 2001-02 to 3.1 Cr household
by 2010-2011 and is expected to grow to 5.3 Cr by 2015-16 and 11.4 Cr by
2025-2026. This shift will benefit the industry players in terms of higher
margin and ability to pass on the cost increase to the consumers. </span><span style="color: #bf9000;">The total
size of the Indian sanitaryware and bathroom fittings industry is at Rs. 9,500
Cr in FY15, of which the sanitaryware accounts for roughly Rs. 3,500 Cr and is
growing at an average rate of 20 %. The remaining Rs. 6,000 Cr is attributed to
bathroom fittings, also growing at an average rate of 18 %. The outlook for the
industry is robust on the back of country’s very low sanitation coverage,
housing shortage and potential for the replacement market. The contribution
from the replacement in this sector in India is very low at 8 % in comparison
to 80 % in the developed economies. In the sanitaryware industry, the organized
market is 65 % while the unorganized market is about 35 % and in the bathroom
fittings, the organized market share is around 45 % and the unorganized market
is about 55 %. According to the report on world health statistic by World
Health Organization (WHO), the sanitation coverage in India is very low at 36 %.
This in itself shows the growth potential for the industry in a country which
has a population of over 125 Cr and is expected to grow to 135 Cr by 2021, as
per census 2011. Further, the growth would be boosted by the government
initiatives such as affordable housing, Swachh Bharat Abhiyan and development
of 100 smart cities.</span><span style="color: #38761d;"> In Union Budget for 2015-16, the finance minister has
announced 100 % sanitation by October 2019 with a provisional amount of Rs. 3,625
Cr, including Rs. 1,000 Cr for urban sanitation. It has also allocated Rs. 10,025
Cr for rural housing and Rs. 4,150 Cr for Urban housing with an objective of
providing housing for all by 2022. In the recent union cabinet meeting, the
government has approved development of 100 smart cities along with the new
urban renewal mission with a planned outlay of Rs. 1 Trillion. C</span></span><span style="color: #38761d; text-align: left;">era maintains a strong market position in the mass market segment,
because of its ‘value for money’ proposition and a wide brand appeal.
Currently, the company derives bulk of its sanitary ware revenue from these
segments. Competitive intensity is also relatively lower in these segments
because of the lower presence of foreign players. Led by various government
schemes, such as affordable housing, and the shift in consumer sentiment
towards organised players, and is expected this segment to grow at a steady
pace. The company did not have a second brand to cater to the premium market,
and the mass-market perception associated with the CERA brand limited its
ability to compete with the leading domestic and premium brands. Although the
segment accounts for only 10 % of the sanitary ware market, it is one of the
fastest growing. The company has addressed this concern through its marketing-and-distribution
agreement with the Italian company, ECE Banyo, manufacturer of the luxury
sanitary ware brand, ISVEA. Cera is currently in the process of a pan-India
launch of ISVEA’s products, the company’s ability to gain a substantial market
share in this highly competitive segment characterised by the presence of
several domestic (HSIL and Parryware) and international players (Kohler, ToTo,
Duravit and American Standard) - is a monitorable. Apart from the tie-up, Cera
has also consciously taken efforts to premiumise its product portfolio, by
gradually launching products with innovative designs and importing high-end
products. This has reflected in the steady increase in the company’s
realisations of self-manufactured products and share of imports. We believe
premiumisation of its product portfolio is a key positive, as it is expected to
provide a fillip to revenue and aid margin expansion. The government plans to
make the Goods and Service Tax (GST) effective from June 2017. The Ministry of
Finance has finalised a four-tier rate structure – 5 %, 12 %, 18 % and 28 %.
Mass consumption goods are expected to fall in 5 %, and luxury goods, tobacco,
etc. to fall in 28 %, whereas most other goods and services are expected to
fall in the 18 % category. Some of the key benefits of GST for building
products players are highlighted below: The current effective indirect tax rate
for most building product companies is in the range of 22 %-29 %, and it does
not allow a set-off of tax paid on services. After GST implementation, the
effective tax for these companies is expected to go down to 18 % to 20 %, as
the base rate comes down and also as companies will be entitled for set off
benefits. This is to be margin accretive for building product players. Currently,
building product companies set up additional depots, employ more C&F agents
in different states to bypass CST. With GST, it is expected that there will be
rationalisation of warehouses and an effective inventory/supply chain
management. This is also expected to reduce the logistics cost for companies
owing to better turnaround time and consolidation of warehouses. Currently, the
unorganised sector accounts for 30 % to 35 % of the industry. The GST is
expected to accelerate the shift towards the organised segment, as the law is
expected to reduce/eliminate tax sops enjoyed by unorganised players, leading to
higher compliance. This will create a level-playing field and benefit organised
players such as Cera. </span><span style="color: #38761d; text-align: left;">The company’s balance sheet quality is robust, driven
by an efficient working capital management, low leverage and a healthy cash
balance. Working capital days remained at 45-55 days during FY11-16, one of the
best in the industry. The efficient working capital management has enabled it
to consistently generate positive cash flow from operations and maintain a
cash-rich balance sheet. Its leverage declined to 0.1 times in FY16 from 0.3
times in FY11; making Cera almost debt-free. A strong balance sheet provides
additional headroom for growth and makes the company less vulnerable to
external shocks. </span><span lang="" style="color: #38761d; text-align: left;">While soaring aspirations has been an important
ingredient for increasing offtake, the primary trigger has been the
significantly enhanced tile availability. This has worked towards making the
product more affordable. Hence, what was once considered a rich man's foot-step
luxury has now transcended into an Indian's regular wall and flooring solution.
While this change remained concentrated in metros and urban India in earlier
years, this transformation is currently sweeping Tier II and Tier III towns in
India. The Indian tile industry is poised to experience significant growth over
the coming year. This optimism stems from the important realities that are
expected to catalyse tile demand pan-India. Going ahead, the business landscape
appears promising because of <b>passing of GST Bill</b>. OROP; Normal monsoon;
a 25 bps cut in interest rates by the RBI are expected to increase disposable
income in the hands of the average Indian leading to increased discretionary
spending. And this is just the beginning. India's <b>'Housing for All' </b>programme
proposes to build six crore houses by 2022 - four crore of them in rural and
two crore in urban India. On financial side, R</span><span style="color: #38761d; text-align: left;">evenue
is estimated to increase at a CAGR of 19.3 % over FY16-19 to </span><span style="color: #38761d; text-align: left;">Rs. </span><span style="color: #38761d; text-align: left;">15.2 bn, driven by the
faucet and tiles segments. Tiles segment is expected to grow 30 % over
FY16-19E, followed by the faucet (20% CAGR) and the sanitary ware (18 %)
segments. Consequently, the share of the sanitary ware segment is expected to
decline to 57.9 % in FY19 from 62.3 % in FY14. EBITDA margin is expected to
expand 110 bps to 16.5 % over FY16-19, driven by: a higher share of in-house
manufacturing facility for tiles; premiumisation of the product portfolio,
post-marketing arrangement with ECE Banyo and launch of high-end faucets; lower
power and fuel costs, following the installation of solar panels and wind
turbines, as well as lower crude oil prices; and growth in realisation, once
demand recovers in FY18. Adjusted PAT is expected to grow at a three-year CAGR
of 26 %. Sturdy growth is expected to stem from healthy revenue and EBITDA
growth. RoCE is expected to improve to 33.6 % in FY19 from 29.1 % in FY16,
driven by healthy EBITDA and low leverage. RoE is expected to increase to 24.0 %
in FY19 from 21.1 % in FY16, because of strong PAT margin and faster asset
turnover. </span></span><span style="color: #38761d; font-family: georgia, "times new roman", serif;">At the current market price of Rs. 2532.50, the stock is trading at a PE of 31.57 x FY17E and 25.29 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 80.20 in FY17E and Rs. 100.10 in FY18E. CERA is confident of sustaining its growth in coming years with its business strategies of continuously upgrading product basket, leveraging on strong brand image, optimizing product potential capacity utilization and distribution network with all backed up by well-structured sales & marketing plans. </span></div>
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<tr><th><span style="color: #bf9000; font-family: georgia, "times new roman", serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: georgia, "times new roman", serif;">FY16</span></th><th><span style="color: #bf9000; font-family: georgia, "times new roman", serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: georgia, "times new roman", serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: georgia, "times new roman", serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">SALES (</span><span style="font-family: georgia, "times new roman", serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: georgia, "times new roman", serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">935.80</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">1,026.50</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">1,236.00</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">1,522.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">NET PROFIT (</span><span style="color: #38761d; font-family: georgia, "times new roman", serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: georgia, "times new roman", serif;">Cr)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">81.50</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">104.30</span></td><td>130.10</td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">163.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">EPS (</span><span style="color: #38761d; font-family: georgia, "times new roman", serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: georgia, "times new roman", serif;">)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">62.70</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">80.20</span></td><td>100.10</td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">125.40</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">PE (x)</span></td><td>38.60</td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">30.20</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">24.20</span></td><td>19.30</td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">7.50</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">6.20</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">5.10</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">4.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">21.40</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">17.80</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">14.50</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">11.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">21.10</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">22.50</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">23.20</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">24.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">29.10</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">31.60</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">33.00</span></td><td><span style="color: #38761d; font-family: georgia, "times new roman", serif;">33.60</span></td></tr>
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<span style="font-family: georgia, "times new roman", serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: georgia, "times new roman", serif;"> on every purchase</span><span style="color: #38761d; font-family: georgia, serif;">. </span></b><b style="font-family: georgia, "times new roman", serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, "times new roman", serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b><br />
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="" style="color: #cc0000; font-family: georgia, serif; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="" style="font-family: georgia, serif;"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do hold</span><span style="color: #bf9000;"> CERA SANITARYWARE Ltd in my investment portfolio.</span></i></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: georgia, "times new roman", serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: georgia, "times new roman", serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: georgia, "times new roman", serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="" style="font-family: gabriela; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com4tag:blogger.com,1999:blog-8296423824543086164.post-25321758293216658862017-03-03T05:56:00.000+05:302017-03-05T14:40:06.981+05:30JUBILANT FOODWORKS LTD : IT's PIZZA TIME !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUlIspQAqk0DXtbco3TM1bJaJQEPu4OVQC2GYKUWYhFM3B7iRbwyos5PFnSHcC-YxUhDmR4-d3bFr5APeRV-oOIyuVlHD9tFs_8IiauaM5MY1B80xq0FRkMd-Q27R4w9G_PrQy2CDl_p5-/s1600/jub.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUlIspQAqk0DXtbco3TM1bJaJQEPu4OVQC2GYKUWYhFM3B7iRbwyos5PFnSHcC-YxUhDmR4-d3bFr5APeRV-oOIyuVlHD9tFs_8IiauaM5MY1B80xq0FRkMd-Q27R4w9G_PrQy2CDl_p5-/s320/jub.jpg" width="320" /></a></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stock-share-price/jubilant-foodworks-ltd/jublfood/533155/"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">534804</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=JUBLFOOD&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">JUBLFOOD</span></b></a></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 1031.10; Market
Cap: Rs. 6,800.00 Cr; 52 Week High/Low: Rs. 1348.75 / Rs. 760.50</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 6,59,49,070 shares;
Promoters : 2,96,52,784 shares – 44.96 %; Total Public holding : 3,62,96,286
shares – 55.04 %; <span class="apple-style-span">Book Value: Rs. 116.49;
Face Value: Rs. 10.00; EPS: Rs. 13.40; Dividend: 25.00 %; P/E: 76.94 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E:
50.12; EV/EBITDA: 24.95.</span></span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: </span></b><b><span style="color: #c00000; font-family: "georgia" , "serif"; font-size: 13.5pt;">ZERO</span></b><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 6,768.62 Cr.<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">JUBILANT FOODWORKS LTD: </span></b><span style="background: white; color: #38761d; line-height: 150%;">The Company was
founded on 16th March, 1995 and is based in Noida, India. </span><span style="color: #38761d; line-height: 150%;">The
company was formerly known as Dominos’s Pizza India Limited and changed its
name to Jubilant FoodWorks Limited in 2009<span style="background: white;">. </span></span><span style="background: white; color: #38761d; line-height: 150%;">Jubilant FoodWorks
Limited operates as a food services company. The company holds the rights to
develop and operate Domino's pizza brand in India, Sri Lanka, Bangladesh, and
Nepal and Dunkin’ Donuts brands & restaurants in India. Its Dunkin’ Donuts
restaurants offer donuts, drip coffee, cappuccino and latte, milkshakes,
smoothies, and iced teas, as well as a range of burgers, wraps, sandwiches, and
side-bites. In addition, the company sells its products online. </span><span style="color: #38761d; line-height: 150%;">The company came with an IPO of
2,26,70,447 equity shares of Rs. 10 each at Rs. 145.00 per share to the general
public in January, 2010. The purpose of the issue was to achieve the benefits
of listing on the exchanges and for the pre-payment of loans & other
general corporate purposes. It got listed at Rs. 160.00 per share making a high
of Rs. 240.90 on listing day. </span><span style="color: #38761d; line-height: 150%;">Domino's Pizza India has grown into a
countrywide network of stores, with a team of over 6,000 people. Jubilant
FoodWorks has the sole master franchisee for Domino’s Pizza & Dunkin Donuts
in India. It also has, the product profile which are complementary to Domino’s
and are run separately from Domino’s outlets. Dunkin’ Donuts is owned globally
by Dunkin’ brands, which also owns Baskin Robbins worldwide. Dunkin’ Donuts has
over 11,000 outlets worldwide in over 30 countries. </span><span style="background: white; color: #38761d; line-height: 150%;">As of February 6, 2017,
Jubilant FoodWorks Ltd operated 1,111 Domino’s Pizza restaurants in across 260
cities; and 68 Dunkin’ Donuts restaurants in 19 cities in India. </span><span style="line-height: 150%;"><span style="color: #38761d;">Jubilant Foodworks Ltd is locally
compared with </span><span style="color: #bf9000;">Westlife Development Ltd (who runs McDonalds in India),
Speciality Restaurants (which runs Mainland China & Ohh Calcutta in India),
Tata Global Beverages (which runs StarBucks in India)</span><span style="color: #38761d;"> and Globally with </span><span style="color: #bf9000;">Sato
Restaurant Systems Co., Ltd of Japan, Hiday Hidaka Corp of Japan, Faurwood
Holdings Ltd of Hong Kong, Ajisen (China) Holdings Ltd of Hong Kong, Cafe` de
Coral Holdings Ltd of Hong Kong, Jollibee Foods Corporation of Philippiness, Matsuya
Foods Co., ltd of Japan, MOS Food Services Inc of Japan, BJ’s Restaurants Inc
of California, Bob Evans Farms Inc of Ohio, Carnival Corporation Ltd of
Florida, Dunkin’ Brands Group Inc of Massachusetts, The Wendy’s Company of
Ohio, Domino’s Pizza Group of UK, McDonald’s Corporation of Illinios, Compass
Group PLC of UK, Lowe’s Companies Inc of North Carolina, Starbucks Corporation
of Washington, YUM! Brands Inc of Kentucky, Zoe’s Kitchen Inc of Texas</span><span style="color: #38761d;">. </span></span></span></div>
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<b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment Rationale:<o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhug1Q10tRgYXN4KKBBbF17I3zccDNNft0u9935DRw_9jJYjlKDc6nFpWhVl0-kyy3H6rNeOpKOTFPaQhbrnh-dvLxO_BC7BW3Z0fZyOx-iYgtEpyHkjRRn1-rGQpLiQeJpO-ZuLcL-vvic/s1600/PIZZA-PARTY+gull.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhug1Q10tRgYXN4KKBBbF17I3zccDNNft0u9935DRw_9jJYjlKDc6nFpWhVl0-kyy3H6rNeOpKOTFPaQhbrnh-dvLxO_BC7BW3Z0fZyOx-iYgtEpyHkjRRn1-rGQpLiQeJpO-ZuLcL-vvic/s320/PIZZA-PARTY+gull.gif" width="320" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">Jubilant </span></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">FoodWorks was incorporated in 1995 but started its operations in 1996. It is
the sole master franchisee for both Domino’s Pizza Brand since 1996 as well as
Dunkin’ Donuts Brand since 2011 in India. The company is part of the Bhartia
group, which owns a 48.9 % stake in Jubilant FoodWorks Ltd. With over 1,100
Domino’s restaurants in India, starting from the first outlet opened in 1996,
Jubilant FoodWorks is in charge of the second-largest chain of restaurants for
Domino’s worldwide, overtaking UK in the current year but it’s still behind the
US which is Domino’s home country, headquartered in Michigan, US. In terms of
number of stores as well as sales, Jubilant FoodWorks is the largest player in
the Quick Service Restaurants (QSR) market, which is still in nascent stage in
India with about 17 % market share whereas there’s more than 60 % market share
is of pizza and in excess of 70 % in pizza delivery. </span><span style="color: #bf9000;">QSR’s in India accounts
for slightly 2 % of the overall food service market in India and this is
expected to grow much faster at 20 % compared to 10 % food service industry’s
growth. The Indian food industry is poised for huge growth, increasing its
contribution to world food trade every year. In India, the food sector has
emerged as a high-growth and high-profit sector due to its immense potential
for value addition, particularly within the food processing industry. The food
industry, which is currently valued at US$ 39.71 billion, is expected to grow
at a Compounded Annual Growth Rate (CAGR) of 11 % to US$ 65.4 billion by 2018.
Food and grocery account for around 31 % of India’s consumption basket. Indian
food service industry is expected to reach US$ 78 billion by 2018.The Indian
gourmet food market is currently valued at US$ 1.3 billion and is growing at a
Compound Annual Growth Rate (CAGR) of 20 %. India's organic food market is
expected to increase by three times by 2020. The online food ordering business
in India is in its nascent stage, but witnessing exponential growth. The
organised food business in India is worth US$ 48 billion, of which food
delivery is valued at US$ 15 billion. With online food delivery players like
FoodPanda, Zomato, TinyOwl and Swiggy building scale through partnerships, the
organised food business has a huge potential and a promising future. The online
food delivery industry grew at 150 per cent year-on-year with an estimated
Gross Merchandise Value (GMV) of US$ 300 million in 2016. Also as a help for
QSR industry, there are many business factors such as high turnover, low area
occupied; reasonable ticket size matters. </span></span><span style="color: #bf9000;"><span style="line-height: 150%;">In
India, the biggest barrier to profitability in the restaurant as well as retail
businesses in urban areas, particularly in metros, is high lease rentals.
Domino’s predominantly delivery-based model in these cities enables it to
circumvent this problem. While the overall proportion of delivery to dine-in is
50:50. Consequently, the store size required is much smaller at around
900-1,500 sq.ft compared to predominantly dine-in restaurants and other QSR (at
2,500-3,000 sq.ft). In addition, the average bill size for pizza outlets like
Domino’s is also higher than other QSRs like McDonalds, KFC and coffee shops
like Café Coffee Day (CCD), Barista and Costa Coffee. </span><span style="line-height: 150%;">Jubilant FoodWorks has focused on its</span><span style="background: white; line-height: 150%;"> less competitive intensity delivery start-ups focusing more
on profitability and will also focus on Same Stores Sales Growth over store
expansion via store opening rationalisation</span>.</span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> <span style="line-height: 150%;">The demonetization drive was dampening
on JFL’s performance in 2HFY17E, but with gradual recovery in consumer
confidence, increased promotions, moderation in competition from food aggregators
and success of new products could take SSSG to higher levels, going forward. While
JFL’s operating cash generation has fallen from 15 % to 10 % of sales in past
four years, it still remains strong as the Company generates operating cash in
the excess of Rs. 2500 Cr annually. Notably, in past four years JFL has doubled
its store count from 550 to 1,100 and added several commissaries without adding
any debt on its books, which is impressive.</span><span style="line-height: 150%;">
</span><span style="line-height: 150%;">JFL has maintained solid control over
its costs. While overall expenditure witnessed 4 % CAGR through FY12-17E, JFL has
remarkably been able to maintain its total expenditure per store constant in
the last four years. Around half of </span><i><span style="line-height: 150%;">Dominos’
</span></i><span style="line-height: 150%;">sales are through the delivery
platform with the average online ordering as a percentage of delivery sales has
been increasing rapidly, which now accounts for 47 % of delivery sales. Most of
these customers are using alternative payment options i.e. credit-debit cards,
mobile wallets and net banking for paying the bill. JFL has now also offered
cashless payment facilities for all home deliveries ordered through the phone. JFL
did witnessed fall in revenues in initial days of demonetization, but gradually
it improved as new currency started floating in hence marking improvement in
sales. Not with standing significant material impact on revenues in last 4
years owing to dismal SSS growth with additional impact of </span><i><span style="line-height: 150%;">Dunkin Donuts</span></i><span style="line-height: 150%;">, JFL has impressively contained its costs.
While overall expenditure increased at 24 % CAGR through FY12-17E, it has been able
to maintain its total expenditure per store constant in the last 4 years. Despite
steady rise in overall cost, JFL has been able to maintain average operating
cost per store constant at Rs. 2.2 Cr calculated based on average number of
stores per year. Company reduced employee strength per store without hampering
efficiency and has also rationalized its power supply expenditure by
implementing Wipro’s energy management services. Company have</span><span style="line-height: 150%;"> </span><span style="line-height: 150%;">increased its share of online ordering and is</span><span style="line-height: 150%;"> </span><span style="line-height: 150%;">renegotiating rentals and increasingly entering into
rental contracts based on % of revenue rather than flat structure. The company is
reducing the capex costs per store and increasing its emphasis on launching n</span><span style="line-height: 150%;">ew products</span><span style="line-height: 150%;">, JFL has introduced several new
products especially in non-pizza segment like </span><i><span style="line-height: 150%;">Pizza Mania Extreme & Burger Pizza. </span></i><span style="line-height: 150%;">While
through Pizza Mania Extreme, JFL intends to provide value-added offerings at
reasonably lower price points vs. regular pizza, it introduced </span><i><span style="line-height: 150%;">Burger Pizza </span></i><span style="line-height: 150%;">to cash
in the rising opportunity in Burgers segment with an all-day menu option,
unlike Pizza which is more of a meal replacement category. With both these
products getting encouraging response from the consumers, they would
permanently feature on </span><i><span style="line-height: 150%;">Dominos’
</span></i><span style="line-height: 150%;">menu,
going forward. In the pizza segment, the company has recently launched Quattro
Formaggi Burst Pizza and Choco Pizza. JFL’s new state of the art commissary is
expected to be commissioned in Noida by March’17, which is expected to not only
manufacture the conventional dough, but also other products such as buns,
breads and some types of desserts. This is anticipated to accentuate new
product development and increase JFL’s ability to introduce new products at a faster
rate. </span><span style="line-height: 150%;">However, only very few of them contributed
meaningfully to its growth in past few years, which is evident from share of
Pizzas to its overall sales remaining more or less stagnant in past four years.</span><span style="line-height: 150%;"> Jubilant’s core business comes from
Dominos Pizzas, and Pizzas are consumed during lunch and dinner and are not
snacks like in the case of other outlets. A combination of delivery-based model
and healthy bill size enables high sales per square feet and aids profitability.
Jubilants’s </span><span style="line-height: 150%;">Asset-light business model boosts </span><span style="line-height: 150%;">its high-growth story, the business is remarkably
asset-light as a result lease rentals are much lower which helps profitability
of the store. Net working capital continues to be in excess of negative 25 days
and fixed asset turnover continues to be in excess of 3 times. Even in a
subdued economic environment of the past two years, there was no worsening of
working capital metrics. When the growth trajectory resumes on same-store
sales, cash flow improvement will be significant. It is remarkable that
Jubilant FoodWorks, which runs a high-growth business like Domino’s, which expanded
from 180 stores in FY08 to around 1,100 stores currently including 68 Dunkin’
Donuts outlets did not have the need to raise fresh equity capital or avail
significant amount of debt. This is a testament to strong business model and a
kind of proof about the abilities and expertise of management which also shows
their understandings about their business in India. </span><span style="line-height: 150%;"> </span></span></div>
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<b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation:<o:p></o:p></span></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Jubilant FoodWorks Limited is India’s largest
food service company. JFL operates Domino’s Pizza & Dunkin Donuts brand
with the exclusive rights for India, Sri Lanka, Bangladesh and Nepal. The
company have recently launched </span><i style="color: #38761d;"><span style="line-height: 150%;">Pizza
Mania Extreme & Burger Pizza and</span></i><span style="color: #38761d; line-height: 150%;"> launched Quattro Formaggi
Burst Pizza and Choco Pizza, Navratra Pizza and these products are receiving positive
response from its customers. It has launched its </span><span style="color: #38761d; line-height: 150%;">Online </span><span style="color: #38761d; line-height: 150%;">Mobile ordering site in July, 2013 and it is
seen as important platform to reach a wider audience base. Till present there
are over 62 lakh downloads of the Domino’s Pizza mobile ordering app across
various smart phones </span><span style="color: #38761d; line-height: 150%;">& the </span><span style="color: #38761d; line-height: 150%;">Average
Online ordering contributes to 49 % of delivery sales in Q3 FY17 and Mobile
Ordering sales contributes to 56 % during the quarter. There are total 68 </span><span style="color: #38761d; line-height: 150%;">Dunkin’ Donuts </span><span style="line-height: 150%;"><span style="color: #38761d;">Restaurants
as on February 06, 2017 in 19 Cities and offers a wide variety of western menu
including donuts, coffee, burgers, sandwiches, snacks, and more. It has
introduced Big Joy Paneer Delight, Munchkins, Donut Cakes which is 100 %
eggless, DunkyDoos, Big Joy Burger which are gaining popularity amongst kids
and youngsters. </span><span style="color: #bf9000;">Within the pizza market, Domino’s has a share of more than 60 %.
Domino’s has consistently gained its market share from its pizza peers as well
as other QSRs in the past few years. The average bill size of Domino’s Pizza is
healthy across stores which range from Rs. 350 to Rs. 450 per head. And most of
the stores also have delivery facility except stores that are located next to
food courts situated at higher levels in malls and the ones that are newly set
up. Delivery proportion in other stores is 20 %, which is healthy and adds
another avenue of growth. Delivery portion has minimum bill size of Rs. 150 and
has on an average 7 bikes to facilitate that delivery. Looking at these factors
it can be easily believed that the break-even of its store could be achieved in
two-three years. Company will focus more on Same Store Sales Growth rather than
focusing on opening on new stores and expected that SSS growth could be around
8-9 %.</span></span><span style="line-height: 150%;"><span style="color: #bf9000;"> Growth in SSS will depend on a mix
of company-related and macro factors, like Increase traction in new products, faster
growth in value-added offerings, Revival in consumer confidence, especially
post demonetization, Level of discounting and promotions, Uptick in job
creation, and Extent of price hikes which
JFL could pass on to the consumers. The growth in </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">SSS is
likely to recover in FY18E on the back of positive improvement in
afore-mentioned areas and it could be around 8 %.</span> </span><span style="color: #38761d; line-height: 150%;">JFL plans to open over 100 stores
annually in next few years. While the number of Dominos outlets stood at 1,100
at Feb 17 end, Dominos International has projected the potential store count
for Dominos in India at 1,800. However, with the decline in percentage of new
stores opened vis-à-vis extant stores, JFL’s margins would improve at a faster
pace as higher number of stores would have attained breakeven. Based on current
SSS growth trends, calculation suggests a new Dominos store would typically
achieve cash breakeven in 4 years. </span><span style="color: #38761d; line-height: 150%;">On financial side<b> </b>Jubilant
Foodworks Q3FY17 performance was good, it reported Revenues of Rs. 660 Cr, up
3.9 % YOY; SSG was at -3.3 %, EBITDA at Rs. 64 Cr, down 12 % YOY, gross margin
declined 2 % YOY to 74.9 %, impacted by promotional activity and change in mix;
EBITDA margin declined 1.80 % YOY to 9.7 %, impacted by higher rent cost, however
lower employee cost and controlled other expenditure curtailed decline in
EBITDA margins. Home delivery sales through phone has also been impacted due to
cash crunch and has been not compensated by online sale, company is working on
getting card machines for home delivery. New product launches like Pizza Mania
extremes and Burger Pizza are seeing healthy traction and aiding growth.
Delivery sales continue to grow faster than dine-in sales as company is
aggressive on driving sales through OLO (online ordering) and in long term it
expects to be 70 % to 80 % which is the average seen in developed markets. SSSG
uptick, GST and break-even in Dunkin are levers to margin expansion.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">JFL’s operating cash generation
has fallen from 15 % to 10% of sales in past four years, yet it still remains
strong as the company generates operating cash in the excess of Rs. 250Cr annually.
Notably, in past four years JFL has doubled its store count from 550 to 1,100
and added several commissaries without adding any debt on its books, which is
impressive. JFL’s gross block increased by >2.5x to Rs. 900 Cr in the last 4
years, while the resultant higher depreciation impacted its earnings as well.
This is evident from JFL’s cash profit of Rs. 220 Cr was almost double than the
reported net profit Rs. 110 Cr in FY16. The growth shown by Jubilant FoodWorks Ltd
is consistently based on the robust operational foundation on which it stands.
In the current economic environment, demonetization and slowdown in consumer
spending, especially in discretionary expenditure, the company continues to
pursue excellence in key areas such as cost management, restaurant selection
processes, and continual re-investment in strengthening the supply chain,
connecting deeply with consumers, and investing in innovations. This approach
is complemented by a robust training apparatus and high operational efficiency
standards that allow growing the business in line with the potential. Domino’s
Pizza mobile ordering (Online Ordering (OLO)) remains an important platform to
reach a wider audience base serving around 63 lakh pizzas every month with its
new ad campaign on Order 1 pizza online and get 1 pizza free. This enables to
drive higher levels of optimization and supply chain systems into the
hinterland, to serve tier 2 and 3 cities. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 1031.10, the stock is trading at a PE of 80.55 x FY17E and 44.83 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 12.80 in FY17E and Rs. 23.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. </span></div>
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<table border="1" cellpadding="9" cellspacing="0" style="background-color: white; color: #00810f; font-family: georgia, utopia, "palatino linotype", palatino, serif; font-size: 18px; line-height: 24px; text-align: justify;"><tbody>
<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 2,410.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,608.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3,116.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3,788.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">106.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">84.40</span></td><td>151.20</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">229.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 16.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.80</span></td><td>23.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">34.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td> 62.20</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 78.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 43.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 28.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 8.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 7.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 7.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 5.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td>24.30</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 25.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 17.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 12.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 14.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 10.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.40</span></td></tr>
</tbody></table>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> JUBILANT FOODWORKS LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"></b></span></span></span></span></b></div>
<h1>
<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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<span class="apple-style-span"><b style="background-color: transparent; color: #454545; font-size: 12px; line-height: 18px;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">VIEW THE POWER POINT PRESENTATION ON</span></b><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"></b></span></span></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com4tag:blogger.com,1999:blog-8296423824543086164.post-84094236251716589802017-02-23T05:34:00.000+05:302017-02-27T14:48:28.998+05:30PRABHAT DAIRY LTD : SAY CHEESE !!!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3OKDXftsrCWSdaddO7-NkwyIm3_Yi0RusYZc7PI662CxNmGiY8mqy_yOhrkDctK7H0t8vyyZUikUHOb1xWpKabBP3btvuC3E9hwWxIjedFbyrz6qChCji4KP8Hvp6YXDP62ZTeQ9Udjr1/s1600/EAADEDB-EDA1-495B-933B-A81A5B3296CB-logo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="234" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3OKDXftsrCWSdaddO7-NkwyIm3_Yi0RusYZc7PI662CxNmGiY8mqy_yOhrkDctK7H0t8vyyZUikUHOb1xWpKabBP3btvuC3E9hwWxIjedFbyrz6qChCji4KP8Hvp6YXDP62ZTeQ9Udjr1/s320/EAADEDB-EDA1-495B-933B-A81A5B3296CB-logo.jpg" width="320" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=539351"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">539351</span></b></a></span><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=PRABHAT&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">PRABHAT</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 126.45;</span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Market Cap: Rs. 1,235.11 Cr; 52
Week High/Low: Rs. 151.00 / Rs. 71.00</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 9,76,76,131 shares; Promoters : 4,33,34,483 shares – 44.37 %; Total
Public holding : 5,43,41,648 shares – 55.63 %; </span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Book
Value: Rs. 53.59; Face Value: Rs. 10.00; EPS: Rs. 2.36; Dividend: 4.00 % ; P/E:
53.58 times;</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 50.43;
EV/EBITDA: 9.55 times. </span></b></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 158.56 Cr; Enterprise</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value:
Rs. 1,381.99 Cr.<o:p></o:p></span></b></div>
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<b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 12.0pt; line-height: 150%;"> <o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;">PRABHAT DAIRY LTD: </span></b><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The Company was i</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">ncorporated
in 1998 and based in Ahemdnagar. <span style="background: white;">Prabhat Dairy
Limited is an integrated milk and dairy products company. The Company is
engaged in the business of procurement and processing of milk and sale of milk
and milk products, such as ghee, flavored milk, skimmed milk powder, whole milk
powder and condensed milk. Its portfolio consists of dairy products, including
pasteurized and sweetened milk; clarified butter (ghee); yoghurt; dairy
whitener; cheese; paneer; milk powder; lassi, and chaas. It also offers
products, such as ultra-pasteurized or ultra-high temperature (UHT) milk,
Shrikhand, mishti doi, gulab jamun mix, Prabhat Gold, Prabhat Fresh, Prabhat
Popular and Prabhat Rich. The Company sells its products under their retail
consumer brands, as well as ingredient products or co manufactured products to various
institutional and multinational companies. The Company's milk collection
platform consists of approximately 440 milk collection centers, over 20 milk
chilling centers and 100 bulk milk coolers. T</span>he company came out with an
IPO on August 28, 2015 offering 4,07,92,956
equity shares of Rs. 10 each for Rs. 115 per share with retail discount
of Rs. 5 per share raising Rs. 470 Cr. The shares of the company got listed on September
21, 2015 at Rs. 115 making a high of Rs. 120 and low of Rs. 112.40 on listing
day. The object of the issue was to make part prepayment of loans availed by
the company and its wholly owned subsidiary SAIPL, to meet capital expenditure
and for general corporate purposes</span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">. </span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The Company offers products under categories, such as ghee,
including pure ghee, pure cow ghee and low cholesterol ghee; butter; milk
powder, including whole milk powder and skimmed milk powder; dairy whitener;
milk, including full cream milk, toned milk and double toned milk, and curd,
including set curd and pouched curd. Its product portfolio also includes
flavored milk, sweet lassi, paneer, chaach, dairy creamer and cheese. The
Company offers milk in pouches, and curd in variants, such as regular, probiotic,
meethi dahi, low fat, sugar lite and raita. The Company primarily markets and
sells its products under the brand, Dairy Best. </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">PRABHAT DAIRY Ltd is locally compared
with</span> <span style="color: #bf9000;">Kwality Ltd, Parag Milk Foods Ltd, Hatsun Agro Products, Anik Industries
Ltd, Modern Dairies Ltd, Umang Dairies Ltd, Heritage Foods Ltd </span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;">globally
compared with </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">Nestle of Switzerland, Lactalis of Italy, Danone of France,
Fonterra of New Zealand, Dairy farmers of America of USA, FrieslandCampina of
Netherlands, Arla Foods of Denmark, Saputo of Canada, Dean Foods of USA, Yili
of China, Mengniu of China, Unilever of UK, Sodiaal of France, Kraft foods of
USA, Meiji of Japan, Muller of Germany. </span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> </span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="line-height: 150%;"> </span><span lang="EN-US" style="line-height: 150%;"> <span style="background: white;"><o:p></o:p></span></span></span></div>
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<b><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment Rationale:<o:p></o:p></span></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="color: #38761d; line-height: 150%;">Prabhat
Dairy Ltd was incorporated in 1998, and is an integrated milk and dairy
producer with aggregate milk processing capacity of 1.5 mn litres per day. Over
the years, the company has diversified into pasteurised milk, flavoured milk,
sweetened condensed milk, ultrapasteurised or ultra-high temperature (UHT)
milk, yoghurt, dairy whitener, clarified butter (ghee), and milk powder,
ingredients for baby foods, lassi and chaas. It sells these products under
retail consumer brands as well as ingredient products or as co-manufactured
products to a number of institutional and multinational companies. Prabhat
commenced commercial production of cheese, paneer and shrikhand in FY16. <span style="background: white;">The company has clientels namely Mondelez
International, Britannia Ind, Inbisco, Abbott, Parle, Lotte, Yakult, UNIBIC,
Drytech, ITC, FDC, Nestle, Wrigley’s, Perfetti van Melle, Heritage foods,
Haldiram’s, Chisholm, Interfood, Vadilal, Olam, Mother Dairy, Dmart,
FutureGroup, Danone. </span></span><span style="color: #bf9000;"><span lang="EN-US" style="line-height: 150%;">India
is the largest milk producing nation in the world with production of 147 mn
tones in 2016, accounting for one fifth of the world’s production. </span><span lang="EN-US" style="line-height: 150%;">Domestic
milk production in India grew at 4.3 % CAGR, to nearly 134 billion litres in
Fiscal 2015, from 113 billion litres in Fiscal 2010. The growth in milk
production in India outpaced other large milk producing nations such as United
States of America and China, which grew at 2-3 % CAGR in the past five years.
Milk production is growing at a rate of 4.3 % while consumption is growing at 5
% leaving a gap between demand and supply. </span><span lang="EN-US" style="line-height: 150%;">Indian dairy market is worth Rs. 4.3
Trillion and among that organized sector is worth Rs. 75,000 Cr. Revenue share
of organized segment is likely to reach 25 % in 2018 from 20 % in 2015 on the
back of shift in consumer preference towards branded products. Out of the total
production, unorganized sector has majority of the market share with 41 % and
organized sector with market share of 20 %. There is another major segment
which is the farmers who has 40 % market share and uses for household
consumption. Indian Dairy volumes have been growing at CAGR of 4 % in last five
years whereas organized sector is growing at 8 % CAGR in the same period.
Evolving Indian consumerism will likely lead to volume growth of 13 % for the
organized segment by 2018 whereas the sector volumes are likely to grow at CAGR
of 5 %, according to Industry estimates. However, in terms of value, it has
grown at CAGR of 17 % in the last five years, driven by Value Added Products
(VAP) which has seen higher growth of 23 % in the same period compared to 15 %
for liquid milk. Organized players are focusing more on VAP products such as
paneer, cheese, curd, butter, ice cream & lassi as they get twice the
margins of liquid milk products. Share of VAP as shot up to 43 % in 2016 from
35 % in 2010. Over the next few years, branded milk and VAP are likely to grow
at 14 % & 23 % respectively. Domestic demand for milk is likely to increase
by CAGR of 4 % annually and to reach 172 mn tons by 2022 from the current
levels of 138 mn tons in 2015. Production has been increasing in order to meet
the rising demand from growing Indian population. In order to ensure stable
supply of milk, more number of processing centers has to be set up near
procurement locations as the shelf life of products is less. More number of
plants will be set up near major milk producing locations as organized players
expand rapidly in next few years to ensure uninterrupted supply. North India
produces 35 % of India’s milk production with the likes of major states such as
UP, Punjab; Haryana & Bihar followed by west which contributes 25 % and
major states include Rajasthan, Gujarat & Maharashtra. </span><span style="line-height: 150%;">With changing consumer lifestyles, favourable
demographics and increasing urbanisation the demand for consumer foods is
rapidly increasing which in turn will boost the demand for milk and milk
products ingredients. According to the research estimates the market size of
the consumer foods industry in India at </span><span style="line-height: 150%;">Rs. </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">850 billion in
2013-14. It is believed that the industry will continue to grow at a healthy
pace over the medium term, driven by a number of macroeconomic, demographic and
social factors. This is expected to have a positive impact on those involved in
the supply of key milk related ingredients.</span><span style="color: #38761d;"> Still the contract manufacturing
model is not used widely in Indian dairy and milk products industry. Manufacturing
through the contract model, which accounts for 5-10 % of the overall industry’s
production, is prevalent in cases where a large company either a co-operative
or a private company wants to expand its product bouquet without incurring
significant capital expenditure. For example, Britannia and Mother Dairy partly
produce dairy and milk products in this manner. Companies in the milk and milk
products market, generally, evolve from being a mere contract manufacturer to
establishing themselves as a full-fledged brand. Those working on the forward
integrated model do not enjoy the pricing advantage while procuring raw milk in
comparison to those using the fully integrated model, as discussed in section
above. Further, there is a price differential even amongst the fully integrated
players depending upon whether they operate under the co-operative such as
Amul, Mother Dairy etc or the corporate route like Parag Milk Foods, Heritage
Foods, Prabhat Dairy etc. </span></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">Prabhat dairy is in segments like Ghee, Paneer,
Cheese, Curd
and related products, Icecream, Milk Powder, and Sweetened condensed milk. The </span><b style="color: #38761d;"><i>Ghee
segment- </i></b><span style="color: #38761d;">The market for ghee is the second-largest segment after
processed milk, expanded by 13-14 % CAGR to Rs. 455 to Rs. 460 billion in
Fiscal 2016, from around </span></span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">275 billion in
Fiscal 2012. In terms of volume, the growth is estimated around 3 % CAGR. Growing
preference of households mainly in urban areas for processed ghee, instead of
home-made ghee, led to the evolution of the ghee segment in India. However,
growth over the past five years, of 13 % to 14 % in CAGR terms, was mainly
driven by realisations. Realisations rose by about 10-11 % CAGR mainly due to a
9-10 % CAGR rise in milk prices, in the same period.</span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> With
demand for toned and skimmed cow milk on the rise, the demand for branded ghee
is expected to increase as ghee cannot be prepared using toned/ skimmed milk.
Realisations in this segment are directly linked to milk prices and are thus
expected to increase by about 7-8% CAGR until Fiscal 2017. Thus, in terms of
value, the overall segment is estimated to grow at about 9-10% CAGR until
Fiscal 2017. </span><span style="color: #38761d; line-height: 150%;">Unorganized players are prominent in
ghee segment, where organized players account for just 10 % of the entire ghee
segment. </span><b style="color: #38761d;"><i><span lang="EN-US" style="line-height: 150%;">Paneer- </span></i></b><span style="color: #38761d; line-height: 150%;">The size of domestic paneer segment has expanded at
about 15 % CAGR to </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">240 to Rs. 245
billion in Fiscal 2016, from about </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">136 billion in
Fiscal 2012 and about 5 % CAGR in terms of volume. Growth can be attributed to
rising demand from the food services industry, which as per the industry
interactions grew by about 25 % CAGR over the past five years. Higher milk
prices drove up realisations by about 10 % in CAGR terms.</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">
Paneer volumes are expected to record about 5-6 % CAGR until Fiscal 2017,
backed by rising demand from the food services industry, with changing tastes
and preferences of consumers. Quick Service Restaurants (QSRs) are estimated to
grow by about 26 % CAGR until Fiscal 2017. The key demand drivers for paneer
include the rise in domestic travel and frequency of out-of-home food
consumption. About 50-60% of total paneer consumption is driven by bulk sales.
Household demand is also increasing as paneer is increasingly perceived as an
easy-to-cook ingredient. Realisations in this segment are linked to movements
in milk prices and are estimated to record about 7-8% CAGR, until Fiscal 2017.
The overall growth in the paneer segment is expected to be about 13-14% in
terms of CAGR, over the next three years. </span><span style="color: #38761d; line-height: 150%;">There
is a growing demand for paneer (cottage cheese) in the international market
too. In order to meet the export requirement companies such as Amul, Prabhat
Dairy, and Britannia have been engaging in the production of paneer which will
have an increased shelf life. <b><i>Cheese- </i></b>Cheese is the fastest
growing segment in the domestic dairy and milk products industry. The cheese
market grew by around 20 % CAGR, to reach </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">50 to Rs. 55
billion in Fiscal 2016, from </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">26 billion in
Fiscal 2012. Growth was mainly driven by the urban population, which accounted
for about 80-90% of total cheese consumption in India. Bulk sales have grown at
a faster pace, with emergence of food service formats. Thus, with rising demand
from the food service industry, growth in disposable incomes and consumption of
fast/instant food gaining ground in India, consumption of cheese is expected to
continue to grow at a faster pace. The consumption is expected to grow at
around 10% until Fiscal 2017. Changing lifestyles of consumers, who prefer to
eat out more often, and increasing consumption of fast foods such as pizzas,
pastas, burgers, etc. will support growth in this segment. Realisations are
estimated to grow by about 10-11 % CAGR until Fiscal 2017. Though it would be
partly driven by higher milk prices, a change in product mix, with increasing
share of pizza cheese, cheese spreads, cheese slices, etc., will also support
realisations. Overall growth in the segment would be about 20-21% CAGR in terms
of value until Fiscal 2017. <b><i>Curd and related products- </i></b></span><span lang="EN-US" style="color: #38761d; line-height: 150%;">Curd
market is estimated to be size of Rs. 25,100 Cr and is expected to grow at CAGR
of 18 % in next five years and reach Rs. 49,300 Cr by 2020. Butter market is
next large segment in VAP with estimated size of Rs. 19,500 Cr and to grow a
similar pace and reach Rs. 38,200 Cr by 2020, according to International Market
Analysis Research and Consultant (IMARC) report. </span><span style="color: #38761d; line-height: 150%;">Growth
can be attributed to a gradual shift in consumption pattern, over the years.
The market is evolving from loose curd available at local shops to plain and
flavoured packaged curd and drinkable, flavoured and frozen yogurt. </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">According
to industry sources, notwithstanding a rise in prices, consumption has grown at
a faster pace in the past two years, as compared to a long-term growth
trajectory of about 7-8%. Going forward, consumption is expected to grow at a
stronger rate and volumes could rise by about 8-9%, until Fiscal 2017. Change
in consumer lifestyle, led by growing urbanisation, increasing nuclear
families, need for convenience, and good taste and quality of packaged curd are
expected to drive demand, especially in the branded market. The buttermilk and
lassi segment has expanded at about 10-11 per cent CAGR to </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">Rs.</span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">110-115 billion in 2015-16,
from Rs 90 billion in 2012-13. Buttermilk, in particular, has been considered a
healthy beverage in India since ages, but sales have been largely confined to
the unorganized sector. Lassi is largely consumed in the northern region along
with daily meals, and is also catered mainly by the unorganized players. The
segment is expected to continue growing at about 10-11 per cent CAGR between
2013-14 and 2016-17, similar to the trend in the past. </span><b style="color: #38761d;"><i><span style="line-height: 150%;">Ice-cream- </span></i></b><span style="color: #38761d; line-height: 150%;">Ice
cream is one of the fastest growing segments in the domestic dairy and milk
products industry. Between Fiscal 2012 and Fiscal 2016, the segment grew at
about 20-22 % CAGR in terms of value to </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">35-40 billion, from
</span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">15-20 billion and about 7-8 % CAGR in terms of
volumes. An 11 % CAGR raise in milk prices increased realisations by about 13-14
% CAGR in the same period. Industry sources indicate that ice cream consumption
has grown at a faster pace in the past two years, despite price hikes, as
compared to the long term growth trajectory of 7-8 % CAGR. Consumption is
likely to grow further, with the segment expected to record about 10 % CAGR,
until Fiscal 2017. Rise in consumption in the non-summer months, growth in
urbanisation, disposable incomes and out-of-home food consumption, improved
cold chain infrastructure and emergence of modern format retail facilities are
key growth drivers for this segment. The segment is expected to record an
overall growth of about 19-20 % CAGR in terms of value, until Fiscal 2017. <b><i>Milk
powder-</i></b>The market size of the milk powder segment, which is directly
consumed in India, is estimated at </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">25-27 billion in
Fiscal 2016. A significant portion of the milk powder produced is exported or
used as an intermediate in manufacturing dairy and other value added products
such as confectionary, bakery products, etc. Owing to adequate availability of
milk in India, we are well placed to cater to the increasing demand for milk
powder from milk scarce countries such as Italy, Germany, Belgium, Portugal
etc. While the domestic consumption of milk powder has increased at a healthy
CAGR of 15-16 % over the past few years, the export market has expanded
manifold. Going ahead, the market for milk powder is expected to continue to
grow at a healthy and steady annual average rate of about 15 % driven by
growing preference (higher shelf life) by households and industrial
consumption. <b><i>Sweetened condensed milk- </i></b>Sweetened condensed milk
(SCM) is sold both as a finished product and as a vital ingredient for the
manufacturing of certain consumer foods (such as chocolates, confectionaries,
bakery products, etc.). SCM is gaining popularity as it serves as a ready to
use processed milk to prepare sweets. Some of the key companies in this segment
include Nestle as in Brand: Milkmaid, Amul as in Brand: Mithai Mate and Prabhat
Dairy as in Brand: Milk Magic. The demand for SCM (as a finished product) is
believed to increase in the long term mainly in the urban areas. SCM is also
widely used as an ingredient in chocolate and confectionary business. Dairy
players act as dedicated suppliers of SCM to major manufacturers of consumer
foods, for instance</span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> Prabhat Dairy is the leading supplier of
sweetened condensed milk to Mondelez International, a chocolate manufacturing
company. On the back of expected growth in the consumer foods industry, the
outlook for SCM remains positive in the long term. </span><span style="color: #38761d; line-height: 150%;">Companies such as Mondelez International (Cadbury),
Heinz (Complan) and GSK Consumer (Horlicks) enter into contracts with
corporates in dairy and milk products industry to provide them with consistent
quality of ingredients such as processed milk, sweet and condensed milk, milk
powder etc. under the ingredient supply model of business. The growth of the
B2B segment is driven by the continuous demand for consistent quality milk and
milk products which serve as vital inputs in the manufacturing of end products
such as biscuits, confectionaries, etc. The expected healthy growth in the
consumer foods industry shall augur well for dairy companies who operate in the
B2B segment. </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">Major
FMCG players are on the verge of entering into Dairy business, and the company
is likely to be beneficiary as it has good institutional business and
repetitive orders from Britannia, Mother dairy, HUL, Coffee Day and ITC. PRABHAT DAIRY</span><span style="color: #38761d; line-height: 150%;">
Ltd being one amongst the leader in the industry has very strong footing and
has strong cash flow which thrusts the growth for the company, and strong
financials with sustained cash flow makes it attractive for long term
investment.</span><b style="color: #38761d;"><span style="line-height: 150%;"> </span></b><span style="color: #38761d; line-height: 150%;"><o:p></o:p></span></span></div>
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<b><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation: <o:p></o:p></span></span></b></div>
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<span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Prabhat
Dairy Ltd. is one of the largest processor of dairy products in the private
sector in India. </span><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Prabhat has 2
state of the art manufacturing unit at Shrirampur and Turbhe, Navi Mumbai. They
have established automated production facilities at our Shrirampur and Navi
Mumbai facilities equipped with advanced technology which ensures operational
efficiencies including lower production losses, strict quality control and
ability to process large orders. In addition, the technology infrastructure
connects the procurement and production processes. They use computerized milk
testing facilities and comprehensive enterprise management programs covering
production, sales, finance, purchase, stores, and inventory, storage and
payroll functions. The manufacturing facility is complimented with a wide range
of packing and filling machines supplied by Indian and overseas suppliers. All
the manufacturing and packing facilities follow proper zoning to ensure HACCP
compliance. </span><span style="color: #bf9000;"><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">India continued to be the largest milk producing
nation in the world, with an estimated milk production of 134 billion liters
for the Fiscal 2016, an increase of 3.9 % over the previous Fiscal 2015. The
estimated per capita availability of milk increased to 302 grams per day which
is more than the world average of 294 grams per day. Additionally, the per
capita availability of milk in developed countries was estimated at 831 grams
per day and in Asia it was estimated at 186 grams per day. The dairy cooperatives
procured about 12.5 million tonnes of milk in Fiscal 2016 as compared to 12.2
million tonnes in Fiscal 2015, registering a growth of 2.5 %. Liquid milk
marketing by the cooperatives stood at 11 million tonnes in Fiscal 2016 as
compared to 10.4 million tonnes in Fiscal 2015, registering an increase of
about 5.8 %. Currently, about 42 % of the total milk produced in India is
purchased by consumers directly from milk farmers in a raw form. The remaining
58 % goes for processing and is sold as processed milk and milk products like
curd, yogurt, buttermilk, lassi, butter, ghee, ice cream, frozen desserts,
cheese, paneer, khoa and milk powder (including skimmed and whole).</span><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;"> </span><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">The
processed dairy industry in India was estimated to be around </span><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">3,650
to Rs. 3,700 billion, out of which milk </span><span style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">products accounted for around Rs. 1,490 to
Rs. 1,530 billion. Paneer and khoa accounts to 32 %, ghee 30 % and curd
products 22 % account for the major portion of the milk products segment. The
processed milk and milk products segment is expected to record about 12-13 %
CAGR between Fiscal 2015 and Fiscal 2018. Growth will be driven by several
factors such as changing lifestyle of consumers, growth in the food services
industry, increasing urbanisation, rising need for convenience, better health
awareness among end-users, etc. Sensing higher demand for processed milk and
milk products, several domestic and global players forayed into different value
added segments (leading to higher margins) to gain a higher market share.</span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;"> While
demand for processed milk grew by 5.3 % CAGR in Fiscal 2012 to Fiscal 2016,
realisations rose by about 9-10 % CAGR in the same period. Higher realisations
could be attributed to rise in milk prices and growth in consumption of
flavoured milk and tetra pack milk. As a result, the processed milk segment
recorded 14-15 % CAGR, reaching Rs. 2,160-2,170 billion in Fiscal 2016, from
about Rs. 1,250 billion in Fiscal 2012. Milk prices are expected to rise by 7-8
% CAGR over the next three years, primarily driven by an increase in fodder
prices, which in turn, are expected to be driven by a similar rise in minimum
support prices of key crops<i>. </i>Overall, the segment is expected to grow by
12-13 % CAGR, in terms of value, from Fiscal 2016 to Fiscal 2018 to reach Rs. 3,090-3,100
billion. The private companies operate in either or a combination of various
business models like forward integrated; fully integrated; supplier of
Ingredients; and contract manufacturing. The fully integrated business model is
very similar to the co-operative business model. The major difference lies in
the structure of payment to the dairy farmers. In the fully integrated private
company business model, the farmer is paid only once, as opposed to dual
payments made in the co-operative model. However, the private company pays the
farmer 10-15 % higher than what is paid by co-operatives as the initial
payment, to incentivise farmers to supply milk. In the forward integrated
business model, the private company does not deal directly with the dairy
farmers. Instead, the company procures milk (processed/ unprocessed) through
other routes such as village collection centres, franchisee chilling centres,
bulk private coolers, district union factories and regional co-operative
federation factories. Companies, working on this model, usually get into higher
value-added products and exports, as the cost of procuring milk usually ranges
between Rs. 32-34 per litre for cow milk and Rs. 44-46 per litre for buffalo
milk and at such cost; it becomes non-remunerative to enter the high volume
pouched milk segment. Given the fragmented landscape of the Indian dairy
farmers (in terms of smaller animal holdings), most of the private companies
prefer forward integration rather than becoming a fully integrated company. The
latter requires building a strong procurement system (at the farmer level) and
further undertaking production of value-added products. Within the corporate
segment, few companies have been successful in establishing themselves as fully
integrated players such as Prabhat Dairy and Parag Milk Foods. On the other
hand, the entry barriers are fewer in case of forward integration as building a
strong raw material procurement platform is not required. However, we
understand that those working on the fully integrated model have been
successful in establishing their brand and are relatively well placed to face
the competition in the market. Dairy and milk products are changing and some of
the major growth drivers for the dairy and milk products industry in India are
rising share of high margin milk products which accounts 15-20 % of the total
milk produced in India, greater value-addition by companies driven by the rise
in urbanisation and change in consumer lifestyle is likely to drive up
player-wise growth rates. Rising trends in urbanisation, migration across the
country, number of working women and disposable incomes has increased
consumers' access to packaged dairy products. Companies are increasingly
innovating and manufacturing products across all price points to cater to
consumers, with varying tastes and preferences. This, coupled with enhanced
packaging, longer shelf-life and better quality of products, will drive further
penetration of processed milk products and thereby, support long-term growth.<i>
</i>With cold storage facilities, transportation and other critical supply
chain infrastructure improving across India, companies will be able to
manufacture and sell more products, over the medium term. This would help
increase the penetration of processed milk products in towns and villages, thus
driving growth of the dairy and milk products industry, over the next 3-4
years. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Prabhat, in Q2
FY16, commissioned its 30 tonnes per day cheese plant which is third highest
capacity in India. The company is currently targeting the HORECA i.e. hotel,
restaurants and cafe & B2B space which comprises 70 % of the total cheese
consumption in India. This strategy goes well with management’s blueprint of
initially focusing on institutional and B2B sales, and ultimately launching the
same in the B2C segment once the product gains steady traction. The Cheese
segment offers higher gross margins compared to other dairy products. As the capacity
utilization of the cheese plant gradually increases, it will have a positive
impact on the overall gross margin. Recently
Prabhat received its first export order for the supply of cheddar cheese to Iraq,
while the order is small Rs 1 Cr; it is significant as it could open up new
revenue streams from geographical expansion. In order to increase its
product offering, Prabhat commissioned a 5 tpd paneer plant in FY16. The
company launched paneer in an attractive thermoform packaging which has
extended its shelf-life from 15 to 21 days. Prabhat launched Dahi with no
preservatives in Mumbai. It has also adopted a unique model for distribution of
fresh Dahi for the first time in India under the project called ‘Raftaar’ which
delivers fresh Dahi in chilled vans / mopeds with chilled carrier boxes to
10,000 grocery shops in Mumbai.<b> </b>Prabhat started commercial operations of
its newly set up 5 tpd capacity shrikhand plant in Q1 FY17. Products like
Paneer, Dahi, Lassi and Shrikhand are retailed in Modern Trade shelves like Big
Bazaar, Star Bazaar, Hypercity, D Mart etc which provides abundant brand recall
for Prabhat. On the back of the above
product launches we expect the share of VADP in overall revenues to propel from
25% in FY16 to 36% by FY19. Despite having a dominant presence in
institutional business, Prabhat has enjoyed the highest EBITDA margins in the
dairy space and is expected to take an
upswing of 1.30 % to 11.5 % in FY19 led by increased share of high
margin B2C business, increase in capacity utilization across all segments, with
blended utilization rising from 64.3 % in FY16 to 88.6 % in FY19. I</span><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">n
Septermber 2015, Prabhat had a debt of Rs 412 Cr with a debt to equity of 1.2X.
The IPO proceeds of Rs. 300 Cr and internal accrual helped Prabhat to pare its
debt by Rs. 250 Cr in FY16 which lead to an improvement in the debt to equity
ratio to 0.24X in FY16. With major capex complete and cash flows augmenting,
the debt to equity ratio is expected to dip to 0.22X in FY19.</span><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;"> </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Management believes that
in dairy sector there are different seasons and different cycles. Prabhat has
seen transformation of business segment from specialty dairy ingredient
supplier to consumer brand & dairy product company. Right now company revenue
from B2b is 70 % and is expected to be 50 % in FY2020, Revenue from B2C is 30 %
and expected to be 50 % in FY2020. Revenue from VAD id 80-86 % and is expected
to be on similar lines in FY2020, Liquid milk id 15-20 % and is expected to be
on similar lines in FY2020. For Prabhat, both </span><b style="color: #38761d; font-family: Georgia, "Times New Roman", serif;"><span style="line-height: 150%;">B2B and B2C </span></b><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">distributions are Pan
India and products with long shelve life like Cow ghee, UHT milk and cheese are
majorly distributed currently. In B2B business, company has introduced Ricotta
cheese and Mozzarella cheese (for dominos), Paneer for dominos and Britannia, Shrikhand
and SMP with Vadilal and other ice creams player. Also company has started
exporting Shrikhand and ice-creams. In B2C business, products like Ghee,
Paneer, butter, curd continue to gain and also distribution reach has increased
to 25 states and more than 500 distribution and 1 lakh touch points. Also
company has tied up with TajSats for supplying cheese. Modern business segment expanded
in both Maharashtra and Gujarat. Their products like like Paneer, Dahi, Lassi and
Shrikhand are retailed in Big Bazaar, Star Bazaar, Hypercity, D-Mart.</span><b style="color: #38761d; font-family: Georgia, "Times New Roman", serif;"><span style="line-height: 150%;"> </span></b><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Prabhat dairy
ltd posted growth of 34.5 % yoy and 25.8 % qoq, with revenue of Rs. 408.10 Cr.
During the quarter it being a flush season some of the region has faced draught
situation while on other hand milk procurement price increased from Rs. 25.6 to
Rs. 27.2. It has total procurement capacity of 1.5 Mn liters per day and out of
which it procured 0.85 MLPD for Q3FY17. It procures around 75 % of its milk
directly from 85000 farmers. It procures milk from Ahmednagar, Pune, Nashik and
adjoining districts in Maharashtra. Also it has around 180 MTPD of condense
milk and 30 MTPD of cheese plant. It’s a new in this segment of cheese and so
its utilization level is low. For 9MFY17 revenue was at Rs. 1032.68 Cr which is
the growth of 19.9 % yoy.</span><b style="color: #38761d; font-family: Georgia, "Times New Roman", serif;"><span style="line-height: 150%;"> </span></b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EBIDTA for Q3FY17 stood at Rs. 37.66 Cr
with growth of around 37.0% yoy and 36.6% qoq. Its margins were almost flat at around
9.2% with increase of 16bps yoy and 73bps qoq. Margins remain stable due to increase
of price of milk and also other expense in the quarter. For 9MFY17 BIDT was at Rs.
96.95 Cr with 8 % growth but its margins shown de-growth of 104bps yoy and
stood at 9.4 %. PAT before exceptional in Q3FY17 was at Rs. 8.16 Cr with
de-growth of 8.2 % yoy and 8.8% qoq due to increase of depreciation and tax for
the quarter. Its PAT margins decline by 93 bps yoy and 73 bps qoq with margin
at 2.0%. Exceptional item remained at Rs. 25.59 Cr due to changing of
accounting method to income accrual as per accounting standards.</span><span style="font-family: "georgia" , serif;"> </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 126.45, the stock is trading at a PE of 36.12 x FY17E and 25.29 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 3.50 in FY17E and Rs. 5.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16A</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1,003.36</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,170.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,369.49</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,602.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">25.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.52</span></td><td>33.98</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">48.58</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 3.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.50</span></td><td>3.50</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>34.10</td><td>49.4</td><td>35.60</td><td>24.90</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>2.50</td><td>1.80</td><td>1.80</td><td>1.70</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 7.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td>9.39</td><td>9.85</td><td>13.25</td><td>16.53</td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> PRABHAT DAIRY LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-23554551704461167182017-02-13T06:01:00.000+05:302017-02-15T15:16:13.510+05:30KRBL LTD: RICE COOKED WELL !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBrfGJ0Zpcs19Phyphenhyphen4oDuxlEJxqVqqK5rzQWSm4IgSH511kB9B_WjmbEVe0vCCHUjbyOEGXe5ohmDQ5jTZTAsLwzcHzI4exTpFPbo7ALrfSKnLmAi-OhhFflnJNY0OQm_JdHVxPooxcHV-s/s1600/KRBL-Logo.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBrfGJ0Zpcs19Phyphenhyphen4oDuxlEJxqVqqK5rzQWSm4IgSH511kB9B_WjmbEVe0vCCHUjbyOEGXe5ohmDQ5jTZTAsLwzcHzI4exTpFPbo7ALrfSKnLmAi-OhhFflnJNY0OQm_JdHVxPooxcHV-s/s1600/KRBL-Logo.jpeg" /></a></div>
<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=509480"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">530813</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=KRBL&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ KRBL</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 377.25; Market Cap:
Rs. 8,880.08 Cr; 52 Week High/Low: Rs. 388.80 / Rs. 174.00.</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 23,53,89,892 shares;
Promoters : 13,84,39,916 shares – 58.81 %; Total Public holding : 9,69,49,976
shares – 41.19 %; <span class="apple-style-span">Book Value: Rs. 68.98; Face
Value: Rs. 1.00; EPS: Rs. 15.19; Dividend: 190.00 %; P/E: 24.8 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 25.71;
EV/EBITDA: 17.57.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 1,160.45 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 10,022.66 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">KRBL LTD: </span></b><span style="color: #38761d; line-height: 150%;">The Company was founded in 1988 as a
partnership firm, but incorporated as company on March 30, 1993 as Khushi Ram
Behari Lal Ltd in Delhi. </span><span style="color: #38761d; line-height: 150%;">KRBL is a 120 year
heritage and an in existence since 1889, KRBL Ltd. is India’s first integrated
rice company with a comprehensive product chain. KRBL have experience of three
generations in perfecting the Basmati grain. KRBL stands at top slot of the
Indian Rice Industry, unmatched and unparalleled in every aspect. The company
came with an IPO in 1995. </span><span style="color: #38761d; line-height: 150%;">The company has not declared any bonus
shares yet. The company announced splits in its face value of shares from Rs.
10 to Re. 1 on December 17, 2009. </span><span style="background: white; color: #38761d; line-height: 150%;">KRBL Limited is an India-based basmati rice
processing company. The Company is engaged in seed development, contact farming,
procurement of paddy, storage, processing, packaging, branding and marketing of
basmati rice. The Company's operating segments include Agri, which includes
agricultural commodities, such as rice, Furfural, seed, bran and bran oil,
among others, and Energy, which includes power generation from wind turbine,
husk based power plant and solar power plant. </span><span style="background: white; color: #38761d; line-height: 150%;">KRBL
manufactures<span class="apple-converted-space"> </span><span class="ilad">agricultural products</span><span class="apple-converted-space"> </span>such as rice bran oil, furfural and
de-oiled cakes. The husk is utilized to<span class="apple-converted-space"> </span><span class="ilad">extract</span><span class="apple-converted-space"> </span>furfural
and the bran used to produce around 50 tons of rice bran. It has a total bran
oil capacity of 42 MTPD (metric tons per day) and furfural of 10 MTPD. The
company’s milling and packing units are located in Ghaziabad (Uttar Pradesh),
Dhuri (Punjab), Alipur (Delhi), Gandhidam (Kandla) and Dhulia (Maharashtra).
Its integrated unit at Dhuri is one of the largest in the world with capacity
of 150 MTPH (metric ton per hour). The company’s total milling capacity has
increased to 198 MTPH in 2007. The company markets its products in India and
overseas markets including the United States and the Middle East. In India, its
products are marketed under the brand names: Royal, Zaffrani, Doon, Train, Al
Wissam, Qiada, Al Bustan, Al Mithali, Indian Farm, Sun Flower, India Gate,
Lion, India Gate, Nur Jahan, Aarati, Necklace, Bemisal, Shubh Mangal and Lotus,
India Gate Classic, India Gate Super, India Gate White Organic, India Gate
Golden and Doon Premium. It has its procurement network for basmati rice that
spreads across Punjab, Haryana, Uttranchal and Uttar Pradesh. KRBL is also
engaged in wind turbine and husk-based power plant power generation business.
The company has 10.5 MW power capacity using rice husk as fuel and a 3.5 MW
power plant in Ghaziabad. It has a 12.5 MW windmill in Dhulia, Maharashtra with
a power purchase agreement with Maharashtra State Electricity Board (MSEB). The
company is ISO 9002, Hazard Analysis and Critical Control Points (HACCP),
KOSHER (approved by the Jewish dietary laws), and FDA (Food and Drug
Administration) certified. The Company has two manufacturing units and one
processing unit with a total capacity of 195 metric tons per hour. The
Company’s Dhuri Plant in Punjab is the largest, fully integrated rice milling
plant in the world with a capacity of 150 metric tons per hour and its
Ghaziabad plant has existing capacity of 45 metric tons per hour. The Company
has a wholly owned subsidiary, KRBL DMCC in Dubai. </span><span style="background: white; color: #38761d; line-height: 150%;">The Company's
geographical segments include Sales within India and Sales outside India,
including Middle East and Other than Middle East. It exports its products to
Saudi Arabia, the United Arab Emirates, Iraq, Kuwait and Qatar. KRBL also</span><span style="background: white; color: #38761d; line-height: 150%;"> engaged in trading of commodities. It operates in two
business segments: agri and energy. The agri segment includes agri commodity,
such as rice, pulses, seed, wheat, bran and bran oil. The energy segment
includes power generation from wind turbine and husk-based power plants. </span><span style="line-height: 150%;"><span style="color: #38761d;">The
company is compared with </span><span style="color: #bf9000;">Chaman Lal Setia Co Ltd, Kohinoor Foods Ltd, Lakshmi
Energy & Foods, REI Agro Ltd, LT Foods Ltd, Usher Agro Ltd, Ajanta Soya
Ltd, Navdurga Rice Mill</span><span style="color: #38761d;"> and Globally with </span><span style="color: #bf9000;">Riviana Foods Inc of USA, American
Rice Inc of USA, Famers Rice Cooperative of USA, Ricetec Inc of USA, Riceland
Foods Inc of USA, Farmers Rice Milling Company Inc of USA, Specialty Rice Inc
of USA, MARS Incorporated of USA, Asia Golden Rice Co. Ltd of Thailand, Cargill
of USA, Archer Daniels Midland of USA, Bunge of USA, Louis Dreyfus of France,
Nakornton Rice Co Ltd Thailand, PAK Rice Village of Pakistan, Sunrise Foodstuff
Joint Stock Company of Vietnam, AEDI’ S.R.L. of Italy, Tade BEVAR S.A. of
Brazil, Sichuan Deyi Green Foods Group Co. Ltd of China.</span><span style="color: #38761d;"> </span></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEsaJeK83YeypSMrPMBMtZGV3gNTJA68Zkhu5AiIvLzfiU7jcLvhcmUVQ1LLNWUbQ8-6vq5xcgtEaRAwCUX2SVqwiH4HqkEGSwBcW4h-KWvXZqu-umQHWcUtWEKO6M5C3f5VmxoMXz0vSz/s1600/1000984429_0fbad89daad727d8.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEsaJeK83YeypSMrPMBMtZGV3gNTJA68Zkhu5AiIvLzfiU7jcLvhcmUVQ1LLNWUbQ8-6vq5xcgtEaRAwCUX2SVqwiH4HqkEGSwBcW4h-KWvXZqu-umQHWcUtWEKO6M5C3f5VmxoMXz0vSz/s400/1000984429_0fbad89daad727d8.jpg" width="335" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">KRBL
LTD is India’s preferred Basmati Rice Company with a legacy spanning 120 years;
KRBL is a global rice entity with a multi-brand presence both in domestic as
well as in the overseas markets. A leading integrated industry player, the
Company’s business philosophy is aligned to the heart of India with its quality
rice, led by its flagship brand India Gate, made in the country’s heartland.
The world’s largest Basmati Rice exports to 73 countries, KRBL’s business spans
the value chain of rice, from the seed to the grain, across agro processing and
marketing. Its rice milling capacity of 195 MT/hour, the largest in the world,
lends it a distinctive edge, ranking it at the top of the industry.
State-of-the-art storage and warehousing capacities, innovative marketing
approach, expanding distribution network and strong R&D capabilities are
the pillars of KRBL’s growth trajectory. The Company maintains robust and
deep-rooted relations with farmers through a well-structured contact farming
network, which has given the Company foundational strength. Backed by a strong
brand equity and dealer network KRBL has an extensive geographical presence in
the Middle East region, with Saudi Arabia, UAE, Kuwait, Bahrain, Iran, Iraq and
Qatar among the key buyers of its Basmati rice. Over the years, the Company has
also developed other popular rice brands, such as Nurjahan, Telephone, Train,
Unity, Bawabat Al-hind, to meet the needs of different categories of consumers
across regions. </span><span style="color: #bf9000;">India is one of the major rice producing, consuming and
exporting countries in the world. India continues to be the world’s largest
rice exporter for the fourth consecutive year. India exports 30.1 % of total
rice exports of the world around $6.4 billion followed by Thailand which
exports 21.4 % of total rice export of the world of worth $4.5 billion. On
third position it is USA who exports 9.7 % of total rice export of the world
worth $2.1 billion. Pakistan exports rice worth $1.9 billion which has 9.1 %
share in total rice exports of the world, Vietnam exports worth $1.6 billion
with 7.5 % of total rice exports of the world. India has a significant
competitive edge in rice exports due to combination of external factors,
domestic market dynamics, high yielding and better paddy quality, low cost of
paddy production and efficient execution of contracted business both from east
and west coast ports of India. India’s rice industry has seen a transformation
in the last decade, with growth of branded business in the domestic market and
a strong impetus to export. This is reflected in the growth rates of leading
Indian rice companies, with CAGRs ranging between 20 % and 30 % in value terms
over the last four years. India is also the world’s largest exporter of
Basmatic Rice to the global market with major destinations being Saudi Arabia,
Iran, United Arab Emirates, Iraq and Kuwait. India is also the largest player
in export of Non-Basmati Rice. Key markets in the non-basmati segment are
Benin, Bangladesh, Senegal, South Africa, Liberia and Côte d’Ivoire. Indian
rice industry has developed a strong position in exports, reaching 25 % of
market share of global trade. The Government of India rolled out various
policies in its Union Budget 2016-17 that aims to double rural income by 2022
and address critical factors hindering agricultural productivity in the
country. These policies laid emphasis on water resources, soil fertility, input
use and enhancing farmers’ access to markets. The “Pradhan Mantri Sinchai
Yojana” schemes would fast track existing irrigation projects and bring an
additional 10.9 million hectares of farmland under irrigation. Agriculture
credit and storage capacity would be enhanced and a pilot programme for direct
payments to farmers to assist them in fertilisers purchase would be
implemented. According to the U.S. Department of Agriculture (USDA) Foreign
Agriculture Services (FAS) report, that if the weather conditions remains
normal then the rice production is forecasted to be at 105 million tonnes
harvested from 44 million hectares as against with 103.5 million tonnes
harvested from 43.46 million hectares in 2015-16. </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">With the rice becoming staple diet for
more and more people across the world and shift in preference for branded
quality rice, the demand for Basmati Rice has been quite strong and will
continue to remain so, on the back of rising income. </span><span style="color: #38761d;">In overseas markets, the
only competition has been there from Pakistan as it is the only country other
than India which grows basmati rice and exports the same. But, with superior
quality and higher production, India continues to enjoy majority export market
share. The demand for branded Basmati Rice has grown at CAGR of 20 % in past
five years, driven by growth in domestic and exports market. India continues to
be the largest exporter of basmati rice to the global markets with Saudi
Arabia, UAE, Iran, Iraq and Kuwait being leading export destinations. Middle
East remains leading export destination where premium basmati rice is widely
consumed. As per report from US Department of Agriculture, global rice
consumption has risen from 445 million MT in 2010-11 to 483 million MT in
2015-16 wherein export from India rose from 90mn MT to 97mn MT during the said
period. During the same period, Indian basmati rice exports grew from 2.3mn MT
to 3.8mn MT at CAGR of 13.4 % while domestic consumption grew from 1.2mn MT to
2.0mn MT at CAGR of 13.6 %. While Basmati Rice is consumed across the globe,
West Asian countries account for 75 % of Indian Basmati rice exports in 2015-16.
Within West Asia, Iran and Saudi Arabia are the two largest buyers accounting
over 50 % of basmati rice exports from India. Data suggests that during 2011,
unbranded basmati rice consumed was to 86 % as against 14 % branded rice; this
has changed to non-branded rice at 74 % against 26 % branded rice during 2016.
India accounts for 20 % of global rice consumption and 80 % of global basmati
exports. </span></span><span style="color: #38761d; line-height: 150%;">Iran is the largest market for Indian basmati rice, with
easing of sanctions by the UN, India did lose some market share but there was
no impact on KRBL. Iran has been the fastest growing buyer for Indian basmati
in the past three years. </span><span style="line-height: 150%;"><span style="color: #38761d;">KRBL,
with the largest and most modern milling capacities and R&D capability of
Basmati Rice, is well placed to tap growth opportunity. The company enjoys more
than 30 % market share in organized domestic market and 25 % share in export
market. Over the years, the company has developed rice brands to meet the
requirements of different categories of consumers. </span><b style="color: #38761d;"><i>India Gate</i></b><span style="color: #38761d;"> happens to be
its flagship brand with two variants namely, Classic and Super having average
realization of Rs. 72/kg higher than industry export realization of Rs. 54/kg.
KRBL’s operating margin is likely to improve further as the company has
procured low cost paddy and has strong inventory build-up. With brand recall,
better processing setup and plants, well integrated and along with the Central
government’s initiatives such as the ‘Rashtriya Krishi Vikas Yojana’ will help
companies likes KRBL and the company can perform better coming future. </span></span><span style="color: #38761d; line-height: 150%;"> <o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Outlook and Valuation: </span></b></span><br />
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<span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">KRBL
Ltd (KRBL) history dates backs to the year 1889 in Faisalabad, Pakistan where
the company was found, but was incorporated in 1993 in Delhi, KRBL is the
world’s largest Basmati rice exporting company with multi-brand presence both
in domestic as well as overseas markets. Over the years, the company has
developed rice brands such as India Gate, Nur Jahan, Telephone, Train, Unity
and Bawabat Al-hind to meet the requirements of different categories of
consumers. Being an integrated player, the company also deals in value added
by-products like Bran Oil and De-oiled Cakes. It has got Energy business
vertical as well, wherein it uses rice husks for captive power plant. Its
energy portfolio comprises of Bio-Mass, Solar and Wind energy. KRBL has strong
presence in export markets with 51 % market share of Basmati Rice market of
USA, dominant presence in Middle East and expanding its export base to Africa
and Europe. The KRBL is ISO 9002, HACCP (Hazard Analysis and Critical Control
Points), KOSHER (approved by Jewish Dietary Law) and FDA (Food and Drug
Administration) certified. The company KRBL follows backward integration
through partnership with farmers wherein the company encourages contract
farming, makes available with high yielding seeds and provides intensive
training on crop cultivation. Thus, the company is fully integrated across supply
chain which enables it to focus on quality of produce and which ultimately
helps improve realization for KRBL, which is around Rs. 72 per kg, much above
average industry realization of Rs. 53 per kg. Basmati rice contributes to 97.5
% of total agri business revenue. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KRBL came out with the strategy of contract
farming in Punjab, Haryana and Uttar Pradesh wherein the company provides high
yielding seeds including PUSA 1509 seeds and intensive training on crop
cultivation which has been of great help in augmenting and procuring better
quality paddy along with enhancing its market share for seed business. The
strategy has worked in favour of farmers as well with acreage under cultivation
has increased substantially from 60,000 acres in 2005 to 240,000 acres in FY15.
Backed by strategic marketing initiatives, the company has come up with
6,90,000 outlets spread across towns and cities in the country. It has strong
tie-ups with several domestic retail chains including Food Bazaar, Spencers,
D-Mart Reliance Retail, Vishal Mega Mart, More, Walmart, Easy Day, Reliance
Cash & Carry, Metro Cash & Carry and in local E-commerce to steer
growth for KRBL. In order to capitalize on opportunity in renewable energy, the
company has set up Solar Power Plants and Wind Power Plants at different parts
of the country. Solar Power plant of 15 MW is situated in Madhya Pradesh
whereas Wind power plants of capacity 87.05 MW are situated in different parts
of the country including Maharashtra (33.50MW), Rajasthan (11.85 MW), Tamil Nadu
(8.10MW), Karnataka (11.10MW), Andhra Pradesh (10.50MW) and Madhya Pradesh
(12.00 MW). Wind Mills of 20.1 MW will be commissioned in Maharashtra shortly. Thus,
energy segment is showing signs of greater traction thereby ensuring
diversified earnings for the company.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> Also company has set up a Furfuryl
Alcohol plant in Bhasaur, Dhuri dist. Sangrur (Punjab), at a total cost of Rs.
7 Cr. The commercial production of this Furfuryl Alcohol is expected to start
shortly. On financial side the consolidated revenue for the 2nd quarter stood
at Rs. 732.98 Cr from Rs. 918.76 Cr, when compared with the prior year period.
During the 2nd quarter, net profit increased by 13.78 % to Rs. 98.41 Cr from
Rs. 86.49 Cr in the corresponding quarter ending of previous year. During the
quarter, EBIDTA stood at Rs. 153.06 Cr as against Rs. 140.18 Cr in the
corresponding period of the previous year. During the quarter, PBT stood at Rs.
124.91 Cr as against Rs. 116.91 Cr in the corresponding period of the previous
year. EPS of the company stood at Rs. 4.18 in Q2 FY17 against Rs. 3.67 in Q2
FY16. For 6 month period of FY17, net profit of KRBL stood at Rs. 178.82 Cr as
compared to Rs. 166.65 Cr for the 6 month period of previous financial year. In
H1 FY17, Net sales stood at Rs. 1533.32 Cr as against to Rs. 1941.71 Cr in H1
FY16. Operating Profit & PAT of the company are expected to grow at a CAGR
of 11 % and 14 % over 2015 to 2018E, respectively. KRBL’s Current ratio points
to soundness of health of the company in terms of its ability to meet its short
term financial obligation. Growth trend is likely to remain up on the back of
constant rise in demand, about 29.5 % likely fall in sowing of basmati seeds
which may result into fall in production and corresponding rise in price,
growing Basmati rice consumption demand in Middle East, Persian Gulf, Africa,
US and Europe. KRBL, with the help of its subsidiaries and with the highest
rice milling capacities, is well placed to capitalize on growing demand. Amidst
growing demand of basmati rice as staple diet-domestically as well as globally,
KRBL with the credibility of being the largest player in domestic and export
markets and with highest milling capacities is well placed to boost its revenue
growth. KRBL enjoys great brand recall, on the back of quality basmati rice and
years of experience at industry place which result into its products attracting
premium price. Given the backdrop of rising demand for branded basmati rice
globally and domestically with wide network of distribution, KRBL is better
placed to capitalize on opportunities. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 377.25, the stock is trading at a PE of 22.78 x FY17E and 20.31 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 16.56 in FY17E and Rs. 18.57 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16 </span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 3,159.69</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3,428.13</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3,085.31</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3,239.58</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">321.73</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">337.06</span></td><td>389.90</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">437.17</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 13.67</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.32</span></td><td>16.56</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.57</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>21.72</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.73</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.92</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.98</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.27</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.54</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.94</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.89</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.16</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.74</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 24.29</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 20.76</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">19.73</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.41</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.43</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.75</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.03</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">27.28</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> KRBL LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><br /></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-7135798757668848242017-02-03T05:54:00.000+05:302017-02-03T00:58:14.075+05:30NILKAMAL LTD: CREATING WEALTH !!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPS32ZzKJsT14suLn6r0xNcwsGA7cYFaA2jYWKe_Jr1zHN8uPLHZyOtjX4k08UzllfGFnqF-o2mABt19u5Q2SokonUPmlSWpGJ8Y_epWETKhe0CeC1nsxG0h3zf0nqJBX9OvMrnfXyRaas/s1600/Nilkamal_Plastics_logo.svg.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPS32ZzKJsT14suLn6r0xNcwsGA7cYFaA2jYWKe_Jr1zHN8uPLHZyOtjX4k08UzllfGFnqF-o2mABt19u5Q2SokonUPmlSWpGJ8Y_epWETKhe0CeC1nsxG0h3zf0nqJBX9OvMrnfXyRaas/s320/Nilkamal_Plastics_logo.svg.png" width="320" /></a></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=523385">523385</a> /</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=NILKAMAL&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">NILKAMAL</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 1,685.15; Market
Cap: Rs. 2,514.66 Cr; 52 Week High/Low: Rs. 1,841.90 / Rs. 885.00.</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 1,49,22,525 shares;
Promoters : 95,70,007 shares –64.13 %; Total Public holding : 53,52,518 shares
– 35.87 %; <span class="apple-style-span">Book Value: Rs. 392.01; Face
Value: Rs. 10.00; EPS: Rs. 79.67; Dividend: 70.00 %; P/E: 21.15 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 37.93;
EV/EBITDA: 29.61.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 105 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 2,612.36 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">NILKAMAL LIMITED: </span></b><span style="line-height: 150%;"><span style="color: #38761d;">The Company was </span><span style="background: white; color: #38761d;">founded in 1934 and is headquartered in Mumbai, India.</span><span style="color: #38761d;"> The
company was earlier know as Creamer Plastic Ltd and changed its name to
Nilkamal Plastics Ltd on August 23, 1990. </span><span style="background: white; color: #38761d;">Nilkamal
Limited, together with its subsidiaries, manufactures and sells injection
molded plastic articles and polymers primarily in India. It operates in
Plastics; Lifestyle Furniture, Furnishings and Accessories; and Others
segments. Nilkamal Plastics Ltd came with an IPO on February 1991 with issue of
18,00,000 shares of Face value of Rs. 10 each at par. The company offers
various material handling products, including crates, pallets, metal shelving
and racking products, material handling equipment, hospitality products, golf
cart & resort vehicles, tool storage cabinets, ice boxes, fish tubs,
vaccine carriers, road safety products, plastic formwork products, waste
management tools, PE manhole products, and cold storage solutions. It also
provides premier chairs, baby chairs, chair shells, dining tables, stools,
racks, trolleys, school benches, sofa sets, tables, wall units, TV trolleys,
cabinets and cupboards, drawers, bedroom sets, metal beds, wooden wardrobes,
crystal chairs, office tables and chairs, computer tables, junior study sets,
and planters. The company also offers its products to automobile,
pharmaceutical, engineering, electrical, logistics, textiles, supermarkets,
electronics, retail, food and beverages, agriculture, seafood, hospitality and
catering, and other allied business. In addition, the company manufactures and
sells mattresses; provides storage systems of metal and mass housings; and
operates 19 retail stores in 13 cities under the @home brand. The company also
exports its products to Middle East, Europe & America. Company’s s</span><span style="color: #38761d;">ubsidiary
includes Nilkamal Eswaran Plastic Pvt. Ltd (Sri Lanka) whereby Nilkamal holds 76
%; this company is a leading manufacturer of moulded furniture in Sri Lanka. Another
such subsidiary is Nilkamal Crates & Bins FZE (UAE), this a wholly owned
subsidiary, which manufactures and exports plastic containers, pallets, parts
bins, waste bins, ice boxes, metal wire cage and hand pallet trucks. Nilkamal
has two Joint Ventures Nilkamal BITO Storage Systems Pvt. Ltd with 50 % JV, an
Indo German JV, this is into manufacturing and selling of metal storage
systems. The second JV is Cambro Nilkamal Pvt Ltd: 50 % JV which is into
manufacturing of hospitality products suited for large restaurants and hotels. The
company is locally compared with </span><span style="color: #bf9000;">Peacock Industries, Supreme Ind, Sintex, Wim Plast Ltd</span><span style="color: #38761d;"> and Globally
compared with </span><span style="color: #bf9000;">Hume Industries Bhd of Malaysia, Teems Inc of South Korea, Duc
Thanh Wood Processing JSC of Vietnam, LenCheong Holding Berhad of Malaysia,
Crown Holding of USA, AEP Ind from USA, AptarGroup of USA, Avery Dennison Corp
of USA, Ball Corporation of USA, Berry Plastics Group Inc of USA, The Pack Corp
of Tokyo, Nampak Ltd of South Africa, Mpact Ltd of South Africa, Polyplex Pcl
of Thailand, Billerudkorsnas Ab of Sweden, British Polythene Ind of UK, DS
Smith Plc of UK, Huhtamaki Oyj of Finland, Resilux NV from Netherlands</span><span style="color: #38761d;">.<o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"><o:p></o:p></span></span></div>
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<span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Nilkamal Ltd is one amongst the world's
largest manufacturer of moulded furniture and India's leading manufacturer of
Material Handling Systems. Company is also a pioneer in the home retailing
segment. Company is spread across the country with 16 large format retail
stores with an average of 25,000sq.ft. Per. Company is well positioned as a
Home Maker store and is a perfect one-stop solution store for home planning,
with finest quality furniture, soft furnishing, home accessories and a plethora
of a whole lot of Services to enhance customers indoor and outdoor spaces. The
design of the products of this company is contemporary yet practical, mirroring
Indian taste & finesse. The comprehensive product mix right from bins,
crates, pallets to Material Handling Equipment ranging from Pallet Trucks to
Stackers, Forklifts, shelving and racking plus which are the equipment’s
required for the rapid growing logistics industry. Product quality of Nilkamal
is widely accepted, nationally & internationally and has an office in
Ajman, UAE to cater to the Middle Eastern Markets. It also exports to most
major markets in Europe and Americas which are known for being sticklers for
quality. It has consistently won prestigious export awards and is now an Export
House. The Company has advanced machinery in Injection Moulding, Rotational
Moulding, Vaccum Forming, Polyurethane Injection (of insulation) and
capabilities for SMC and Blow Moulding. Occupying a massive total constructed
area of 11, 33,738 sq ft. All of Nilkamal’s manufacturing plants are ISO 9001
& 2008 Certified and practices 6 Sigma manufacturing process and the
extensive manufacturing infrastructure is ably supported by their wide and
strong sales network, operating through 50 Regional Offices and 77 Warehouses
spread across the India. All the plants, warehouses and offices are connected
to the Head Office in real time by ERP, SAP-R3. As far as Moulded Furniture is
concerned, Nilkamal is a recognized name in the industry with a market share of
39 % amongst organized players. The demand for moulded plastic furniture is
expected to improve owing to its cost effective nature vis-à-vis traditional
wooden furniture. Plastic products have application in various industries as
well as in households. Nilkamal is in the process of
augmenting its range of differentiated products in the ‘Premium Monoblock’ segment,
which has registered a growth of 21 % over the last year. The Hybrid chairs
combining metal and plastic introduced in the last two financial years has also
registered a robust growth of 35 % on a year-on-year basis. The metal line
facility actioned at Hosur two years back is consistently producing series of
Contract Chairs with a combination of fabric & PVC with steel thereby
delivering a unique buying position for the consumer as well as for architects.
The year gone by has also seen an addition of innovative niche products
in the plastic storage domain. The visibility equation of traded products has
been accelerated with the help of 23 “Nilkamal Home Ideas” Stores ranging from
4,000- 8,000 sq.ft. at various 2 & 3 tier cities. Apart from the
"Nilkamal Home Ideas” Stores, the Company also has a strong network of 40
plus depots and 1,000 plus channel partners on a pan India basis as well as 10
DODOs across various regions, who are in a way a one-stop furniture-solution
provider, to their current base of approximately 6 Cr satisfied households of moulded
furniture. The strong network has helped the penetration of the traded segment
to the remotest rural market thus enhancing our ability to manage complex supply
chain equations. The Company has also registered a
fine presence in Modern Trade segment and also entered into business partnership
with various E-Commerce portals to improve the sale of various value added products.
In the long run the company remains bullish on the prospect of Furniture
business based on a good. DP growth which would unfold a lot of opportunities
for exponential growth, as the growing middle class would need quality furniture
from reliable manufacturers to meet their aspirations of modern living. The
rising labour costs coupled with time poverty for the working middle class
consumers, softening of interest rates and implementation of GST in the near
future are also positive triggers for this change. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">The pan India penetration
and the Company’s strength of servicing customers at arm’s length through
depots in major cities would definitely augment their leadership strength and
help the division grow at the rate of 12 % to 15 % in revenue terms. Mattress
Division During the financial year 2015-16, the division
achieved revenue of Rs. 29.80 Cr. In large metros and Tier 1 & 2 cities,
this growth is expected to be higher in the coming years as it becomes
difficult to find people who provide customized mattresses. The organized companies
are developing budget mattresses to address the need of low cost mattresses for
value seekers. This should further put pressure on the unorganized trade,
especially in large cities. The Company has also recently introduced low
cost mattresses by carrying out value engineering to address the budget buyers’
needs. In the last financial year Company has rationalized prices, product
offerings and sharply focused on applications of each product to strengthen
market share. At the cost of small drop in sales the bottom line has improved. The
Company has introduced several unique products, which have found good
acceptance in the market. With the focus on sales, distribution and marketing,
the Company envisages better growth in the next year. The Company has decided
to focus on market nearer to the manufacturing base in south and east to
control freight cost. The Company’s distribution network and brand name is well
suited for marketing this product. Mattress requires high consultative selling;
the dealer has a very high influence on converting the customer to any brand.
Reaching out to such dealers, training them on the features of each of the
mattress and ensuring high quality of reiteration to the customer is a challenge.
First time branded mattress buyers are extremely price sensitive and seeks
value. Un-organized players still dominate the industry, evade statutory levies
and taxes. The mattress industry has a low entry barrier therefore competition
will continue to come up in various markets from time-to-time. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">However, they
are restricted to their local markets. Hotels, Hospitals and Hostels prefer high
performance, high quality branded mattress with flame retardant, Anti –
Bacterial fabrics. Wellness is gaining popularity among the large urban
population, it is a question of marketing a mattress in the true light and its importance
of wellness, since people use a mattress for 8 hours of the day Lifestyle
Furniture, Furnishing and Accessories Division. In the
financial year 2015-16, apart from the @home portal, the company has also
entered into business partnerships with other leading e-commerce portals. This
year, the Institutional sales channel has registered 30 % growth over the last
year. @home has also improvised its supply chain management with the
introduction of ARS (auto replenishment system). ARS has helped the division to
improve its inventory turnover and streamline its display. The year also
witnessed the streamlining of pricing and display mechanism at the operational
level. @home had also started its outsourced captive unit for furniture to
innovate more in terms of product offering and for better inventory management.
The year also witnessed @home’s foray into the Solid Wood furniture segment. Growing
competition from the online players in terms of range, pricing and burgeoning
real-estate rates are areas of concern. Nilkamal has already done a
capex of Rs. 460 Cr & has decided to go slow on @Home brand business and
may even look at divesting its stake, it will focus on its core business.
Nilkamal’s other business segments are also on the verge of a turnaround.
Management has expressed confidence that all negatives like aggressive capex,
moderation in volume and the pressure on margins is factored in its valuation
at present and that likely improvement in volumes and margins and free cash
flow generation can lead to a re-rating of the stock<span style="background: white;">.</span><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">Outlook and Valuation:</span></b><span style="line-height: 150%;"><span style="color: #38761d;"> </span></span></span><br />
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">NILKAMAL was incorporated in 1985, and
is a pioneer in the plastic industry and is credited as the leader amongst the
leading manufacturers of moulded plastic products in India. The company has
three divisions, viz Plastics division which contribute around 82 % of the
revenue, Lifestyle Furniture, & Furnishings and Accessories, Retail
contributes around 12 % of the revenue and Mattress & others contributes 6
% to the Nilkamal’s revenue. The products of these divisions are sold through
the company’s own retail chain “@home”. The company has recently forayed into the
mattress business. The company’s manufacturing plants are located at Barjora and
Hooghly in West Bengal, Hosur in Tamil Nadu, Jammu, Kharadapada and Vasona in
Dadra & Nagar Haveli, Noida in UP, Sinnor in Maharashtra and in Pudducherry.
Nilkamal is a market leader in the Material Handling segment too, backed by its
ability to directly reach a very diverse set of industrial customers through
400+ self-employed sales people & operating from 50+ regional sales offices
which is located across India. The Moulded Furniture segment of the company
enjoys a 39 % market share in its category. Nilkamal has 26 small format stores
along with a strong network of 40+ depots and 1000+ channel partners on a pan
India basis, this not only increases the division’s ability to serve remotest
rural markets but also further augment Nilkamal’s leader ship position in the
near future. Nilkamal enjoys leadership position with a market share of around
32 % and a lead of over two times its closest competitor. While economic growth
leading to higher investments by corporates will lead to higher demand & Nilkamal
is well geared by adding a variety of products in the seating solutions segments
like office chairs, designer chairs etc. for commercial establishment like food
courts, malls etc. to address the raising need of the personal consumption for
plastics furniture the company has set up one stop furniture showroom “Nilkamal
Home Ideas” for all Nilkamal furniture products in the categories of living;
bedrooms; sofas; dining; designer chairs etc. Higher purchasing power backed by
the higher income levels and increased urbanization rising construction
activity in housing segment will continue to boost the growth in mattress
industry. Such scenario leads to increase in spring mattress segment where,
Nilkamal has invested in machinery and marketing strategy for growth. Nilkamal’s
Plastic products are made from polymers such as polyethylene (PE),
polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) which are
processed in numerous ways to achieve the desired shape and design of the
product and so the key raw material used in manufacturing of Nilkamal’s
products are polymers which are derived from crude oil and the Crude oil prices
have corrected from a high of US$115 per bbl in August 2014 to US$ 53 per
barrel currently which makes raw material cost for Nilkaml cheaper. Furthermore
demand for polymers in China has weakened substantially on the back to economic
slowdown. This will translate into marked reduction in raw material prices for
Nilkamal resulting in a strong CAGR in nearer future. Nilkamal is one of the
strong brands in the plastic segment that can be further classified into
material handling commanding market share of around 36 % and moulded furniture category
commanding value market share of 40 %. The company has 1200 distributors and
over 5000 touch points across India. Nilkamal has nine manufacturing units for manufacture
of plastic moulded furniture and material handling solutions. Material handling
and moulded furniture contribute 57 % and 43 % to segment revenues,
respectively. </span><span style="color: #bf9000;">The Indian economy was relatively stable during the fiscal year
2015-16. The country’s gross domestic product (GDP) grew by 7.4 % compared to
7.2 % growth in GDP in 2014-15. The country’s GDP is expected to grow by 7.7 %
during the year. Domestic consumption is expected to be the main driver of the
likely acceleration in economic growth this year. The Plastic Business has
achieved a volume growth of 3 % and value growth of 5 %. During the financial
year 2015-16 it has achieved total turnover of Rs. 1,765.72 Cr as compared to
Rs. 1,695.21 Cr in the previous year. To enhance product offering, this Year
the Nilkamal has widen school furniture and SOHO (small office/home office)
furniture range by adding more than 50 products in this segment. The Company
has reinforced their market presence by adding more Modern Trade outlets,
E-commerce portals and just dial to promote the sales of various value added
products. The Company has rationalized the prices of Mattress and enhanced the
dealer engagement programs to further enhance the market share in South, West
& East. In the current financial year the Company plans to enhance its
range of rubberized coir, foam and spring Mattress which will serve the
comfort, back support for the spine and wellness factors sought by our esteemed
customers. The company is in process to partner with digital Payment/Wallet
companies to further improve customer experience both in Online and Offline
Channel. Nilkamal is optimistic on a revival in demand for material handling
products, going forward, supported by various initiatives (like “Swachh Bharat
Abhiyan”) taken by the newly formed government at the Centre. The long awaited GST
bill has been passed in both the houses of the Parliament and also got the approval
from most of the states and its implementation is expected to be from 1<sup>st</sup>
July 2017. The objective of GST is to end the regime of multiple taxes on goods
and services and bring them under one rate, which would make the pricing of the
products more rational. The system will change from the current production-based
taxation to being consumption-based, which would bring uniformity in taxes across
states and is expected to increase efficiency and compliance in the system. Implementation
of GST would be a game changer for the organized plastic players as it would reduce
the pricing gap between organized and unorganized players and make the organized
players’ pricing equally attractive. Plastic processing industry is highly fragmented
with unorganized players accounted 70 % of total industry size. This would shift
consumer attention and preference towards quality branded products and help to gain
market share from unorganized players. Further, unorganized players are currently
out of the tax purview, thus enjoying lower costs by evading taxes. Post GST implementation,
this is likely to be diminished sharply and the market share of the organized players
would increase significantly. Nilkamal being strong player in organized plastic
sector and would be benefited from GST implementation as it would create incremental
demand for its branded products</span><span style="color: #38761d;">. </span><span class="A0" style="color: #38761d;"><span style="line-height: 150%;">During nine months, Nilkamal’s revenue
grew at 4.8 % to Rs. 1,526.2 Cr in 9MFY17 from Rs. 1,456.8 Cr in 9MFY16. The
plastic segment witnessed a growth of 6.1 % to Rs. 1,370 Cr from Rs. 1,291.7 Cr
same period last year. However, retail segment remained flat with drop of -1.2 %
to Rs. 174.10 Cr in 9MFY17 from Rs. 176.20 Cr in 9MFY16. EBITDA margins
remained flat during the nine month period at 10.4 % and grew at 5.8 % to Rs. 158.70
Cr in 9MFY17 from Rs. 150.10 Cr in 9MFY16. Retail segment EBITDA margins
improved to 4.6 % in 9MFY17 from 2.4 % in 9MFY16. EBITDA grew at a healthy
phase to Rs. 8 Cr in 9MFY17 from Rs. 4.20 Cr in 9MFY16 registering a growth of
91.9 %.</span></span><b style="color: #38761d;"> </b><span class="A0" style="color: #38761d;"><span style="line-height: 150%;">Nilkamal’s revenue during Q3FY17 registered
a double digit growth of 16.4 % YoY at Rs. 528.90 Cr compared to Rs. 454.6 Cr
in Q3FY16. The plastic segment being the major contributor grew at 19.1 % YoY
to Rs. 476.70 Cr mainly on account of the growth in volume and value at 22.0 %
and 19.0 % respectively. </span></span><span style="color: #38761d;">Nilkamal is a pioneer in the plastic industry
and is among the leading manufacturers of moulded furniture. Company has established
a strong brand value over the years in the organized plastic industry, which
accounts 20 % of total plastic industry. The rollout of GST from next financial
year would be a game changer for the industry as it would narrow down the price
differential between organized and unorganized players, thus witness a shift of
consumer attention and preference towards quality and branded products, gaining
market share from unorganized players. Besides, company would be benefited from
lower polymer prices across the globe and would aid to improve its margins and return
ratios. Management has hired consultancies like ATK earney and BCG consulting group
to bring structural changes in Material handling and Furniture segment. As per the
strategy, company would maintain RoE of 20 % for its future business and would bring
back its pricing power. Management expects long term revenue growth of 12-15 % in
next 3-5 years with EBITDA margin in the range of 13-15 %. Management intends to
cap its EBITDA margin, hence any recovery in crude oil prices would not impact its
margins and even company would not pass on any raw material cost benefit to customers.
Further, company would maintain capex of Rs. 25-30 crore annually going ahead, hence
no major capex has lineup. Pick up in domestic economy would also fuel the demand
for its products as its products demand depend on the discretionary spending. Further,
company has maintained healthy balance sheet by paying off the debt and generating
surplus cash flows to fund its working capital requirements. </span></span><span style="color: #38761d;">It is quite optimistic on the company’s
long term growth story and do believe in coming years the company would emerge as
a long term wealth creator for the investors. On valuation front, company is also
attractively traded. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 1685.15, the stock is trading at a PE of 19.14 x FY16E and 17.73 x FY17E respectively. The company can post Earnings per share (EPS) of Rs. 88.00 in FY17E and Rs. 95.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 2,003.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,123.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,315.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,530.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">113.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">131.40</span></td><td>141.80</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">155.10</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 75.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">88.00</span></td><td>95.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">103.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>14.60</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.40</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 18.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 18.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.50</span></td></tr>
</tbody></table>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> NILKAMAL LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-15445569791688715972017-02-02T07:00:00.000+05:302017-02-05T12:13:41.858+05:30UNION BUDGET 2017-18 : HIGHLIGHTS !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiqc5Jxv-XSdzi54DWn9B6nbJluqF8w0IRAUl_aolZzw7DGPzfc9fa0r6BweCm1Z1uv5eYAd5grm44dNpEfflratc6mUl5gxPHyDqn4Q-L_qIIVKOKSnv_JsnXJCkWMAhKWEBIWNFc_U43/s1600/INDIA.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiqc5Jxv-XSdzi54DWn9B6nbJluqF8w0IRAUl_aolZzw7DGPzfc9fa0r6BweCm1Z1uv5eYAd5grm44dNpEfflratc6mUl5gxPHyDqn4Q-L_qIIVKOKSnv_JsnXJCkWMAhKWEBIWNFc_U43/s400/INDIA.png" width="260" /></a></div>
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT </span></b><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">at 7.10 % for FY16 - FY17</span></b></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;"><br />
</span></b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2016 - 17 IS </span><b><span style="color: #bf9000; font-family: "times new roman" , "serif"; font-size: 13.5pt;">₹</span></b><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;"> </span></b><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">Rs. 151,93,000 LAKHS CR</span></b><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;"> </span></b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">AND AT 2011-12 PRICES ITS AT <b>Rs. 121,55,000 LAKHS CR. </b></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">FY17 FISCAL DEFICIT AT Rs. 5,47,000 CR.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span><br />
<span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">FY17 TOTAL SUBSIDES AT Rs. 2,40,000 CR.</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">THE CENTER'S TOTAL REVENUE 2017-18 IS PROJECTED AT </span><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">Rs. 19,11,578 Cr.</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">. </span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">THE CENTER'S EXPENDITURE 2017-18 IS PROJECTED AT</span><span style="font-family: "gabriela"; font-size: 13.5pt;"> </span><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">Rs. 21,46,735 Cr.</span></b><br />
<span style="color: #38761d; font-family: "gabriela"; font-size: 18px;">FY18 NET MARKET LOANS OF Rs. 3,48,000 CR.</span></div>
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<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">INFLOWS (Rs. in Crs) </span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></span></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;">AMOUNT</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">CORPORATE TAX</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela";"> 5,38,744</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">INCOME TAX</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela";"> 4,41,255</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">CUSTOMS DUTY</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela";"> 2,45,000</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">EXCISE DUTY</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> 4,06,900</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">SERVICE TAX</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> 2,75,000</span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">TAX OF UNION TERRITORY </span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela";"> 4,679</span></div>
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<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">GROSS TAX REVENUES</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></span></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> 19,11,578 </span></b></div>
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<b style="color: #bf9000;"><span style="font-family: "gabriela"; font-size: 12pt;">NET TAX REVENUE (Rs. in Crs)</span></b></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> 12,27,000</span></b></div>
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<b style="color: #bf9000;"><span style="font-family: "gabriela"; font-size: 12pt;">STATES SHARE IN TAXES (Rs. in Crs)</span></b></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> 6,75,000</span></b></div>
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<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">NON TAX RECEIPTS (Rs. in Crs) </span></b><b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></b></span></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;">AMOUNT</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">INTEREST RECEIPTS</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #38761d; font-family: "gabriela";"> 19,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">DIVIDENDS & PROFITS</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> 1,42,000 </span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">OTHER NON TAX RECEIPTS</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 1,27,000 </span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> </span><span style="color: #bf9000;"><span style="font-family: "gabriela"; font-size: 12pt;"> <b>TOTAL</b></span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #bf9000; font-family: "gabriela";"><b> 2,88,000</b></span></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoNormalTable"><tbody>
<tr><td style="padding: 2.25pt;"><div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">NON DEBT CAPITAL RECEIPTS (Rs. in Crs) </span></b><b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></b></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #bf9000; font-family: "gabriela";"><b> 84,000</b></span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b style="color: #bf9000;"><span style="font-family: "gabriela"; font-size: 12pt;">DEBT RECEIPT (Rs. in Crs)</span></b></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> 5,47,000 </span></b></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> </span><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> TOTAL CAPITAL RECEIPTS </span></b></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> 6,31,000</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt;">*</span></b><b><span style="font-family: "gabriela"; font-size: 13.5pt;"><span style="color: #38761d;"> </span><i><span style="color: #bf9000;">NATIONAL CALAMITY CONTINGENCY DUTY (NCD) transferred to ncd fund Rs. 10,000 Cr. </span></i></span></b><br />
<b><span style="font-family: "gabriela"; font-size: 13.5pt;"><i><span style="color: #bf9000;"><br />
</span></i></span></b></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoNormalTable"><tbody>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">OUT FLOW (Rs. in Cr)</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #bf9000;"><b><span style="font-family: "gabriela"; font-size: 12pt;">AMOUNT</span></b><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #bf9000; font-family: "gabriela";"><b> </b></span><span style="color: #38761d; font-family: "gabriela"; font-size: 16px;">PENSION</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 1,31,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">RURAL DEVELOPMENT</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 1,29,000</span><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 12pt;"> </span></b></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">DEFENCE</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 2,62,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">SUBSIDIES</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> 2,40,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">TRANSFER TO STATES</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;"> 1,37,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">INTEREST PAYMENTS</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 5,23,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">OTHER GENERAL SERVICES</span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 2,14,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">TRANSPORT</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 1,24,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela"; font-size: 12pt;">HOME AFFAIRS </span><span style="font-family: "gabriela"; font-size: 12pt;"><o:p></o:p></span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 84,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">EDUCATION</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 80,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">ENERGY</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 37,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">URBAN DEVELOPMENT</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 41,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">SOCIAL WELFARE</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 39,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">HEALTH & FAMILY WELFARE</span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 49,000</span></div>
</td></tr>
<tr><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";">AGRICULTURE & ALLIED ACTIVITIES </span></div>
</td><td style="padding: 2.25pt;"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"> 57,000 </span></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<div style="text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;">SOME MORE POINTS FROM BUDGET </span></b></div>
<div style="text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt;"><br />
</span></b></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="font-family: "gabriela"; line-height: 24px;"><span style="color: #38761d;">Govt. committed to achieve Fiscal deficit target of 3.2 % of GDP for FY17-18 followed by fiscal deficit of 3.00 % for 2019. Abolition on plan, non-plan expenditure, focus on capital expenditure which will be 25.4 %.</span><o:p></o:p></span></div>
<div style="line-height: 24px; margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "gabriela";"><span style="color: #38761d;"><br />
</span></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Existing rate of tax for Individuals between Rs. 2.5 lakhs to Rs. 5 lakhs reduced to 5 % from 10 %, all other categories of tax payers in subsequent brackets will get benefit of Rs. 12,500. A simple 1 page return for people with annual income of Rs. 5 lakh other than business income.</span></div>
<div style="line-height: 24px; margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela";"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes to imply additional 10 % surcharge on individual income above Rs. 50 lakh and upto Rs. 1 Cr to make up for Rs. 15,000 Cr loss due to cut in persoanl I-T rate. 15 % surcharge on individual income above Rs. 1 Cr to remain. Proposes to have carry forward of MAT for 15 years. </span><span style="font-family: "gabriela"; line-height: 24px;"><o:p></o:p></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #bf9000; font-family: "gabriela"; line-height: 24px;"><b>Out of 13.14 lakh registered companies - only 5.97 lakh companies have filed returns for 2016-17. About 3.7 Cr individuals filed tax returns & 99 lakh showed income above 2.5 lakh, and 1.95 Cr individual showed income between Rs. 2.5 lakh to Rs. 5 lakh and out of 76 lakh individual assessees declaring income more than Rs. 5 lakh - 56 lakh are salaried. Only 24 lakh people showed income more than Rs. 10 lakhs. Only 1.72 lakh people showed income of more than Rs. 50 lakh a year but 1.25 Cr cars sold last year, 2 Cr Indians travelled aboard in 2015. </b></span><br />
<span style="color: #bf9000; font-family: "gabriela"; line-height: 24px;"><b><br /></b></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Propose to have NO CASH Transaction of more than Rs. 3 Lakh and a penalty of equal amount to be levied in case of breach. Limits the cash donation by charitable trust to Rs. 2000. Maximum amount of Cash donation for political parties will be Rs. 2000 from any one source but they will be entitled to receive donation by cheque or digital mode from donors. Amendment is proposed for and in RBI ACT whereby a donor can purchase these bonds from banks or post office via cheque or digital transaction, they can be redeemed only by registred political parties. Proposes to have carry forward of MAT for 15 years. And for MSME propose to reduce tax for small companies with turnover of upto Rs. 50 Cr to 25 %, 67 lakh companies fall in this category & 96 % of companies to get this benefit. The Revenue loss of Rs. 20,000 Cr. </span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes to reduce basic customs duty for LNG to 2.5 % from 5 %. Rs. 10,000 Cr has been set aside for Banks recapitalisation, Rs. 64,000 Cr for National Highways, Rs. 10,000 Cr for BharatNet project to expand Broadband coverage. </span><span style="font-family: "gabriela"; line-height: 24px;"><o:p></o:p></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes to finish 1 Cr houses by 2019 for those living in kachcha houses and targets to construct roads which increased it pace to Rs. 133 km/day in 2017. To allocate Rs. 48,000 Cr to MGNREGA and would bring out 1 Cr rural families out of poverty and 100 % rural electricification by 2018. .</span><span style="font-family: "gabriela"; line-height: 24px;"><o:p></o:p></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes to list PSE to foster public accountability with time bound listing, to create integrated public sector oil major. Also proposes to launch new ETF. </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">The shares of Railways PSE like IRCTC would be listed and FIPB will be abolish in 2017-18</span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">. FPI category 1 and 2 investors exempted from indirect transfer provision. GST preparedness of IT system on schedule and not many changes to excise duties since GST will be implemented soon.</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">To prevent evasion of capital gains tax via investment in bogus company, budget proposes long term capital gain tax on shares purchased after 1 OCT 2004, such transaction will be taxed at 10 % longterm capital gain tax if Securities Transaction Tax (STT) is not paid at the time of purchase. </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">.</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes </span><span style="color: #38761d; font-family: "gabriela"; text-indent: -18pt;">to bring out 1 Cr households out of Poverty by 2019. For affoardable housing the Area of 30 Sq.mtr (322.917 Sq.ft.) only in 4 metropolitan city limits and 60 Sq.mtr (645.835 Sq.ft.) for the rest of the country to be counted as Carpet area and NOT built-up area. And affoardable housing proect should be completed in 5 years from 3 years earlier. Tax on Notional rental income for builders to be calculated only after 1 year from the end of the year in which Completion Certificate is received</span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">.</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes to reduce Holding period for Land or building or immovable properties for Capital Gains tax reduced from 3 years to now 2 years. Base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all assets including immovable property. For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed. Capital Gains tax exempted for person holding land from which land was pooled for creation of State capital of Telangana. if land belonging to owners as on 2.6.2014. </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">.</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;"><br />
</span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">Proposes concessional withholding rate of 5 % for interest received by foregin entities on loans given in India to be contiuned for another 3 years beyond June 20, 2017. Startups to get two relaxtation under the scheme of Income tax holiday given last year with the condition that continuous holding of 51 % voting rights to be relaxed as long as the original investment of promoter is not diluted and this exemption is available for 3 years out of any 7 years from the date of establishment instead of 3 years out of 5 years. .</span><span style="font-family: "gabriela"; line-height: 24px;"><o:p></o:p></span></div>
<div style="margin: 0cm 0cm 0.0001pt 36pt; text-indent: -18pt;">
<span style="color: #38761d; font-family: "gabriela"; line-height: 24px;"><br />
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<span style="font-family: "symbol"; line-height: 24px;">®</span><span style="font-size: xx-small;"> </span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px;">In the presumptive Income tax for small traders, income to be taken as 6 % of turnover which is received by digital or banking means</span><span style="color: #38761d; font-family: "gabriela"; line-height: 24px; text-indent: -18pt;">. Cash expenditure allowable to be reduced to Rs. 10,000 from existing Rs. 20,000. The audit limit for business entites opting for presumptive scheme to be increased from Rs. 1 Cr to Rs. 2 Cr. Individual and HUF's not required to keep books of accounts if their turnover is upto Rs. 25 lakhs or income upto Rs. 2.5 lakhs. Professionals in presumptive scheme to pay advance tax only in one installment in March insted of four. TDS of 5 % not to be deducted for individual insurance agents if they certify their income to be below taxable limit.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a> </span></b><br />
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Reader Friends, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !!</b></span></span></span></i></b><br />
<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br />
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<b><span style="font-family: "georgia" , "times new roman" , serif;"><b style="line-height: 18px; text-align: left;"><span style="line-height: 20px;"><i><span style="color: #990000; font-size: large;">*</span><span style="color: #351c75; font-size: medium;">Dear Reader friend, if you enjoyed this article, please do share it with your Friends and Colleagues through Facebook and Twitter, and drop in your valuable thoughts in comment box..</span></i></span></b></span></b><br />
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<b style="background-color: white; line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-71208406673779970802017-01-23T06:38:00.000+05:302017-01-23T01:39:33.824+05:30TITAN COMPANY LTD : SHINE UNFADING !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho4UPzNTF89WL09PRdNDwXcOJpnT4o3WHiQDMrb_-ZpsKuwftrEJ4GI4zqDOQjYWUwX5AVnmc0X-8OGkGaV7zfEPadKriYHnn9BMlC6ejPoCBMBa3YASp9tJqZinB78E9kRp8s7vBpsvr-/s1600/Titan_Company_Logo.svg.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho4UPzNTF89WL09PRdNDwXcOJpnT4o3WHiQDMrb_-ZpsKuwftrEJ4GI4zqDOQjYWUwX5AVnmc0X-8OGkGaV7zfEPadKriYHnn9BMlC6ejPoCBMBa3YASp9tJqZinB78E9kRp8s7vBpsvr-/s320/Titan_Company_Logo.svg.png" width="308" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=500114"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">500114</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=TITAN&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">TITAN</span></b></a></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 360.70; Market Cap: Rs. 32,022.44 Cr; 52 Week High/Low: Rs. 444.50 /
Rs. 296.15.</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 88,77,86,160 shares; Promoters : 47,10,07,920 shares – 53.05 %; Total
Public holding : 41,67,78,240 shares – 46.94 %; <span class="apple-style-span">Book Value: Rs. 39.59; Face Value: Rs. 1.00; EPS: Rs. 8.14;
Dividend: 220.00 % ; P/E: 44.31 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 45.24; EV/EBITDA: 30.28;</span></span></b><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">
Total Debt: Rs. 113.05 Cr;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 32,056.55 Cr.</span></b><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif";"> <o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">TITAN COMPANY LTD: </span></b><span class="apple-converted-space" style="color: #38761d;"><b><span lang="EN-US" style="line-height: 150%;"> </span></b></span><span lang="EN-US" style="color: #38761d;">The Company was founded on
26th July 1984 and is based in Bengaluru, India. Titan was promoted jointly by
Questar Investments Ltd a Tata Company with its associates Tata Sons Ltd and
Tata Press Ltd and the Tamil Nadu Industrial Development Corporation (TIDCO)
with main objective to manufacture analog electonic watches with over 150
designs. The company was earlier known as Titan Watches Ltd and changed its
name to Titan Industries Ltd in 1993 and again in 2013 the company changed its
name to Titan Company Ltd. The Company had declared split in face value of its
shares from Rs. 10 to Rs. 1 on 29 April 2011 and on same date it also declared
bonus in ratio of 1:1. Titan Industries Limited manufactures and retail sale of
watches, jewelry, clocks, and eye wear primarily in India and internationally.
The company provides its watches under</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><b style="color: #38761d;"><i><span lang="EN-US">Titan Edge, Titan Raga, Nebula, Sonata, Xylys, Fastrack</span></i></b><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">brands. It also markets
international brands, such</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><b style="color: #38761d;"><span lang="EN-US">as</span></b><span class="apple-converted-space" style="color: #38761d;"><b><span lang="EN-US" style="line-height: 150%;"> </span></b></span><b style="color: #38761d;"><i><span lang="EN-US">Versace, Seiko, Tommy
Hilfiger, Hugo Boss, Esprit, Raymond Weil, DKNY, Baume & Mercier and
Victorinox</span></i></b><span class="apple-converted-space" style="color: #38761d;"><b><span lang="EN-US" style="line-height: 150%;"> </span></b></span><span lang="EN-US" style="color: #38761d;">under a licensed agreement. It also offers jewelry under the
Tanishq and Goldplus brand names, as well as operates a chain of luxury jewelry
boutiques under the Zoya brand. In addition, the company provides sunglasses
under its Fastrack brand; and prescription eyewear, such as lenses and contact
lenses. It sells frames, sunglasses, and accessories of proprietary brands and
other premium brands, as well as provides optometry services. Further, the
company provides precision engineering components and sub-assemblies, machine
building and automation solutions, tooling solutions, and electronic
sub-assemblies for use various industries, in aerospace, automotive, oil and
gas, engineering, hydraulics, solar, and medical instruments. It operates
approximately</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">1100</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">retail stores across a carpet
area of over</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">1.3</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">million sq. ft. spanning over</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">204</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">towns. The company has over</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">364</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">World of Titan showrooms; over</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">140</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">Fastrack stores;</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">928</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">after-sales-service centers;
It also has approximately</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">145</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">Tanishq boutiques and 2 Zoya
stores; over</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">31</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">Gold Plus stores; and
approximately</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">220</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">Titan Eye+ stores. Titan Company
has more than around</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">7,000</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">employees,</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">two</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">exclusive design studios for watches
and Jewellery,</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span lang="EN-US">10</span></i><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US"><span style="color: #38761d;">manufacturing units all around
India. The company also sells its product through departmental stores such as
Shoppers stop, Central, Westside, Pantaloons & Reliance retail. Titan
Industries Ltd is locally compared with </span><span style="color: #bf9000;">Renaissance
Jewelery, Goldiam International, Atlas Jewellery India Ltd, Winsome Diamonds,
Parekh Platinum, Gitanjali Gems Ltd, Surana Corporation Limited, Shrenuj
& company, Rajesh Exports, Shree Ganesh Jewellary House I Ltd, SBT
& International</span></span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span lang="EN-US" style="color: #38761d;">and
globally compared with</span><span class="apple-converted-space" style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"> </span></span><span style="color: #bf9000;"><span lang="EN-US">Citizen Holdings Co Ltd of Japan, Casio Computer Co Ltd of
Japan, F&A Aqua Holdings INC of Japan, Guess? INC of USA, Rolex of
Switzerland, Omega of Switzerland, Oakley of USA, Timex of USA, Seiko of Japan,
TAG Heuer of Switzerland, Patek Philippe of Switzerland, Swatch Group of Europe</span><span class="apple-converted-space"><span lang="EN-US" style="line-height: 150%;"> </span></span></span><span lang="EN-US" style="color: #38761d;">. </span><b style="color: #38761d;"><span lang="EN-US"> </span></b></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US">Investment
Rationale:</span></b><span lang="EN-US"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTjraApbvuonieZBaQGmqjj5K0c3fD-z-Gi2TAHRv3OzavEtqDcvLrq1ocN13ZFfrUJ5cdIF6SIS3RTb9EbsSYkQ_gZv5hrootIG0ZtOKKqJ3N9DeZ5aHij_aOlZfI3mnrt1zWkM2-e56U/s1600/1471447921-2338.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTjraApbvuonieZBaQGmqjj5K0c3fD-z-Gi2TAHRv3OzavEtqDcvLrq1ocN13ZFfrUJ5cdIF6SIS3RTb9EbsSYkQ_gZv5hrootIG0ZtOKKqJ3N9DeZ5aHij_aOlZfI3mnrt1zWkM2-e56U/s320/1471447921-2338.jpg" width="320" /></a></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Titan Industries
Ltd is the world’s fifth largest integrated watch manufacturer with a market
share of around 65 % in the domestic organised watch market and also enjoys
market share of around 40 % in the organised jewellery retailing market where
the company offers gold and diamond jewellery through its popular brands -
Tanishq, Gold Plus and Zoya. Titan Industries Ltd is the organization
that brought about a paradigm shift in the Indian watch market when it
introduced its futuristic quartz technology, complemented by international
styling. India is the fifth largest retail destination globally and the Indian
retail industry has experienced tremendous growth over the last decade with a
significant shift towards organised retailing format and development taking place
not just in major cities and metros, but also in Tier II and Tier III cities. </span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #bf9000;">The
overall retail market in India is likely to reach Rs. 48 trillion by FY 18. As India’s
retail industry aggressively expands itself, online medium of retail is gaining
more and more acceptance there is a tremendous growth opportunity for retail
companies, both domestic and international. Favourable demographics, increasing
urbanisation, nuclear families, rising affluence amid consumers, growing
preference for branded products and higher aspirations are other factors which drives
retail consumption in India. Both organised and unorganised retail are bound
not only to coexist but also achieve rapid and sustained growth in the coming
years. The Indian retail market, currently estimated at around US$ 490 billion,
is project to grow at a compound annual growth rate of 6 % to reach US$ 865
billion by 2023. Organised retail, which constituted 7 % of total retail in 2011–12,
is estimated to grow at a CAGR of 24 % and attain 10.25 % share of total retail
by 2016–17. India has about 10 lakhs online retailers – small and large – which
sell their products through various ecommerce portals. India remains a largely
untapped and unorganised retail market, with several international retail companies
yet to commence operations in the country. India holds a substantial advantage
over other emerging retail destinations owing to its strong domestic
consumption and low rate of market penetration by overseas retailers. India's
new middle class is increasingly becoming brand conscious and willing to spend
on quality goods, a trend which is creating numerous business opportunities for
mid-range international brands. With political and economic sentiments already
showing signs of improvement, this could be the right time for international retailers
to look at India for expansion into the region. With this growth in the
ecommerce Industry, online retail is estimated to reach US$ 70 billion by 2020
from US$ 0.6 billion in 2011. <span lang="EN-US">According
to the World Gold Council, gold demand rose 15 % in Q3 2015; the council
maintains that demand grew in both the urban and rural segments. </span>The overall long‐term environment remains exciting considering
the Indian consumption story. The 3 aspects of consumption i.e. the demographic
dividend, rising incomes of Indian consumers and growing aspirations of Indians
excites the company. Titan Company participates in
categories that are unorganised, under‐served and under‐penetrated.<b> </b></span><span style="color: #38761d;">Titan always tries to make pro consumer choices for example in the watch
business, the company moved from mechanical watches to quartz watches. Being in
the unorganized sector also has its pros like large opportunity in branded
space, improved quality of competition and category transformation and cons like
non level playing field for organized players and regulations. </span><span lang="EN-US" style="color: #38761d;">Titan derives 80 % of its revenues from Jewellery business. Titan
has 4 % market share in gold Jewellery & 7 % market share in diamond
segment. </span><span style="color: #38761d;">The month
of October witnessed a robust overall growth with Tanishq reporting a growth of
39 % during the festive period. However, following the </span><i><span style="color: #bf9000;">announcement of demonetization on November 8,2017 there was a sharp
decline in sales due to cash crunch and muted sentiments of customers. Since,
large part of estimated around 60 % of Tanishq customers pays through the
digital mode and the profile of the consumer is different from that of
unorganised players, the jewellery division has revived daily sales traction to
pre-demonetisation days i.e. post the festive period. Management indicated that
decline in sales is not as high as 30 % to 40 % post demonetization and sales
are mainly driven by gold exchange schemes. Government policies in the recent
past coupled with the demonetization of Rs. 500 & 1000 notes will bring
structural changes in the industry which augurs well for organised players like
Tanishq. Post demonetization, the cost of doing business for an unorganised
player is likely to get expensive which will result in them passing on the
higher cost to their customer and improve the competitive positioning of
Tanishq. Titan has already reduced its making charges over the past 1-2 years
especially at the lower end which has changed the price perception of Tanishq.
Further, its replacement offer is better when compared to unorganised players</span></i><i style="color: #38761d;">.</i><span style="color: #38761d;">
The management in concall highlighted that the Watches
segment has also been impacted adversely due to the demonetization announcement,
however retail channel sales have revived. Trade channel for watches is still
under pressure with a demand shortfall of 20 % to 30 %. The company expects the
impact of demonetization to stabilise in FY18. Further, it expects to get
benefit from the demand shift from unorganised to organised retail. Tanishq
continues to endeavour to bring in new and exciting designs, thereby enticing
customers to furnish the PAN cards and purchase jewellery. Management believes
that the company could benefit from demonetization with respect to increasing
its franchise network as few unorganised players would shift to Tanishq. Many
jewellers are forced to shut shop due to supply side cash crunch as there’s no
liquidity with vendors. Titan offers its cash strapped vendors’ funding
facilities and hence can carry on with business as usual. Helios has been
largely immune from the impact of demonetisation due to its lower ticket size
and high share of credit/debit card customer’s vs cash paying customers. The Golden
Harvest Scheme (GHS) enrolments have been steady and there has been no impact
on the monthly instalments. Due to a reduction in premium on USD, the gold on
lease option has become as attractive as buying gold on spot. The Industry
sources suggest that the overall jewellery industry in India has declined by 15
% to 20 % in CY16, while Titan’s jewellery revenues have reported a growth of 2
%, indicating an increase in market share during CY16. It is expected that the
government regulations such as compulsory hallmarking, demonetisation/drive
towards cashless transaction and GST to bode well for the organised sector,
accelerating the shift from unorganised to organised retail. Titan has the largest network of after sale service for watches in
India. This is proving to be an advantage as foreign brands entering India are using the network built by Titan. Titan has assiduously positioned itself in the premium designer
jewellery space. Titan has the ability to create significant value with its
large distribution presence, strong brand, designing skills and proven
execution track record. Titan has proved its metal time and again by emerging
strong and successful against various regulatory hurdles that have emerged over
the past one year. With robust balance sheet, strong brand equity and
professional management team in place gives the bullish sentiments on Titan.</span> <span style="color: #38761d;"><o:p></o:p></span></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and
Valuation: <o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixKlSW-XrIGaqzNXr1lwRD0Ze-FXMx68I2RZXxHZ5xAYEPeOEsUjhVYB6Lnk-k3n51J-hT0_NjKldv6lro0JQKYpKjrI6CiqxgyowEab9xBTyv1T-cCWbbUNnqvma9B69PUGUsEBNKrDtQ/s1600/titan.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixKlSW-XrIGaqzNXr1lwRD0Ze-FXMx68I2RZXxHZ5xAYEPeOEsUjhVYB6Lnk-k3n51J-hT0_NjKldv6lro0JQKYpKjrI6CiqxgyowEab9xBTyv1T-cCWbbUNnqvma9B69PUGUsEBNKrDtQ/s400/titan.png" width="400" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d;">Titan</span><span lang="EN-US" style="color: #38761d;">’s success story began in 1984
with a joint venture between the Tata Group and the Tamil Nadu Industrial
Development Corporation. Titan is the fifth largest integrated own brand watch
manufacturer in the world. In addition to ‘Titan’ the watch brand, Titan has
also built ‘Tanishq’ the leading jewellery brand over the past few years. Both
these brands are among the most recognized and loved brands in India. The
company has sold 150 million watches world over and manufactures over 15 million
watches every year.</span><span class="A0"><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;"> Titan is basically a
play on evolving Indian consumerism who aspires for branded products and
recognition. Titan’s business segment majorly focuses on women and youth who
would form the majority of Indian population by 2020. Among its business
segments, majority of revenues are contributed by Tanishq which caters to women
by launching new designs, collection of diamonds and studded jewelery to
attract traditional & working women. Watch business sells products of
international brands and in-house made products designed specifically to youth
and women under brand names of Fast track & raga respectively. Major growth
drivers from the company’s perspective would be the rise in launch of new
innovative products & designer collections, expansion of stores &
building brands. From macro perspective, positive factors would be rise in
discretionary spending, weddings & rise of female economy.</span><span style="color: #bf9000;"> Indian annual
consumer spending is expected to grow at CAGR of 14% and reach $3.5 Tn in 2020.
</span></span></span><span style="color: #bf9000;"><span lang="EN-US">The Average
age of India’s population by 2020 is expected to be 29 years, making India the
world’s largest country having young population. India witnesses approximately
10 million of weddings annually and with gold being integral part of it,
approximately 400 to 500 tons of gold is exchanged during the marriages. Gold
& jewellery approximately accounts for around 40 % of marriage expenses as
the tradition of gifting & wearing gold jewels during marriages is
inculcated strongly in the minds of Indian people. Indian Wedding industry is
worth $38 billion and is expected to grow at a rate of 25 %. Increased spend on
weddings is expected to come from Tier II and III cities which are likely to
see higher disposable incomes and is expected to drive the growth of wedding
industry. </span>In the last
20 years, Indian jewellery demand stood to 575 tons of Gold annually. <span lang="EN-US">India is the largest
market for Gold, contributing 27 % of world’s jewellery demand and 20 % of
total gold demand in 2015; and has high impact on the international Gold market
& prices. </span>Titan is proxy play on Indian evolving consumerism and long term story
despite headwinds in short term<b>. </b></span><span style="color: #38761d;">For Titan, FY16 was
a challenging year for the company. The company’s sales income declined 5.4 %
while net profit declined 14.2 %. The company launched its first smart watch,
‘Titan JUXT’. The initial response was encouraging. The company expects a good
growth opportunity in years to come. The company believes there is an
opportunity for all its brands to introduce technology watches to garner a significant
share in one of the fast growing segments today. Favre Leuba, the heritage
Swiss brand that the company acquired, is being actively worked on for a launch
towards the end of FY17. The product, marketing and distribution strategy is
being worked upon by a newly constituted team largely from Swiss watch industry.
The performance of the jewellery division was dampened on account of various regulations
imposed by the government in FY16. The fourth quarter was tough owing to
regulatory changes like implementation of PAN card rule for purchases above Rs.
2 lakh and industry strike in March 2016 on account of introduction of 1 %
excise duty that was opposed by the jewellery industry. The management believes
the worst has played out on the regulatory and competitive fronts and growth trajectory
for Tanishq will come back in FY17, aided also substantially by the Golden
Harvest Jewellery purchase scheme that is now fully back in place. Despite a
slowdown in retail, the eyewear segment grew 12 % in FY16 over previous year. Over
70 new stores were opened during the year taking the total store count to 402.
Over 300 new products were introduced during the year. In sunglasses, Fastrack
and Titan Glares continued to do well with Fastrack sunglasses selling over
1.10 million pieces during the year.</span><b style="color: #38761d;"> </b><span style="color: #38761d;">During FY07-15,
revenues grew at a CAGR of 26.6 % led by a healthy 31.2 % CAGR in the jewellery
segment. It is expected that the jewellery and watches segment to grow at a
CAGR of 13% and 8%, respectively, in FY16-19E. Jewellery revenues in FY17 are
expected to be buoyed by Gold Harvest Scheme redemption, which was absent in
FY16 due to regulatory changes. In the jewellery segment, Titan plans to add
new products at different price points to capture higher volume growth. The company
is also looking at the online channel as another growth engine to engage with customers
who prefer the convenience of online buying and spend higher time and money on
online purchases. Also, the management is introducing new collections (Zuhur,
Shubham) with exquisite designs to attract customers into buying jewellery. The
domestic performance of the watches segment in Q2FY17 saw an increase of 5 %
YoY growth. However, overall revenue of the watch segment declined 5 % on
account of a decline in exports. Regulatory tightening by the government with
the intention of curbing black money could lead to higher compliance from small
and unorganised players leading to a level playing field for organised players like
Titan resulting in a shift from the unorganised to the organised segment. The company
would be a beneficiary of the shift of demand towards the organised segment.
Considering its strong brand image and pan-India presence, Titan would be able
to double its market share in the Indian jewellery market from the current 5 %.
Titan’s operating margin has fluctuated in the past owing to a changing product
mix and also impact of rupee movement in the watch segment. On a segmental basis,
the gold business has relatively stable margins. The share of studded jewellery
does tend to bring some variation as studded jewellery has 3.0x gross margins
of plain gold jewellery. Also, in Q1FY17, it introduced a lotus themed
collection ‘Niloufer’, which was well received by the market. Strategically,
Titan is focusing on introducing high margin products and enhancing its studded
share, which would enable it to improve its EBITDA margin, going ahead. Titan is relatively lower leveraged and has a maintained a strong cash
balance, which enables it to meet working capital requirements. Despite the
continued growth, Titan has managed to remain debt-free considering the nature
of its business. Even after the change in gold regulations, the company has
very low debt on a net basis. The company has been consistently reporting
return ratios in excess of 25-30 % in the last 10 years.</span><b style="color: #38761d;"> </b><span style="color: #38761d;">Titan has always strived
hard to achieve topline growth. To achieve this, it has launched various brands
across categories and is working hard towards nurturing these brands. It is
also exploring new product categories, which are relatively lower penetrated and
striving further to grows Slower growth in H1FY17 is expected to be compensated by higher growth
in H2FY17 due to strong festive season sales in Q3FY17 and a weak base Q4FY16
(Due to jewellers strike in March 2016). Titan’s management indicated that the
jewellery industry de-grew 30 % in H1FY17 suggesting tough times for the
sector. However, Titan’s performance is commendable considering the tough
regulatory environment curbing revenue growth for the sector with the
management indicting that the company may have gained market share. Also, the government’s
decision to enhance the limit for golden harvest scheme to 35 % of company’s
networth from the earlier mandated 25 % would assist the company’s revenue
growth. The management is continuing with its strategy of aggressive retail expansion
and introduction of newer brands at different price points. The company is also
looking at having higher share of studded jewellery, which would aid in margin
growth in FY18E and FY19E. Titan would be a beneficiary of the shift from unorganised
to organised players owing to its strong brand and pan India retail presence. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 360.70, the stock is trading at a PE of 39.63 x FY17E and 32.79 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 9.10 in FY17E and Rs. 11.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<table border="1" cellpadding="9" cellspacing="0" style="background-color: white; color: #00810f; font-family: georgia, utopia, "palatino linotype", palatino, serif; font-size: 18px; line-height: 24px; text-align: justify;"><tbody>
<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16A</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 11,264.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11,889.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13,520.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15,360.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">705.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">804.00</span></td><td>978.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,172.40</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 8.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.10</span></td><td>11.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>41.10</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">36.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 21.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 21.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.10</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">31.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">32.80</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> TITAN COMPANY LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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<span class="apple-style-span"><b style="background-color: transparent; color: #454545; font-size: 12px; line-height: 18px;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">VIEW THE POWER POINT PRESENTATION ON</span></b><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"></b></span></span></div>
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<span class="apple-style-span"><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><strong id="yiv119040258yui_3_2_0_178_134492229647170" style="font-family: Georgia, serif; font-size: 19px; line-height: 24px;"><a href="http://www.authorstream.com/Presentation/montyuu-1585474-return-capital-employed/" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">RETURN ON CAPITAL</a> </strong></span></span></span></span></b></span></span></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com5tag:blogger.com,1999:blog-8296423824543086164.post-34376541567700990132017-01-21T07:00:00.001+05:302022-03-11T15:18:15.354+05:30BOMBAY STOCK EXCHANGE LTD (BSE LTD) : IPO MUST SUBSCRIBE !!! <div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglx_GmoNSiqsgzhdf40gG647zJgum_49KQKcUmidEmnOJncBL2OnKl8MVM2XMRMZgX-CShSI2lpfbSxlc7oIyTGI30qDZflgvRoRVfvyjZO90KwIJTbsqT2wYd4tDsldjD04eOkDreVtHg/s1600/bse-logo_0small.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="133" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglx_GmoNSiqsgzhdf40gG647zJgum_49KQKcUmidEmnOJncBL2OnKl8MVM2XMRMZgX-CShSI2lpfbSxlc7oIyTGI30qDZflgvRoRVfvyjZO90KwIJTbsqT2wYd4tDsldjD04eOkDreVtHg/s200/bse-logo_0small.jpg" width="200" /></a></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Price Band:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> Rs. 805 - Rs.
806.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b style="font-family: Georgia, "Times New Roman", serif;"><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt;">Retail Discount :
NA .</span></b><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b style="font-family: Georgia, "Times New Roman", serif;"><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Face Value:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> Rs. 2.00.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Minimum Lot Size: 18</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> Shares.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Issue opens on:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> 23rd January
2017, Monday.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Issue closes on:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> 25th January
2017, Wednesday.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Listing Date on:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> 3rd February
2017.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span><br />
<span style="font-family: "gabriela"; font-size: 13.5pt;"><b style="color: black; font-family: "Times New Roman"; font-size: medium;"><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Listing on:</span></b><span style="font-family: "gabriela"; font-size: 13.5pt;"><span style="color: #38761d;"> </span><b><span style="color: #990000;">NSE only</span><span style="color: #38761d;">. </span></b></span></span><b style="font-family: "times new roman";"><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Script Code: </span></b><b style="font-family: gabriela; font-size: 18px;"><span style="color: #990000;"><a href="https://www.nseindia.com/companytracker/cmtracker.jsp?symbol=BSE&cName=cmtracker_nsedef.css" target="_blank">BSE</a></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Total No. of Shares
offered:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> <b>1,54,27,197 </b>shares or 28.26 %.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Employee
Reservation: </span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">NA. </span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">QIB Book:<span class="apple-converted-space"> </span></span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">77,13,598 shares or 50 % of
issue. </span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Non – Institutional
Bidders: </span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">23,14,079 shares or 15 % of issue.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Retail Book: </span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">53,99,518 shares or
35 % of issue.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Equity Shares
outstanding prior Issue:<span class="apple-converted-space"> </span></span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">5,45,88,172 shares.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Equity Shares
outstanding post Issue: </span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">5,45,88,172 shares.</span><span style="font-family: "gabriela"; font-size: 13.5pt;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;">Total Size of the
Issue:</span></b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt;"> Rs.
1,243.43 Crs - Rs. 1,241.89 Cr.</span></div>
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<tr><th><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";"><span style="color: #38761d;">KEY FINANCIALS</span><span style="color: #660000;">*</span><span style="color: #38761d;"> </span></span></span></th><th><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">31 Mar 14</span></span></th><th><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">31 Mar 15</span></span></th><th><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">31 Mar 16</span></span></th><th><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">30 Jun 16</span></span></th></tr>
<tr><td><span style="color: #bf9000;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">Total Income (</span></span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b><span style="font-family: "gabriela";">₹ </span></b></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">Crs)</span></span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">266.79</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">361.14</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">426.54</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">113.02 </span></td></tr>
<tr><td><span style="color: #bf9000;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";"><span style="font-family: "gabriela";">Net Profit (</span></span></span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b><span style="font-family: "gabriela";">₹ </span></b></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">Cr)</span></span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">135.19</span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">129.74</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">122.53</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">41.40</span></td></tr>
<tr><td><span style="color: #bf9000;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">Net Profit Margin (%</span></span><span style="font-family: "georgia" , "times new roman" , serif;">)</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">25.50</span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">20.80</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">18.60</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">23.30</span></td></tr>
<tr><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">EPS (<b><span style="font-family: "gabriela";">₹</span></b>.)</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">12.78</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">11.88</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">11.22</span></td><td><span style="color: #bf9000; font-family: "gabriela";">3.79</span></td></tr>
<tr><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">NAV (<b><span style="font-family: "gabriela";">₹</span></b>.)</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">224.11</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">225.33</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">224.27</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">228.06</span></td></tr>
<tr><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">Net Worth (<b><span style="font-family: "gabriela";">₹</span></b>.)</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">2,370.77</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">2,460.89</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">2,449.28</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">2,490.68</span></td></tr>
<tr><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">ROE (%)</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">5.80</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">5.40</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";"> 5.00</span></td><td><span style="color: #bf9000; font-family: "gabriela";"> 6.70</span></td></tr>
<tr><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">ROCE (%)</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">9.70</span></span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";">8.70</span></span></td><td><span style="color: #bf9000; font-family: "gabriela";">8.20</span></td><td><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "gabriela";"> </span></span><span style="color: #bf9000; font-family: "gabriela";">9.70</span></td></tr>
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<span style="color: #990000; font-family: "gabriela";"><b><i>*Standalone nos. & figures before consolidation of share capital from Re. 1 to Rs.2</i></b></span><span style="font-family: "gabriela";"><span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><span lang="EN-US"></span></span></span><br />
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<b><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;">BOMBAY
STOCK EXCHANGE LIMITED: </span></b><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">BSE was
founded in 1875 and is Asia’s oldest stock exchange and is based in Mumbai,
India. The company was formerly known as Bombay Stock Exchange Limited and
changed its name to BSE Limited on July 2011. BSE Ltd incorporated itself as
company limited by shares from the Association of person on 20th May 2005,
under the demutualization scheme introduced by the market regulator SEBI
(Securities and Exchange Board of India) whereby the 700 odd brokers
shareholders surrendered their membership cards in exchange for the shares,
whereby BSE members were alloted 10,000 Shares of Re.1 each against 1
membership right held. In November 2008, BSE gave handsome bonus in ratio of 12
new shares of Re.1 each for every 1 share of Re.1 held to its members. In 25th
Novemeber 2016 company declared consolidation of Share capital by increasing
the nominal value of Equity shares from Re. 1 per share to Rs. 2 per share. BSE</span><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"> was
the first Exchange in India to be recognized as a Stock Exchange by the
Government of India under the Securities Contracts (Regulation) Act, 1956.<span class="apple-converted-space"> </span><span style="background: white;">BSE
Limited, together with its subsidiaries, provides market platform for trading
in equity, debt instruments, derivatives, and mutual funds in India. It
also offers depository and record-keeping services to the
securities industry that facilitate dematerialization of holding of securities
and book entry settlement, clearing and settlement functions for
trades reported on the debt and mutual fund segments of the company and for the
currency derivatives segment on United Stock Exchange, as well as collateral
management and risk management services for various segments of stock
exchanges. In addition, the company provides education services through BSE
Institute Ltd and IT solutions with focus on equity, stock, commodities,
banking, and financial services markets that include a multi-asset online
collateral management system; a clearing and settlement system for
delivery-based derivatives; real time risk management system with integrated
collateral management system software. Company has two prominent subsidiaries
namely<span class="apple-converted-space"> </span></span></span><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;">Central Depository Services (India) Ltd (CDSL), Indian
Clearing Corporation Ltd (ICCL), Marketplace Technologies Pvt Ltd
(MTPL), BFSI Sector Skill Council of India (BFSI), Marketplace Tech Infra
Services Pvt Ltd, CDSL Ventures Ltd (CVL), Central Insurance Repository Ltd
(CIRL) and lastly BSE Institute Ltd (BIL)</span><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">.</span><span style="font-family: "gabriela"; line-height: 150%;"><o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxUcCIKWIHdM17UqDxBeE6z-2FMVkkyHkyIWi2QO7XfwR8QUPp1qqC2Ao_vEyF59tEynlK5G-7kKjpWiPflLzmAJSx7PyOhQxfXAm0PBfxGHj5J7I2bzRzFR1atD_vODGEzfmWo10Tes9d/s1600/BSE_building_at_Dalal_Street.JPG" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxUcCIKWIHdM17UqDxBeE6z-2FMVkkyHkyIWi2QO7XfwR8QUPp1qqC2Ao_vEyF59tEynlK5G-7kKjpWiPflLzmAJSx7PyOhQxfXAm0PBfxGHj5J7I2bzRzFR1atD_vODGEzfmWo10Tes9d/s400/BSE_building_at_Dalal_Street.JPG" width="400" /></a></div>
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<span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">Company’s product<span class="apple-converted-space"> </span><i>Fastrade
on Web</i><span class="apple-converted-space"> </span>allows investors to
trade online on the company, as well as on NSE; BSE's settlement
software handles settlement pertaining to various segments of the company and
an end-to-end system helps for offer for sale;<span class="apple-converted-space"> </span><i style="color: #38761d;">BSE StAR MF</i>, an online mutual
fund transaction platform; and a platform for trading in equities of
small-and-medium enterprises. In Janaury 9, 2017, BSE inaugarated India's first<span class="apple-converted-space"> </span></span><b><i><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;"><a href="http://www.indiainx.com/" target="_blank">International
Exchange (INX)</a>,<span class="apple-converted-space"> </span></span></i></b><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">in Gujarat's International Financial Services Centre (IFSC)
in Gujarat International Finance Tech (GIFT) City- Gujarat. India INX is a
state-of-the-art facility, which will act as a gateway to raise capital for the
country's infrastructure and development needs, it also provides cross broder
opportunities of investment with a comparatively low cost of transaction in the
world. India INX provides advantages in terms of Tax Structure and supportive
regulatory framework - which includes No Security transaction tax, No commodity
transaction tax, No dividend distribution tax, No long term capital gain tax
and No Income tax for first five years. On February 19, 2013, BSE and
S&P Dow Jones Indices announced an strategic partnership to calculate,
disseminate and license the widely followed suite of BSE indices.
Each of the BSE indices will be co-branded as<span class="apple-converted-space"> </span></span><b><span style="background: white; color: #cc0000; font-family: "gabriela"; line-height: 150%;">"S&P"</span></b><b><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;"> </span></b><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">including the </span><b><span style="background: white; color: #cc0000; font-family: "gabriela"; line-height: 150%;">S&P</span></b><span class="apple-converted-space"><b><span style="background: white; font-family: "gabriela"; line-height: 150%;"> </span></b></span><b><span style="background: white; color: #3d85c6; font-family: "gabriela"; line-height: 150%;">BSE SENSEX</span></b><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">,<span class="apple-converted-space"> </span></span><b><span style="background: white; color: #3d85c6; font-family: "gabriela"; line-height: 150%;">BSE 200,
BSE 100</span></b><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">. BSE Ltd is earliest and second
biggest exchange from 22 stock exchanges in India with more than 5,600 stocks
listed on its platform.</span><span style="color: #38761d; font-family: "gabriela"; line-height: 150%;"> It accounts for over two thirds of
the total trading volume in the country<span style="background: white;">. </span>Approximately
70,000 deals are executed on a daily basis, giving it one of the highest per
hour rates of trading in the world. <span style="background: white;">BSE has
5,672 companies listed which makes BSE first exchange to have most of the
listed companies around the globe and among these there are around 3,500
companies which have a serious trading volume. The combine market value of
these companies is Rs. 99 trillion. This makes BSE 11th largest on planet. </span>The
BSE `Sensex' is a widely used market index and is a value-weighted index
composed of 30 companies with the base of April 1979 = 100. </span><span style="color: #bf9000; font-family: "gabriela"; line-height: 150%;">In
2011, BSE improved its technology & its response time to each trade
improved to 10 milliseconds against 200 milliseconds earlier. As a result it
gained higher order to transaction ratio. The ratio was at 19:1 - means there
were 19 trades against 1 transaction, this was much higher then the benchmark,
this had provide ample liquidity and attracted algorithm trades. BSE in June
2013, bought a technology from Germany's Deutsche Borse to speed up its
execution of trades on its exchange. This new technology helped BSE to execute
1 lakh orders per second as compared to 20,000 order per second currently. This
technology has increased the speed response of BSE systems by 100 times from
the currently around 10 milliseconds to 100 microseconds. At present BSE can
handle 1,00,000 orders a second against 20,000 earlier. </span><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">BSE is compared with </span><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;">MCX</span><span class="apple-converted-space"><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;"> </span></span><span style="background: white; color: #38761d; font-family: "gabriela"; line-height: 150%;">of India<span class="apple-converted-space"> </span>locally
and Globally<span class="apple-converted-space"> </span>it is compared<span class="apple-converted-space"> </span></span><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;">with
Bursa Malaysia Berhad of Malaysia; Singapore Exchange Ltd of Singapore; Japan
Exchange Group Inc of Japan; CME Group Incorporation, NYSE Euronext, Nasdaq OMX
Group Inc.(The) and Intercontinental Exchange Inc of USA. </span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">Valuations:</span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">The
company has fixed the price band at Rs. 805-806 per share. FY16 consolidated
total income increased 5 % YoY to Rs. 658 Cr, PBT before exceptional items was
Rs. 238 Cr and PAT was Rs. 123 Cr. For H1FY17 the consolidated total income
improved to Rs. 383 Cr and PAT came in at Rs. 105 Cr. BSE will sell 24 % in
CDSL in IPO in FY17 which will reduce topline by about Rs. 120 Cr to BSE and
reduction in PAT by Rs. 20 Cr for BSE in FY18. But, Bse will also get
benefitted with no more expenses on Liquidity Enhancement scheme which was
about Rs. 250 Cr and with SEBI now directing BSE not to transfer 25 % of its
profit to settlement gurantee fund will boost bottomline forward. Based
on FY16 annual EPS of Rs. 22.44 (post consolidation of share capital), BSE
issue is priced at P/E of 35.87x on lower band and 35.91x on upper band. This
is at a significant discount to peers like MCX which is trading
at 47 times. BSE has consistently maintained high PAT margin with strong
ROE of 34 %. </span></b><b><span style="color: #990000; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">It is a debt free company</span></b><b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;"> with
consolidated Net-worth at Rs. 2,553 Cr which translates in Book value of Rs.
468 per share. BSE has cash and cash equivalents of Rs. 2,492 Cr which
translates cash per share of Rs. 456.50. For BSE its 85 % of its revenue comes
as trading fees and charges. BSE has a robust cash flows with fantastic return ratios.</span></b><br />
<b style="color: #38761d; font-family: georgia, "times new roman", serif;"><br /></b>
<b style="color: #38761d; font-family: georgia, "times new roman", serif;">Comparisons with Industry globally as on 20 Jan 2017</b><span style="font-family: "gabriela"; font-size: 10pt;"> </span></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">Exchange</span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">Currency</span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">Price</span></b></div>
</td>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">O/S Shares (Cr) </span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">MarketCap (Cr)</span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">Basic EPS </span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">NAV</span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">P/E</span></b></div>
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<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">RONW(%)</span></b><b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">BSE</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">INR </span></b><b><span style="color: #bf9000; font-family: "times new roman" , "serif"; font-size: 10pt; line-height: 115%;">₹</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">806</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">5.458</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">64.52</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">22.44</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">468</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">35.91</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #bf9000; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">9.70</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">MCX</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">INR </span></b><b><span style="color: #38761d; font-family: "times new roman" , "serif"; font-size: 10pt; line-height: 115%;">₹</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">1193.15</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">5.10</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">89.41</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">25.79</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">272.92</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">46.31</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>3.50</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">CME Grp</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">US $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">116.66</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">33.67</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>3,929</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>4.29</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">61.07</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">27.21</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>6.01</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">ICE</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">US $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>57.40</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">11.344</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>3,425</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>2.44</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>25.06</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>23.49</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>9.38</b></span></span></div>
</td></tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">ASX</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">AUD $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>48.99</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">19.35</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>948</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>2.20</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>19.59</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>22.23</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>11.24</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">NZX</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">NZD $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">1.06</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">26.83</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">28.441</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">0.03</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">0.29</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>30.42</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>37.52</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">LSG</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">GBP</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>3,018.38</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>0.35</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>1,057</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">0.68</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>790.15</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>44.26</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>9.85</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">SGX</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">SGD $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>7.53</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">107.17</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>807</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">0.31</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">0.93</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">24.30</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>35.51</b></span></span></div>
</td>
</tr>
<tr>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">HongKong Exg </span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">HKD $</span></b><span style="font-family: "gabriela"; font-size: 10pt; line-height: 115%;"><o:p></o:p></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">185.50</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<b><span style="color: #38761d; font-family: "gabriela"; font-size: 10pt; line-height: 115%;">122.43</span></b></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>22,711</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>4.99</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>25.34</b></span></span></div>
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<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>37.18</b></span></span></div>
</td>
<td style="padding: 3.75pt;"><div class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">
<span style="color: #38761d; font-family: "gabriela";"><span style="font-size: 13.3333px;"><b>31.15</b></span></span></div>
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<span style="color: #38761d; font-family: "gabriela"; font-weight: bold; line-height: 150%;"><b><span style="color: #38761d; font-family: "gabriela"; font-size: 13.5pt; line-height: 27px;">Outlook and My views on IPO:</span></b></span><br />
<span style="color: #38761d; font-family: "gabriela"; font-weight: bold; line-height: 150%;">According
to me one should look for subscribing for BSE IPO as it enjoys to be in the
oligopoly nature, high operating leverage, robust cash flow and is in business which has </span><span style="color: #bf9000; font-family: "gabriela"; font-weight: bold; line-height: 150%;">high entry barrier</span><span style="color: #38761d; font-family: "gabriela"; font-weight: bold; line-height: 150%;">. BSE will be
second listed company after MCX - the National stock Exchange of India is
unlisted. Most of the BSE's revenue comes from retail traders. About 10 %
of revenue comes from Institutions, about 25 % from Algorithmic trading and the
rest comes from Retail traders. 85 % of its revenue coming from rating business
which earns better margins is thus being offered to public at very attractive
valuation. BSE has a market share of 39 % in the currency derivates segment and 14 % in equity cash segment whereas NSE remains the leader with market share of 56 % and 86 % respectively. BSE distributes 85 % of its profit as dividend and plans to continue with high dividend in future, BSE has filed IPO for its subsidiary CDSL and would be dilute 26 % stake in the IPO. The Information and data services of BSE contributes 4 % to 5 % as compared to 10 % to 25 % in other economies. They gre at 14 % CAGR over 5 years, for BSE there is ample of scope and should grow annually by atleast 15 %. Revenues from Index services can grow if it is expanded its offering beyond equities and hence revenue from Index Services should grow at 15-20 % over the next 5 years (as per DRHP). </span><i style="font-weight: bold;"><span style="background: white; color: #bf9000; font-family: "gabriela"; line-height: 150%;">The best way to participate in the growth of a
nation is to own a piece of its stock exchange, because the best and most
profitable commercial ideas eventually become publically listed companies.
Exchanges in India are still in development phase and has ample headroom for
growth in retail participation. Equity as percentage of financial savings in
India ia at a remarkably low level of 5 % in contrast with 14 % in China, 15 %
in Brazil, 20 % in Indonesia and 42 % in USA. This will increase as goverment
is mulling to boost equity investment in India via allowing EPFO to invest in
equity, new products like REITs. India is a fantastically diverse country with
an unrivalled entrepreneurial culture. Listing on the BSE, which hosts more
than 5,300 companies than any exchange in Asia, provides the capital to empower
those businesses to expand. </span></i><b><i><span style="color: #bf9000; font-family: "gabriela"; font-size: 13.5pt; line-height: 150%;">Exchanges
are almost the perfect business models with limited competition, high operating
leverage and robust cash flows. Stock exchanges in particular have strong
correlation to underlying economic activity. In India only two exchanges
accounts for nearly 99 % market share in equities trading. Across a number of
macroeconomic and broad market factors the Indian capital markets are at a
“multiyear to multi decade low”. Stock exchanges would benefit substantially
from the anticipated improvement in overall economic activity there by leading
to high earnings growth over the next few years. NSE the Unlisted and BSE also
Unlisted along with the MCX-SX which is also unlisted but directly related to
MCX will be one of the best investments to play the impending recovery in
economy and capital markets. India is already seeing initial signs of volume
recovery with last two months & cash market volumes are up 100 % YoY.
At current levels the velocity is in-line with eight year average of 60 %.
Moreover with a number of new products having high potential (such as Interest
Rate Derivatives, Corporate Debt, Volatility Index) in their nascent stages,
exchanges would have robust volume growth over the medium term. </span></i></b></div>
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<br /></div>
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<b><span style="font-family: "georgia" , "times new roman" , serif; line-height: 18pt;"><span style="color: #38761d; font-family: "gabriela";">Globally, Exchanges trends to trade
at average of 5 times their book value and at 18-20 times their earnings. Indian
stock exchanges are comparable to their Asian peers than their western peers.
Western market exchanges are not vertically integrated (Depository and Clearing
Corporation not part of the exchange) and hence do not have the float income
enjoyed by vertically integrated exchanges. Emerging market Asian exchanges
such a Hong Kong stock Exchange and SGX trade at 25x 1 year forward P/E
& 13x EV/EBITDA. It can be safely assumed that NSE could command
similar valuation given its market leadership, track record in launching new
products and potential for growth. BSE is at a cusp of a turn-around, with the
all the ingredients such as focus on increasing market shares in various
segments, innovation, technology, infrastructure and management in place. It
can be noted that a small shift in market share is adequate for BSE to have
sharp increase in earnings. The Top 5 subsidiaries of BSE which are CDSL- 50.1 %; ICCL-100 %; Marketplace Technologies-100 %; CDSL Venture- 100 %; BSE Institute-100 %, and all are profitable. At the IPO price of Rs. 806, BSE will have
Market cap of Rs. 4,399.80 Cr </span></span><i><span style="color: #bf9000; font-family: "gabriela";">(5,45,88,172 shares x Rs. 806) </span></i><span style="color: #38761d; font-family: "gabriela";">which means a P/E of 35.87 times for
FY16 and P/E of 21 times for FY17E. BSE to have enterprise value of Rs. 1,907
Cr at upper price band of Rs. 806. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; line-height: 18pt;"><span style="color: #bf9000; font-family: "gabriela";">Thus, on valuation excluding cash
& value of CDSL holding BSE's stock exchange business is available at
Rs. 1,100 Cr which is attractive pricing & with new business coming up
in<span class="apple-converted-space"> </span><a href="http://www.indiainx.com/markets/getquotecurrency.aspx?Scripcode=1200508" target="_blank">INDIAINX</a><span class="apple-converted-space"> </span>in gift city strong fundamentals with
good institutional holdings the Long term investors should look into
subscribing the IPO for good opportunity. Short term investor can subscribe for
listing gains.</span></span></b></div>
<div style="line-height: 150%; margin: 0cm 0cm 0.0001pt;">
<b><span style="color: #bf9000; font-family: "gabriela";"><br />
*</span><span style="line-height: normal; text-align: left;"><span style="color: #990000; font-family: "gabriela";">As the author of this blog I
disclose that I do hold BSE LIMITED at pre ipo in my investment portfolio.</span></span></b></div>
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<b><span style="line-height: normal; text-align: left;"><span style="color: #990000; font-family: "gabriela";">
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<b><i><span style="color: #990000; font-family: "gabriela"; font-size: 14pt;">*</span></i></b><b><i><span style="color: #bf9000; font-family: "gabriela"; font-size: 14pt;"> </span></i></b><b><span style="color: #bf9000; font-family: "gabriela"; font-size: 14pt;">READ
PREVIOUS POSTS ON BSE - <a href="http://bhavikkshah.blogspot.com/search/label/BSE"><span style="color: blue;">CLICKHERE</span></a></span></b><b><span style="font-family: "gabriela"; font-size: 14pt;"><o:p></o:p></span></b></div>
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<b style="background-color: white; font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="background-color: white; font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b></div>
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<div style="background-color: white; font-family: "times new roman";">
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
<div style="background-color: white; font-family: "times new roman";">
<br />
<div>
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
<div style="background-color: white;">
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><br /></i></b></span></span></span></span></b></div>
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><br /></i></b></span></span></span></span></b></div>
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"></b></span></span></span></span></b></div>
<h1>
<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
</div>
<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
<div style="line-height: 20px;">
<div style="margin: 0px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>---------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<br /></div>
<div style="background-color: white; font-family: "times new roman";">
<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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<span class="apple-style-span"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px;"><br /></b></span></div>
<div style="background-color: white;">
<div style="font-family: Arial, Helvetica, sans-serif; font-size: 19px; line-height: 20px;">
<span class="apple-style-span"><b style="background-color: transparent; color: #454545; font-size: 12px; line-height: 18px;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">VIEW THE POWER POINT PRESENTATION ON</span></b><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"></b></span></span></div>
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<span class="apple-style-span"><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><strong id="yiv119040258yui_3_2_0_178_134492229647170" style="font-family: Georgia, serif; font-size: 19px; line-height: 24px;"><a href="http://www.authorstream.com/Presentation/montyuu-1585474-return-capital-employed/" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">RETURN ON CAPITAL</a> </strong></span></span></span></span></b></span></span><br />
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com5tag:blogger.com,1999:blog-8296423824543086164.post-79938034036471805422017-01-13T05:35:00.000+05:302017-01-13T00:06:01.630+05:30ADITYA BIRLA FASHION AND RETAIL LTD: RETAILING WAY !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfcs-hCXUBkQ6VfXo4w1arX9vLmIAre9mEcfPU4VkMU34e8IUl-v0_om_QNDKE-BKSbwczjPaJiHSUj3KKSJL3r8mEbnD10XAR9bokQE7DiyUF9QNgFgnXFwBxXH9nE_mNtpq6vjYUz-9u/s1600/ABFRL_med-logo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfcs-hCXUBkQ6VfXo4w1arX9vLmIAre9mEcfPU4VkMU34e8IUl-v0_om_QNDKE-BKSbwczjPaJiHSUj3KKSJL3r8mEbnD10XAR9bokQE7DiyUF9QNgFgnXFwBxXH9nE_mNtpq6vjYUz-9u/s1600/ABFRL_med-logo.jpg" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=535755"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">535755</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=ABFRL&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">ABFRL</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 139.70; Market Cap: Rs. 10,744.23 Cr; 52 Week High/Low: Rs. 246.90 /
Rs. 122.90</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 76,90,93,684 shares; Promoters : 45,71,64,117 shares – 59.44 %; Total Public
holding : 31,19,29,567 shares – 40.56
%; <span class="apple-style-span">Book Value: Rs. 12.22; Face Value: Rs. 10.00;
EPS: Rs. -0.76; Dividend: 00.00 %; P/E: --- times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 88.25;
EV/EBITDA: 28.19x</span></span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 1,849.31;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 12,573.21 Cr.</span></b><strong><span lang="EN-US" style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">ADITYA BIRLA
FASHION AND RETAIL LIMITED:</span></b><span lang="EN-US" style="background: white; color: #38761d;"> The Company was </span><span style="color: #38761d;">incorporated in April
19,2007, as Peter England Fashion and Retail Ltd and changed its name to
Pantaloons Fashion & Retail Limited on April 23, 2013. Then it changed its
name to </span><span lang="EN-US" style="background: white;"><span style="color: #38761d;">Aditya Birla Fashion and Retail Limited. ABFRL is a fashion
and lifestyle company. The Company is engaged in providing branded fashion
apparels and accessories, and the retail sale of clothing, footwear and leather
articles in stores. It operates through two segments: Madura Fashion &
Lifestyle, and Pantaloons. Its Madura Fashion & Lifestyle segment is
engaged in manufacturing and distribution of branded fashion apparel and
accessories, and comprises over 1,800 exclusive brand outlets (EBOs) and
approximately 150 value stores. Its Pantaloons segment is engaged in retailing
of apparel and accessories, and comprises over 160 stores, including one
Pantaloons Kids store and approximately 30 Factory Outlets. The Pantaloons
segment has a diversified customer base with men, women, kids and non-apparels.
The Company's brands include Louis Philippe, Van Heusen, Allen Solly and Peter
England. ABFRL is locally compared with </span><span style="color: #bf9000;">Brandhouse Retail Ltd, Trent Ltd,
V-Mart Retail Ltd, Thomas Scott India Ltd, Bombay Swadeshi Stores Ltd, Future
Enterprise, V2Retail Ltd, Himatsingka Seide Ltd</span><span style="color: #38761d;">, and globally compared with
</span><span style="color: #bf9000;">Christian Dior of France, Nike of USA, Inditex (ZARA) of Spain, Cheil
Industries of Korea, TJX Cos of USA, H&M Sweden, Kering (GUCCI) of France,
Adidas of USA, VF (VANS) of USA, L Brands (Victoria secrets) of USA, Ross
Stores of USA, Fast Retailing Japan, GAP of USA, Hermes International of
France, Nordstrom of USA, PVH (Tommy Hilfiger) of USA, Burberry Group of UK</span><span style="color: #38761d;">. </span></span><span lang="EN-US" style="color: #38761d;"> </span><span lang="EN-US" style="background: white; color: #38761d;"> </span><span lang="EN-US" style="color: #38761d;"><o:p></o:p></span></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment Rationale:<o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ1OOXEmUbpWEfEX9zIRd5XQdfZKNi24IuQtaHf5aW1BreMbwPGYtQQXUyk_ffKRsWqJYx0hzere_7Bqba89h2ycGAW5qFDtDxVfgZIpjK9I0qbpQ1ZBa7_UNnyb8fwhuToi_72a9UqkSB/s1600/1464174145-1371.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="298" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ1OOXEmUbpWEfEX9zIRd5XQdfZKNi24IuQtaHf5aW1BreMbwPGYtQQXUyk_ffKRsWqJYx0hzere_7Bqba89h2ycGAW5qFDtDxVfgZIpjK9I0qbpQ1ZBa7_UNnyb8fwhuToi_72a9UqkSB/s400/1464174145-1371.jpg" width="400" /></a></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Aditya Birla
Fashion and Retail Limited (ABFRL) have evolved from the amalgamation of the branded
apparel and retail business of the Aditya Birla Group namely Madura Fashion
(Madura) division (from Aditya Birla Nuvo, ABNL) and Pantaloons Fashion and
Retail (PFRL). The consolidated entity is the largest pure fashion player in
India with leading menswear brands (from Madura) and one of India’s largest
big-box fashion retailers in the form of Pantaloons. In 1999 Aditya Birla group
took over Madura Garments, in 2004 it translated itself from wholesale to
retail, in 2006 it expanded its retail network for the brands, in 2007 it
launched The Collective and People brand, in 2013 it acquired Pantaloons in
2015 it consolidated its apparel business. Madura is the owner and perpetual
licensee of prominent brands such as Van Heusen, Louis Philippe, Allen Solly
and Peter England with over 2000 retail stores and over 7000 points of sale, encompassing
a retail footprint of 2.6 mn sq ft. ABFRL also houses <b><i>The Collective</i></b>, a super-premium
retail concept offering high end brands such as Armani Jeans, Versace
Collection, Hugo Boss, McQ Alexander McQueen etc. Pantaloon’s focuses on value
fashion and is now a leading player in women’s wear with 163 stores covering
2.9 mn sq ft over 78 cities across the country. The
merger of Pantaloons with Madura was completed in an all-stock transaction on Jan
9, 2016, with an effective date of 1st April 2015. The merger transaction was
structured through the following route: Mirror demerger of Madura Fashion
division into Pantaloons, Mirror demerger of Madura Lifestyle division (100 % subsidiary
of ABNL) into Pantaloons <i>The subsequent swap ratios were: 26 equity shares of
Pantaloons for every 5 equity shares of ABNL, 7 equity shares of Pantaloons for
every 500 equity shares of Madura Lifestyle, 1 equity share of Pantaloons for
all outstanding preference shares of Madura Lifestyle Post the merger, Pantaloons
was re-named ABFRL and the holding of ABNL in ABFRL declined from 72.6 %. However,
the holding company Aditya Birla Group (ABG) which holds 57.2 % in ABNL retained
majority ownership in ABFRL with a 51.1 % stake in the company</i>. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">The
total size of the Indian retail market is estimated to be USD 600 billion and
has been growing at a CAGR of 7 % over FY10-15. Apparel retail market
constitutes 8 % of India’s retail market and is pegged at USD 45 billion, of
which, only 19 % is organised apparel retail. As per industry estimates, the
entire retail sector is slated to grow at a CAGR of 11 % to USD 1 trillion by
2020, with modern retail outpacing the sector growing at 26 % CAGR to USD 150 billion.
Organised apparel market is slated to grow at 15 % over the next five years.
The key growth drivers for modern retail include favourable demographics,
rising brand awareness leading to a shift to organised, improved
infrastructure, increased penetration of e-commerce. India’s strong demographic
profile is one of the key drivers to accelerated growth in organised formats.
Factors like rising disposable income, increasing urbanisation, changing
lifestyle with greater exposure to global fashion/trends and rise in
discretionary spends are essential for a sustained growth of the organised
sector. The urban population, which accounted for 30 % of the total population
in 2010, is expected to increase to 40 % by 2030. Industry estimates expect
higher per capita spend a + 25 % to 50 % with over 20 Cr nuclear family
households. With growing urban population and increase in number of dual income
nuclear families are expected to result in average annual household income
tripling from US$ 6,393 in 2010 to US$ 18,448 in 2020. The penetration of
modern retail via exclusive brand outlets, multi-brand outlets, departmental
stores and cash & carry formats have exposed Indian consumers to the latest
fashion trends and helped in building brand awareness. It is estimated that
organised retail would contribute 40 % to total apparel retail market by 2020. The
rise of e-commerce has been a boon to retailers allowing them to sell across
the country without incurring the cost of setting up stores. The size of online
retail is pegged at US$ 3.5 billion, with fashion contributing 35 % to the
sales volume mix. By 2020, Indian online retail is expected to grow 13 times to
US$ 45 billion, with proportion of online shoppers amongst internet users
doubling to 40 %. The menswear segment contributes 42 % to the Indian apparel
market and is expected to grow at a CAGR of 9 % to US$ 40 billion by 2023.
While it is currently dominated by categories such as shirts and trousers,
western wear, especially denim market is expected to grow at an astounding 14 %
CAGR fuelling growth in the segment. By comparison, womens wear is relatively
smaller in size contributing 38 %, but is expected to grow at a faster pace of
10 % CAGR to US$ 39 billion by 2023. The growth in this segment is expected to
be driven by a shift to branded apparel and an increased share of western wear.
The kids wear segment is the fastest growing category, estimated to grow at 11 %
CAGR to US$ 22 billion by 2023, driven largely by the luxury and premium categories.
ABFRL has strengthened its portfolio with acquisition
of Pantaloons diversifying from men to women’s and kids wear. It has wide range
of merchandise across all price segments, thereby expanding customer base and
affordability in branded apparel segment. The Company has expanded to boost
portfolio through organic and in-organic route into super premium segments like
Simon Carter and Forever 21. ABFRL has established a global supply chain for
raw materials, strong in-house design and product development capabilities to
cater to the changing perception and taste of the consumers. It has an
extensive reach through multi-channel distribution network of 2,100 retail
stores and >7,000 additional points of sale operating in more than 375 cities/towns
and own e-commerce venture to cater for online sales. ABFRL has presence
in 375 cities with over 7000 points of sale and more than 2000 Exclusive Brand Outlets
(EBOs) and Value Stores, with an overall retail footprint of 5.6 mn sq. ft. The
company is the owner/perpetual brand licensor of leading brands such as Louis
Philippe, Van Heusen, Allen Solly and Peter England. Pantaloons has a strong
portfolio of exclusive brands, contributing to 60 % of total revenues and is
one of the largest value fashion retailers in the country.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> The consolidation of
these two entities has created a formidable player in the brand and fashion
retail space, encompassing offerings across the value chain with an
unparalleled network. Madura is expected to benefit from the stable cash flow
generation of its mature brands and grow through new brand acquisition and
increased penetration. Pantaloons is currently in the final phase of
restructuring and stands to gain from profitable store expansion and uptick in urban
demand. Madura, the brand business of ABFRL traces its origins from Madura
Coats Limited, a readymade garments division of Coats Viyella PLC, UK. Madura
Coats was acquired by the Aditya Birla Group (Indian Rayon Industries) in the
year 2000. ABG also acquired the exclusive brand right/ownership of premium
brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England.
Since the acquisition of Madura Coats and the ownership/licensee of the brands,
the company has grown the premium brands namely Van Heusen, Allen Solly, Louis
Philippe and Peter England to an enviable position. Currently, the four brands
report revenues in excess of Rs 10bn (at MRP) each, far ahead of its
competitors in the brand space. Over the years, the company has acquired brands
across the value chain to provide a diverse offering to its customers. The
Collective is super-premium apparel and accessories retail outfit housing
brands such as Armani Jeans, Versace Collection, Hugo Boss, Vivienne Westwood,
McQ Alexander McQueen, etc. Louis Philippe is a premium menswear brand that
specialises in formals, semi-formals, custom made clothing and accessories,
while Van Heusen offers formal wear, party wear and casual wear ranges for both
men and women. Allen Solly has created a niche for itself by introducing the
concept of “Friday Dressing” to menswear in India and Peter England remains the
largest mid-segment menswear brand in the country. PEOPLE is a fast fashion
brand focusing on international and fusion styles with presence in menswear,
womenswear and kidswear. ABFRL has recently acquired Forever21’s franchise from
DLF brands for a consideration of Rs 1.75bn. This acquisition will help the
company to take advantage of the fast growing women’s apparel segment. Madura’s menswear brands encompass the “premium” and
“bridge to- luxury” categories in both - formal and casual clothing. Pantaloons
has successfully captured the fast growing value and fast fashion segment
providing ABFRL a portfolio of brands across the entire fashion pyramid. While Madura has a superior store network with over
1800 EBOs and 150 value stores covering over 2.8mn sq ft, the merger with
Pantaloons gives it access to a further 146 big box retail stores and 22 factory
outlets. The combined entity has a retail footprint of 5.6 mn sq ft, with
presence in big box format, EBOs and MBOs. With its origins in Kolkata, Pantaloons
has remained strong in the east region of the country, and the contribution
from North and East was 56 % as of Q1FY17. Madura, on the other hand, has over
58 % of its stores located in the South, Central and Western regions of the
country, giving ABFRL a strong pan-India presence. Pantaloons has over 5.5 mn members in their loyalty
programme contributing to 75 % of sales while Madura runs various loyalty
programmes for their brands and has a base of 8.6 mn members contributing to 55
% of sales. The combination of the loyalty programmes will enhance the user
base and can be used by the company to provide a better service to its
customers using big data analytics etc. In a bid to
improve the diversity of offerings from a predominantly menswear brand
portfolio, the company has launched new categories such as kids wear, women’s
western wear, party-wear and accessories. This category extension not only
helps de-risk the brand portfolio, repositioning the division from menswear to
a family outlet, but also provides access to high growth categories such as
womens wear and kids wear. In-line with their category expansion strategy, the
company recently launched innerwear and athleisure wear (clothing designed for
workouts and other athletic activities) in Bangalore, Chennai and Hyderabad
markets, entering the Rs 710 bn innerwear market under their brand Van Heusen.
While mainline brands have grown at a steady 17 %+ CAGR over the past 5 years,
the category has seen some challenges over the past 12 months. Overall growth
has been boosted by associated categories, which have reported a stronger
growth at 37 % CAGR over the past 5 years. Increasing per capita income, and
increasing discretionary spending, and a portfolio of
brands across the entire fashion pyramid makes ABFRL the best in the retail
sector also with its<span lang="EN-US">
complemented presence across the traditional and new distribution platforms
will have huge revenue positive. During the past several years, the company has
invested heavily to further enrich its brands. With a strong foothold in Indian
retail space, possession of some of the well-known brands, ABFRL is an eminent
in Indian Retail sector. </span><span lang="EN-US"> </span><span lang="EN-US"><o:p></o:p></span></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and
Valuation: <o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9pLlLtto9cE4yMAGAX4NXASQtP1td5epqO2solh7Mxf_ml2gIUlAz9vklvivFardMQFS5ir_sY2u54slxMO5YFXcTnC82o5CjyzQQN6vZoNtVWnQEoUNAo_Lu2OuQPJW6ByXSVvNxgc86/s1600/All+brand+F.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="316" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9pLlLtto9cE4yMAGAX4NXASQtP1td5epqO2solh7Mxf_ml2gIUlAz9vklvivFardMQFS5ir_sY2u54slxMO5YFXcTnC82o5CjyzQQN6vZoNtVWnQEoUNAo_Lu2OuQPJW6ByXSVvNxgc86/s400/All+brand+F.png" width="400" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d;">Aditya Birla
Fashion & Retail has extensive reach with a footprint of 5.5 mn square feet
in India and is considered to be India’s No.1 pure fashion Lifestyle Company
having five largest and most admired brands i.e. Louis Philippe, Van Heusen,
Allen Solly, and Peter England & Pantaloons.</span> <span style="color: #38761d;">ABFRL is building an agile design & supply chain
by shifting from 2 seasons to 4 seasons and the company has worked with
internal and external consultants for this transition. The main aim of this
strategy is to stay ahead of the peers in introducing the latest trends in the
market and to aid correction in the inventory levels. With expectations of a
stable macro-economic environment over the next 6-9 months, FY2018 is expected
to be better for the branded apparel players. With a strong presence in the
Men’s and Women’s apparel space, ABFRL to be one of the key beneficiaries of
improving discretionary consumption trend. ABFRL has acquired brand ‘</span><b style="color: #38761d;">Forever 21</b><span style="color: #38761d;">’during July
2016, and also acquired the online and offline rights of this contemporary
women’s fast fashion brand. With ‘Forever 21’ acquisition, ABFRL has created a
strong play in one of the fastest growing segments in the Indian Branded
Apparel market. Also, in early September 2016, ABFRL entered into the men’s
innerwear and athleisure market under the Van Heusen brand in Chennai,
Hyderabad and Bengaluru. The Van Heusen branded men’s innerwear and athleisure
products are available across 400 Multi Brand Outlets (MBO) and ABFRL plans to
launch it pan-India next year. H1FY2017 results include the financials of
‘Forever 21’ which was acquired in Q2FY2017 and also the newly launched Van
Heusen innerwear business. During November 2016, ABFRL signed an exclusive deal
with the UK’s most successful fashion brand, Ted Baker to offer men’s wear,
women’s wear and accessories in India. Ted Baker has more than 500 stores
across Europe, the US, Canada, Australia, China, South Africa and the Middle-East.
ABFRL’s portfolio of brands spans luxury, premium, sub-premium and fast fashion
segments. The addition of Ted Baker will further augment ABRFL’s position in
the affordable luxury space. The company is planning its first Ted Baker store
by the end of FY2017. </span><span style="color: #bf9000;">ABFRL runs three separate models for their Exclusive Brand Outlet’s,
namely, Company-Owned-Company-Operated (COCO), Company-Owned-Franchise-Operated
(COFO) and Franchise-Owned-Franchise- Operated (FOFO). The COCO model forms 30 %
of EBOs, in here the company owns the inventory and also invests in rent and
other capital expenditure to set up the store. Madura prefers using the COFO
model which is 30 % of EBOs, where inventory is owned by the company but the
franchise invests in store fittings, rent and operations. This is a preferred
model, since the company is able to manage inventory at an aggregate level with
better IT system with minimal capital investment in the store. In smaller
markets, where the company feels that it lacks the experience and expertise to
understand local trends, they prefer a FOFO model which constitutes 40 % of EBOs.
In this model, the inventory is sold outright and is owned by the franchise.
All sales made to MBOs are on an outright sale basis. Madura uses distribution
agents, who are mapped to MBOs depending on the locality they service. The
company has its average store size is of 1500 to 2000 sq. ft., and
capex required is Rs. 3,000 per sq. ft., and has inventory of Rs. 20 lakhs
which attains break even in 12-15 months with payback period in 48 – 50 months.
The company has
rationalized its store network over the past few quarters by closing down
unprofitable stores to improve overall network health. Madura reported capital
employed turn and ROCE of 7.7 x and 55 % respectively after adjusting goodwill.
</span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Since the acquisition of Pantaloons by ABG, the retailer is undergoing a
massive restructuring programme in phase manner. In the first phase, the
company managed the transition, whereby 22 stores were renovated and 14 new
stores added. Additionally, to boost their private labels Pantaloons set up an
in-house design studio to design their merchandise and also created a new
vendor network. In second phase, gaps in the portfolio were filled with new brands.
Pantaloons launched six new brands and also rolled out a new SAP system. Cost
efficiencies, price improvement and optimising product mix led to 3.00 % improvement
in gross margin. In the third phase which is in FY16, Pantaloons reported a revenue growth of 17 %,
and an SSG of 5.9 % embarking on its growth journey. Pantaloons reported an
EBIT loss of Rs 1.6 billion with EBIT loss of Rs 1.1 billion excluding one-offs
of Rs 48.5 Cr, and is well on its way to achieve its profitability target in
the near term. In its fourth phase company intends to build scale via store and
brand expansion, currently, Pantaloons is in the process of adding 40 to 50
stores a year and adding new brands/categories wherever they find white spaces
in their overall portfolio. This will help sustain the growth trajectory the
company embarked upon. The company has now entered the final phase of
restructuring of Pantaloons, where the focus would remain on driving profitable
growth with a focus on private labels, new brand additions especially in the
fast fashion space and category expansion in kidswear. Pantaloons has also been
spearheading the shift to a 4 season model (versus a 2 season model that
currently exists) to ensure freshness in stock and improve overall turns. Additionally,
the company has managed to reduce their price points in Pantaloons by 7 % to 8 %,
while improving their gross margins by increasing the contribution from more
profitable private labels and by controlling the markdowns. On financial side<b> </b>in Q2FY2017, Aditya Birla
Fashion & Retail’s (ABFRL) overall revenue grew by 13 % YoY, mainly led by
a 22 % YoY growth in Pantaloons and 5 % YoY growth in Madura Fashion &
Lifestyle (MFL). But, MFL witnessed a 10 % YoY decline in revenue on a
like-to-like basis due to inventory correction. The branded readymade garments
& fashion industry witnessed a prolonged End of Season Sale (EOSS) with
deep discounting across segments. However, the Operating Profit Margin (OPM) of
8.8 % was down by only 0.70 %, led by lower discounting in the Madura business
and reduced operating leverage in the Pantaloons business. Profit after Tax
(PAT) stood at Rs. 64.9 crore, which was up by 7 % YoY. The demonetisation has
had an adverse effect on ABFRL’s operations, particularly the wholesale
business of Madura. The wholesale channel, as in most distribution businesses,
has significant dealings in cash, which will impede the company’s ability to
absorb incremental inventory. Also, footfalls in the Pantaloons business would
be affected in Q3FY2017 and early part of Q4FY2017 due to a slowdown in overall
discretionary consumption. Since 45 % of the company’s business happens in
cash, H2FY2017 performance is expected to be much lower in comparison to
H1FY2017. It is expected that ABFRL’s EBITDA
margins to improve by 1.40 % over FY16-19E to 7.9 % on the back of completion of
restructuring process in Pantaloons, improved consumer demand driving SSG and
operating leverage in both Madura and Pantaloons, and improving mix in favour
of private labels in the retail business. ABFRL can have EBITDA growth of 23.6 %
CAGR over FY16-19E to Rs 7.5 billion. Decreasing interest burden coupled with
strong operating level profitability is expected to drive PAT to Rs 2.4 billion
in FY19E against a loss of Rs 1 billion in FY16. Operating leverage and mix
improvement should drive margin profile. In addition, lower interest outgo will
further aid profit growth. Improved profitability and controlled working
capital to drive return ratios and free cash flow. The ROCE is expected to
expand from 12.45 % to 15 % in FY19E. ABFRL
can report positive free cash flow from FY18E. Given the varied margin and
growth profiles of both the divisions, Madura & Pantaloons are valued separately.
Madura on an EV/EBITDA valuation methodology assigning a 10 % discount to Page
Industries (Page has a superior return ratio profile). Pantaloons will turn profitable
in the near term with robust EBITDA growth. Pantaloons on an EV/EBITDA
valuation methodology given 20 % premium to SOTP Value in multiple of Shoppers
Stop (SHOP) due to higher private label mix. Based on our SoTP valuation, ABFRL
comes around Rs. 200 per share. ABFRL is expected to have better
financial performance in FY2018 and FY2019. Expected recovery in the
macro-economic environment, better Pantaloons performance and an improved
performance by some of recent acquisitions would be the key triggers for ABFRL
in the near term. The stock has already corrected by 15 % in the last six weeks
and could be seen as a good entry point in view of its long-term growth prospects.
Maintaining a Positive view on ABFRL a upside of 15-20 % from the current level
is expected. T</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">he current market price of stock is Rs. 139.70, can post Earnings per share (EPS) of Rs. (0.10) in FY17E and Rs. 1.80 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. ABFRL is the best amongst the retail sector stocks.</span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SOTP VALUATIONS :</span></b></div>
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<div class="MsoNormal">
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<div class="Default" style="line-height: normal; text-align: left;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 24px;"></span></span></div>
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<tr><th><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">Business Subsidiary </span></div>
</div>
</th><th><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">Value Per Share (</span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; line-height: 24px; text-align: center;">₹</span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">)</span></div>
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</th></tr>
<tr><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Madura</span></div>
</div>
</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">179.47</span></div>
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</td></tr>
<tr><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Pantaloons</span></div>
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</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">46.04</span></div>
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<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Enterprise Value (Rs.)</span></div>
</div>
</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">255.51</span></div>
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</td></tr>
<tr><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #cc0000; font-family: "georgia" , "times new roman" , serif;">less Net Debt (Rs.)</span></div>
</div>
</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #cc0000; font-family: "georgia" , "times new roman" , serif;">24.66</span></div>
</div>
</td></tr>
<tr><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Market Capital (Rs.)</span></div>
</div>
</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">200.85</span></div>
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</td></tr>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Shares Outstanding (cr)</span></div>
</div>
</td><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">76.90</span></div>
</div>
</td></tr>
<tr><td><div style="text-align: justify;">
<div style="margin: 0px;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b>Value Per Share</b></span></div>
</div>
</td><td><div style="margin: 0px; text-align: justify;">
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b>200.85</b></span></div>
</td></tr>
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<table border="1" cellpadding="9" cellspacing="0" style="background-color: white; color: #00810f; font-family: georgia, utopia, "palatino linotype", palatino, serif; font-size: 18px; line-height: 24px; text-align: justify;"><tbody>
<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 6,060.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5,994.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7,119.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8,683.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">(104.10)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">(5.40)</span></td><td>75.90</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">137.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> (1.40)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">(0.1)</span></td><td>1.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>(102.60)</td><td>(786.0)</td><td>147.70</td><td>48.90</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>11.30</td><td>11.50</td><td>10.70</td><td>8.80</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> (16.20)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> (0.6)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.30</span></td></tr>
</tbody></table>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> ADITYA BIRLA FASHION AND RETAIL LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia, 'Times New Roman', serif; line-height: 24px;"><br /></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<div style="line-height: 20px;">
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-46555993101322391952017-01-03T06:00:00.000+05:302017-01-04T17:23:11.591+05:30HUHTAMAKI PPL LTD: POWER PACK STOCK !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqCg82-_TVzrYgKI6bRuEA1diRXOm67imEXZ5PiDkT7QJEUEiE-7rd3Y-fAKcIG5hVpUBA-g-PSP1K6ZJ2WZf0h8FxZoeE0gGhlYJR9tnl3Ou1Ow4c8y9X_PMBjHmHz9nXCVGogwW9Rnn4/s1600/images.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="172" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqCg82-_TVzrYgKI6bRuEA1diRXOm67imEXZ5PiDkT7QJEUEiE-7rd3Y-fAKcIG5hVpUBA-g-PSP1K6ZJ2WZf0h8FxZoeE0gGhlYJR9tnl3Ou1Ow4c8y9X_PMBjHmHz9nXCVGogwW9Rnn4/s400/images.jpg" width="400" /></a></div>
<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=509820" target="_blank"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">509820</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=PAPERPROD&cName=cmtracker_nsedef.css" target="_blank"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">PAPERPROD</span></b></a></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 240.30; Market
Cap: Rs. 1,747.26 Cr; 52 Week High/Low: Rs. 326.45 / Rs. 176.00</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 7,27,11,934 shares;
Promoters : 3,99,79,253 shares – 63.78 %; Total Public holding : 2,27,07,937
shares – 36.22 %; <span class="apple-style-span">Book Value: Rs. 84.71; Face
Value: Rs. 2.00; EPS: Rs. 12.36; Dividend: 140.00 % ; P/E: 19.44 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 22.66;
EV/EBITDA: 7.77.</span></b></span><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"><o:p></o:p></span></b></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 528.64 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 2,136.06 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">HUHTAMAKI PPL Ltd: </span></b><span style="background: white; color: #38761d; line-height: 150%;">Huhtamaki
Paper Products Limited was founded in 1935 and is headquartered in Thane,
India. The company was formerly known as The Paper Products Limited and changed
its name to Huhtamaki PPL Limited in May 2014. Huhtamaki PPL Limited is a
subsidiary of Huhtavefa B.V. from Netherlands. The company have given bonuses
in two tranches the first was in September 1987 in the ratio of 1:4 and second
in September 1993 in the ratio of 1:2, Company also declared splits in the face
value of its shares from Rs. 10 to Rs. 2 in January 2007. Huhtamaki PPL Limited
provides packaging solutions in India. Its packaging solutions include flexible
packaging products, including film, foil, and paper based laminate structures;
labelling technologies, which include shrink sleeves, heat transfer, pressure
sensitive, metalized paper, and wrap-around; and specialized cartons for
packaging of powders and solids. The company also offers packaging machines
comprising sleeve application machinery and shrink tunnels, heat transfer
applicators, and support on labelling equipment for wrap around and self-adhesive
labels; holographic options; metalized films; co-extruded blown films;
extrusion coated materials; gravure cylinders; and polyethylene films. It
serves various product groups, such as soaps and detergents, shampoos, noodles,
biscuits, baby foods, chocolates, coffee, tea, milk powder, and juices. HPPL
also exports its products to 5 continents. </span><span style="color: #38761d; line-height: 150%;">In 1999, PPL became a member of
the Huhtamaki Packaging Worldwide, a global leader in consumer packaging.
Huhtavefa BV is the holding company of Huhtamaki Netherlands BV, Netherlands.
Huhtamaki is a global consumer & Speciality packaging company with a wide
range of packaging products & other paper forming technology. In February
2014, Huhtamaki group increased its stake from 60.77 % to 63.78 % by acquiring
1,88,48,087 shares or 3.01 % stake from Mr. Suresh Gupta, Chairman of HPPL, at
a total consideration of Rs. 169.63 Cr or Rs. 90 per share. Further, 1,00,24,744
equity shares were allotted to Huhtamaki group at Rs. 134.08 on 20th August
2014 totalling to Rs. 134.41 Cr, thereby increasing Huhtamaki’s stake from
63.78 % to 68.8 %. PPL has three state of the art & fully integrated
manufacturing facilities at Thane, Silvassa and Hyderabad with highly skilled
and experienced staff. HPPL is capable of working with the customer from
product inception to the super market and with complete control and
confidentiality. HPPL has an impressive client list that includes,</span><span class="apple-converted-space" style="color: #38761d;"><span style="line-height: 150%;"> </span></span><i style="color: #38761d;"><span style="line-height: 150%;">Levers, Nestle, Cadbury, Britannia, Glaxo
Smithkline, Coca Cola, Perfetti, Dabur, Marico, P&G</span></i><span style="background: white; color: #38761d; line-height: 150%;">. </span><span style="line-height: 150%;"><span style="color: #38761d;">HPPL has presence across 4 continents: South
Asia, Africa, Middle East, Europe and Central America & provides service to
over 50 customers worldwide.</span><span style="background: white; color: #38761d;"> </span><span style="color: #38761d;">As of March
31, 2014, HPPL has 51 % stake in its subsidiary based in India named Webtech
Labels Pvt. Ltd, which was acquired in Nov 2012 for a consideration of Rs.
37.70 Cr, in an all cash deal. Webtech Labels is specialized in manufacturing
high-end pressure sensitive labels, especially to pharmaceutical customers. Huhtamaki
</span><span style="background: white; color: #38761d;">PPL</span><span style="color: #38761d;"> can be locally compared with </span><span style="color: #bf9000;">Uflex
Ltd, Glory Polyfilms Ltd, Xpro India Ltd, Essel Propack Ltd (Packaging India
Pvt. Ltd. - part of Essel Propack group), Shree Rama Multi Tech Ltd, Cosmos
Films Ltd, Nahar Poly Films Ltd & from some unlisted players like Uma
Polymers, Umax Packaging & Parikh Packaging</span><span style="color: #38761d;"> and globally compared with</span><span style="color: #bf9000;">
Avery Dennison Corporation of USA, Ball Corporation of USA, Berry Plastics
Group Inc of USA, Crown Holdings Inc of USA, Packaging Corporation of America
of USA, Seal Air Corporation of USA, British Polythene Industries PLC of UK,
Huhtamaki Oyji of Finland, Smurfit Kappa Group Plc of Ireland, Vetropack
Holding AG of Switzerland, Polyplex (Thailand) Public Company Ltd of Thailand,
The Pack Corporation of Japan, Lock & Lock Co., Ltd of South Korea,
Greatview Aseptic Packaging Company Ltd of China, CPMC Holding Ltd of Hong
Kong, Mpact Ltd of South Africa, Nampak Ltd of South Africa.</span><span style="color: #38761d;"><o:p></o:p></span></span></span></div>
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<b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment Rationale: <o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguomyIvIQ0q8JRWZdWy4FgyU52wKXxeAx2tFg5t081_6ZwGvg6PYU9Y2yEcrBiKSj5fTPuvOknlfn_UBUEfBfPB3H9KvlF1yC3MjoXDSI4xwg3kLa6ZkD2PndEi6wP5qYTmTlTZnN3sdIv/s1600/218091259.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguomyIvIQ0q8JRWZdWy4FgyU52wKXxeAx2tFg5t081_6ZwGvg6PYU9Y2yEcrBiKSj5fTPuvOknlfn_UBUEfBfPB3H9KvlF1yC3MjoXDSI4xwg3kLa6ZkD2PndEi6wP5qYTmTlTZnN3sdIv/s400/218091259.jpg" width="330" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Huhtamaki
PPL Ltd. (HPPL) earlier known as The Paper Products Ltd. is India’s leading
manufacturer of primary consumer packaging. HPPL</span><span class="apple-converted-space" style="color: #38761d;"><span style="background: white; line-height: 150%;"> </span></span><span style="background: white; color: #38761d; line-height: 150%;">supplies
packaging materials for many of the top brands in India and c</span><span class="st" style="color: #38761d;"><span style="background: white; line-height: 150%;">ommands
about 60 % of market share in premium flexible packaging </span></span><span class="apple-converted-space" style="color: #38761d;"><span style="background: white; line-height: 150%;">business. H</span></span><span style="color: #38761d; line-height: 150%;">PPL is India's leading
Consumer Packaging Company offering a wide range of packaging solutions like</span><span class="apple-converted-space" style="color: #38761d;"><span style="line-height: 150%;"> </span></span><span style="color: #38761d; line-height: 150%;">Flexible Packaging</span><span style="color: #38761d; line-height: 150%;">, Labelling Technologies</span><span class="apple-converted-space" style="color: #38761d;"><span style="line-height: 150%;"> </span></span><span style="color: #38761d; line-height: 150%;">and</span><span class="apple-converted-space" style="color: #38761d;"><span style="line-height: 150%;"> </span></span><span style="color: #38761d; line-height: 150%;">Specialised Cartons</span><span style="color: #38761d; line-height: 150%;"> and all this is
supported by the Packaging Machine Division. HPPL provides the customer with
Total packaging solutions. </span><span class="apple-converted-space" style="color: #38761d;"><span style="background: white; line-height: 150%;">HPPL </span></span><span class="st" style="color: #38761d;"><span style="background: white; line-height: 150%;">has very
long and eminent clients list which includes all major players in FMCG sector. </span></span><span style="line-height: 150%;"><span style="color: #38761d;">The
company mainly caters to the premium segment of packaging and enjoys 60 % of
market shares in premium segment. Its major clients include </span><span style="color: #bf9000;"><i>Britannia, Hector Beverages (Paper Boat),
Cadbury, Castrol, Coca Cola, Dabur, Emami, Eveready, GSK, Godrej, Hindustan
Unilever, ITC, Marico, Nestle, Pepsi, Perfetti, P&G, Tata Tea, TTK-LIG,
Wipro</i> etc</span><span style="color: #38761d;">. The top ten clients only accounts for 60 % of the HPPL’s
revenues. Product-wise, Laminates and Converted, Coated & Uncoated Paper
and Films category accounts for a major portion of HPPL’s total revenues.</span><span style="background: white; color: #38761d;"> </span><span style="color: #38761d;">HPPL derives around 80 % of its revenues from
the domestic market, while exports account for the balance 20 %.</span><span style="background: white; color: #38761d;"> <i>HPPL i</i></span></span><span class="st" style="color: #38761d;"><i><span style="background: white; line-height: 150%;">s like a one stop shop for FMCG companies for
their packaging needs</span></i></span><span class="st" style="color: #38761d;"><span style="background: white; line-height: 150%;">. HPPL is specialised in
flexible packaging and with a g</span></span><span style="background: white; color: #38761d; line-height: 150%;">rowing trend
of processed food market and with the penetration of untapped rural markets by
personal care companies, there will be the increase in use of flexible
packaging. </span><span style="color: #38761d; line-height: 150%;">HPPL is amongst selected few companies worldwide having
expertise in holographic images in packaging medium. This makes the packaging
look attractive, thus enhancing the product visibility for premium positioning.
Holograms are also popular as a deterrent against counterfeits for product
protection. </span><span style="line-height: 150%;"><span style="color: #bf9000;">The packaging industry in India is expected to reach $ 73 billion
in 2020 from $ 33 billion in FY 16. In the coming years, Indian packaging
industry is anticipated to register 18 % annual growth rate, with the flexible
packaging and rigid packaging expected to grow annually at 25 % and 15 %,
respectively. The Indian packaging industry constitutes about 4 % of the global
packaging industry. The per capita packaging consumption in India is quite low
at 4.3 kgs, compared to countries like Germany where it is 42 kgs and Taiwan
where it is 19 kgs. However, organised retail and boom in e-commerce, which
offer huge potential for future growth of retailing, is giving a boost to the packaging
sector. Today, plastics are the material of choice in packaging for the sectors
such as FMCG, food and beverages, pharmaceuticals etc. Globally, plastics
comprise of 42 % of packaging with the combination of rigid and flexible plastics
in packaging. Plastics are used heavily for packaging due to innovative visual
appeal for customer attraction and convenience. Additionally, they improve the
hygiene quotient and shelf-life of the products especially in food and beverages
segment. As plastics possess versatile properties it can help us do more with
less. One such property is light weight. As plastics are light in weight, they
have a high product to package ratio which results in lighter weighed end
product. For example, only 1.5 pounds of flexible plastics can deliver
approximately 60 pounds of beverage; compared to three pounds of aluminium or
50 pounds of glass. Thus, plastic packaging enables in shipping more products
with less packaging material. And also brings down the fuel consumption and the
overall transportation cost. Huhtamaki PPL Ltd is setting up a new Flexible
Packaging manufacturing unit in Assam which is likely to be commissioned during
the first half of 2017, to better service its customers based in North East
India. The Company's subsidiary, Webtech Labels Private Limited, is setting up
a new label manufacturing unit in Sikkim, to service its customers based in
North East India and likely to be commissioned during the first half of 2017.</span></span><span style="color: #38761d; line-height: 150%;">
Further, the main Label manufacturing unit of Webtech Labels, located at
Mahape, Navi Mumbai, primarily catering to Pharma companies will be relocated
to a new state of the art facility in the Greater Mumbai Region by the end of 2017.
The combined value of these investments/modernisation is expected to be appx.
Rs. 65 crores. As the industry grows and matures, there is expected to be a
trend towards consolidation as supply side companies merge and acquire smaller
companies to increase scale, reduce competition, and improve bargaining power
with customers. The main problems faced by MSMEs are: lack of available sources
of credit, high cost of packaging materials, lack of skilled labour, irregular
power supply, and an underdeveloped sense of how to market, brand, and
distribute. Today, flexible packaging is the fastest-growing sector of India’s
packaging industry. The shift from traditional rigid packaging to flexible
packaging on account of its attractiveness, cost effectiveness, and strength is
largely aided by increasing consumer demand for processed food.<span class="apple-converted-space"> </span><span style="background: white;">The future of the Indian packaging industry is very
good, if investment materializes. The growth of the domestic market will be
good and export potential is substantial, too, if it’s properly addressed. If
organized retail takes off as expected, growth opportunities are substantial,
and enormous potential exists in converting wasted food into valuable product.</span><o:p></o:p></span></span></div>
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<b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation: </span></span></b><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRv0D5Nvk3a5p791XFYNir5O3CjUzLnZjEyJd2cJdql_V2iuuaYdTGSFK_z5uNAujR7b33po0s3biR3BEaCbK36oROX32y_CGZUt3qNzR73jkiwx8eZTeTEn82FCS6xF3pv360xU2BpkB_/s1600/739958829.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="330" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRv0D5Nvk3a5p791XFYNir5O3CjUzLnZjEyJd2cJdql_V2iuuaYdTGSFK_z5uNAujR7b33po0s3biR3BEaCbK36oROX32y_CGZUt3qNzR73jkiwx8eZTeTEn82FCS6xF3pv360xU2BpkB_/s400/739958829.jpg" width="400" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">Huhtamaki
PPL Limited (HPPL) is a part of Huhtamaki Oyj, Finland and is known for packaging
since the company was founded in 1935. Today, HPPL offers a wide portfolio of packaging
solutions that include Flexible Packaging, including a variety of Pouching Solutions,
Labelling Technologies, Shrink Sleeve solutions, Specialised Cartons, Cylinder Engraving
and Specialised Films for high barrier. And all this supported by Packaging Machine
Expertise, to provide you with Total packaging solutions. Today HPPL is like One
Stop Shop in a true sense. HPPL has a thriving International business, an area of
high focus across its technology groups. With 13 state of the art, fully
integrated manufacturing facilities at Thane, Silvassa, Hyderabad, Rudrapur,
Navi Mumbai, Parwanoo, Khopoli, Taloja, Ambernath, Banglore; a highly skilled
and experienced team, HPPL is capable of working with you from product
inception to the super market and with complete control and confidentiality. Through
close collaborations with customers in developing innovative packaging
solutions, HPPL delivers truly meaningful brand experiences for consumers. HPPL’s
technical excellence and superior quality standards help its customers in
improving aesthetics, increasing shelf life & handling transportation of
their products. </span><span style="color: #bf9000;">HPPL is a pioneer and the market leader in flexible packaging
in India and has a market share of </span></span><span style="color: #bf9000;"><span class="st"><span style="background: white; line-height: 150%;">60 % in
premium flexible packaging </span></span><span class="apple-converted-space"><span style="background: white; line-height: 150%;">business and about </span></span></span><span style="line-height: 150%;"><span style="color: #bf9000;">9 %
overall in the organized market, which is of about $2 billion by size. It has currently,
installed capacity of for paper & films is about 52,000 MT and company’s
capacity utilization rate is 75 % to 80 %. HPPL successfully meets the
packaging needs of almost entire range of FMCG segments including personal
products, personal wash, laundry, foods, sauces, beverages, bakery products,
spices, chocolates and confectionery, dairy and also for seeds, specialized
chemicals, electronics, healthcare and many other specific specialized uses
including anti-spurious packaging. HPPL thus enjoys Competitive advantage due
to use of its superior technology & capability. HPPL has an MNC Tag and
with diverse products & Strategic acquisition of competitor, adds to its competitive
advantage.</span><span style="color: #38761d;"> </span><span style="color: #bf9000;">I</span><span style="color: #bf9000;">ndia is a growing market for plastics and consumes about 12.8
million metric tonnes (MMT) of plastics annually against global consumption of
285 MMT per year. The plastics and polymer consumption is growing at an average
rate of 10 %. About 30,000 processing units with 113,000 processing machines
have created manufacturing capacity of 30 MMT per annum in India. This has been
achieved with a 13 % CAGR of processing capacity during last 5 years. The
industry has invested $5 billion in the machinery and it is expected to invest
$ 10 billion more for increasing the capacity during the next 5 years. The per
capita consumption of polymers in India during 2014-15 was just 10.5 kg as
compared to 109 kg in USA, 45 kg in China and 32 kg in Brazil. India is
expected to be among the top ten packaging consumers in the world by 2016. The
low level of per capita plastics consumption in India is indicative of the
massive growth potential of the plastic industry. Give n the rising consumerism
and modern lifestyles, it is expected that per capita consumption will be
doubled in the next five years.</span> <span style="color: #38761d;">On financial
side the company’s net profit stood at Rs. 16.79 Cr as against Rs. 15.97 Cr in
the corresponding quarter ending of previous year, an increase of 5.13 %. Revenue
for the quarter rose by 6.76 % to Rs. 557.47 Cr from Rs. 522.19 Cr, when
compared with the prior year period. During the quarter, company reported
EBIDTA of Rs. 59.94 Cr as against Rs. 55.33 Cr in the corresponding period of
the previous year, up by 8.33 %. During Q3 CY16, Profit before tax up by 38.26 %
to Rs. 29.09 Cr from Rs. 21.04 Cr in Q3 CY15. EPS of the company stood at Rs.
2.31 a share during the quarter, as against Rs. 2.20 over previous year period.
During 9M CY16, Net sales up by 9.66 % to Rs. 1,655.26 Cr from Rs. 1,509.39 Cr in
9M CY15. During the nine months ended 2016, net profit was increased by 23 % to
Rs. 69.33 Cr from Rs. 56.37 Cr over the nine months ended 2015. Net Sales PAT
of the company are expected to grow at a CAGR of 23 % and 17 % over 2014 to
2017E, respectively. Huhtamaki PPL Ltd is setting up a new Flexible Packaging
manufacturing unit in Assam which is likely to be commissioned during the first
half of 2017. Huhtamaki PPL Ltd. is one of the
most prestigious flexible packaging companies in India and is continuously
taking up new initiatives to expand its presence overseas to tap the vast
potential in the global markets. With the recent acquisition of Positive
Packaging Ltd., the manufacturing capabilities of HPPL are expected to increase
considerably which in turn will increase the revenues for the Company. The
Company is a market leader in the flexible packaging industry in India and has
reputed clients like HLL, Colgate, Nestle, etc. It is expected that the
projected growth rate of 15 % in the flexible packaging industry will
positively impact HPPL in the future. </span></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 240.30, the stock is trading at a PE of 19.66 x FY16E and 16.50 x FY17E respectively. The company can post Earnings per share (EPS) of Rs. 12.22 in FY16E and Rs. 14.56 in FY17E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY14</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1,225.34</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,037.38</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,229.45</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,474.69</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">66.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">76.93</span></td><td>88.85</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">105.89</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 9.16</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.58</span></td><td>12.22</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.56</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>25.56</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.13</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">19.16</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.08</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.01</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.76</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.42</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.10</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.77</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.13</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.36</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 11.02</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 12.78</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.12</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.44</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">28.69</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">32.07</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">32.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">32.42</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px; text-align: left;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: Georgia, 'Times New Roman', serif; line-height: 24px; text-align: left;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" /><b style="font-family: Georgia, 'Times New Roman', serif; line-height: 24px; text-align: left;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<b style="font-family: Georgia, 'Times New Roman', serif; line-height: 24px; text-align: left;"><br /></b><span style="color: #38761d; font-family: "gabriela";"><i><b>*<span style="font-size: large;">Read my previous posts on HPPL <a href="http://bhavikkshah.blogspot.in/2014/10/huhtamaki-ppl-ltd-total-packaging.html" target="_blank">CLICK</a></span></b></i></span></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> HUHTAMAKI PAPER PRODUCTS LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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<span class="apple-style-span"><b style="background-color: transparent; color: #454545; font-size: 12px; line-height: 18px;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">VIEW THE POWER POINT PRESENTATION ON</span></b><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"></b></span></span></div>
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<span class="apple-style-span"><span style="font-weight: bold;"><b style="font-family: courier, monaco, monospace, sans-serif; font-size: 18px; line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><strong id="yiv119040258yui_3_2_0_178_134492229647170" style="font-family: Georgia, serif; font-size: 19px; line-height: 24px;"><a href="http://www.authorstream.com/Presentation/montyuu-1585474-return-capital-employed/" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">RETURN ON CAPITAL</a> </strong></span></span></span></span></b></span></span></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com7tag:blogger.com,1999:blog-8296423824543086164.post-69249089076324002782016-12-23T05:18:00.000+05:302016-12-24T15:31:47.539+05:30SHEMAROO ENTERTAINMENT LTD: ENTERTAINING AT ITS BEST !!! <div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5IEpiXDX1xsfYNqsP2dz76T6Uy5SBtQAUbUuZgmGqXUVUnXjZfLH2DnLih3rLGItlTbHGFi1bqPTaOV_CTC6L5NI1S5abZz-VK_pSR5q3lo8ZR6-xRAtZ9bmC6V0c_BVMB1G5o2qLj2oC/s1600/shemaroo-entertainment-logo1.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="145" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5IEpiXDX1xsfYNqsP2dz76T6Uy5SBtQAUbUuZgmGqXUVUnXjZfLH2DnLih3rLGItlTbHGFi1bqPTaOV_CTC6L5NI1S5abZz-VK_pSR5q3lo8ZR6-xRAtZ9bmC6V0c_BVMB1G5o2qLj2oC/s320/shemaroo-entertainment-logo1.jpg" width="320" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=538685"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">538685</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=SHEMAROO&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">SHEMAROO</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 374.30; Market Cap: Rs. 1,017.43 Cr; 52 Week High/Low: Rs. 422.00 /
Rs. 221.10</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 2,71,82,239 shares; Promoters : 1,78,91,920 shares – 65.82 %; Total Public
holding : 92,90,319 shares – 34.18
%; <span class="apple-style-span">Book Value: Rs. 134.24; Face Value: Rs. 10.00;
EPS: Rs. 21.52; Dividend: 14.00 %; P/E: 17.39 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 34.80;
EV/EBITDA: 9.36x</span></span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 212.39;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 1,228.75 Cr.</span></b><strong><span lang="EN-US" style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">SHEMAROO
ENTERTAINMENT LIMITED:</span></b><span lang="EN-US" style="background: white; color: #38761d;"> The Company was </span><span style="color: #38761d;">incorporated in 1962,
Shemaroo Entertainment Ltd is Mumbai based integrated media content house with
activities across content acquisition, value addition to content and content
distribution. Shemaroo distribute entertainment content through television such
as satellite, terrestrial and cable television; mobile, internet, direct to
home and other ways. Shemaroo is also an official channel partner for Google
and managing 32 channels. Shemaroo's content library consists of over 1000
titles across new Hindi films, Hindi films classics, and titles in other
regional languages like Marathi, Gujarati, Punjabi, Bengali etc. and a variety
of non-film content. </span><span lang="EN-US" style="background: white; color: #38761d;">T</span><span lang="EN-US"><span style="color: #38761d;">he
company came out with an IPO on September 16, 2014 offering 77,41,885 equity shares of Rs. 10 each for Rs. 170 per
share with retail discount of Rs. 10 per share at Rs. 153 raising Rs. 131.62
Cr. The shares of the company got listed on October 1, 2014 at Rs. 180 making a
high of Rs. 181 and low of Rs. 171.00 on listing day. The object of the issue
was to fund working capital requirements, to fund expenditure for general
corporate purposes, and listing of its equity shares will enhance visibility
and brand name among existing and potential customers and business. </span><span style="background: white; color: #38761d;">Shemaroo Entertainment Limited is a holding company.
The Company is an entertainment company engaged in the business of motion
picture, video and television program distribution activities. Its business
activities include content library; distribution platforms, including broadcast
syndication, new media, home entertainment and other distribution platforms;
content licensing, and other business activities. Its Content Library consists
of over 3,400 titles spanning various Hindi films. The Company also has
non-film content and titles in various other regional languages, such as
Marathi, Gujarati, Punjabi and Bengali, among others. Its content is
distributed over various Internet video platforms, such as YouTube, Hooq,
Hotstar, Apple iTunes, Google Play and Spuul. </span><span style="color: #38761d;">Shemaroo Entertainment Ltd
is locally compared to </span><span style="color: #bf9000;">EROS International, ZEE Media Corporation Ltd, TV Today Network ltd, NDTV
Ltd, TV 18 Broadcast Ltd, Sahara One Media, BAG Films, Raj Television, Diksat
Transworld, Sun Tv Network, Sri Adikari Bros, Jain Studios, </span></span></span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">PVR Ltd, Prime Focus ltd, Reliance Broadcast Network Ltd, Balaji Telefilms ltd, Media Matrix Worldwide Ltd, Shree Ashtavinayak Cine Vision Ltd, Tips Industries Ltd</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> and globally compared with </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">Walt Disney Co of US California, Time Warner Inc of USA, IG Port Incorporated of Japan, Twenty First Century Fox, Inc of New York, Lions Gate Entertainment Corp of California, UTV Media PLC of UK, Dreamworks Animation Skg Inc of California.</span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment
Rationale:<o:p></o:p></span></span></b><span style="font-family: "georgia" , serif;"> </span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="color: #38761d;">Shemaroo
Entertainment was incorporated in October 29, 1962 as a book library, Shemaroo
Entertainment Ltd (Shemaroo) is a Mumbai based integrated media content house.
It is involved in content aggregation, content acquisition, value addition to
content and content distribution. Shemaroo's content library consists of over
1000 titles across new Hindi films, classic Hindi films, titles in other
regional languages such as Marathi, Gujarati, Punjabi and Bengali, and a
variety of non-film content. It has three subsidiaries, of which two are
foreign companies. Together with film based copyrights and other entertainment
rights, the brand "Shemaroo" is synonymous with quality
entertainment. In 1979, they set up India's first video rental business and thereafter
in 1987, they forayed into distribution of content through the home video
segment in the video home system (“VHS”) format. Over the years, this Company
has successfully adapted to changing content consumption patterns by expanding
into content aggregation and distribution for broadcasting on television
platforms. Shemaroo’s content library consists of more than 2,800 titles
spanning new Hindi films like The Dirty Picture, Kahaani, OMG: Oh My God!,
Black, Ishqiya, Slumdog Millionaire, Ajab Prem Ki Ghazab Kahani, Omkara, Dil
Toh Baccha Hai, Chandni Chowk to China, Bheja Fry 2, amongst others. Hindi
films classics like Zanjeer, Beta, Dil, Disco Dancer, Mughal-e-Azam, Amar Akbar
Anthony, Namak Halaal, Kaalia, Madhumati etc., titles in various other regional
languages like Marathi, Gujarati, Punjabi, Bengali among others as well as
non-film content. Shemaroo is also India’s one of the largest independent
content aggregators in Bollywood. Currently, Shemaroo distribute content over
which they have either complete ownership rights or limited ownership rights.
Titles over which we have complete ownership rights are referred to as
“Perpetual Rights”, which allows Shemaroo to distribute content worldwide for a
perpetual period across all mediums. Titles over which they have limited
ownership rights are referred to as “Aggregation Rights”. Aggregation Rights
are restricted by either period of usage, distribution platforms, medium and
geography or combination thereof. Titles where Shemaroo have Perpetual Rights
or Aggregation Rights are known as our “Content Library”. Shemaroo also
distribute their content through various mediums such as television such as
satellite, terrestrial and cable television; new media platforms consisting of
mobile, internet, direct to home (“DTH”) and other applications; home
entertainment; and other media. The Indian media and entertainment industry is
estimated at Rs 1.10 trillion as of 2016. Television and print (primarily
newspapers) account for more than 70 % of the industry's revenue. Shemaroo’s
recent initiatives include tying up as an official channel partner for Google
Inc.’s You Tube where it is managing 32 channels. It is also moving beyond
providing just content, to providing content management solutions to partners
including Reliance Communications Re 1 WAP store and Airtel digital television
in connection with an interactive devotional service, namely
“iDarshan”. The Indian Media and Entertainment (M&E) industry is
projected to grow at a CAGR of 15 % between 2012 and 2017 to reach Rs 1.66
trillion. This industry has been on a steady growth trajectory over the past
five years barring 2009 due to an economic slowdown. Continuous expansion into
different segments, steady growth in television and print, and emergence and
rapid expansion of new segments such as digital have been key growth drivers.
The industry’s revenue is expected to grow at 13 % CAGR over the next five
years. Growth would be driven by a revival in advertising spends. Advertising
revenue is estimated to increase 13 to 14 % in 2015, as companies hike spends
across major advertising channels. The film industry’s revenue is projected to
record 11 % CAGR, driven by increasing number of multiplexes, higher average
ticket prices and expansion into tier II and tier III cities. While radio could
see steady revenue growth, the much awaited FM Phase III auctions would provide
a fillip. The number of Cable and Satellite (C&S) households in India
base is expected to grow to 17.3 Cr by 2017, representing 91 % of TV
households. With the mandatory Digital Access System (DAS) getting implemented
in the four metros of Delhi, Mumbai, Kolkata and Chennai is seen as a
revolutionary step in the media industry. The Subscription revenue for
broadcasters is estimated to grow at a CAGR of 26 % by 2017. Increase in the
declared subscriber base and aggregation of distribution on behalf of
broadcasters is expected to drive up the share of subscription to total
broadcaster revenue from 36 % in 2012 to 48 % in 2017.<span class="apple-converted-space"> </span></span><i><span lang="EN-US" style="color: #bf9000;">Hindi and regional General
Entertainment Channels (GECs) account for major portion of the total viewership<span class="apple-converted-space"> </span></span></i><span lang="EN-US" style="color: #bf9000;">for over 50 % of the total
viewership. GECs are the key drivers of television viewership, accounting for
65 % to 75 % of Hindi and regional markets. Hindi GEC and Hindi movie genres
consolidated their position with a viewership share of 30 % and 11.9 % in 2016,
compared to 26.5 % in 2014. Movie acquisition costs continued to soar as
broadcasters retained their strategy in using block-buster movies to sustain
viewer interest and buzz. Star Network is reported to have invested
approximately Rs. 300 Cr on movie acquisitions in the past year. Zee
Entertainment on the other hand is reported to have invested Rs. 200 Cr to
acquire 10 movies during the year. New media continues its growth trajectory in
2016, with growth in advertising revenues of close to 40 % over last year.
Coming in at approximately Rs. 2200 Cr in revenue in 2016, digital ad spends
reached approximately 6.7 % of the total M&E industry advertising
revenue. As expected, mobile and wireless connections continued to drive the
growth of internet penetration in India. By the end of 2016 there were 14.4 Cr
internet connections in India, a rise of 41 % over last year. Online streaming
is a major growth engine for the music industry, both globally and in India.
According to Strategy Analytics, globally, online streaming revenues will grow
at nearly 5 times the rate of growth for download revenues in 2015, at 40 %
versus 8.5 %.</span><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d;"> </span></span><span lang="EN-US" style="color: #38761d;">Until recently
there were few legal sources for buying media content in India. In 2012 the
Indian digital music industry saw the debut of Flipkart’s Flyte and Apple’s
iTunes stores featuring comprehensive selection of local and international
music from all the major labels and thousands of independent labels.<span class="apple-converted-space"> </span></span><span lang="EN-US" style="color: #bf9000;">Shemaroo Entertainment
(Shemaroo) is India’s leading media content house. Shemaroo sports a content
library of 3,011 titles, with 781 perpetual (complete) rights and 2,230
aggregated (limited) rights. The company benefits from the strong relationships
with producers and the expertise and brand name associated with high consumer
recall and media visibility. On the distribution side, Shemaroo is aligned with
big names such as SONY, Star, Colors, etc. On the New Media side, it sells its
movies to media platforms such as YouTube, Hooq, Apple iTunes, Hotstar through
their pacts with telecom operators like Airtel, BSNL, Vodafone, RCom, Tata
Teleservices etc. These business relationships are enabling Shemaroo to cash in
on the developing trends in technology. Post the first stage of film cycle
Shemaroo enters into the fray due to which the risk related with the success of
the film reduces significantly, due to higher visibility of performance
vis-à-vis the first cycle of launch. It has been observed that the subsequent
stages of film cycle are growing at a good rate due to increasing advertisement
spends and onset of digitization. The risk of piracy also reduces to a great
extent as maximum piracy occurs in the first cycle of films. Increasing
internet penetration, proliferation of smartphones, and 4G roll out, National
Optical Fibre rollout programme may benefit Shemaroo along with the advent of
new global media platforms like Netflix coming to India.<span class="apple-converted-space"> </span>As SEL generates revenues from distribution
of content, diverse and wealthy content library bodes well for its top line
growth.<span class="apple-converted-space"> </span>Shemaroo’s flagship
business has been to buy content from production houses, producers etc and to
sell this content to broadcasting channels, cable TV companies, home
entertainment purpose.</span><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d;"> </span></span><span lang="EN-US" style="color: #38761d;">Indian
television industry has six genres and movies genre is the second largest genre
after General Entertainment Channels (GEC).<span class="apple-converted-space"> </span>Furthermore,
the company continuously reported increase in its inventory levels, which
represents ongoing addition of content to support the future growth
opportunities. SEL’s rich content library is complemented by its presence
across the traditional and new distribution platforms. During the past several
years, the company has invested heavily to further enrich its content library.
With a strong foothold in Indian media space, possession of some of the
well-known movie titles, and rich content library, Shemaroo is an eminent brand
in the Indian media space.<span class="apple-converted-space"> </span></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation:
<o:p></o:p></span></span></b></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Shemaroo Entertainment Limited, is today an established integrated media
content house in India with activities across content acquisition, value
addition to content and content distribution. Over the years, the Company has
successfully adapted to changing content consumption patterns by expanding into
content aggregation and distribution for broadcasting on television platforms.
It is continuing its expansion into New Media platforms. Shemaroo acquires
content only after the movie is released from its first copyright holders
(usually TV broadcasters). So essentially, Shemaroo is a trading company which
buys content, re-packages and markets it to various Exhibitors. <span lang="EN-US" style="background: white;">Besides this </span>Shemaroo has other smaller business like the Home
Entertainment Business which has a product presence of 1,300 titles across over
2,000 retail stores across India like Planet M, Music World, Crossword etc.
This business sells DVDs and Blue Ray Discs in line with the emerging industry
trend of shifting from physical to digital formats. Other Media business
includes media platforms like Airborne rights for in-flight entertainment,
international film festivals and overseas markets such as USA, UK, Singapore,
Fiji, UAE, Australia, East Europe and North Africa. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">The company has launched a
first of its kind movie premiere service named ‘Miniplex’ on Airtel Digital TV
and Tata Sky. Miniplex is an ad-free, subscription based service which would
premiere one movie every week for the first time on Indian television. Miniplex
is a cross platform service and in addition to DTH it will be launched across
various other platforms like digital, cable etc in phased manner. In line with
this recently Shemaroo entered into an agreement with Dish TV based on the
subscription fee model. The Miniplex will premiere latest blockbuster movies every
Friday. So, in this manner Shemaroo makes a mark on the digital TV<span lang="EN-US">business. The subscription
fees are fixed at Rs. 60 per month while the service will give a theatre like
feeling to customers at home. This business is actually at a nascent stage. As
the company moves ahead with more tie-ups, the Miniplex business may attract a
huge potential to become a substantial revenue stream for Shemaroo. </span>Very recently the company has secured a new tie-up
with Dish TV which is expected to build-up in a big way. Management aims to buy
75 to 100 titles per annum hereon and enhance its movie library. The company
benefits from the strong relationships with producers like RK Films, Tips
Industries, Red Chillies Entertainment etc. and the expertise and brand name
associated with high consumer recall and media visibility. On the distribution
side, the company is aligned with big names such as SONY, Star, Colors, etc who
regularly buy movies from Shemaroo. On the New Media side, the company sells
its movies to media platforms such as YouTube, Hooq, Apple iTunes, Hotstar
through their pacts with telecom operators like Airtel, BSNL, Vodafone, RCom,
Tata Teleservices etc. These business relationships are enabling Shemaroo to
cash in on the developing trends in technology. The company acquires forward
content rights, with either complete ownership (perpetual rights) or limited
ownership (aggregate rights), which are then sold on a forward rights basis for
a period of 5-7 years to broadcasters. In the life span of a movie release,
majority revenues like is 90 % to 95 % are generated through domestic and
overseas theatricals and television release. The first cycle is typically 5 to 7
years, post which Shemaroo enters the fray. Subsequent movie cycles are
typically of 5 year duration. Since Shemaroo is absent in the first cycle, the
risk reduces somewhat, due to higher visibility of performance vis-à-vis the
first cycle of launch. It has been observed that the subsequent stages of film
cycle are growing at a good rate due to increasing advertisement spends and
onset of digitization. Shemaroo takes utmost care and due diligence while
buying a content depending on its success in the first phase of film cycle.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> The
company strives to buy the perpetual rights of a film wherever possible but
also tries to strike a balance by spreading its acquisition to aggregate titles
too with cost of perpetual rights is 3x to 4x the cost of aggregate rights.
Shemaroo’s absence in the first phase of film cycle reduces the risks
associated with piracy too. The company intends to monetize their movie content
across all media platforms within the digital ambit. As mentioned above,
Shemaroo has tie up with almost all of the media platforms be it YouTube, Hooq,
Spool etc. </span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">More than 50 % to 55 % of the digital media revenues for Shemaroo
come from the advertising revenues from YouTube channels. <i>In a way, more the number of media platforms, more will Shemaroo
benefit out of it</i>. <i>This is it shelf
signifies that Shemaroo is a platform agnostic company. The entry of Netflix in
India through a tie-up with Shemaroo in a subscription based model will mean a
lot for the company. Netflix would get access to the vast movie library of
Shemaroo and in return offer Shemaroo with another huge platform for
distributing and monetizing its content</i>. Shemaroo implements different
types of business models while dealing with various platforms depending upon
the frequency of usage, costing etc. With Google Play, it is a subscription
model, wherein users can rent or purchase movie for a fee. Shemaroo is
currently showcasing 10 movies on this platform and many more are in the
pipeline. Tie-up with Facebook entails pay per download model. There are
already five movies live on FB from Shemaroo’s stable and there are four more
to hit this platform shortly. Both these tie-ups are based on revenue sharing
models. The tie-up with Apple iTunes is also a revenue sharing model in which
Apple keep 30 %<span lang="EN-US">of
the fee while its partner like Shemaroo in the case of this tie-up gains 70 %.
While, for every dollar Google Play is making, Shemaroo makes almost 50 to 55
cents out of it. </span>Shemaroo being the only listed player in
second stage of film cycle stands an advantage on the back of its expertise,
strong relationships with industry players and a wide variety of movie library.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">
The company’s business risk is minimized due to its absence in theatrical
release phase thus relatively insulating it from issues like piracy and high
competitive intensity. The company has showed consistent performance
for the quarter with revenue growing at 20 % YoY and 18 % sequentially on
standalone front. On consolidated front the revenue grew by 21.4 % YoY and by
18.4 % sequentially. Revenue from digital media continued the upward curve with
52 % growth rate when compared to corresponding quarter of previous year. On
sequential basis the revenue from digital media division grew by 19 %. Share of
new media to revenue improved to 21.2 % vs. 17.0 % in corresponding quarter of
previous year and stood steady sequentially. Traditional media too continued to
grow at a healthy growth rate of 15 % YoY for the quarter under review and
sequentially the revenue grew by 19 %. Share in revenue for traditional media
stood at 78.8 % vs. 83.1 % YoY and stood steady sequentially. The improving
share of digital media continued to drive up the operating margins for the
company. EBITDA margin inclined to 29.8 % for the quarter under review against
25.2% in the corresponding quarter of the previous year. However margins stood
flat sequentially. Higher operating margins of the company lead to improving
profitability. Net profit for the quarter under review came in at Rs 16.9 Cr
vs. Rs 11.4 Cr in the corresponding quarter of the previous year climbing by 48
% YoY. However, on sequential basis it was down by 1.8%. On consolidated front
net profit grew by 35.5 % YoY to Rs 15.2 Cr and by 8 % sequentially. Higher advertising revenues from platforms like
YouTube will lead to a rich pricing mix for the company. Availability of
Shemaroo content over all the major digital platforms and quick monetization
also leads to better margins. Furthermore, advent of Netflix in India will
further enhance margins as it will be based on subscription model and Shemaroo
will be paid according to international standards. The company targets 18 %
Internal Rate of Return at the portfolio level, thus helping it to decide the
cost of content acquisition. This augurs well for the margin growth. 4G rollout
and entry of global companies like Netflix will lend a better bargaining power
at the market leaders like Shemaroo’s hands thus increasing sales along with
margins. Management has guided us for a northward movement in margins from here
given the operating leverage they will be getting from the New Media Business
with new players entering India and better pricing scenario. On the Traditional
Media Business, the company expects margins to remain stable. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 374.3, the stock is trading at a PE of 14.91 x FY17E and 11.80 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 25.10 in FY17E and Rs. 31.70 in FY17E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 374.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">438.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">517.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">613.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">52.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">68.00</span></td><td>86.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">106.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 22.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">25.10</span></td><td>31.70</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">39.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>14.90</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.40</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>2.40</td><td>2.10</td><td>1.70</td><td>1.40</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td>8.40</td><td>7.10</td><td>6.00</td><td>5.00</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 15.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 17.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.50</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> SHEMAROO ENTERTAINMENT LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com1tag:blogger.com,1999:blog-8296423824543086164.post-11218636034675013102016-12-13T05:49:00.000+05:302017-02-07T15:41:59.551+05:30SANGHVI MOVERS LTD : MOVING AHEAD !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF7XA3Mc6yJVwCKIN5hNHNoOfcpCtx-jahFZJrd46tiHJUEk_GVLt_Ey9nwuHevRhv21Dvg3DaVxqIYTaABwYH4TDhSwmDGNoJ-1aIFGPmNoHVqRTKRjXpafVtCN84aPAAmxKhM89OQ5HR/s1600/Sanghvi.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF7XA3Mc6yJVwCKIN5hNHNoOfcpCtx-jahFZJrd46tiHJUEk_GVLt_Ey9nwuHevRhv21Dvg3DaVxqIYTaABwYH4TDhSwmDGNoJ-1aIFGPmNoHVqRTKRjXpafVtCN84aPAAmxKhM89OQ5HR/s1600/Sanghvi.jpg" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=530073"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">530073</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=SANGHVIMOV&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">SANGHVIMOV</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<span lang="EN-US" style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; font-weight: bold;">CMP:
Rs. 220.70; Market Cap: Rs. 955.63 Cr; 52 Week High/Low: Rs. 376.00 / Rs. 197.00.</span><span lang="EN-US" style="font-size: 13.5pt;"> </span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 4,32,88,000 shares; Promoters : 2,02,95,129 shares –46.88 %; Total
Public holding : 2,29,92,871 shares – 53.12 %; <span class="apple-style-span">Book Value: Rs. 173.22; Face Value: Rs. 2.00; EPS: Rs.
23.98; Dividend: 150.00 % ; P/E: 9.20 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E:
24.76; EV/EBITDA: 4.29 times. </span></span></b><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 607.02 Cr;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 1,548. 18 Cr.</span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">SANGHVI MOVERS
LTD: </span></b><span lang="EN-US" style="background: white;"><span style="color: #38761d;">The Company was founded on November 3, 1989 and is based in
Pune, India. Sanghvi Movers Limited operates as a crane rental services company.
It’s a major player in Equipment rental & leasing sector in India and other
parts of Asia. It provides heavy lift, plant erection and maintenance services
for various large scale projects. The company gave last split in the face value
of its shares from Rs. 10 to Rs. 2 on 29 May 2007 and has not announced any
bonus so far. The company also offers over dimensional, heavy, and bulk cargo
transportation services. It operates a fleet of 400 medium to large size
hydraulic truck mounted telescopic and lattice boom cranes and crawler cranes
with lifting capacity ranging from 20 MT to 800 MT; and 132 hydraulic multi
axle modular trailers. In addition, the company also engages in the generation
of power from windmills. It primarily serves power, cement, steel, refinery,
metros, windmill, and metal sectors. The Company operates in two business
segments: Operations of Cranes and Power Generation. It earns regular revenue from
the business of power generation from windmills commissioned in Jaisalmer,
Rajasthan and Chitradurga, Karnataka. The Company's clients include ACC Ltd,
BGR Energy Systems Ltd, Birla Corporation Ltd, Electrosteels Ltd, Furnace
Fabrica (India) Ltd, Jindal Steel & Power Ltd, Leitner Shriram Mfg Ltd,
Neelachal ISPAT Nigam Ltd, Suzlon, Aditya Birla Group, TOYO, BHEL, Reliance,
Vedanta Group, Siemens, Tata Steel, Enron power, Samsung and Gujarat Ambuja.
Sanghvi Movers ltd is locally compared with </span><span style="color: #bf9000;">Crown lifters, Sancia Global
infrastructure Ltd,</span><span style="color: #38761d;"> globally compared with </span><span style="color: #bf9000;">Nippon Pallet Pool Company Ltd of
Japan, Han Kook Capital Company Ltd of South Korea and with Nippan Rental
Company Ltd of Japan. </span><span style="color: #38761d;"><o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US">Investment Rationale:</span></b><span lang="EN-US"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwYNaVSeAjsjKKasxp3UD6jAAj1nk4IIINTd9gdJHjaF_qw3np8LNsMnzFgv2sPYXymPzIquXpd5mySsis4vsbpCTP82VLVEdi97OaA__4LgFzjogcpWc1F1TSJuwML9RYbt4XHFC7F9_E/s1600/952994495_98b103a3ca0eab21.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwYNaVSeAjsjKKasxp3UD6jAAj1nk4IIINTd9gdJHjaF_qw3np8LNsMnzFgv2sPYXymPzIquXpd5mySsis4vsbpCTP82VLVEdi97OaA__4LgFzjogcpWc1F1TSJuwML9RYbt4XHFC7F9_E/s400/952994495_98b103a3ca0eab21.jpg" width="336" /></a></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Sanghvi Movers is <span lang="EN-US">the 3rd largest crane services
company in Asia and ranked seventh largest in the world</span>. The company has a
robust fleet of over 400 cranes, majority of which are above the 100 tonne
category. Sanghvi Movers has an overall market share of about 45 % and more than
80 % market share in the 100 tonnes and above category. The company undertakes the
implementation of turnkey projects and caters to 75 % of the traditional power
sector and 65 % of the windmill sector’s crane requirement. <span lang="EN-US">The company has Crawler and
truck mounted cranes and also has Hydraulic Multi Axle Modular Trailer. The
company claims to have 98 % guaranteed machine availability with a timely
deployment. The company has its owned state of the art Sanghvi Training Academy
which provides high skills crane training programmes and produces highly
skilled crane operators. Sanghvi Movers has 12 depots across the country to
ensure timely deployment of cranes. </span>The performance of the Sanghvi is dependent on the Indian Economy, more
particularly investments in infrastructure and core sector of the economy both
by private as well as public sector undertakings. According to the provisional
estimates released by the Ministry of Statistics, the Annual growth rate for
financial year 2014-15 of Gross Domestic Product (GDP) was seen to improve to
7.3 % as against 4.9 % in the previous year. It is projected to reach 8 %
growth rate in the next fiscal year (2015-16), soon it is also expected that
the India's growth rate will outpace that of China, Japan and Germany combined
as projected by International Monetary Fund (IMF). Control on price rise
continued and remarkable downfall in inflation was noted, with wholesale price
index (WPI) falling at five year low of 0.11 in December 2014 in contrast to
6.40 in December 2013. The Central Government's emphasis on the renewable
energy more particularly on wind power generation and solar energy will bound
to increase the demand for the crane rental business. </span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #bf9000;">In view of the increased
investments in the renewable energy sector and upcoming projects in refinery
and gas, cement, power and steel sector, the company expects increase in demand
and rental for the cranes. Sanghvi Movers Limited has been providing heavy
lift, plant erection and maintenance services to various large scale projects.
The Company has maintained a good track record in terms of effective deployment
of cranes at competitive rates with due regard to time schedule as well as
safety and efficiency in operations. The growth of crane rental business is
constrained due to higher capital cost may result in availability of suitable
cranes as per market demand. There is a concern for safety of cranes at work
sites. The introduction of GST may result into simplified tax regime. The
Company's operations may get affected on account of increase in competition in
crane hiring business, delay in receivables. The Company has concentrated its
fleet of cranes more on heavy duty cranes i.e. cranes above 100 Tons. At
present more than 90 % of gross block of cranes is in 100 MT & above.
Obviously, more than 90 % of the Company's turnover is contributed by higher
tonnage cranes. </span><span style="color: #38761d;">The current order book position for the
company stands at Rs. 250 Cr and the company is expecting that the fleet
utilization would be around 80-82 % during H2FY17E. It has planned for capex to
the tune of Rs. 189.2 Cr during FY17E and has placed a purchase order for import
of 5 Nos. New Terex Cranes with Capacity of 650 MT, some Derrick attachments
and boom inserts for cranes. These cranes have been bought under trade in
agreement with Terex Global GmbH which will buy 5 Nos. used Terex Demag CC
2400-1 Cranes from the company at an aggregate value of Rs. 53.33 Cr. Hence,
the net capex for Cranes and allied attachments would be around Rs. 136 Cr. In
addition to this, the company has already bought office premises in BKC, Mumbai
for a sum of Rs. 17 Cr. Hence, the total capex for FY17E would be Rs. 153 Cr. </span><span lang="EN-US" style="color: #38761d;">Company’s</span><span lang="EN-US" style="color: #38761d;"> 2QFY17 financial performance
was impacted by the seasonal spillover caused on account of the de-hiring of
cranes getting pushed to 2QFY17. While this impacted the utilisation rates at 66
% in 2QFY17 vs. 79 % in 1QFY17, the gross block yields remained stable at 2.77
% vs. 2.80 % for 1QFY17. With a residual order book position of Rs. 2.5 bn for
the next 6 months and already receiving work orders for its new +650MT, it is
expected that Sanghvi mover’s fleet utilisation rates will improve to 82 % to 83
% in 2HFY17, with its gross block yields remaining healthy at 2.75 % 2.80 %. Despite
the 1HFY17 disappointment, the management continues to see good traction in the
wind power space and expects a conservative 3,500-4,000MW of wind asset
creation over FY17-19E. Additionally, it is also optimistic about pick-up in
ordering activity from the thermal power space</span><span style="color: #38761d;">. </span><span lang="EN-US" style="color: #38761d;">Despite
the tepid financial performance it is expected that Sanghvi movers to report
FCF of Rs. 2.2bn in FY19E. With no major capex plans, company plans to utilise
the cash generated from operations to retire its debt, which would consequently
lead to interest cost saving. Company will repay Rs. 3.3 bn of debt over
FY17-19E. Incrementally, company could also reward its shareholders in the form
of higher dividends or share buybacks.</span><span lang="EN-US" style="color: #38761d;"> </span><span style="color: #38761d;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US">Outlook and
Valuation: </span></b><span lang="EN-US"><o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPKDsTBhJOrV4Fb6bSSMe5cFQf2nMb2hcsp2C-Zqqe3mW4DKpcuC3V3-GE9OsZZaeHEFFYe9aFPuL7W-tuikrx6YiLbGqsQtsm7jajvmA86uGZPOhLqpC00HrJI4jaUpiNXAE8HUsmwvPo/s1600/crane-158143_960_720.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="366" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPKDsTBhJOrV4Fb6bSSMe5cFQf2nMb2hcsp2C-Zqqe3mW4DKpcuC3V3-GE9OsZZaeHEFFYe9aFPuL7W-tuikrx6YiLbGqsQtsm7jajvmA86uGZPOhLqpC00HrJI4jaUpiNXAE8HUsmwvPo/s400/crane-158143_960_720.png" width="400" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="color: #38761d;">Sanghvi Movers has a near
monopolistic position in the high tonnage crane rental market in India. Company
is a great proxy play to the improvement in Indian Infrastructure industry. </span><span style="color: #38761d;">Sanghvi Movers
Limited is the Largest Crane Hiring Company in India and 6</span><sup style="color: #38761d;">th</sup><span style="color: #38761d;"> Largest
in the World, as per rankings from Cranes International. </span><span lang="EN-US"><span style="color: #38761d;">The company is led by a strong
entrepreneur C. Sanghvi and his professional team, company has been able to
maintain its competitive advantages. Company has its </span><i><span style="color: #38761d;">Economic Moat </span><span style="color: #990000;">(A competitive advantage that one company has over the
other companies in the same industry – by Warren Buffett)</span></i><span style="color: #38761d;"> expanding moats
which is a very strong sign of a future Multi-bagger stock. </span></span><span lang="EN-US" style="color: #38761d;">Logistics is responsible for all the movement that takes place within the organization
whether it is inbound logistics of incoming, raw materials or movement within
the company or the physical distribution of finished goods, logistics
encompasses all of these. </span><span lang="EN-US"><span style="color: #bf9000;">A typical logistics framework mainly consists of
physical supply, internal operations and physical distribution of goods and
services. To put it more simple manner, the material supply logistics starts
from the base level of “generation of the demand”, through the “process of
purchase” and “supply of material from the vendor” right through to “final
acceptance” and “payments to the supplier” and “issue to the indenter” and has
to be considered as a “one whole activity” with each stage having an impact on
price/cost of material supply. Logistics is, in itself, a system; it is a
network of related activities with the purpose of managing the orderly flow of
material and personnel within the logistics channel.</span></span><span lang="EN-US" style="color: #38761d;"> </span><span lang="EN-US" style="color: #38761d;">On
financial side, Sanghvi reported revenue growth of 7.5 % registering Rs. 249.7
Cr during H1FY17 compared to H1FY16 of Rs. 232.2 Cr. Wind Mill continued to be
the major revenue contributor and stood at 63 % followed by power at 15 %, refinery
& gas at 11 %, Steel & metal at 4 %, Cement at 2 % & Others at 5 %.
EBITDA stood at Rs. 153.2 Cr in H1FY17 compared to Rs. 151.4 Cr in H1FY16, with
EBITDA margins at 61.4 % in H1FY17 a drop of -3.84 % when compared to 65.2 % in
H1FY16. The drop in EBITDA margins was mainly on account of increased freight
& carrier charges during H1FY17. Increase in other income for H1FY17
includes gain of Rs. 1.5 Cr on investment in equity shares of Suzlon Energy
Limited. It also includes a sum of Rs. 1.9 Cr towards the interest received on
GJ RTO Tax refund and a sum of Rs. 70 lakhs towards profit on 3 cranes sold
during the six months. PAT for H1FY17 stood at Rs. 37.8 Cr compared to Rs. 45.00
Cr in H1FY16 witnessing a drop in the PAT margins from 15.1 % in H1FY17 by 4.26
% compared to 19.4 % in H1FY16. </span></span><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">With a capped capex cycle, mostly in the wind power space, which
would drive SGM’s tepid revenue CAGR of around 6.6 % over FY16-19E, Utilisation
rates and average yields on gross block to remain between 75 % to 78 % and 2.75
% to 2.85 % over FY17-19E, Improving Net Working Capital cycle from 265 days in
FY14 to 108 in FY18E, Strong FCF generation of Rs. 2.2bn in FY19E, which will
largely be utilised towards debt repayment and FCF yield of 19.3 % in FY19E
Sanghvi movers can gain premium in valuation. Also with increasing focus on
optimum utilsation, strong working capital management and ace promoter acumen,
Sanghvi Movers is well positioned to withstand any cyclical slowdown in the
crane hiring business. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 220.70, the stock is trading at a PE of 7.11 x FY17E and 6.14 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 31.00 in FY17E and Rs. 35.90 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. </span><br />
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 308.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">531.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">628.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">676.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">116.90</span></td><td>134.10</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">155.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">27.00</span></td><td>31.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">35.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>146.50</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.10</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">0.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 16.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.90</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b><br />
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<b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #990000; font-size: large;"><a href="http://bhavikkshah.blogspot.in/search/label/SANGHVI%20MOVERS%20LTD" target="_blank">READ MY PREVIOUS POSTS ON SANGHVI MOVERS - HERE</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> SANGHVI MOVERS LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com2tag:blogger.com,1999:blog-8296423824543086164.post-61005884910947988332016-12-03T06:25:00.000+05:302017-02-06T11:56:33.616+05:30INOX WIND LTD: WINDS WILL CHANGE !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stock-share-price/inox-wind-ltd/inoxwind/539083/"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">539083</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=INOXWIND&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">INOXWIND</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 185.85; Market Cap:
Rs. 4,124.35 Cr; 52 Week High/Low: Rs. 378.50 / Rs. 163.00.</span></b><b><span style="font-family: "arial" , sans-serif; font-size: 9pt;"> </span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 22,19,18,226 shares;
Promoters : 19,00,00,000 shares –85.62 %; Total Public holding : 3,19,18,226
shares – 14.38 %; <span class="apple-style-span">Book Value: Rs. 83.03; Face
Value: Rs. 10.00; EPS: Rs. 17.14; Dividend: 0.00 %; P/E: 10.84 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E:
24.11; EV/EBITDA: 8.25.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 1,467.17 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 5,524.30 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> </span></strong><strong><span style="font-family: "verdana" , "sans-serif"; font-size: 8.5pt;"><o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">INOX WIND LIMITED: </span></b><span style="color: #38761d; line-height: 150%;">Incorporated on April 9, 2009 and is based in
Noida, India. Inox Wind Ltd </span><span style="background: white; color: #38761d; line-height: 150%;">is a subsidiary of Gujarat
Fluoro chemicals Limited. Inox Wind Limited manufactures and sells wind turbine
generators and components in India. T</span><span style="color: #38761d; line-height: 150%;">he
company came out with an IPO on March 18 2015 offering 3,19,18,226 equity shares
of Rs. 10 each for Rs. 325 per share raising Rs. 1,037.34 Cr, retail investor
were given a discount of Rs. 15 per share. It got listed on April 9, 2015 at
Rs. 400 made a high of Rs. 427.40 on listing day. The object of offer for sale
was to invest in new equipment at the Una (Himachal Pradesh) unit to optimise
the capacity of the nacelle and hub manufacturing facility, for expansion and
up-gradation of existing manufacturing facilities, for long term working
capital requirements, for investment in their subsidiary IWISL for the purpose
of development of power evacuation infrastructure and other infrastructure
developments and for other general corporate purposes.</span><span style="background: white; color: #38761d; line-height: 150%;"> </span><span style="background: rgb(253 , 253 , 253); color: #38761d; line-height: 150%;">Inox Wind Ltd provides turnkey
solutions for wind farm projects & </span><span style="color: #38761d; line-height: 150%;">offers services including wind resource
assessment, site acquisition, infrastructure development, erections and
commissioning, and also long term operations and maintenance of wind power
projects. Company manufacture the components of wind turbine generators
in-house with a view to ensuring high quality, advanced technology and
reliability and maintaining cost competitiveness. Company has facilities
dedicated to manufacturing nacelles, hubs, rotor blade sets and towers. Inox
Wind have a perpetual license from AMSC Austria GmbH (formerly Windtec GmbH), or
AMSC, a leading wind energy technology company based in Austria, to manufacture
2 MW WTGs in India based on AMSC’s proprietary technology. </span><span style="color: #38761d; line-height: 150%;">Inox Wind has a fully integrated state-of-the-art
manufacturing plants at Una (Himachal Pradesh) for Hubs and Nacelles and
Rohika, near Ahmedabad (Gujarat) for Blades and Tubular Towers. Inox Wind
manufactures the key components of the Wind Turbine Generator (WTG) to ensure
high quality based on the most advanced technology, reliability of performance,
and cost competitiveness. Inox WTGs are designed for low wind speed sites such
as those in India. Inox Wind is an ISO 9001:2008 certified company. In
addition, IWL’s manufacturing units are awarded with ISO 14001:2004, OHSAS
18001:2007 and ISO 3834-2 (tower manufacturing facility). Inox Wind turbines
are type certified by TUV SUD according to “The Guidelines for the
Certification of Wind Turbines issued by Germanischer Lloyd” and are duly
enlisted in RLMM by C-WET. Inox Wind
manufacturers two different WTG models 2 MW rating:<b> </b>Rotor
diameter of 93 meters with hub height of 80 meters Rotor Diameter of 100 meters
with hub height of 80 to 92 meters. Inox Wind owns a 100 % subsidiary, Inox
Wind Infrastructure Services, which does the project development in respect of
wind power projects, including wind studies, energy assessments, land
acquisition, site infrastructure development, power evacuation, statutory
approvals, erection and commissioning and long term operation and maintenance
of the wind farms. </span><span style="color: #38761d; line-height: 150%;">Company
produced and sold 60 turbine generators and in FY 2013; 60 turbine generators
of 2 MW each. </span><span style="color: #38761d; line-height: 150%;">INOX WIND</span><span style="background: white; line-height: 150%;"><span style="color: #38761d;"> Limited is locally compared with </span><span style="color: #bf9000;">Suzlon Energy Ltd, Honda
Siel Power Products Ltd, Triveni Turbine Ltd, TD Power System Ltd, BHEL,
Siemens Ltd, Crompton Greaves Ltd, Thermax Ltd, ABB India Ltd, Alstom India
Ltd, KEC International Ltd, Gamesa Wind Turbines Pvt Ltd, GE India Industrial
Pvt Ltd, Vestas Wind Technology India Private ltd, Sinovel DB India Pvt Ltd</span><span style="color: #38761d;"> and
globally compared with </span><span style="color: #bf9000;">AZZ Inc of USA,
Ametek Inc of USA, Babcock & Wilcox Enterpr of USA, Broadwind Energy Inc of
USA, Enersys of USA, Franklin Electric Co Inc of USA, Areva of France, Alstom
of France, Gamesa Corp Technologica S.A.
of Spain, Vestas Wind Systems A/s of Germany, Schneider Electric S.E.of France,
PNE WIND AG of Germany.</span></span><span style="color: #38761d; line-height: 150%;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEyH2YBRD4rfnckwiNSgYrLcD276at-Fw37UfQRHuEgnZPs3VDAva9YPNrFQfyhHY-B0tBKWBCNS5FZQ8Bx65_bs8iRupY0xQp4KVluggdPFPbJodXYGhH2BqatpXyRnML3z6t1qXH7b4I/s1600/Wind+Energy.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEyH2YBRD4rfnckwiNSgYrLcD276at-Fw37UfQRHuEgnZPs3VDAva9YPNrFQfyhHY-B0tBKWBCNS5FZQ8Bx65_bs8iRupY0xQp4KVluggdPFPbJodXYGhH2BqatpXyRnML3z6t1qXH7b4I/s400/Wind+Energy.gif" width="400" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Inox
Wind Ltd, an Inox Group company, is India’s fourth-largest wind turbine generator
(WTG) manufacturer and commands market share of 7 % in FY15. The Inox Group is operational
from 1923 in India and currently operates in industrial gases, engineering
plastics, refrigerants, chemicals, cryogenic engineering, renewable energy and
entertainment sectors. The Group has two publicly-listed companies – Gujarat
Fluorochemicals and Inox Leisure. Inox Wind Ltd is the subsidiary of Gujarat
Fluorochemicals. Inox Wind Ltd commenced its operations in March 2010, and is
into manufacturing of key components of Wind Turbine Generators and other parts
like nacelles, hubs, rotor blade sets, and towers used to generate electricity
from wind power. It provides turnkey solutions for wind farm projects through
its wholly-owned subsidiaries, and has a project site pipeline of 4GW. </span><span style="line-height: 150%;"><span style="color: #38761d;">We live in the modern era of
clean energy growth that can fuel a future of opportunity and greater
prosperity for every person on the planet. </span><span style="color: #bf9000;">Renewable energy, so far considered
to be an alternative to the conventional fuel source has now progressed into
becoming a regular energy source.</span></span><span style="line-height: 150%;"><span style="color: #bf9000;">
This shift is driven by the improved cost efficiency of renewable energy
sources with the help of advancements in technology combined with an increasing
focus on climate change which is leading people, companies and countries to
consume energy from more efficient sources. There is heightened awareness about
disciplining the emitters of greenhouse gases. Governments, businesses and
investors around the world are realizing that the evolution to low-emission,
climate-resilient growth is imminent beneficial and already under way Now that
the Paris Agreement is coming into force, countries need to get serious about
what they committed to last December. Meeting the Paris targets means a
completely decarbonized electricity supply well before 2050 and wind power will
play the major role in getting us there. The mainstream position of renewables
is evidenced in the global installations during 2015 which stood at 64 GW of
wind energy and 57 GW of solar energy. Leading the passage from fossils fuels
to renewable sources are the developing nations including India and China,
among others. The renewable industry recorded a growth of 18 % CAGR in 2015 and
is expected to attract US$5.86 trillion worth of investment till 2035. This
poses massive growth potential for the sector in India. With the government’s Commitment
made at COP21 to install 175 GW of renewable energy by 2022, and to reduce
carbon emissions by 30- 35 % and increase renewables to 40 % of the energy mix
by 2030, India is set to truly expand its renewable energy portfolio. The production
is getting marked boost through the ‘Make in India’ initiative. The government
has also strived to facilitate the growth of renewable energy through the establishment
of a positive policy and business environment. As a result, the sector witnessed
annual installations of 3,415 MW in FY15-16, higher than ever before and 48 %
higher than the 2308 Mw of the previous year. A major portion of this capacity
addition was accounted for by new projects in MP where more than a third of the
capacity a 1290 MW was added, Rajasthan added 688 MW, Gujarat added 388 MW and
AP added 363 MW, arising out of the substantial reduction in preferential
tariff for new wind energy. The Indian wind energy industry is expected to grow
at a rate of 30 % annually, and may even surpass this on the back of the positive
policies. The Supreme Court supported Renewable Purchase Obligation (RPO)
compliance, the renewable Generation Obligation (RGO), Green Corridor, interstate
transmission charges waiver, inclusion of renewable energy in the priority
lending sector, UDAY scheme which gives state utilities stronger credibility to
invest in renewable energy and approval of National Off-shore Policy which has
opened up 7,600 km of coastline for off shore wind energy generation projects
have all positively affected the environment and established a US$200 billion
opportunity. Foreign investment in the industry is also surging. The
incremental wind based energy capacity requirement by FY22 is estimated at
about 35 GW as against the current installed capacity of 27.4 GW. This is
assuming annual energy demand to continue to grow at 6 %, Renewable Purchase Obligation
at 12 % by FY22 and wind as a renewable energy resource contributing to a
dominant share of 75 % in meeting the non-solar RPO requirement on an all India
basis. The RPO norms continue to vary across the states in terms of both
quantum of RPO varying from 2 % to 12.5 % in FY17 across the states and the period
of RPO trajectory with only six states stipulating RPO norms till FY22.</span><span style="color: #38761d;"> According
to IRENA (International Renewable Energy Agency), technology innovation will be
a significant driver of the offshore wind boom. It highlights upcoming
innovations that will enable sector development, including next generation wind
turbines with larger blades, and floating turbines, which will open up new
markets in deeper water. These advancements, combined with other sector
developments, will reduce average costs for electricity generated by offshore
wind farms by 57 % over time from $170 per Mwh in 2015 to $74 per Mwh in 2045.
Inox Wind Ltd is one of the largest land bank owners in this sector in the
country with more than 4500 MW capacity. Inox will be one of the biggest beneficiaries
of the hybrid policy for both solar and wind. Inox Wind plans to install solar
panels in winds parks where it already has the common infrastructure
commissioned and constructed. Since both technologies are complementary, Inox will
be one of the lowest suppliers of hybrid service as well, especially when it
comes to installing solar panels. Inox Wind is seeing a lot of traction as far
as cash collection is concerned. </span></span><span style="color: #38761d; line-height: 150%;">With
the support and encouragement received from government for wind sector, certain
initiatives has been taken Non Solar Renewable Purchase Obligation - Guidelines
issued from 8.75 % in FY17 to up to 10.25 % in FY19 to increase the demand from
states with more wind supply, Gujarat state will have tariff at Rs. 4.19 for 5
years, Solar & Wind Hybrid Policy is been drafted for better &
optimization utilization of capacity, UDAY scheme to ensure stricter
enforcement of RPO with currently 16 states has joined in the scheme, lastly
1000 MW transmission utility to be connected which will facilitate supply of
wind power to non-windy states. </span><span style="color: #38761d; line-height: 150%;">There
are many initiatives taken by the new government like </span><span style="color: #38761d; line-height: 150%;">several
states such as Rajasthan, Madhya Pradesh, Gujarat, Andhra Pradesh, Telangana, Maharashtra
and Karnataka have provided preferential tariff over and above MNRE’s GBI of Rs.
0.5 per kilowatt-hour to attract investment. Some have also increased wind
power tariffs by 2-15 % to attract investments. These states are expected to
witness traction and will play a critical role to achieve the aggregate target
of 4-5GW per annum. Several states including Tamil Nadu, Karnataka, Maharashtra
and Gujarat have policies that eliminate or reduce value-added tax (VAT) for
wind turbine components.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">The Maharashtra
Energy Development Agency (MEDA) has created a green cess (tax) fund. A part of
this fund is used to create infrastructure for grid connectivity with proposed
wind farms. Strong evacuation infrastructure promotes investments in wind
power. State governments like Rajasthan, Madhya Pradesh and Gujarat have
formalized land facilitation policies to expedite wind energy projects. Major
projects get delayed mainly on account of delays in land acquisition which is
seen getting smoothen off. Inox wind is surely a good pick from the renewable
setor on back the developments and financials improvements.</span><span style="color: #38761d; line-height: 150%;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Outlook and Valuation:</span></b></span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3BaRvX9VqWTeK5X6xLpvx_5n_qRlJMuocEyL5JrbUjrgIR-lyd0vOsijTtCEYZ7XbhFJNDIJP9GSxi6EStinU9CinOHkkPXPzbBGnQ9-csNo4o494DvdixuPeqqTm89V9d3xY4jvzx3lI/s1600/wind-turbine-diagram-gif.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3BaRvX9VqWTeK5X6xLpvx_5n_qRlJMuocEyL5JrbUjrgIR-lyd0vOsijTtCEYZ7XbhFJNDIJP9GSxi6EStinU9CinOHkkPXPzbBGnQ9-csNo4o494DvdixuPeqqTm89V9d3xY4jvzx3lI/s400/wind-turbine-diagram-gif.gif" width="400" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="background: rgb(253 , 253 , 253); color: #38761d; line-height: 150%;">Inox Wind Ltd provides turnkey solutions for wind farm
projects & </span><span style="color: #38761d; line-height: 150%;">offers services including wind resource
assessment, site acquisition, infrastructure development, erections and
commissioning, and also long term operations and maintenance of wind power projects.
Company manufacture the components of wind turbine generators in-house with a
view to ensuring high quality, advanced technology and reliability and
maintaining cost competitiveness. Company has facilities dedicated to
manufacturing nacelles, hubs, rotor blade sets and towers. Inox Wind have a
perpetual license from AMSC Austria GmbH (formerly Windtec GmbH), or AMSC, a
leading wind energy technology company based in Austria, to manufacture 2 MW
WTGs in India based on AMSC’s proprietary technology. </span><span style="color: #38761d; line-height: 150%;">In August 2014, INXW and AMSC amended
the agreement to cover all 2MW WTGs with rotor diameters between 85 meters and
120 meters. In addition, INXW has a non-exclusive license to manufacture 2MW
WTGs worldwide based on AMSC’s proprietary technology. Globally, over 15GW of
aggregate production capacity operates on AMSC technology</span><span style="color: #38761d; line-height: 150%;">. </span><span style="color: #38761d; line-height: 150%;">As per the terms of
license from AMSC, INXW is required to purchase Electronic Control System
manufactured by AMSC or its affiliates.<b> </b>INXW has a non-exclusive
perpetual license from WINDnovation Engineering Solutions GmbH, Germany for the
technology on manufacturing Rotor blade sets. INXW procures gearboxes from DHHI
(China) and Wikov Industry a.s. (Czech Republic), and generators from Emerson
Industrial Automation and ABB India for its gearboxes and generators. </span><span style="color: #38761d; line-height: 150%;">In the
equipment supply business, INXW is among the top-2 players in India; while the
size of this segment is 15 % for the WTG industry, it is targeted to contribute
30 % to INXW’s revenue in FY16. The
major Wind Turbine Manufactures in India are Chiranjjeevi Wind Energy, Elecon
Engineering, Garuda Vaayu Shakti, Ghodawat Energy, Inox Wind, NEPC India,
Pioneer Wincon,PowerWind, Regen Power Tech, RRB Energy, Siva Windturbine, Southern
Wind Farm, SRC Green Power, SUZLON</span><span style="color: #38761d; line-height: 150%;">. INXW manufactures the key components for WTGs in-house, which
ensures cost competitiveness, cost-effective logistics, and attractive margins.
</span><span style="line-height: 150%;"><span style="color: #bf9000;">The
long term future for wind is underpinned mainly by its order of competence and
cost effectiveness in comparison with other conventional fossil fuels. New
products are being introduced with a notably improved yield curve and also to
yoke wind energy from low wind sites. Today India only gets 8.7 % of its power
from wind energy. Thus, there exists a credible prospect for growth of wind
turbine industry in India. The long term outlook of wind market continues to
remain strong with rationalization of tariff structure to ensure only players
with superior technology and execution capabilities across wind rich states
would be emerging as the winners. The growth of the wind energy sector in India
for the years to come will be sustained by the unexploited resource availability.
Upbeat on the improved regulatory and financial environment, investors are
expected to pour over $15 billion into India’s wind energy sector by 2020, a
report by ratings and research firm CRISIL. The Indian government has pledged
the continuance of significant incentives for the wind energy sector, such as <i>accelerated depreciation and
generation-based incentive</i>. However, the wind energy sector might take a
major hit, with the Budget capping the accelerated depreciation tax benefit at
a maximum of 40% from April 2017. The government is also planning to launch the
National Wind Energy Mission which would accelerate the development of wind
energy projects and open the offshore wind energy sector as well. However this
industry is still the focus of those customers who are ready to incur higher
capital cost to generate higher returns. Larger rotor blades and higher hub
heights offer superior PLF (plant load factor), compensating for lower tariffs
and still generating attractive Internal Rate of Returns. In 2015, India
announced plans to increase its renewable energy output to 175 GW by the year
2022, with 60 GW coming from wind power alone. With an installed capacity of 26,904
MW as of March 2016 of wind energy, renewable energy sources excluding large hydro,
currently accounts for sub 15 % to 16 % of India’s overall installed power
capacity. Wind energy holds the major portion of 65.09 % of 37,010 MW total
renewable energy capacity as on Aug, 15 and continues as the largest supplier
of clean energy. </span><span style="color: #38761d;">70 % of wind generation happens during the five months
duration from May to September coinciding with southwest monsoon duration.
Fiscal 2016 saw the highest ever annual installation of 3,472 MW. This has
increased the installed WTG base to 27,000 MW 15 % y-o-y growth. Inox Wind has
a permanent exclusive license from AMSC (American Superconductors) to manufacture
2 MW WTGs, using its proprietary know-how. Under the authorized agreement, IWL
is required to purchase all ECS (Electronic Control Systems) from AMSC. There
are more than 7,000 turbines with an aggregate capacity of more than 15,000 MW
profitably operating across the globe based on AMSC technology. IWL’s WTGs are
equipped with DFIG (Double Fed Induction Generator) technology. IWL has entered
into two strategic long term technological agreements with AMSC. This alliance
has not only helped in reducing the R&D expenditure but also gives it a
technological advancement edge. The other agreement provides access to
custom-made rotor blade-sets design through WIND Innovation. Enhanced supply
chain management coupled with cost saving due to indigenization will help in
reducing the foreign exchange exposure of IWL if IWL chooses to manufacture in
future. Association of IWL and AMSC for the development of 3MW WTG for India
will improve efficiency at a lower cost of generation providing it with cutting
edge WTG technology. IWL also has a license from Romax Technology, UK, which is
a global provider of integrated software and services, for their gear box
designs. With the launch of new 113 meter rotor diameter with a hub height of
120 meters which is 20 % more efficient, 40 % of the future orders are expected
to consist of this product itself. The descent of IWL in unexplored southern
states like Kerela, Karnataka and Tamil Nadu, is an attempt by the company to
stay ahead of its competitors and to maintain a growth rate with is higher than
that of the industry as it has done in the past. A decreasing current ratio,
increasing leverage and falling interest coverage underpins the rising debt of
the company. The total debt of the company rose by a startling 57.1 % in FY15
and 68.7% in FY16. With an increase in sales, the company had to purchase more
and more components, the payment period of which is 3-6 months, depending on
the credit period given by the suppliers. The company also has a huge trade
receivable component sitting on its Balance Sheet as on FY16. The trade receivables
in turn have risen by 69 % in FY16 which is almost in line with the growth in
revenues for FY16 of 63 % which is evident by a roughly stable debtors’
turnover ratio. Less than 10 % of the receivables are more than 6 months old. The
65 % increase (y-o-y) in short term loans and advances in FY16 y-o-y is mainly
due to inter corporate loans given to subsidiaries, IWSL (Inox wind
Infrastructure Services Ltd.) and IRL (Inox Renewables Ltd.), at an interest
rate of 10 % p.a. With the new additions to its already diversified and reputed
clientele, like the Adani’s first order in the wind sector, the company boasts
of a current order book of 1,104 MW as on March, 2016. Incremental orders are
expected to be undertaken in the first quarter of the current fiscal as well.
Winning new orders and more crucially, winning additional business from existing
clients is believed to be more important than hunting for big contracts. This
belief is further strengthened by Inox’s client mining skills. It has
maintained optimism about future order inflows, on the back of government’s
focus on renewable sector and also IWLs strong market positioning and capex
pipeline of independent power producers (IPPs). The sector is expected to grow
at a CAGR of 15 % over the next five years and Inox plans to grab a larger
market share as it moves forward. </span></span><span style="color: #38761d; line-height: 150%;">Continuing
from Q1, production in last quarter was further geared towards clearing the
inventory backlog and improving the working capital cycle of the company. One of
the key reasons of working capital blockage was mismatch in manufacturing capacities
and therefore to this extent, last quarter Inox again focused on correcting that
mismatch. The company has deliberately focused more on the production of blades
and towers relative to the production of nacelles and hubs. For the first half
of the current fiscal year, 162 MW of nacelles and the hubs were produced
versus 332 MW last year, 366 MW of blades were produced versus 280 MW last year
and 286 MW of towers were produced versus 332 MW last year 194 MW was
commissioned in the first half of the current year versus 216 MW in the first
half last year In terms of cost analysis for the first half of the current
fiscal, raw material and EPC cost which were at 74.90% of the overall sale
price in H1 last year is now down to 70.4 % which is a cost of saving of almost
4.50 %. Other variable cost was at about 3.5% last year versus 3.6% this year.
Fixed overheads went up from 7.3% to 14.2 % largely because of lower production
of nacelles and the hubs. Last quarter there has been a lot of logistics
movement of inventory to south such as AP and karnataka, where Inox is building
new projects. Logistics costs in blades and towers are almost two or three
times the logistics cost of a nacelle and since the company has dispatched huge
amounts of blades and towers as opposed to nacelles to overcome the inventory
mismatch which was prevalent in the last few quarters. </span></span><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Recently, IWL expanded its Turbine capacity
to 113m from the earlier 100m. As a result, management expects 5 % increase in
the costs, but efficiency is expected to increase by 20 %. Further, realization
of large rotor blades would increase. Considering shift in business mix where
high capacity Turbines would contribute more to the financials, it is expected
that the efficiency of IWL to improve. As a result, it is expected that the
Adj. EBITDA margins to improve from 15.4 % in FY2016 to 16.4 % in FY2018E. The
Adj. PAT margin expansion during FY2016-18E could remain around 10.6 %. Considering
the 4QFY2016 Order Book, and expected strong order inflow trends, IWL stock is
trading at attractive valuations. Post the 17 % correction in the IWL stock
after 4QFY2016 results were announced, the stock a</span></span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 185.85, the stock is trading at a PE of 9.11x FY17E and 8.00 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 20.40 in FY17E and Rs. 23.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16 </span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 2,702.27</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4,406.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4,710.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5,053.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">327.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">421.20</span></td><td>453.50</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">509.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 14.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">19.00</span></td><td>20.40</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>17.60</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.40 </span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">10.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 36.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.00</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> INOX WIND LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com6tag:blogger.com,1999:blog-8296423824543086164.post-84889123655889312852016-11-23T06:30:00.000+05:302016-11-23T14:46:29.230+05:30ZEE ENTERTAINMENT ENTERPRISE LTD: AROUND THE GLOBE !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRVY3wIidVYyVxsuushRk1Z_-CDiJLs4nO8Y8Peq0npkMYxqbCX4TValVscVarrLNO5rKfmUnQTjt4hkRokBCi3Jv9ZhlHUJTKH_uBAe7yhVO3_D04iKtfn8ZT9dETQ-wYaf0D5B5FoThK/s1600/ZEE-Corporate-Logo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRVY3wIidVYyVxsuushRk1Z_-CDiJLs4nO8Y8Peq0npkMYxqbCX4TValVscVarrLNO5rKfmUnQTjt4hkRokBCi3Jv9ZhlHUJTKH_uBAe7yhVO3_D04iKtfn8ZT9dETQ-wYaf0D5B5FoThK/s320/ZEE-Corporate-Logo.jpg" width="320" /></a></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=505537"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">505537</span></b></a><span class="apple-converted-space"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=ZEEL&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">ZEEL</span></b></a><b><span style="font-size: 13.5pt;"><o:p></o:p></span></b></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 449.50; Market Cap:
Rs. 43,172.16 Cr; 52 Week High/Low: Rs. 589.90 / Rs. 350.10.</span></b><b><span style="font-size: 13.5pt;"><o:p></o:p></span></b></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 96,04,48,720 shares;
Promoters : 41,36,70,212 shares – 43.07 %; Total Public holding : 54,67,78,508
shares – 56.93 %; </span></b><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Book Value: Rs. 43.88; Face Value: Rs. 1.00;
EPS: Rs. 10.32; Dividend: 225.00 %; P/E: 43.55 times;</span></b></span><span class="apple-converted-space"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 35.52;
EV/EBITDA: 23.69 times.</span><span style="font-size: 13.5pt;"> </span></b></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 1.90 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 42,200.76 Cr.</span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">ZEE ENTERTAINMENT
ENTERPRISES LTD:</span></b><span style="line-height: 150%;"><span style="color: #38761d;"> Zee
Entertainment Ltd was founded in the year 1982, based in Mumbai. Company was
formerly known as Zee Telefilms Limited and changed its name to Zee
Entertainment Enterprises Limited in January 2007.</span><strong style="color: #38761d;"> </strong><span style="color: #38761d;">The
Company came out with an IPO in 1993 offering 90,00,000 equity shares of Rs. 10
each for Rs. 20 per share raising Rs. 18.00 Cr. ZEEL announced split in its
face value from Rs. 10 to Rs.1 on September 1999, later in September 2010 it announced
bonus in ratio of 1:1 and on completion of 20 years of broadcasting business in
May 2013, the Company announced the distribution of about Rs. 2,015 Crs by way
of Bonus issue of 6 % Non-Convertible Redeemable Preference Shares of Face
value of Re. 1 each. This bonus issue was in ratio of 21 non-convertible redeemable
preference shares with tenure of eight years of Re. 1 each for every 1 Equity
share of Re. 1 held in a company. The bonus issue was with one-fifth of the
amount i.e. around Rs. 400 Cr redeemable from fourth year onwards in five equal
instalments till eight year, this was issued on March 4, 2014. ZEEL, together
with its subsidiaries, operates as a vertically integrated media and
entertainment company in India. It operates in three segments: Broadcasting and
Content, Education, and Film Production. The Broadcasting and Content segment
develops, produces, and procures television programming and film content, and
delivers through satellites, cable, and Internet. It broadcasts channels, such
as Hindi general entertainment channels and regional language general
entertainment channels, Bollywood channels, sports channels, English
entertainment channels, alternate lifestyle channels. </span><span style="background: white; color: #38761d;">The company broadcasts Hindi entertainment channels - Zee TV, Zee Smile,
and 9X; Hindi movies channels - Zee Cinema, Zee Premier, Zee Action, and Zee
Classic; English entertainment, movies, and life style channels - Zee Studio,
Zee Café, and Zee Trendz; and Sports channels - TEN Cricket, TEN Action, TEN
Sports, and TEN Golf. It also broadcasts Regional language entertainment channels,
including Zee Marathi, Zee Bangla, Zee Talkies, Zee Telegu, Zee Kannada, ETC
Punjabi, and Zee Tamil; religious and alternate lifestyle channels comprising
Zee Jagran and Zee Salaam; music channels, such as Zing and ETC Music; niche
and special interest channels comprising Zee Khana Khazana; and HD channels,
including Zee TV HD, Zee Cinema HD, Zee Studio HD, and TEN HD. </span><span style="color: #38761d;">Company</span><span class="apple-style-span" style="color: #38761d;"> </span><span style="color: #38761d;">earns
revenues by the way of advertisement and subscription revenues and syndication.
The Education segment engages in distribution of software learning products;
and provides education and training in information technology. Zee
Entertainment Enterprises Ltd has approximately 959 million viewers in 169
countries worldwide. The Film Production segment produces and distributes films.
The company has a library housing approximately 2,10,678 hours of television
content and about 3,500 hours of movie titles. Effective March 29, 2010, Zee
News Ltd. demerged its Regional General Entertainment channel business
undertaking and transferred its operation to Zee Entertainment Enterprises
Limited. It has operations in India, the United States, Canada, Europe, Africa,
the Middle East, Southeast Asia, Australia, and New Zealand. ZEEL can be
locally be compared with </span><span style="color: #bf9000;">Balaji Telefilms Ltd, New Delhi Television Ltd, Sri
Adhikari Bros Tele Network, Sun TV Network Ltd, Network 18 Media &
Investment Ltd and TV18 Broadcasts Limited, Raj Television Networks Ltd,</span><span style="color: #38761d;"> and
Globally with </span><span style="color: #bf9000;">UTV Media PLC of UK, CBS Corporation of USA, British Sky
Broadcasting Group of UK, Viacom Inc of USA, Comcast Corp of USA, Direct TV
USA, Discovery Communications of USA, Dish Network of USA, Dreamworks
Animations SKG of USA, Time Warner Cable Inc of USA, TV Tokyo Holdings
Corporation of Japan, Chubu-Nippon Broadcasting Co., Ltd of Japan, Wowow
Incorporated of Japan, Twenty First Century Fox of USA, Walt Disney company of
USA, News Corp of USA, NBC Universal of USA</span><span style="color: #38761d;">.<o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaAMcCk2shWTZTkwS2XQyQxQljb_TaEnm7dlvjtV8TXif74CZhgGB6eQZLmrluRoGM-U4pSMmJoHcT4rYqD9CNH0OcfmZAn5l_ykrqSvUvJbytHsq-z2nBQg-v8qOnKAAvIEWdji2k8Gu-/s1600/932238478_45f09321c7b9a438.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaAMcCk2shWTZTkwS2XQyQxQljb_TaEnm7dlvjtV8TXif74CZhgGB6eQZLmrluRoGM-U4pSMmJoHcT4rYqD9CNH0OcfmZAn5l_ykrqSvUvJbytHsq-z2nBQg-v8qOnKAAvIEWdji2k8Gu-/s400/932238478_45f09321c7b9a438.jpg" width="336" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Zee Entertainment Enterprises Limited
is one of India’s leading television, media and Entertainment Company. It is
amongst the largest producers and aggregators of Hindi programming in the
world, with extensive library housing over 2,10,678 hours of television content.
ZEE has rights to more than 3,500 movie titles from foremost studios and of iconic
film stars; Zee houses the world's largest Hindi film library. Through its
strong presence worldwide, Zee entertains over 67 Cr+ viewers across 169
countries. The Zee stable owns an integrated range of businesses. All of these
in singularity adhere to the content to consumer value chain model of media and
entertainment business. Zee is a pioneer in every aspect of content aggregation
and distribution through traditional media like satellite and cable and new
media like the internet, in India. Zee Entertainment Enterprise is the first listed
media company in India and first to launch a Hindi General Entertainment
Channel as Zee TV. </span><span style="color: #bf9000;"><span style="line-height: 150%;">The Indian Media and Entertainment (M&E)
industry is a sunrise sector for the economy and is making high growth strides.
Proving its resilience to the world, the Indian M&E industry is on the cusp
of a strong phase of growth, backed by rising consumer demand and improving advertising
revenues. The industry has been largely driven by increasing digitisation and higher
internet usage over the last decade. Internet has almost become a mainstream
media for entertainment for most of the people. The Indian media &
entertainment sector is expected to grow at a Compound Annual Growth Rate
(CAGR) of 13.9 % year-on-year to reach Rs 1,96,400 Cr (US$ 28.82 billion) by
2019. In 2015, the overall Media and Entertainment industry grew 11.7 % over
2014. The largest segment, India’s</span><span style="line-height: 150%;"> </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">television
industry, is expected to maintain its strong growth momentum led by
subscription revenues, representing a year-on-year growth of about 13.2 % to
reach Rs 60,000 Cr (US$ 8.8 billion) in 2017. Significantly, with the increased
penetration of smartphones and expansion of 3G/4G network in India, the country
is likely to see around 900 Cr mobile application (apps) downloads during 2017,
which is five times more than 156 Cr in 2012. This uptick in app-downloads is
also expected to increase the revenue from paid apps to an estimated over US$
241.16 million as against US$ 144.7 million in 2014. Internet access has
surpassed the print segment as the second-largest segment contributing to the
overall pie of M&E industry revenues. Television and print are expected to
remain the largest contributors to the advertising pie in 2018 as well.
Internet advertising will emerge as the third-largest segment, with a share of
about 16 % in the total M&E advertising pie. The film segment which
contributed Rs 12,640 Cr (US$ 1.90 billion) in 2014 is projected to grow
steadily at a CAGR of 10 % on the back of higher domestic and overseas
box-office collections as well as cable and satellite rights. Digital
advertising is expected to lead the CAGR with 30.2 %, followed by radio with
18.1 %. Animation and VFX, and television are expected to register a CAGR of
16.3 % and 15.5 % respectively, followed by growth rates of music at 14.0 %,
films at 10 % and OOH with 9.8 % expected CAGR. Within TV, subscription
revenues are expected to be three times more than advertising revenues, by
2018. Growth in the regional reach of print and radio shall provide
opportunities to further improve the advertisement revenue. Recently the
government of India announced </span><span style="background: white;"><span style="color: #bf9000;">Demonetization of
its Rs. 500 and Rs. 1000 currency notes; this move is likely to impact
multiplexes more rather than the content players and broadcast players like ZEE
Entertainment Enterprises Ltd. </span><span style="color: #38761d;">The content interruption is unlikely as only
small payments happen in cash. Print companies could see some impact while the
broadcast companies will be least impacted. Ad revenue forms a major part for
these companies and almost most of the payments are made in cheques so
demonetization would not hurt ZEE. Zee Entertainment is likely to see a sharp
increase in earnings going forward to the extent of 25 % plus over two or three
years due to successful launches of new channels and is expected to do even
better going ahead with increasing its market share in regional space. Also, Goods
& Services Bill will be a great positive for the company. </span></span></span><span style="background: white; color: #38761d; line-height: 150%;">Recently, Sony
Pictures Networks India (SPN) announced that it will acquire Ten Sports for Rs.
2,600 crore ($385 million) from Zee Entertainment Enterprises. The deal will
raise SPN's sports profile and put it on equal footing with Rupert Murdoch's
21st Century Fox-owned Star India. The price reflects a control premium as well
as a four-year, non-compete pledge. ZEE had paid $107 million (Rs. 500 crore)
in instalments during 2006-11 to acquire Ten Sports from Dubai-based Abdul
Rahman Bukhatir's Taj Group. Its accumulated losses from the sports business which
were are pegged at Rs. 600 Rs. 640 crore. The transaction is expected to be
completed in four-five months by FEB 2017. ZEE ran the sports business for
close to 10 years and has got it near breakeven. However, they believe that
their energies and resources should be deployed in other high-margin and
profitable businesses. The valuation for TEN was very good as they got an IRR
(internal rate of return) of over 15 %. </span><span style="color: #38761d; line-height: 150%;">Zee reported ad revenue growth of 13.7 % YoY in the quarter aided
by strong growth in regional channels. This was higher than industry ad growth
of 13-15% during the quarter. Zee has a leadership position in Marathi and
Bengal and is in the top 3 positions in Telugu and Kannada space. During
Q2FY17, Zee Tamil witnessed a marked improvement in viewership, and was the
second ranked channel in August and September in the Tamil market. The company
expects to continue its industry leading growth, going ahead. The company,
however, sounded cautionary on moderation in FMCG and e-commerce spends, which
may have some impact on industry growth in the coming quarters. As per the
company, FMCG which forms 55-60 % of the TV ad spend, would thus impact ad
growth by 1 % for every 2 % impact on spends. However, the company remained
upbeat on telcos ad spends owing to 4G launches coupled with GST rollouts
wherein potential savings in tax outgo by companies may be reinvested for ad
spend. International ad growth is expected at low double to high single digits.
Though the programming hours were on the lower side with 25 hours in the
quarter, the management has guided at increasing ad inventory through increase
in programming hours. </span><span style="color: #38761d; line-height: 150%;">Higher
penetration of DTH and the digitisation process augur well for faster growth in
subscription revenue over the long term. And with the rapid growth in mobile
usage and internet connections and looking at the content hours and quality of
ZEE, the company can retain its leadership in media space and command higher
premium in valuations and is well poised to benefit from this favourable
environment.<o:p></o:p></span></span></div>
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<b><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation: <o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVP34UxwQEkbaglTV_1_PYG4CvbQ3k9Tn2nZb2WBKsKQUF4il4hIN0iTXn4oAOz2nsDXxHich6kXMKycudmSYRX3HRNn3TIWC-SvL68SDi3Q-wwWvdGdePWzZzNuRXc1rbiW-FO_yTwG-M/s1600/932239127_950eb7ecf11e34be.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVP34UxwQEkbaglTV_1_PYG4CvbQ3k9Tn2nZb2WBKsKQUF4il4hIN0iTXn4oAOz2nsDXxHich6kXMKycudmSYRX3HRNn3TIWC-SvL68SDi3Q-wwWvdGdePWzZzNuRXc1rbiW-FO_yTwG-M/s400/932239127_950eb7ecf11e34be.jpg" width="336" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Zee Entertainment Enterprises Ltd
(ZEEL) is one of India’s leading television, media & entertainment companies.
In a reflection of India's growing influence,
domestic television channels are increasing their networks internationally. </span><span style="color: #38761d; line-height: 150%;">Zee
Entertainment is a leading provider of entertainment content across genres in
the Hindi, English & regional languages. With leading channels like Zee
Marathi, Zee Bangla, Zee Telugu, Zee Kannada, Zee Tamizh and ETC Channel
Punjabi within its fold, Zee Entertainment would now have an unparalleled reach
across the country in the fast growing regional markets. Bollywood - The Indian
Film industry is acclaimed as one of the largest film industries of the world.
ZEE's Hindi movie channels, Zee Cinema, Zee Premier, Zee Action and Zee Classic
maintain its objective in delivering the best of programming in the Hindi
Movies Genre</span><span style="color: #38761d; line-height: 150%;">. </span><span style="color: #38761d; line-height: 150%;">Zee has
restructured its business into five verticals, each of which is expected to become
a significant piece of the overall pie over the medium to long term Horizons.
The five verticals are Broadcasting, International business, Movies & Music,
Digital, Live entertainment. <i><b>Broadcasting
</b></i>segment is currently the major portion of the business; this vertical is likely
to remain the key part with focus on regional segment and improving the ratings
of flagship & other GEC through new launches and improved selection of
shows. Its <i><b>International business</b> </i>segment
along with broadcasting (domestic) would form the lion’s share of the business
in medium term. The company would continue to address the international market
for Indian content in Hindi/Regional/dubbed language</span><span style="color: #38761d; line-height: 150%;">. ZEE’s </span><b style="color: #38761d;"><span style="line-height: 150%;"><i>Movies
& Music</i></span></b><span style="color: #38761d; line-height: 150%;"> segment continues to focus on movies production
both in Hindi and regional space. Zee Music Company, its music label, has built
significant market share, with 60 % incremental share in acquisition of music rights
of new Hindi movies, during the quarter. Zee’s <b><i>Digital</i></b> segment is currently in nascent stage and the company has
yet to discover the market opportunity. During Q2FY17, Ditto TV, its pay
over-the-top (OTT) platform, reduced its subscription price to Rs. 20 a month
vs. the platform clocking 200 million video views in Q2. Its</span><b style="color: #38761d;"><span style="line-height: 150%;"> </span></b><b style="color: #38761d;"><span style="line-height: 150%;"><i>Live entertainment</i> </span></b><span style="color: #38761d; line-height: 150%;">segment
is also in nascent stage segment. The company expects huge opportunities from
domestic as well as international events. During Q2FY17, Zee’s LiveEvents
business rolled out its first event, ‘<i>Wicked
Weekends</i>’ across the country.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Zee
acknowledged that a fall in ratings in its flagship Zee TV was owing to wrong selection
of shows. A new business head has joined four to five months ago. The company
has lined up a pipeline of new shows, which would be launched in H2FY17 and thus
boost ratings.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">The
company launched three new channels in domestic market - Zee Anmol Cinema - a
Hindi movie channel for FTA audience; Zee Yuva, a youth focused Marathi GEC to
add on to its present offerings in Marathi market; and Zee Cinemalu, a movie
channel in Telugu language. In October, it also refreshed the content of
Zindagi, its other Hindi GEC. The company is also in the process of launching
HD versions of its regional channels. ZEE has lined up </span><span style="color: #38761d; line-height: 150%;">its I</span><span style="color: #38761d; line-height: 150%;">nternational channel launches, two
new channels in the international market in Q2FY17 – Zee One – targeted at Spanish
speaking Hispanic population in US and Zee Mundo – a Bollywood movie channel in
Germany, which airs movies dubbed in German. Post the launch of the above
mentioned channels, its international channels bouquet is at 40 with channels
dedicated to native audience at 12. ZEE’s</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">&
TV witnessed 12 % QoQ improvement in viewership. The company indicated that
while it is still away from the breakeven point – i.e., 9 % to 10 % viewership market
share, it is on track to meet its target to achieve breakeven within the 3
years of launch.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">In the
Tamil market, Zee Tamil witnessed a marked improvement and was the second
ranked channel in August and September. In the Telugu market, where it is
third, it indicated that Gemini TV leads owing to huge movie content and Zee
Telugu is superior in the fictional segment. In the Kannada market, where the
company is number two, the leader (Colours Kannada) has higher content hours
and high cost non fiction shows like Bigg Boss, which lends them the leadership.</span><span style="line-height: 150%;"> <span style="color: #bf9000;">The </span></span><span style="color: #bf9000;"><span style="line-height: 150%;">Free to air (FTA) channels
advertisement market size is Rs. 1500 crore including Doordarshan. As per the
company, 80 % of the market size is held by 8-10 channels. Zee’s key strategic objectives
are to be a multimedia entertainment conglomerate, to attain global consumption
leadership, and consistently enhance shareholder value.</span><span style="line-height: 150%;"> Zee’s first </span><span style="line-height: 150%;">priority is to attain leadership
position in key genres, wherein it enjoys leadership in genres of regional
markets such as Telugu, Marathi, Kannada, Odisha (Sarthak) and Bengali and has
maintained top two positions. It also emphasised its leadership in Hindi movies
cluster where it increased its viewership share to 34 %. Zee wants to continue its
expansion in new markets and verticals like its expansion in movie production,
theatres, live events and music. In FY16, Zee created a new entertainment
vertical – Zee Theatre to make unique theatre content across platforms. The
company has also expanded in the international market and invested in new
distribution deals across the Caribbean, African and APAC markets.</span><span style="line-height: 150%;"> </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">The company identified its
focus on digital segment by creating multiple digital offering like OZee and
Ditto TV and creating content which is customised for such platform. Zee also
wants to attain sustainable profitable growth through efficient capital
allocation and prudent cost model. Interestingly, the sale of sports business
finally in Q2FY17, mirrored the management’s intention to shift focus from loss
making segment to profitable segment, and they sold off loss making sports
properties which improves its Operating cash flow which will remain robust at Rs.
730 crore despite acquisition of Sarthak Entertainment in FY16.</span><span style="color: #38761d;"> Company’s FCF,
however, was impacted by higher investments in building production studios and
Sarthak Entertainment acquisition, while sale of air plane generated inflow of Rs.
36.7 crore. Going ahead, with most of capex cycle over in terms of any major
channel launches the FCF generation should improve going ahead. Acquisition of
Reliance Broadcasting Network will provide Zee an altogether new geography like
Bihar, through the #1 channel over there Big Ganga and entry into the Radio
channel Big FM. However, as it is subject to regulatory approvals and
uncertainty over finalization of the deal time line but post the inclusion, a
good bump up in the ad revenues and overall financials can be seen. On
Financial side, Zee posted strong performance in Q2 as the numbers were lifted
by subscription revenues which grew at 22 % yoy on the back of 24.6 % yoy
growth in the domestic arm on the back of catch up revenues of the previous
quarter and early closures of content deals as compared to previous year.
Advertising revenues witnessed some moderation at 16 % as FMCG and e-commerce
verticals lowered their ad spending a bit. The company in the Hindi GEC had a
market share of 24 % with & TV combined, whereas it remained strong in the
Marathi space with 55 % market share. The highlight of the quarter was the
Tamil channel of Zee which climbed up to second spot while in the Telugu and
Kannada markets Zee remained at 3rd and 2nd spots respectively. In Oriya market,
Sarthak TV continued its dominance. Other sales and services which included
syndication of sports business, Zee Music Company, Ditto TV etc grew by 16.4 %
yoy. On the margin front, EBITDA margins have been continuously inching higher
quarter by quarter. In Q2, they came in at 28.9 % higher 2.90 % yoy as sports
losses reduced and subscription revenues moved up. Programming costs as a % of
sales moved up to 45.3 % up by 1.50 % yoy and 3.50 % qoq on higher cost
involved with movie production and India cricket series. Other expenses as a %
of sales moved down to 16.8 % 3.00 % qoq and 4.80 % yoy on account of cost
control and low carriage fees. Despite higher depreciation and lower other
income, PAT adjusted for exceptional losses came in at </span></span><span style="color: #38761d; line-height: 150%;">Rs.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">327 Cr
which was 17.3 % higher yoy. Higher market share gains are on the cards as Zee
Anmol, regional channels, newly launched channels and the movies basket are
expected to continue their excellence. Even internationally, the revenues are
growing at a hefty pace on new content. This will enable the ad revenues to
grow at a rate of 18 % to 20 % in the coming years higher than the industry
average. Subscription revenues will continue to get trigger from finalization
of content deals, digitization albeit with a delay and the long term positives
to be seen from the new tariff regulations. Hiving off of the sports business
will offer a good riddance from a business which was dragging down the
profitability. This will lift up the margins from FY18E. </span></span><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">The company hopes that Digital will be a
key part of its Growth in the future and hence the company geared for expansion
on that front as well.</span><span style="font-family: "georgia" , serif; font-size: 12pt;"> A</span></span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 449.50, the stock is trading at a PE of 33.79 x FY17E and 26.13 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 13.30 in FY17E and Rs. 17.20 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. </span></div>
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<table border="1" cellpadding="9" cellspacing="0" style="background-color: white; color: #00810f; font-family: georgia, utopia, "palatino linotype", palatino, serif; font-size: 18px; line-height: 24px; text-align: justify;"><tbody>
<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY19E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 5,851.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6,832.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7,880.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9,042.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,060.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,277.20</span></td><td>1,652.20</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,926.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 10.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.30</span></td><td>17.20</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.10</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>48.10</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">38.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">25.60</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">32.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 18.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 18.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">15.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.90</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">hold </span><span style="color: #bf9000;">ZEE ENTERTAINMENT LTD in my investment portfolio.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<h1>
<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-64911106038463254042016-11-13T05:15:00.000+05:302016-11-13T18:58:31.288+05:30THYROCARE TECHNOLOGIES LTD: A MUST STOCK IN PORTFOLIO !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ3_78xQdDSdrbrgoAL7uLTKRyl7LUhhSbhONKuoNb-j3H145hRD8SbRgRoawGBRqRLTjEmuYss2g_8RCFXZ6f9mF2dRvVHZ8eDp4joy1tTFQwy8ZPwesvSmo_pUwygGrjRdUY7VbKFXYQ/s1600/1-6bde7af5-6159-4113-b576-b10caac8064e.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="92" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ3_78xQdDSdrbrgoAL7uLTKRyl7LUhhSbhONKuoNb-j3H145hRD8SbRgRoawGBRqRLTjEmuYss2g_8RCFXZ6f9mF2dRvVHZ8eDp4joy1tTFQwy8ZPwesvSmo_pUwygGrjRdUY7VbKFXYQ/s320/1-6bde7af5-6159-4113-b576-b10caac8064e.jpg" width="320" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:<span class="apple-converted-space"> </span></span></b><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=539871"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">539871</span></b></a></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=THYROCARE&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">THYROCARE</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 616.75; Market Cap: Rs. 3,313.39 Cr; 52 Week High/Low: Rs. 684.80 /
Rs. 446.00</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 5,37,23,533 shares; Promoters : 3,43,61,745 shares – 63.96 %; Total Public
holding : 1,92,27,188 shares – 35.79 %; <span class="apple-style-span">Book
Value: Rs. 69.87; Face Value: Rs. 10.00; EPS: Rs. 12.32; Dividend: 95.55 %;
P/E: 50.06 times;</span><span class="apple-converted-space"> </span><span class="apple-style-span">Ind.</span><span class="apple-converted-space"> </span><span class="apple-style-span">P/E: 57.05; EV/EBITDA: 29.28x</span></span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: </span></b><b><span lang="EN-US" style="color: #c00000; font-family: "georgia" , "serif"; font-size: 13.5pt;">NIL</span></b><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">;<span class="apple-converted-space"> </span>Enterprise<span class="apple-converted-space"> </span>Value: Rs. 3,305.79 Cr.</span></b><strong><span lang="EN-US" style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> <o:p></o:p></span></strong></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US">THYROCARE
TECHNOLOGIES LIMITED:</span></b><span lang="EN-US" style="background: white; color: #38761d;"> The Company was </span><span style="color: #38761d;">incorporated in 2000.
Thyrocare Technologies Ltd is one of the leading pan-India diagnostic chains
and conducts an array of medical diagnostic tests and profiles of tests that
helps in early detection and management of disorders and diseases. They are
India's first fully automated diagnostic laboratory having its strong presence
in more than 2000 cities and towns in India and internationally. </span><span lang="EN-US" style="background: white; color: #38761d;">T</span><span lang="EN-US" style="color: #38761d;">he company came out with an
IPO on April 27, 2016 offering 1,07,44,708 equity shares of Rs. 10 each for Rs.
446 per share raising Rs. 479.21 Cr. The shares of the company got listed on May
9, 2016 at Rs. 662 making a high of Rs. 665.40 and low of Rs. 606.00 on listing
day. The object of offer for sale was to achieve the benefits of listing and to
provide liquidity to selling shareholders. <span style="background: white;">The
company has issued three bonuses prior IPO in the span of 16 years so far in
the ratio of 1 for 1 in November 2003, 5 for 2 in March 2006 and 3 for 1 in
September 2014. Between the years 2003 to 2006 it issued shares at a price of
Rs. 200 per share. It also issued few shares in March 2013 at a price of Rs. 75
per share. </span></span><span style="color: #38761d;">Thyrocare
is among the leading diagnostic chains. It conducts an array of medical diagnostic
tests that centre on early detection and management of disorders and diseases.
The company operates its testing services through a fully-automated central
processing laboratory (CPL) in Navi Mumbai, which acts as a hub to branches.
The company has recently expanded its operations to include a network of five
regional processing laboratories (RPLs). Out of these, four RPLs were set up in
2015 one each in New Delhi, Coimbatore, Hyderabad, and Kolkata while it set up
one in Bhopal in 2016. The company as of February 29, 2016, had a network of
1,041 authorized service providers (ASPs), comprising of 687 Thyrocare Aggregators
(TAGs) and 354 Thyrocare Service Providers (TSPs) spread across 466 cities, 24
states and one union territory. These ASPs operate under a franchise agreement
with the company and deliver samples directly to one of the RPLs or to one of
the 22 hub locations if the sample is to be processed at the CPL. As of
February 29, 2016, it offered 198 tests and 59 profiles of tests to detect a number
of disorders. Its profiles of tests include 16 tests administered under its “Aarogyam”
brand, which offers patients a suite of wellness and preventive health care
tests. Their laboratory processes over 30,000 samples
and above 1 lakh investigations every day. Their profiles of tests include 17
profiles of tests administered under their 'Aarogyam' brand. Through wholly owned
subsidiary, NHL, they operate a network of molecular imaging centres in New
Delhi, Navi Mumbai and Hyderabad, which focuses on early and effective cancer
monitoring. </span><span lang="EN-US"><span style="color: #38761d;">Thyrocare
Technologies Ltd is locally compared to </span><span style="color: #bf9000;">Dr. Lal Pathlabs Ltd ADS Diagnostic Ltd,
Sharon Bio-Medicine Ltd, Secunderabad Health Care Ltd, Keral Ayurveda Ltd,
Looks Health Services, Kovai Medical Center, Healthcare Global, SRL
Diagnosticcs, Metropolis, Oncquest Laboratories Ltd, Suburban Diagnostics,
Medall HealthCare Pvt Ltd, Hitech Diagnostic Centre, Vijaya Diagnostic Centre,
Lucid Medical Diagnostics</span><span style="color: #38761d;">. </span><span style="background: white; color: #38761d;"> </span><span style="color: #38761d;"><o:p></o:p></span></span></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Investment
Rationale:<o:p></o:p></span></span></b></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="color: #38761d;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjY5QzSnPKmzGv8Vhwnj13L6gDCFdtSfukZ6Y7WNblZfkmMVXtxmfdfNlRl2VdiqHn_ga0xASCUH4Mqmj-apxgTy0U-6u4GdMAiuQs-VWPl4pVq-UF8jfGJkKHEcNA73n82END9obTZF3N/s1600/453968-pharma-dna.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjY5QzSnPKmzGv8Vhwnj13L6gDCFdtSfukZ6Y7WNblZfkmMVXtxmfdfNlRl2VdiqHn_ga0xASCUH4Mqmj-apxgTy0U-6u4GdMAiuQs-VWPl4pVq-UF8jfGJkKHEcNA73n82END9obTZF3N/s400/453968-pharma-dna.jpg" width="400" /></a></span></span></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d;">Thyrocare
Technologies Ltd is a pan-India diagnostics chain with focus on preventive and
wellness health offerings under the Aarogyam brand. The company has a pan India
presence with 1,122 authorised service providers (ASPs), comprised of 878
Thyrocare Aggregators (TAGs) and 244 Thyrocare Service Providers (TSPs) spread
across 483 cities and 27 states and 1 union territory. The company follows a
hub and spoke business model with a fully automated central processing lab
(CPL) in Navi Mumbai and 5 regional processing labs (RPL) across India. </span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d;">In terms of
revenue, Wellness & Preventive Healthcare tests account for 50 % of the
revenue of which thyroid tests account for 20 % and the balance 30 % are accounted
by non-thyroid tests. </span><span lang="EN-US" style="background: white; color: #38761d;">The Indian Diagnostic Industry is a mega industry, which
comprises of equipment manufacturers and pathology labs. </span><span lang="EN-US" style="color: #38761d;">In India’s healthcare
industry, diagnostic services play the role of an information intermediary,
providing useful information disease diagnosis. From FY12 to FY16, the industry
grew at a CAGR of 16 % to Rs. 37,700 Cr. For the next three fiscal years, it is
estimated that the Indian diagnostic industry will grow at a CAGR of 16 % to 18
% to reach Rs. 58,500 Cr to 61,600 Cr in FY18.</span><span lang="EN-US" style="color: #38761d;"> </span><span style="color: #bf9000;">The diagnostic industry in India can be
classified into <b>pathology testing services</b>
and <b>imaging diagnostic services</b>. <b><i>Pathology
testing</i></b> or in-vitro diagnosis involves the collection of samples, in
the form of blood, urine, stool, etc., and analysing them using laboratory equipment
and technology to arrive at useful clinical information, to assist in treatment
of diseases. It also includes testing of biochemistry, immunology haematology,
urine analysis, molecular diagnosis and microbiology. <b><i>Imaging diagnosis or radiology</i></b>
involves imaging procedures such as X-rays and ultrasounds, which help mark
anatomical or physiological changes inside a patient’s body, to assist doctors
to diagnose patient’s disease. The imaging diagnostic segment also includes
more complex tests, such as CT scans and MRIs and highly specialised tests,
such as PET-CT scans. Pathology testing is often preferred as a first line of
diagnosis for a majority of diseases and, thus, it contributes to a major
portion of the diagnostic industry. Given the high volumes of pathology testing
conducted in India, pathology testing still accounts for more than half of the
revenue of the Indian diagnostic industry, although the cost of imaging
diagnostic services is often more expensive compared to pathology testing. The
pathology business is highly scalable as blood samples can be shipped to a
remote, centralised location to achieve economies of scale. In contrast,
imaging business operators have to install diagnostic equipment close to the
patient. Imaging services cannot be centralised and, as a result, are difficult
to scale up. Diagnostic centres in India can be classified as
hospital‐based, diagnostic chains and standalone
centres. Standalone centres form the majority share of 48 % followed by
hospital based 37 % centres, while diagnostic chains account for the balance 15
%. The absence of stringent regulations and low entry barriers has led to the
evolution of standalone centres, while hospitals tend to have their own
pathology labs. Within diagnostic chains, large pan‐India chains form 35 % to 40 % and
regional chains form 60 % to 65 %. Specialized tests require expensive
infrastructure, which has led to the formation of diagnostic chains in India.
These follow the hub and spoke model and enables economies of scale. However,
the fragmented nature of the industry indicates low pricing power for service
providers in the near term. The key drivers for the industry are increase in evidence
based treatments, huge demand-supply gap, increase in health insurance
coverage, need for greater health coverage as population and life expectancy
increase, rising income levels making quality healthcare services affordable,
and growing demand for lifestyle related diseases & healthcare services. This
growth is likely to be supported by rising awareness towards wellness and a
higher tendency among the population to take preventive actions against
diseases. Changing lifestyle is perpetuating higher chronic diseases and with
rising income levels, demand for diagnostic testing in India is on the rise.
</span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Further, the health insurance penetration level in India is currently low with 17
% of the population availing to it. Moreover, 86 % of the healthcare related
expenses are borne directly by consumers in case of private healthcare
services. Increase in penetration levels of health insurance is expected to
indirectly increase demand for diagnostic services. Of the diagnostic market
large pan-India chains account for 35 % to 40 % and regional chains cover the
balance 60 % to 65 %. Also, they can eat into unorganised sectors market share
which stands at 48 %. This leaves a lot of room for organised players like Dr
Lal Pathlabs, Thyocare and SRL amongst others to grow faster than the industry.
</span><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">Thyrocare is one of the leading pan‐India diagnostic chains and offers 192 tests
and 54 profiles of tests to detect health disorders such as thyroid, growth,
metabolism, auto‐immunity, diabetes, anaemia, cardiovascular,
infertility, and various infectious diseases. It offers various diagnostic
tests under brand names Thyrocare, Aarogyam, Neuclear. It processes more than 10mn
blood samples and conducts more than 53mn test annually. Thyrocare started its
diagnostic services with low‐value thyroid tests in the year 2000, it is
now the fastest growing and has the highest value‐added service offering in the segment of wellness and preventive care,
which accounts for 51 % of its diagnostic revenues. Thyrocare is the industry
leader in terms of revenue share from wellness and preventive care tests.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">
Incidentally, CRISIL estimates this segment to deliver 25 % CAGR over FY15‐18, higher than the overall diagnostic
industry CAGR of 17 %. With the setting up of regional processing laboratories
(RPLs) in 2014 as against its only central processing lab in Navi Mumbai,
Thyrocare delivered 27 % CAGR in its diagnostic test volume over FY14‐16. Recently, it has set up two RPLs in
Kolkata and Bhopal and plans to set‐up 20‐25 RPLs at a capex of Rs. 75 Cr over next two
years; this, is supported by a conducive industry scenario will drive growth.
Additionally, the visible ramp‐up in its PET‐CT scan services in cancer diagnosis will provide meaningful incremental
earnings growth. Thyroid profile is one of the key test offerings of
the company and includes total Triiodothyronine, total Thyroxine and thyroid
stimulating hormone tests which are collectively referred to as thyroid tests.
Thyroid tests comprised 28 % of the total samples that the company processed in
FY15 and generated revenue of Rs. 27.2 crore, which constituted 15 % of its
total standalone revenue for FY15. They charge Rs. 780 per test Dr lal charges
650. Despite facing disruptive pricing strategy by its
rival, Thyrocare is a leader of the domestic diagnostic industry in terms of
profitability with an EBITDA margin of 40.7 % in 9MFY16. It is expected that it
will maintain its margin leadership with continuous focus on wellness and
preventive health‐care tests. Considering strong growth momentum
and margin leadership, Thyrocare can post revenue CAGR of 25 % and PAT CAGR of
29 % over FY15‐18. Thyocare has posted a CAGR of 23.0 %
over FY2011-2015. Going forward, given the cash rich balance sheet of the
company, it can easily grow at 30 % over the medium term. <o:p></o:p></span></div>
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<b><span lang="EN-US"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and
Valuation: <o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTMRIdv0Myc-99IR41NgTM_h3uwmOvc7Qtx03H05nKJvW6cSYu7LvqDsSkGNFtbKnJED2ExSBPz0Z0ZkJZB7AbJE0Yua4Nbg7f4zY59593fdCfr67e5HLy7UkBMqbHOxUGlLjDhmzzy4rn/s1600/927292397_aaf83dc0d7575261.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTMRIdv0Myc-99IR41NgTM_h3uwmOvc7Qtx03H05nKJvW6cSYu7LvqDsSkGNFtbKnJED2ExSBPz0Z0ZkJZB7AbJE0Yua4Nbg7f4zY59593fdCfr67e5HLy7UkBMqbHOxUGlLjDhmzzy4rn/s400/927292397_aaf83dc0d7575261.jpg" width="336" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="background: white; color: #38761d;">Thyrocare
Technologies Limited is an India-based diagnostic chain company. The Company
offers a range of medical diagnostic tests and profiles of tests that center on
early detection and management of disorders and diseases. The Company's
business segments include diagnostic testing services activity, manufacturing
of radiopharmaceuticals activity and imaging services activity. The diagnostic
testing services activity segment includes the provision of laboratory testing
services. The manufacturing of radiopharmaceuticals activity segment includes
the manufacture and sale of radioactive pharmaceuticals to its customers. The
imaging services segment represents positron emission tomography-computerized
tomography (PET-CT) scan and sale of radio pharmaceuticals used in imaging
services. It offers various profiles of tests under Aarogyam brand that are
used to detect a range of patient disorders, including growth disorders,
metabolism disorders, autoimmune disorders, diabetes and anemia. </span><span style="color: #bf9000;">Thyrocare’s business model differs from that of its
competitors in a couple of ways. One of the striking differences is that unlike
other organized players, which mostly follow a B2C model, Thyrocare is more of
a B2B player with 85 % of its revenues coming through the channel as against 30
% to 40 % for its peers. This enables the company to keep its other expenditure
lower vis-a-vis its peers, which spend higher on promotional expenses. In terms
of services, the company is more focused on the preventive & wellness, and
the non-preventive segments, while its peers follow a portfolio model of
providing a full range of tests and services, which entail higher manpower
costs. The company’s operations are relatively more automated in nature,
thereby requiring less manpower intervention, unlike its peers which need to
employ qualified manpower like Phds and doctors. As a result, employee costs
for Thyrocare account for 10 % of sales as against 20 % of sales for its peers.
This contributes towards the company enjoying better margins compared to the
industry margin of 41 % for Thyrocare’s diagnostic business as against 26 % for
Dr Lal Pathlabs. Over the medium term the company would be able to sustain its
margins and also scale up its business, given the opportunities in the
industry. This coupled with the low capex requirement for the diagnostic
segment makes it a high ROIC business. The company’s volumes and strong ties with its vendors
have enabled it to develop an equipment leasing model for the CPL that has
resulted in minimal capex for its otherwise expensive diagnostic equipment’s.
The model entails leasing of equipment’s and instruments for the CPL in
exchange for a commitment to purchase reagents and consumables from these
vendors for a specified period of time. The RPLs conduct routine tests which do
not require complex equipment’s; hence, the capex required for equipment’s is
minimal and the same are purchased outright by the company. Additionally, the
premises required to set up these RPLs are leased, thus resulting in lower
capital outlay to set up these RPLs which requires around Rs. 2 Cr to 3 Cr for
set up. As a result, the company has been able to expand its operations without
relying on debt. The company as of 9MFY2016 has <b>no debt</b> on its books. Low capex requirements and high asset
turnover along with high margins enable the company to generate high ROIC on
the core diagnostic business, which is around 40 %. This will enable the
company to fund its growth with ease and warrant it to make a high dividend pay-out.
In fact it has cash and bank and investments of Rs. 91 Cr as of FY2015 on a
consolidated basis. The net cash flow from operating activities is around Rs. 40 Cr to 45 Cr per year and will be used
to fund the next phase of growth<span style="line-height: 150%;">. </span></span><span style="color: #38761d;">Thyrocare's test volumes and strong relationships with vendors have allowed
them to develop an equipment leasing model for the CPL that results in minimal
capital expenditure for diagnostic equipment. Through this model, the
equipments and instruments used in the CPL are generally leased from vendors in
exchange for a commitment to purchase reagents and consumables from these
vendors for a specified period of time. These reagent and consumable costs are
then expensed as costs of materials consumed. Hence, the company benefits
financially from this model as it minimises the capital costs typically associated
with diagnostic equipment as they are not required to expend capital
immediately to procure the necessary instruments and equipments. As the RPLs
conduct relatively routine tests, they do not require complex equipments that
employ a variety of technologies. The capital outlay to purchase the equipment
is therefore minimal in comparison to that required to purchase the equipment
in the CPL, and as such, Thyrocare has purchased the necessary equipments outright. Company
has demonstrated attractive financial performance over last four years. For
FY2011-15, its compounded annual growth rate (CAGR) for sales is 23 %, where the
sales grew from Rs. 78 crore to Rs. 180 crore in FY2015. The company's operating
profit grew at CAGR of 20 %, from Rs. 35.6 crore to Rs. 73 crore in FY2015.
Its profit CAGR has been 18 % from Rs. 25 crore to Rs. 48.5 crore in FY2015.
The company has no debt on books. In fact it has cash and bank and investments
of Rs. 91 crore as of FY2015 on consolidated basis. The net cash flow from
operating activities is around Rs. 40-45 crore per year and will be used to fund
the next phase of growth. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Thyrocare enjoys premium and its Peers like Dr Lal Pathlabs has Ebitda margin of 28 %, Metropolis Healthcare has Ebitda margin of 29 %, SRL Diagnostics has Ebitda margin of 18 %, and Thyrocare Technologies has Ebitda margin 47 %.</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 616.75, the stock is trading at a PE of 44.05 x FY17E and 32.80 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 14.00 in FY17E and Rs. 18.80 in FY18E. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">After listing, Thyrocare has been trading on premium due to its healthy return ratios and high free cash flows. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also .</span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 183.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">241.00</span></td><td>302.00</td><td>387.00</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">47.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">52.00</span></td><td>75.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">101.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 9.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.70</span></td><td>14.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>59.80</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">55.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">39.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>9.50</td><td>8.10</td><td>7.40</td><td>6.50</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">41.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">31.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">19.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 17.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 15.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">19.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.30</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">25.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.50</span></td></tr>
</tbody></table>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold </span><span style="color: #bf9000;">THYROCARE TECHONOLOGIES LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com9tag:blogger.com,1999:blog-8296423824543086164.post-256984461865355192016-10-23T05:30:00.000+05:302016-10-23T15:30:42.709+05:30VETO SWITCHGEARS AND CABLES LTD : VETO POWER !!<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip Code:</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=539331"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">539331</span></b></a></span><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=VETO&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">VETO</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP: Rs. 156.45;</span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Market Cap: Rs. 286.72 Cr; 52 Week High/Low: Rs. 161.40 / Rs. 80.60</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Shares: 1,83,27,100 shares; Promoters: 1,06,64,874 shares – 58.19 %; Total Public holding : 76,62,226 shares – 41.81 %; </span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Book Value: Rs. 46.49; Face Value: Rs. 10.00; EPS: Rs. 7.14; Dividend: 20.00 % ; P/E: 16.96 times;</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 19.94; EV/EBITDA: 11.90 times. </span></b></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 42.27 Cr; Enterprise</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 326.87 Cr.<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;">VETO SWITCHGEAR AND CABLES LTD: </span></b><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The Company was i</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">ncorporated on 2007. </span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">Veto Switch Gears And Cables Limited is an India-based company, which is engaged in the manufacturing of wires and cables, as well as electrical accessories. The Company also deals in various types of light emitting diode (LED) lighting, compact fluorescent lamp (CFL) and fans. The Company's products are focused on households and business groups. Its products include Copper, Polyvinyl chloride (PVC) resin and Aluminum. It supplies products under the brands, VETO and VIMAL POWER. It is also engaged in exporting electrical accessories and goods. The Company's products are marketed in both domestic and international markets. The Company has relationships with approximately 2,000 dealers. The Company has its manufacturing plant at Haridwar. Veto Electricals Private Limited (VEPL) is the subsidiary of the Company. </span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">Company</span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">is also engaged in the manufacture and sale of wires & cables and electrical accessories in India. Veto Switchgears product portfolio ranges from industrial cables, stand cables to telephone & co-axial wires, from general switches to modular switches, from ceiling fans to rechargeable fans, compact fluorescent lamps and other electrical accessories. </span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The company came with an IPO on December 3, 2012 with an </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">offer of 50,00,000 equity shares of Rs. 10 each at Rs. 50 per share raising Rs. 25 Cr. The shares got listed on NSE EMERGE on December 13, 2012 at Rs. 58 per share. The purpose of the issue was to modernization of existing facility at Hardwar, Uttarakhand to finance incremental long term working capital requirement, to enhance company’s brand through advertising and other activites, general coporate purposes and to meet issue expenses. The company got migrated on NSE main board on April 29, 2015 and got listed on BSE on September 9, 2015. </span><span style="background: white; color: #38761d;">The company gave bonus in September 2013 in ratio of 1:10, and has not given any Split in face value of its shares. VETO SWITCHGEARS</span><span style="color: #38761d;"> LTD is locally compared with </span><span style="color: #bf9000;">Sterile Technologies Ltd, KEI Industries Ltd, Polycab Cables, Havells India Ltd, Finolex Cables Ltd, Rishabhdev Technologies, Aksh Optifibre Ltd, Precision Wires Ltd, Ram Ratan Wires Ltd, Torrent Cables Ltd, B C Power Control, Nicco Corp Ltd, G R Cables Ltd, Birla Cable Ltd, Delton Cables Ltd</span><span style="color: #38761d;"> and </span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;">globally compared with </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">General Cable Corporation of USA, Belden Inc of USA, Insteel Industries Inc of USA, Encore Wire Corporation of USA, Asia Pacific Wire & Cable Corp of USA, Optical cable Corporation of USA, Southwire of USA, Prysmian Group of Italy, Nexans of France, Sumitomo Electric Industries of Japan, Furukawa Electric of Japan, Fujikura of Japan, LS Cable & Systems of South Korea, Walsin Lihwa of Taiwan, Far East Cable of China, Grupo Condumex of Mexico, Qingdao Hanhe Cable of China</span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;">.</span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> <span style="background: white;"><o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US" style="line-height: 150%;">Investment Rationale: </span></b><span lang="EN-US" style="line-height: 150%;"><o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhLr-lyA3mzmI3Cxr10jTt8OvyhMt3XZC_44ciAmV7QW_6NsTnMTGbsTyJRz57PHIu_4KVz-6_K-Xt5vxn8ATYurMzXlWovctJIDPOcQ14GUZ8sEoQlPnk5wBJIPnRD9D-mC0bGpqc5LEA/s1600/921900988_171af0a3d54f0d8a.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhLr-lyA3mzmI3Cxr10jTt8OvyhMt3XZC_44ciAmV7QW_6NsTnMTGbsTyJRz57PHIu_4KVz-6_K-Xt5vxn8ATYurMzXlWovctJIDPOcQ14GUZ8sEoQlPnk5wBJIPnRD9D-mC0bGpqc5LEA/s400/921900988_171af0a3d54f0d8a.jpg" width="336" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Veto Switchgear & cables Ltd, established in 2007,</span><span style="background: white; color: #38761d; line-height: 150%;"> <span lang="EN-US">is manufacturer of Wires & Cables and Electrical Accessories. The company is promoted by Gurnani group. It produces all type and ranges of Electrical Accessories. It uses latest production technology and also produces latest products as per market demand. Its products are with the brand name "VETO" and "VIMAL POWER" India's first ISI Mark Electrical Accessories. </span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;">It is engaged in manufacturing and marketing of Wires & Cables , Electrical Accessories , Industrial Cables , Fans , CFL Lamps , Pumps , Modular Switches , LED lights , Immersion Heater , MCB and distribution boards. </span><span style="color: #bf9000; line-height: 150%;">The electronics market of India is one of the largest in the world and is anticipated to grow at a compound annual growth rate (CAGR) of 24.4 % during 2012-2020. Separately, forecasts say that the electric wire and cable market in India is to grow at a CAGR of 16.18 % over the period 2015-19 as power cables led the revenues of the wires and cables market with more than 50 % contribution to the total market in fiscal year 2014. The Indian wire and cable industry is growing satisfactorily and getting more and more consolidated and becoming largely organized now. The power cable led the industry from front contributing almost 50 % of the industry's emphasis on laying comprehensive power distribution and transmission network in the country. The increasing digitalization has of course catapulted the demand even more. Construction is also one of the core sectors of Indian economy and future of this industry is also based on commodity prices. Construction cables and wire sector anticipated to see steep growth in demands in coming days owing to huge government’s, spending in infrastructure, smart cities, real estate boom, and housing explosion. </span><span style="color: #bf9000; line-height: 150%;">Increase in Urban Population and Per-Capita Income growing at a steady rate is beneficial for the sectors. The demand of manufacturing of wires & cables and electrical accessories & other allied products in India is also hence likely to increase. De-licensing and removal of tariffs for the industry, low entry barriers, and increased demand for housing & increased growth in the emerging markets are basic growth drivers of the market. At more than 7 % rate of annual GDP growth, India is already amongst the fastest growing economy in the world. Government priority projects such as Housing for All, Smart Cities, Interlinking of rivers, AMRUT, Swacch Bharat, development of inland water ways for transportation, etc. are various initiatives which will help companies like VETO. Power sector reforms being expected to be a top priority for government is playing out well and government will increasingly turn its attention to reforming the power distribution segment and boosting India's energy independence. </span><span style="color: #bf9000; line-height: 150%;">The year 2015 started off on a good note for the LED industry in India. PM's initiative to launch Notional programme for LED based Home & street lightning as well as a scheme for LED distribution under the domestic Efficient Lighting program is highly valued for the growth of India. The studies showed LEDs were 25 % more efficient than CFL, 23 % more efficient than tube lights and 80 % more efficient than incandescent lamps. The Prime Minister's initiative has accelerated the adoption of LED's in several sectors across the country through the creation of several new policies and financial subsidies undertaken by the Ministry of power, BEE and various state municipalities. This has helped propel the industry to grow five folds in five year from its current size of Rs. </span><span style="color: #bf9000; line-height: 150%;">4000 crores </span><span style="color: #bf9000; line-height: 150%;">according to Electric Lamp and Component Manufacturers Association (ELCOMA). </span><span lang="EN-US" style="background: white; line-height: 150%;"><span style="color: #38761d;">Veto Switchgears enjoys good market share of electrical accessories in Northern region especially in Rajasthan and has pan India market. </span></span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">Veto is a dominant player in Rajasthan with 12-13 % market share. Currently Veto gets 80 % of its revenues from Rajasthan, 10 % from Gujarat and balance 10 % from other states. For Rajasthan and Gujarat the company mainly follows Dealer’s Retailer Model for sales which provide higher margins and direct control over the inventory. The industry usually follows Distributor’s Dealer’s Retailer model which has lower margins but gives scalability. Hence Veto has also decided to expand through distributors in various parts of the country to increase the reach. In next three years, the company is targeting 50 % of sales from outside Rajasthan regions. This strategy would provide higher scalability to the company due to lower requirement of funds and would gradually increase the return ratios of the company. Looking at the growth of the Indian market, company is targeting Rs. 270 to Rs. 280 Crores of Revenue this fiscal & Rs. 1000 Crores in the next five years. </span></span><span style="color: #38761d; line-height: 150%;">Further, Veto has installed another manufacturing unit at </span><span style="color: #38761d; line-height: 150%;">Mahindra SEZ</span><span style="color: #38761d; line-height: 150%;">, Where the construction and erection of the plant for machinery has already been completed which is mainly for wires and cables only and is </span><span style="color: #38761d; line-height: 150%;">100% export oriented unit</span><span style="color: #38761d; line-height: 150%;">. Company has set revenue target Rs. </span><span style="color: #38761d; line-height: 150%;">30 Crores<b> </b></span><span style="color: #38761d; line-height: 150%;">from this unit in the current year itself major earning coming from the state of </span><span style="color: #38761d; line-height: 150%;">Rajasthan</span><span style="color: #38761d; line-height: 150%;">. Veto’s </span><span style="color: #38761d; line-height: 150%;">wire<b> </b></span><span style="color: #38761d; line-height: 150%;">rate is </span><span style="color: #38761d; line-height: 150%;">equal<b> </b></span><span style="color: #38761d; line-height: 150%;">to Havells & Anchor in this state. Infact, wire sale is </span><span style="color: #38761d; line-height: 150%;">more<b> </b></span><span style="color: #38761d; line-height: 150%;">than Anchor in Rajasthan. Veto’s focus this year is to widen and cover more and more states of India. The company has broadened its network and distribution spaces and</span><span style="color: #38761d; line-height: 150%;"> has dealer network of 2,500 across India compared to 2,314 dealers last year. Veto</span><span style="color: #38761d; line-height: 150%;"> also had major success in some of the biggest cities of UAE & is working towards making “<b>Veto</b>” a globally established brand. Its products are marketed in both domestic and international markets. </span><span style="color: #38761d; line-height: 150%;">Recently Veto launched Cooler Kit (Fan) in the market after the previous launches of Fans, CFL Bulbs and LED. It is planning to launch Geyser in next couple of months. More products under the same brand will enable Veto to capture a larger share of spending by consumers and give retailers a bigger bouquet to offer to their customers. Veto plans to enhance its capacity utilization from its two plants at Haridwar and Vasai going forward. Apart from domestic business of Veto, the group has an associate company in Dubai, JMTC FZCO which is trading electrical goods. Veto formed a 100 % subsidiary in Dubai on Oct 2015</span><span style="color: #38761d; line-height: 150%;">, via </span><b style="color: #38761d;"><span style="line-height: 150%;">Dubai Veto Overseas </span></b><span style="color: #38761d; line-height: 150%;">and in 6 months its sale crossed </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">64 crores and PAT crossed </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">5.4 crores as there is no tax in Dubai and EPS for this company stood at </span><span style="color: #38761d; line-height: 150%;">Rs. </span><span style="color: #38761d; line-height: 150%;">2.98. Dubai Veto Overseas</span><span style="color: #38761d; line-height: 150%;"> took over the business of JMTC FZCO gradually without diluting equity. Apart from this, another subsidiary of the domestic business Veto Electricals Pvt Ltd has to commence the business from June 2016 onwards, by exporting electrical goods from its new plant in Mahindra SEZ, in Jaipur. Due to this consolidation, there could be a notable jump in Revenues and PAT from FY17 onwards. The management has also guided that the domestic business is likely grow at a CAGR of 20 % due to expansion of territories and products. Looking at all the developments the overall business could grow at a CAGR of 52 % (FY16E-FY19E) post consolidation of Dubai based promoter group company and business from SEZ (Jaipur). </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">Strong </span><span style="color: #38761d; line-height: 150%;">established brand presence in Rajasthan. Driving growth through innovation and marketing India’s ever growing requirements of energy and capacity addition planned by the Government through various initiatives, gives substantial opportunity for increasing demand for wires & cables and electrical accessories, and Decrease in copper prices, Housing projects of Government and semi-government agencies. Low cost end-to-end business model being adopted by existing or new competitors. Adoption of new strategies by new or Existing players in the market augurs well for Veto Switch gears and cables ltd. VETO on the verge</span><span style="color: #38761d; line-height: 150%;"> being one of the leader in the industry has very strong footing in the sector and has strong cash flow which thrusts the growth for the company, and strong financials with sustained cashflow makes it attractive for long term investment</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">.</span><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"><o:p></o:p></span></b></span></div>
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<b><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Outlook and Valuation:<o:p></o:p></span></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRQ0wFlNCvT6-Cbze2AhtvvX9gYl4d6VcMo6k3w_v5hqqa-hLcit4my2doXtfj7yltFL5i6SWn-z6gl08nEvofe_NRah5gy0x43txupbsUToiCHoGhvRQWcqG3EQElq4eDm8UmmxprWY4A/s1600/921901670_9426f9ad7166d4f9.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRQ0wFlNCvT6-Cbze2AhtvvX9gYl4d6VcMo6k3w_v5hqqa-hLcit4my2doXtfj7yltFL5i6SWn-z6gl08nEvofe_NRah5gy0x43txupbsUToiCHoGhvRQWcqG3EQElq4eDm8UmmxprWY4A/s400/921901670_9426f9ad7166d4f9.jpg" width="336" /></a></div>
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<span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Veto Switchgear Limited (Veto) started its operations as small retail shop in Jaipur in 1968 and gradually it became the leading dealer in the market. Later the promoted felt the need to backward integrate and hence set up a manufacturing plant for Wire and Electrical accessories in Jaipur, Rajasthan in 1975 and over the years it has become one of the largest players in Rajasthan with market share of 12-13 %. The company has strong network of more than 2500 dealers</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;"> across India compared to 2,314 dealers in Q3FY16. However, company plans to expand its dealer network across India and increase its network count to 5,000 in next 2-3 years. Apart from Rajasthan, Veto has decent presence in Gujarat, Haryana, Punjab, Uttarakhand, J&K, Jharkhand, MP, Assam, Kerala are some other states where it has made some inroads. The management has guided at bringing the proportion of Rajasthan to 50 % in the next 2-3 years by expanding Veto’s presence across, Gujarat, Maharashtra, Uttarakhand, UP, Kerala, Himachal Pradesh, NCR, MP, J&K and other unrepresented areas. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Company is also in the manufacturing of electrical accessories, wires and cables at manufacturing facilities in </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Haridwar and Vasai Mumbai</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">. Company also deals in electrical accessories like switch socket, MCB, bell and all electrical accessories which is used for household purposes and manufacturing wires and cables. Cable starts from 0.75 mm to 10 mm. </span><span style="color: #bf9000;"><span style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Veto is looking to expand its business across India and follow the industry standard by appointing distributors across India. This will help Veto increase the scale of the business and lower the working capital requirement. Veto plans to appoint 100 distributors across India in the next two years from the current 6. This will help to reduce its working capital cycle going forward. Currently Veto has a working capital cycle of six months, which is high compared to Crompton Greaves which has of three months, V-Guard has two months and Havells has one month. Further, consolidating its Dubai subsidiary numbers could also lead to lower working capital cycle as that subsidiary works on tighter working capital cycle. </span><span lang="EN-US" style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;">The group has Wire and Electrical accessories business in different companies and apart from India it has operations in Dubai as well. In India the holding company of Veto Switchgear has an old manufacturing plant at Jaipur which manufactures Wire and Electrical accessories and in-turn supply to Dubai Company. The company has revenues of Rs. 30 cr. This plant has become inefficient and group set up new plant in listed company Veto Switchgear at Mahindra SEZ, Jaipur with an investment of Rs. 11 cr. The production from this plant has commenced from April 2016 and sales to Dubai Company will shift to this plant. The plant is likely to do sales of Rs 40 Cr in FY17 which will add up in company’s revenue. Also, the group has an associate company in Dubai - JMTC which has revenues of Rs. 350 Cr and EBITDA of Rs. 60 cr. JMTC market electrical accessories, wire and appliances in Middle East and African market. Veto Switchgear has floated 100 % subsidiary in Dubai to partial transfer the business of associate company. </span></span><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">It commenced operations from 2HFY16 and likely to do around Rs. 20 Cr of sales in 2HFY16 and Rs 80 cr in FY17E. However, the company does all above restructuring, the company will need lot of funds or Bank borrowing as working capital cycle both in India and in Dubai is very high. In India the Working capital cycle is 6 months and in Dubai it is 7.5 months. For example, with an investment of Rs. 25 Cr in 100 % subsidiary in Dubai, the company will be able to do revenues of Rs. 40 Cr. Company is not looking to dilute equity. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Veto expects to benefit from introduction of GST as unorganized sector will lose its benefit. Further the boost to affordable housing provided by the Govt will also likely result in better sales growth for Veto over the medium term. Q4 is generally a good quarter for Veto in domestic market. Veto could also distribute 20 % to 25 % of its PAT by way of dividend it has already paid out 5 % interim dividend in 28th Jan 2016. Dividend could also increase the attractiveness of the stock. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Veto's FY 15-16 sale in India include sale of </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">112 crores constituting </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">50 crores </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">wires and cables</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">, </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">62 crores from </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">electrical accessories</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">. Manufacturing sale of the company is </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">37.5 crores and trading sale includes sale of LED fan and CFL. LED is </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">7.5 crores, fan is </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">3.5 crores and CFL is </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Rs. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">13.5 crores. </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">Company enjoys advantage with respect to receivable days over its peers. In the Electrical business in India<b> </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">receivable days is normally 120 days for all; however for the company it is reduced to 86 days just because of Dubai operation where it is only 30 days. </span><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">The company has grown at a CAGR of 12.4 % between FY12-15 and EBITDA has grown 11 % during the same period. The base business of the company is expected to grow at CAGR of 20 % for next 2-3 years based on outside Rajasthan expansion. The company has high working capital cycle (which is expected to improve on back of addition of distribution level). Due to this, it has negative cash flow from operations in last 2 out of 4 years. In FY15 the operating cash flow was positive as sales growth was nominal. In FY16 and FY17 the operating cash flow is again likely to be negative on account of addition of international operations which has high working capital cycle. The group is trying to consolidate its business in listed company which may face hurdle on account of ownership structure of three brothers in Indian and Dubai operation. The group is consolidating the business. Considering high working capital cycle and lower ROCE, VETO will not be able to get multiple like V-Guard or Bajaj Electrical. However, it can still get multiple of 12x easily and success in the planned strategy would further re-rate the stock. </span><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">With positive outlook for the sector in the medium to long term, Veto Switchgear could post 52 % CAGR of sales growth for FY15-FY19E going by the expectations of the management, the recent restructuring of Dubai business and contribution from its new Jaipur SEZ subsidiary. Considering its expected growth in revenue, margin expansion and healthy return ratios going forward, this stock can perform better.</span><span style="font-family: "georgia" , serif;"> </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 156.45, the stock is trading at a PE of 15.53 x FY17E and 12.28 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 10.07 in FY17E and Rs. 12.73 in FY17E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 97.03</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">176.59</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">270.05</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">328.24</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.16</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.67</span></td><td>18.45</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.34</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 3.91</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.14</span></td><td>10.07</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.73</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>17.63</td><td>12.55</td><td>9.63</td><td>6.69</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>1.73</td><td>2.13</td><td>1.90</td><td>1.65</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td>10.44</td><td>12.18</td><td>7.83</td><td>6.44</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 19.71</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 21.71</span></td><td>20.90</td><td>22.13</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.88</span></td><td>22.05</td><td>25.38</td><td>26.46</td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> VETO SWITCHGEARS AND CABLES LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br />
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com3tag:blogger.com,1999:blog-8296423824543086164.post-71422769232193173872016-10-13T04:58:00.000+05:302016-11-17T16:16:42.767+05:30SOLAR INDUSTRIES INDIA LTD: READY TO EXPLODE !!! <div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLi8q1wRLaj_WMCqHZ1BhRLBuiSYy3RWMD6OswZtJWR0DCavrICn2Y3LOz9m2qZ7vpJBBR0ozNRbmOpF-G6blL_1xlSWkYlLylVOSxe609fF5i2BdXz5o7ymBN6ftPYY3BEmHD0B0vJ6u4/s1600/solare_190.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLi8q1wRLaj_WMCqHZ1BhRLBuiSYy3RWMD6OswZtJWR0DCavrICn2Y3LOz9m2qZ7vpJBBR0ozNRbmOpF-G6blL_1xlSWkYlLylVOSxe609fF5i2BdXz5o7ymBN6ftPYY3BEmHD0B0vJ6u4/s200/solare_190.jpg" width="200" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=532725"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">532725</span></b></a></span><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=SOLARINDS&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">SOLARINDS</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 681.10;</span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Market Cap: Rs. 6,163.28 Cr; 52 Week High/Low: Rs. 759.45 / Rs. 567.06</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 1,80,98,011 shares; Promoters : 1,32,08,207 shares – 72.98 %; Total
Public holding : 48,89,804 shares – 27.02 %; </span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Book
Value: Rs. 95.87; Face Value: Rs. 2.00; EPS: Rs. 18.99; Dividend: 225.00 % ;
P/E: 35.70 times;</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 53.69;
EV/EBITDA: 20.09 times. </span></b></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 400.34 Cr; Enterprise</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value:
Rs. 6,526.58 Cr.<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;">SOLAR INDUSTRIES INDIA
LTD: </span></b><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The Company </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">was founded in 1983 and is headquartered
in Nagpur, Maharashtra, India. The company was earlier known as Solar
Explosives Limited and changed its name to Solar Industries India Ltd in 2009. <span style="background: white;">Solar Industries India Limited is an explosives
manufacturing company. The Company manufactures, supplies and exports
industrial explosives and initiating systems. It manufactures various
explosives products, such as Slurry and emulsion base explosives, bulk
explosives, detonators, pentaerythritol tetranitrate (PETN) and accessories. The
Company's products include Large Dia slurry Explosives, Small Dia Emulsion,
Small Dia Slurry Explosives, Solar Detonators, Supreme Detonators, Supreme
Electric Detonators, Economic Sod, Eco Det, Cord Relay, Cast Booster and
Detonating Fuse. Its products are used across mining and infrastructure
sectors. It also offers high melting explosive (HMX) and HMX Compounded
products to the defense sector. The Company has 25 manufacturing plants eight
states in India and three in overseas locations. The Company offers its
products to 42 countries across the globe. The Company has manufacturing
facilities at Zambia, Nigeria and Turkey. </span></span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The company came with
an IPO in 1980 with an </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">offer
of 4,41,000 equity shares of Rs. 10 each at par. <span style="background: white;">The company has not declared any bonus. Company has declared Split
in face value of its shares from Face value of Rs. 10 to Rs. 2.00 on May 16,
2016. </span></span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">SOLAR INDUSTRIES INDIA LTD </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">is locally compared with </span><span style="color: #bf9000;">Premier
Explosive Ltd, Indo Gulf Industries, GOCL Corp Ltd, Hardcastle & Waud
Manufacturing Co Ltd, UPL Ltd, </span></span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">CDET Explosive Industries
Private Ltd, Salvo Explosive & Chemicals Pvt Ltd, Thangavel Match Ind,
Vetrivel Explosives Pvt Ltd, Dai-Ichi Karkaria Ltd</span><span style="color: #38761d;"> globally compared with </span><span style="color: #bf9000;">Saudi
Explosive manufacturer of UAE, African Explosives (Tanzania) Ltd of Tanzania,
Austin Powder Company of USA, Maxam Brasilia LTDA of Brazil, Maxam Corporation
of Spain, African Explosives (Ghana) Ltd of Ghana, Davey Bickford of France,
Elviemak Sa of Greece, European Federation of Explosives Engineers of UK,
Fabchem China Ltd of china, Biafo Industries Ltd of Pakistan, Hyflux Ltd of
Singapore.</span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> </span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US" style="line-height: 150%;">Investment Rationale: </span></b><span lang="EN-US" style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8WpVAshPHOu7FY6gxLUjn-HT3gF6NI24NiRTGhTLRS4fXa8yeXGholut6iqcHbPf88V-BmQxEid28vQM_9rBT801R0jaJzX2VOZoY8JWF6gxfE5tNY7XUVq_wASduZMZ7FnBzUFgNAKO6/s1600/ZoPmcb.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8WpVAshPHOu7FY6gxLUjn-HT3gF6NI24NiRTGhTLRS4fXa8yeXGholut6iqcHbPf88V-BmQxEid28vQM_9rBT801R0jaJzX2VOZoY8JWF6gxfE5tNY7XUVq_wASduZMZ7FnBzUFgNAKO6/s200/ZoPmcb.gif" width="200" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">Solar
Industries India Ltd (SIIL) founded in 1995, is one of the largest
comprehensive explosives & initiating devices manufacturing company in
India. Solar Industries India Limited has grown to become India’s largest
manufacturer of Industrial explosives and explosives initiating systems and
spreading its presence to global markets with manufacturing plant at Zambia,
Nigeria and Turkey. Solar Industries India Ltd manufacturing facilities span in
19 Locations across India with 3 manufacturing units in Overseas with
distributors network in more than 40 countries. The company offers high quality
and services that are backed by stringent safety standards, a robust
infrastructure companies including the recognized names like Coal India Ltd,
Singareni Collieries company Ltd, Vedenta, Tata, Sasan Power, L&T, and many
more. Solar Industries products includes Cartridge explosives, Detonators, Detonating
cord, Cast booster, Multi-layer Shock Tubes, Underground Bulk, Explosives for
military Application, Pyros, Propellants, Ammunitions. Industrial explosives
comprises of cartridge explosives, bulk explosives, ANFO based explosives, which
includes boosters and PETN as well as accessories for explosives such as safety
fuses, detonating fuses and detonators. </span><span style="color: #bf9000;">The global explosives market is largely
driven by bulk explosives. The mining industry is the largest consumer of
industrial explosives, with coal mining demand dominating over others, due to
increasing demand for coal. Other segments that utilises explosives include
limestone and metal mines besides infrastructure segments like roads, dams,
canals and tunnels. Despite India’s huge reserves of various natural minerals,
the share of the mining and quarrying sector as a percentage of Gross Domestic
Product (GDP) has declined from 2.8 % in FY 2010-11 to 2.1% in FY 2013-14
(Provisional Estimates). This decline came against the backdrop of various
judicial pronouncements and the Justice Shah Commission Report, which led to
the suspension of several mining leases or closure of mines. The revival of the
mining sector is now linked to providing a level playing field between domestic
and foreign investors. The proposal is aimed not only at remedying the problems
in the sector but also at creating an enabling environment based on sound
principles of transparency and efficiency. Once the mining sector is back on
track, the explosives industry is set to witness a new phase of growth. Also
the Government has set an excavation target of 1.35 Billion Tonnes of coal by
FY 2020. According to the plans firmed up by Coal India along with the Union
Coal Ministry, total output envisaged for Coal India’s subsidiaries is about
900 Million Tonnes and other proposed New Projects for is about 100 Million
Tonnes. Its plans for each of the subsidiaries are in place, though, and it
also envisages opening up 70-100 mines to achieve the FY 2020 target. Iron Ore
mining industry is currently facing some hurdles in securing approvals to
restart mines, especially in the three states of Odisha, Karnataka and Goa.
Nevertheless, once these mines begin production, iron ore output is set to grow
at a robust pace of 10 % during FY 2015. Against an output of 140 Million
Tonnes in FY 2014, domestic production is set to reach 155 Million Tonnes in FY
2015. Some positive developments that are imminent include the renewal of
leases for mines in Goa, the formation of a new government in Jharkhand, issuance
of clearances and permits in Odisha and revival of mines in Karnataka. India
was the world’s largest arms importer, largely due to lack of domestically
produced arms. To reduce significant outflows of valuable foreign currency as
well as to promote domestic growth of the industry, the Government presented
the Defence Procurement Policy in FY 2013, under which all Government
procurements would need to have a minimum 30 % of such purchases with
indigenous content. This has opened up new business opportunities for the
explosives sector in India. Budget 2015-16 has also provided an outlay of Rs.
2,46,727 Cr for defence. The Government’s ‘Make in India’ initiative, seeking
to promote self-reliance, indigenisation, technology upgradation and achieving
economies of scale and developing capabilities for exports in the defence
sector, will also open up a large window of opportunity for the explosives
sector.</span></span><span style="color: #bf9000;"><span lang="EN-US" style="line-height: 150%;"> </span><span lang="EN-US" style="line-height: 150%;">These developments will
cumulatively facilitate the emergence of a more efficient and productive coal
sector. This will, in turn, trigger greater demand for the explosives which is
good for this industry. SOLAR INDUSTRIES LTD</span><span lang="EN-US" style="line-height: 150%;"> </span><span style="line-height: 150%;">commands a dominant
volume market share of 25 % among more than 40 players in 1 mt Indian explosive
market in which large 6 player’s accounts for 75 % market share and tedious
licencing procedures act as high entry barriers. </span></span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">Explosives
industry clocked a combined volume CAGR bulk & cartridge explosives of 9 %
while Solar Industries Ltd’s combined volume CAGR bulk & cartridge
explosives was 16 % over FY09-FY16. Solar Industries will continue to
outperform the industry, given the various triggers in domestic and overseas
markets. Unlike capital goods, explosives are industrial consumables and to a
large extent immune to the vagaries of intense cyclicality faced by its main
user industry i.e. mining. </span><span style="color: #38761d;">This can be witnessed from the fact that SIL’s
combined volume CAGR for bulk and cartridge explosives has been 16 % over
FY09-FY16 as against coal production CAGR of 3.8 %, iron ore production CAGR of
-5.8 %, and lignite/limestone production CAGR of 2.9 % /4.0 %, respectively,
over the same period.</span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">SIL
is well placed with its recent addition in licensed capacities due strategic
acquisitions of M/s Blastec (India) Private Ltd & M/s Emul Tek Private Ltd.
The current licensed capacity in this segment stands at 3, 00,000 MT. As per
the management, volumes from tender business are also expected to improve significantly,
with increased focus of government on Coal India and Singareni Collieries to increase
their mining volumes. SIL’s newly commissioned facility at kothagudam (Andhra
Pradesh) along with two new facilities at Barbil (Odisha) & Kota
(Rajasthan) will also contribute significantly to the volume growth. SIL has
achieved superior volume growth compared to the industry. The same trend is
expected to continue and SIL’s bulk volumes can grow at a CAGR of 24 % to
2,82,014 MT in FY16-18E, </span><span style="color: #38761d; line-height: 150%;">Cartridge volumes are expected
to grow at 12 % CAGR over FY16-18E. With </span><span style="color: #38761d; line-height: 150%;">the improvement in the realisations is
mostly due to increase in exports as cartridge fetches higher realisations in
the export market. As per management, both cartridge volumes and realisations
are expected to improve from here, on account of higher demand from domestic
private infrastructure players, private miners and continued up-tick in
exports. </span><span style="color: #38761d; line-height: 150%;">SIL has witnessed improved demand from the defence segment from Q4FY16.
The current order book of the company in this segment is now Rs. 80 crore. The
same is executable by H1FY18E. SIL had already executed Capex of Rs. 200 crore
in this segment for setting up a production capacity of 50 tonne per annum
(TPA) of HMX and 10,000 propellants. The same was utilised to set up a capacity
of 2500 propellant and 50 TPA of HMX. Going ahead, the company has capex plans
of Rs. 50 crore in FY17E and FY18E to increase the propellant capacity from
2,500 units to 10,000 units and HMX capacity from 50 TPA to 100 TPA. The
integrated pinaka rocket launcher facility is likely to come up in the next
four or five months. The management is confident of winning orders in this
segment as it believes that the upcoming facility addresses an area where there
are capacity constraints, especially the ordnance factory board (OFB) end. </span><span style="line-height: 150%;"><span style="color: #bf9000;">SIL
is also planning to foray into manufacturing of bi-modular-charge systems
(BMCS) for artillery guns. BMCS is a crucial component required to propel the
shell out of the barrel, this was so far imported, mainly from France. In last
one year around 10 lakh modules were imported. BMCS can increase the rate of
firing, especially for a gun like Bofors.</span></span><span style="color: #38761d; line-height: 150%;"> Ordnance Factory Board's (OFB) plans
to have a dedicated factory for making BMCS Could not take off after being
conceived 15 years ago. The government now plans to open this area to private
players. SIL has already applied for necessary licenses in this segment and is waiting
for the approval. </span><span style="color: #38761d; line-height: 150%;">SOLAR INDUSTRIES LTD being
one of the leaders in the industry has very strong footing and has strong cash
flow which thrusts the growth for the company, and strong financials with
sustained cash flow makes it attractive for long term investment</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">.</span><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"><o:p></o:p></span></b></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US" style="line-height: 150%;">Outlook and Valuation: </span></b></span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">Solar
Industries India (SIL) is the largest manufacturer of industrial explosives and
explosive initiating systems in India. The Nagpur-based company has licensed
capacity of 4,02,000 tn with its plants across the country. The company’s
offerings include bulk and packaged (cartridge) explosives, apart from a wide
array of initiating systems comprising detonators, detonating fuses and cast
boosters. SIL currently owns and operates the world’s largest single-location
manufacturing capacity for cartridge explosives besides India’s largest
manufacturing capacity for bulk explosives</span><b style="color: #38761d;">. </b><span style="color: #38761d;">Over the past three decades,
SIL has gradually expanded its product offerings from cartridge to bulk
explosives and from detonators to detonating cord and cast boosters. The recent
addition to its vast bouquet of products were multi-layer shock tubes,
underground bulk explosives, explosives for military application, pyrotechnics,
propellants and ammunition developed through intensified efforts of state-of-the-art
R&D centre. Hence, SIL has significantly widened its bouquet of products
and is today a one-stop-shop for industrial explosives. Currently, SIL has 25
manufacturing facilities, spanning 10 states across India and 3 overseas units
- in Zambia, Nigeria and Turkey. It also supplies to corporate giants such as
Steel Authority of India, Oil and Natural Gas Corporation, Tata group, Adani
group, Jindal group, Vedanta, Reliance Power, NHPC, Aditya Birla Group, etc. SIL
is the largest exporter of explosives from India, supplying to more than 22
countries. The company has also taken a strategic leap into the defence sector
recently through the execution of some early orders in this space. Looking
forward, the defence foray offers immense scope for growth. Solar Industries is
the India’s largest manufacturer of
industrial explosives and initiating systems. Having complete explosives range
with a presence across product value chain. It has the World’s largest
single-location cartridge manufacturing facility at Chakdoh near Nagpur. It is
the India’s first private sector company to obtain the licence for setting up
manufacturing facilities for HMX (a warhead explosive) and HMX compounded
products. SIL has displayed similar attributes in the past decade since
its listing on the bourses. SIL became the largest player in 1 mt domestic
industrial explosives market over a period of past 10 years with its volume
market share at 2.5 x from 10 % in FY06 to 25 % in FY16. SIL has grown at
higher-than-industry rate over the same period. SIL’s average volume CAGR across
bulk and cartridge explosive, detonator and detonator fuse was 13 % over
FY09-FY16 against Indian explosives industry’s average volume CAGR of 7 % over
the same period. </span><span style="color: #bf9000;">The company successfully managed to keep competition at bay on
account of its ability and intention to keep investing in the business,
rationalise the cost structure to remain cost-competitive in fact it achieved
the leadership position by going for backward integration, widening its product
portfolio and maintaining strong client relationship. SIL offers the widest
portfolio of products with end-to-end solutions and maintains <i>its numero uno
</i>position as an industrial explosives and initiating systems supplier to
largest consumer of explosives in the country, Coal India, for the past few
years. SIL satisfies nearly 30 % of the explosives requirement of Coal India.
Moreover, after opening up of India’s defence sector for private players, the
company is eyeing multibillion dollar Indian defence space which is being
catered to by either government owned defence establishments or through
imports. After consolidating its position in India, the company successfully
moved to other big explosive-consuming markets by setting up plants in Zambia,
Nigeria and Turkey over the past five years. It is now in the process of
setting up a plant in South Africa. The company has realised the importance of
global opportunity (more than US$10bn) and taken steps to grab the share
through overseas expansion and focus on exports. SIL possesses wide moats in
the form of industry leadership, significant entry barriers, optimal product mix
and carefully pre-planned capacity additions to benefit the most from the
revival in mining & infrastructure activity. Even in the export &
overseas business, SIL has just scratched the surface of growth, with many more
un-penetrated markets yet to be explored. New business segments like defence business
will further solidify SIL’s business model at a time when government’s
prerogative is to indigenise defence manufacturing, which will allow SIL to
scale the defence business at a faster pace.</span><span style="color: #38761d;"> Even during times of moderate
business environment, SIL had witnessed robust revenue CAGR of 40 %, over
FY12-16, backed by a strong 15 % volume CAGR (bulk + cartridge) coupled with capacity
expansion and market share gains. This speaks for the pedigree of the
management and business model that has evolved over time and reiterates our
confidence on the company to capture onto the upcoming opportunity with the revival
in industrial activity. Hence, SIL is a rare combination of excellent growth
track record, proactive management, conservative leverage approach, expanding margins
& return ratios and a 20 %+ growth guidance from the management for the
next three years. The company is expected to generate better cash flows with
cash flow from operations (CFO) improving from Rs. 157.3 crore in FY15 to Rs. 210
crore in FY18E. CFO is likely to remain subdued in FY17E due to higher capex of
Rs. 135 crore in FY16-17E. The same is likely to continue as the management has
guided for higher capex of Rs. 200 crore for FY17E-18E. The FCF is also
expected to grow to Rs. 50 crore in FY18E. The CFO/EBITDA, a measure of quality
of earnings, is also expected to stabilise at 0.5 x in FY18E. With the</span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> robust performance, the company looks
forward to a future full of promise. All the sectors which form company’s
consumer caucus - mining, infrastructure and construction - are witnessing
policy changes that are expected to result in structural strengthening and
phenomenal growth. This gives plenty of reason to be optimistic. The defence
sector too, which is moving strategically from imports to domestic sourcing of
its requirements, has opened up colossal opportunities for company.</span></span><span lang="EN-US" style="font-family: "georgia" , "serif"; font-size: 12pt; line-height: 150%;"> </span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 681.10, the stock is trading at a PE of 32.74 x FY17E and 25.22 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 20.80 in FY17E and Rs. 27.00 in FY17E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. </span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1,344.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,532.80</span></td><td>1,757.40</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">2,149.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">147.40</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">166.10</span></td><td>188.30</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">244.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 16.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.40</span></td><td>20.80</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">27.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>39.70</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">35.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">31.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.90</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">24.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.70</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11.20</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 20.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.10</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.50</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">16.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.60</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> SOLAR INDUSTRIES LTD in my of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com1tag:blogger.com,1999:blog-8296423824543086164.post-7749384265070843332016-10-03T06:00:00.000+05:302016-10-03T01:34:29.861+05:30COSMO FILMS LTD : FULL PACKAGE !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEuMao1Zx_0f-XOAaNHc3E4CrXO8GO5cJd1xhPhGKTSLJj2U5JLmlmPEK0OVEEokA4d2Q0nminXiYpu4_CCHH1GPJ_6ITpvdBQ3SORjLwqdGzfM_mZMhMhyVOLs78NdAR-inJ9F-OkteHG/s1600/Cosmfilmslogolong-1024x246.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="76" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEuMao1Zx_0f-XOAaNHc3E4CrXO8GO5cJd1xhPhGKTSLJj2U5JLmlmPEK0OVEEokA4d2Q0nminXiYpu4_CCHH1GPJ_6ITpvdBQ3SORjLwqdGzfM_mZMhMhyVOLs78NdAR-inJ9F-OkteHG/s320/Cosmfilmslogolong-1024x246.png" width="320" /></a></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span lang="EN-US"><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=508814"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">508814</span></b></a></span><span class="apple-converted-space"><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><span lang="EN-US"><a href="http://www.nseindia.com/companytracker/cmtracker.jsp?symbol=COSMOFILMS&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">COSMOFILMS</span></b></a></span><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 382.70;</span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Market Cap: Rs. 743.97 Cr; 52
Week High/Low: Rs. 411.40 / Rs. 176.85</span></b><span lang="EN-US" style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 1,94.40,076 shares; Promoters : 84,58,439 shares – 43.51 %; Total
Public holding : 1,07,05,241 shares – 55.07 %; </span></b><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Book
Value: Rs. 234.01; Face Value: Rs. 10.00; EPS: Rs. 49.61; Dividend: 100.00 % ;
P/E: 7.71 times;</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></b></span><span class="apple-style-span"><b><span lang="EN-US" style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 6.95;
EV/EBITDA: 11.67 times. </span></b></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total Debt: Rs. 422.39 Cr; Enterprise</span></b><span class="apple-converted-space"><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span lang="EN-US" style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value:
Rs. 1,141.57 Cr.<o:p></o:p></span></b></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;">COSMO FILMS LTD: </span></b><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The Company was i</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">ncorporated
on October 7, 1976 and based in New Delhi. <span style="background: white;">Cosmo
Films Limited is a manufacturer of semi-finished products of plastics. The
Company is engaged in the manufacturing of bi-axially oriented polypropylene
films (BOPP) and thermal films. </span></span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">The company came with
an IPO in 1980 with an </span><span lang="EN-US" style="color: #38761d; line-height: 150%;">offer
of 4,41,000 equity shares of Rs. 10 each at par. <span style="background: white;">The company gave bonus in March 2003 in ratio of 1:1, and has
not given any Split in face value of its shares. </span></span><span lang="EN-US" style="background: white; color: #38761d; line-height: 150%;">COSMO FILMS operates through two segments: Packaging Films
and Others (Equipments and Parts). Their geographic segments include India and
outside India. Its product portfolio consists of packaging films, including
print and pouching films, barrier films and overwrap films; lamination films,
including dry (thermal) lamination films and wet (print) lamination films;
label films, including pressure sensitive label stock films, direct thermal
printable films and wrap around label films, and industrial films, including
synthetic paper, and tape and textile films. The Company has manufacturing
facilities spread across India, the United States and Korea. It has a
manufacturing capacity of over 136,000 metric ton per annum of BOPP films,
approximately 40,000 metric ton per annum of thermal lamination films. </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">COSMO FILMS Ltd is locally compared
with </span><span style="color: #bf9000;">Xpro India Ltd, Uflex Ltd, Fenoplast Ltd, Caprihans India Ltd, Glory Films
Ltd, Essel Propack Ltd, Huhtamaki PPL Ltd, Jhaveri Flexo Industries.</span></span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">
</span><span style="color: #38761d;">Globally compared with </span><span style="color: #bf9000;">Avery Dennison Corporation of USA, Ball Corporation of
USA, Berry Plastics Group Inc of USA, Crown Holdings Inc of USA, Packaging
Corporation of America of USA, Seal Air Corporation of USA, British Polythene
Industries PLC of UK, Huhtamaki Oyji of Finland, Smurfit Kappa Group Plc of
Ireland, Vetropack Holding AG of Switzerland, Polyplex (Thailand) Public
Company Ltd of Thailand, The Pack Corporation of Japan, Lock & Lock Co.,
Ltd of South Korea, Greatview Aseptic Packaging Company Ltd of China, CPMC
Holding Ltd of Hong Kong, Mpact Ltd of South Africa, Nampak Ltd of South
Africa.</span></span><span lang="EN-US" style="color: #38761d; line-height: 150%;"> <span style="background: white;"><o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US" style="line-height: 150%;">Investment Rationale: </span></b><span lang="EN-US" style="line-height: 150%;"><o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZVTx2flJwLv3MN21BVaSZT3-ATJ6_hglYqztQE-bhq25VKTP2qZy0bTFUu63lK7PoBgllMAmjGSd3kQsXJ5APITdj0gJyl0-CpZAW77GnKjdAN6MQTkpjWTCpl4uxyZhrRO1qKsNsVeEs/s1600/918149001_1c2a5c92fcd2706a.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZVTx2flJwLv3MN21BVaSZT3-ATJ6_hglYqztQE-bhq25VKTP2qZy0bTFUu63lK7PoBgllMAmjGSd3kQsXJ5APITdj0gJyl0-CpZAW77GnKjdAN6MQTkpjWTCpl4uxyZhrRO1qKsNsVeEs/s400/918149001_1c2a5c92fcd2706a.jpg" width="336" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Cosmo Films Ltd, established in 1981, today is one of
the global leaders and manufacturers of Biaxially Oriented Polypropylene (BOPP)
films used for packaging, labels and lamination applications. The company is
the largest exporter of BOPP films from India and is also the largest producer
of thermal lamination films in the world with plant cum distribution centres in
India, Japan, Korea & the U.S along with global channel partners in more
than fifty countries. Cosmo Films, being a professionally managed Public
Limited Company has a strong presence in flexible packaging films. In
speciality films segment beside thermal films, wet lamination, synthetic paper,
high barrier films, coated films are key products. Cosmo is the largest
producer of thermal lamination films in the world. In commodity, Cosmo
manufactures tape and textile films as well as packaging films. Within the
packaging segment, company manufactures films such as heat sealable, plain,
metallized, opaque films as well as speciality films such as stable slip film,
low SIT films, high hot tack films, low COF films and extrusion coat able
metallized films. In labels Cosmo has almost a complete range of films for
wrap-around, in-mould and self-adhesive applications in transparent, metallized
and opaque which can work with almost all kinds of printing inks. Company</span><span style="color: #38761d; line-height: 150%;">’</span><span style="color: #38761d; line-height: 150%;">s products are popular in domestic and overseas
markets. Cosmo is the only company acting as a one-stop shop for laminating
solutions i.e. the films and the laminating equipments. In India with e</span><span lang="EN-US" style="line-height: 150%;"><span style="color: #38761d;">conomic
growth and rising personal disposable income which are the growth drivers for
the consumer goods sector, in turn improves the demand for packaging. </span><span style="color: #bf9000;">The Packaging industry is expected to grow around 10-12 %
CAGR in the medium term. With Growing rural demand, retail push, planned
investments by large MNCs in the FMCG business and with the strong fundamentals
of the Indian economy, will boost the growth in FMCG and this will consequently
boost the growth for packaging. As per Indian Brand Equity Federation
(IBEF), FMCG industry in India is expected to grow at a CAGR of 14.7 % between
2012 and 2020, which will also help the growth of the packaging industry. With
the increasing penetration in the rural and semi-urban areas along with the Government
initiatives to boost the rural infrastructure is likely to improve the demand
for FMCG products, thus in turn would indirectly will benefit the specialized
flexible packaging players like Cosmo Films, who offers value addition in the
form of both product specific like high speeds on product filling lines,
insulation from heat & moisture, high strength for supporting long distance
transportation, holographic images etc. & custom designed packaging
solutions like brand image protection, protection from counterfeit and cost
effectiveness. The management has indicated that certain trends like - use of
plastic tubes instead of metal tubes and PET bottles instead of glass bottles
would drive its addressable markets. Recent trend of using pouches instead of rigid
packs for hair/edible oils would expand its market size further. </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">There is expected to be a strong growth in packaged
food industry, change in pack format from rigid packaging to flexible
packaging, balanced demand-supply scenario will keep pricing power stable over
the medium term. Cosmo’s capacity expansion and product mix strategy will yield
better operating performance and superior earnings growth in the industry over
the next few years. Cosmo Films is one of the lowest cost BOPP manufacturer and
is the fifth largest player in the world. The company manufactures packaging
films, lamination films, label films and industrial films for various packaging
applications. Cosmo Films has a business model based on business to business
(B2B) with strong presence in global and domestic market. The company caters to
clients in more than 100 countries with a major presence in USA, Europe, Japan
and India. With a diversified client base and complete solution to packaging
sector, Cosmo has positioned uniquely to tap increased opportunities in the
BOPP films industry.</span><span style="color: #38761d;"> The company sources polypropylene (a key raw material)
from domestic oil & gas companies like RIL, IOC, HPCL and imports from
Middle East (10 per cent). Raw material cost is 64 % of operating revenues
and the company doesn’t get benefit of lower input cost in the P&L due to
cost plus operating model. Sustainable improvement in EBITDA margin is largely
dependent upon product mix strategy, better capacity utilization and efficiency
in operation (like savings in power cost and automation reducing man hours
etc.). </span></span><span style="color: #bf9000; line-height: 150%;"><i>Cosmo
Films enjoys significant entry barriers in specialty films segment. The company
has built unique small size production lines for specialty films to offer
customized and innovative product for premium consumer products. Notably,
specialized films are selling 2.5x premium to traditional BOPP films, a key
profitability driver over the long term</i></span><span style="color: #38761d; line-height: 150%;">. The company is one of the lowest cost
manufacturer of BOPP films in the world. The difference between manufacturing
BOPP films in India and China is very minimal. Moreover, import duty of 7.5 %
along with freight cost attached to imported films makes import an unattractive
option for domestic BOPP end-user industries. Hence, BOPP films imported from
China will not adversely impact pricing power and supply scenario in domestic
market.</span><span style="color: #38761d; line-height: 150%;"> COSMO FILMS being one of the leader in the industry
has very strong footing and has strong cash flow which thrusts the growth for
the company, and strong financials with sustained cashflow makes it attractive
for long term investment</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">.</span><b style="color: #38761d;"><span lang="EN-US" style="line-height: 150%;"><o:p></o:p></span></b></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span lang="EN-US" style="line-height: 150%;">Outlook and Valuation: </span></b><span style="line-height: 150%;"><o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO8YIfH3xuoavAhnyuiC2sup9Tn4jrb4wO668MuTjifvbIYOm_VyYiRg39m0KH3CeK_A-KrbPtZBjWCJTTaorWedaKbsxyqQNoL12KwjB0m6SpdtwkxYZe_phFt6xTuFPX-fysWzyuMUHq/s1600/918150860_621956c43eb6fd73.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO8YIfH3xuoavAhnyuiC2sup9Tn4jrb4wO668MuTjifvbIYOm_VyYiRg39m0KH3CeK_A-KrbPtZBjWCJTTaorWedaKbsxyqQNoL12KwjB0m6SpdtwkxYZe_phFt6xTuFPX-fysWzyuMUHq/s400/918150860_621956c43eb6fd73.jpg" width="336" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 150%;"><span style="color: #38761d;">Cosmo Flims is a leading manufacturer of BOPP films
and specialty films with 20 % market share. The company offers cost-effective
innovative packaging solutions to leading FMCG and global brands. Over the
years, the company expanded product portfolio to improve profitability and
growth. Its products include newer products like thermal, coating and
metalizing films besides the traditional BOPP films. The company has three manufacturing
facilities in India and one each in Korea and USA. It caters to clients in more
than 100 countries with major presence in USA, Europe, Japan and India. The
company derives 50 % sales from export market and balance 50 % from domestic
market. Out of export sales, 70 % is value-added high margin specialty films.
</span><span style="color: #bf9000;">The </span></span><span style="color: #bf9000; line-height: 150%;">Global
BOPP demand is estimated to be 72 lakh MT growing at 5-6 % annually with balanced
demand-supply situation. Domestic BOPP Films industry has grown 12 % CAGR aided
by strong growth in flexible packaging industry over the last five years. During
FY12-13, the industry saw sharp decline in profitability due to intense pricing
pressure and significant over-capacity leading to lower utilization. Cosmo
Films and other players in the industry also witnessed steep decline in gross profit
margin and EBITDA margin during the same period. </span><span lang="EN-US" style="line-height: 150%;"><span style="color: #bf9000;">Now,
pricing, profitability and demand-supply trends have reversed in FY15-FY16. At
present India’s BOPP production is estimated at approx. 5 lakh MT per annum.
Domestic BOPP consumption is approx. 3.5 lakh MT per annum and export from
India is about 1.1 lakh MT per annum. The Indian BOPP Industry has been growing
at almost double of India’s GDP growth rate. Current demand-supply scenario
coupled with capacity utilization shows reasonable stable trend on pricing
power front.</span><span style="color: #38761d;"> In order to benefit from attractive industry outlook, Jindal Poly
and Cosmo Films are expanding BOPP capacity over the next two years by 30000 MT
and 60000 MT respectively. There is a strong growth in packaged food industry,
change in pack format from rigid packaging to flexible packaging, balanced
demand-supply scenario will keep pricing power stable over the medium term. Cosmo’s
capacity expansion and product mix strategy will yield better operating performance
and superior earnings growth in the industry. </span></span><span style="color: #38761d; line-height: 150%;">Cosmo Films is also
working towards operational efficiency by cost-containment measures. The
company will save power cost around Rs. 15 crore and Rs. 25 crore in FY16 and
FY17 respectively due to change in power procurement from State grid to
long-term power purchase agreement (PPA) from private players and lower power
consumption. Upgradation of manufacturing facilities will increase automation
in plant operation and reduce power consumption per unit of production. We
believe that power cost-saving / automation measures along with efficient raw
material procurement make Cosmo Films the lowest cost BOPP film manufacture in
the world. Moreover, refinancing of existing loans at lower rates will reduce
interest cost in coming years. The company has net debt of Rs. 390 crs, of
which Rs. 220 crore are foreign currency loans with natural hedge in the form
of exports revenues and financial hedge. Its m</span><span lang="EN-US" style="color: #38761d; line-height: 150%;">ajor
competitors are Jindal Poly (210000 MT), Max Films (54000 MT), Nahar Poly
(30000 MT), Taghleef UAE (410000 MT) and Terofan (132000 MT). We believe
full-fledged BOPP films product portfolio, lowest cost of production and
diversified client base are key strengths to sustain profitability and improve
market share. </span></span><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cosmo Films has a lean working capital across business
cycles, reflecting underlying superior business operation. The company has
improved core working capital as percentage of net sales from 14 % in
FY14 to 11 % in FY15, aiding to operating cash flows. The company has announced
a capacity expansion of 60,000 MT costing Rs.200 crore funded by internal
accrual and debt. The company has already obtained financial closure on the project.
Post the expansion, installed capacity is expected to increase to 1,96,000 MT
by January 2017. It is expected that the free cash flows to increase driven by
core operational performance. The company has healthy balance sheet with
reasonable leverage like decline in net debt to equity from 1.4x in FY14 to
1.2x in FY15. The lean working capital cycle, reasonable balance sheet leverage
and healthy free cash flows are a rare combination in a slow industrial growth
environment and makes one of the reason of better investment candidate.</span><span style="font-family: "georgia" , serif;"> </span></span><span style="color: #38761d; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d;">t the current market price of Rs. 382.70, the stock is trading at a PE of 6.98 x FY17E and 6.10 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 54.82 in FY17E and Rs. 62.73 in FY17E. </span><span style="background-color: white; color: #38761d;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. </span></span></div>
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<span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<table border="1" cellpadding="9" cellspacing="0" style="background-color: white; color: #00810f; font-family: georgia, utopia, "palatino linotype", palatino, serif; font-size: 18px; line-height: 24px; text-align: justify;"><tbody>
<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 1,646.78</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,620.62</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,766.47</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,943.12</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">27.66</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">96.24</span></td><td>106.57</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">121.94</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 14.23</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">49.51</span></td><td>54.82</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">62.73</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>22.76</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.54</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.91</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.16</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.65</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.38</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.12</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">0.93</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">9.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4.78</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">4.22</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">3.74</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 7.27</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.09</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.93</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.01</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">18.15</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.06</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">28.72</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">28.31</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> COSMO FILMS LTD in my of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com4tag:blogger.com,1999:blog-8296423824543086164.post-71700503946410158942016-09-23T06:30:00.000+05:302016-09-24T22:21:13.708+05:30IGARASHI MOTORS INDIA LTD: ALL GEARED UP !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMB6meoam3K4zUZGipg1CVCcJYuWptyOgdLCqb-kMB1uYIxmJGET9RUgH5muWTM3kmy9l016VxYOzk5KxZMN9q6AnTFskdlvgCv0raReW-lKCq8YM0f4WSYnIpbQaEGsYemjK10p0tvhZl/s1600/logo.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="100" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMB6meoam3K4zUZGipg1CVCcJYuWptyOgdLCqb-kMB1uYIxmJGET9RUgH5muWTM3kmy9l016VxYOzk5KxZMN9q6AnTFskdlvgCv0raReW-lKCq8YM0f4WSYnIpbQaEGsYemjK10p0tvhZl/s320/logo.png" width="320" /></a></div>
<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=517380"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">517380</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://nseindia.com/companytracker/cmtracker.jsp?symbol=IGARASHI&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">IGARASHI</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 730.65; Market Cap: Rs. 2,236.40 Cr; 52 Week High/Low: Rs. 759.75/ Rs.
375.00.</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 3,06,08,444 shares; Promoters : 2,62,76,684 shares – 85.85 %; Total
Public holding : 43,31,760 shares – 14.15 %; <span class="apple-style-span">Book
Value: Rs. 96.19; Face Value: Rs. 10.00; EPS: Rs. 21.89; Dividend: 55.00 %;
P/E: 33.35 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 50.61; EV/EBITDA: 17.29 times.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 44.13 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 2,170.61 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> </span></strong><strong><span style="font-family: "verdana" , "sans-serif"; font-size: 8.5pt;"><o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">IGARASHI MOTORS INDIA
LIMITED: </span></b><span style="color: #38761d; line-height: 150%;">Incorporated in 1946, </span><span style="color: #38761d; line-height: 150%;">and is
based in Tamil Nadu, India. Igarashi Motors Ltd started by Eiji Igarashi who
established a private company in Kawasaki, for the production and sales of D.C.
motors for toys and model ships. It has been developing and manufacturing small
D.C. motors, for more than fifty years. In India the company was established in
the year 1993 in a joint venture with Crompton Greaves for development,
production and sales of DC motors, DC motors with accessory, and assembly
service like end cap-case-armature. The company has developing and
manufacturing small DC motors for more than fifty years and has done pioneering
work in product development, improvement and testing for the creation of new
manufacturing technologies. The design-development-technical departments are in
Japan, China and India dedicated to providing better technology and realizing
the creation of highly efficient small DC motors. Igarashi Motors India Ltd
came with a public issue of Rs. 2.77 Cr of Rs. 10 each at Rs. 10 each in 1994
to part finance its 100 % Export oriented Unit to manufacture permanent magnet
DC micro motors, the total project cost was Rs. 10 Cr and was listed on 19 May
1995. Till date company has not given any bonus or splits in face value of its
shares. Motors produced by Igarashi Motor Sales are designed in accordance with
ISO 9002 regulations to ensure quality products with optimal functionality.
Before, during, and after production, their motors are subject to intense
quality controls and testing methods to ensure reliability & Design FMEA
and Process FMEA are extensively used to secure efficiency and dependability. Igarashi
products includes -</span><b style="color: #38761d;"><span style="line-height: 150%;">DC Motors: </span></b><span style="color: #38761d; line-height: 150%;">Flat
Type Motors, Round Type Motors, High Voltage Motors ; </span><b style="color: #38761d;"><span style="line-height: 150%;">Gear Motors: </span></b><span style="color: #38761d; line-height: 150%;">Planetary
Gear motors, Spur Gear motors, High Voltage Motors, Armatures. Igarashi Motors
has developed an international presence as a means of providing quality product
to companies throughout the world. With sales offices, manufacturing facilities
and distribution centers worldwide. </span><span style="color: #38761d; line-height: 150%;">During
1997-98, the company has expanded capacity of Rotors by 1.5 million nos there
by taking the capacity to 3.5 million nos and then to 6 million nos in 1998-99.
The company was certified QS 9000 in November 1998 and the Quality System has
been upgraded to conform to the latest edition of QS 9000 with effect from
January 2000. During 2002-03 Crompton Greaves Limited have divested their
holding in favour of Igarashi Electric Works. Since Igarashi Electric Works (HK)
ltd have acquired 30,99,993 equity shares of CG Capital & Investments Ltd,
the Board changed the name of the company to Igarashi Motors India Limited. </span><span style="color: #38761d; line-height: 150%;">Its
subsidiaries worldwide includes: Heng Gang Yat Yue Industrial,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Heng Gang Igarashi Electrical Works,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Igarashi Motor Sales, LLC USA,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Igarashi Motoren Germany,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">CG Igarashi Motors Ltd India,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Zhubai Igarashi Electric Works China,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Hanamaki Nippa Industrial Ltd,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Igarashi Electric Works Ltd,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Yat Yue Industrial Ltd,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="line-height: 150%;"><span style="color: #38761d;">Igarashi Electric Works Ltd. </span><span style="background: white;"><span style="color: #38761d;">IGARASHI MOTORS INDIA LTD is locally compared with
</span><span style="color: #bf9000;">Minda Corp Ltd, Majestic Auto Ltd, PPAP Automotive Ltd, Motherson Sumi Systems
Ltd, REIL Electricals, Remsons Industries, Denso India Pvt Ltd, Talbros
Automotive</span><span style="color: #38761d;"> and Globally compared with </span><span style="color: #bf9000;">NGK Spark Plug Corp of Tokyo, Sumitomo
Electricals of Tokyo, Panasonic Corp, Nippon Seiki Corp, Riken Corp</span><span style="color: #38761d;">.</span></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXdnOsCuOt3IxPTKHcmucYw-Xpa0GhK6fRS8Ea2E0sGWFiCvGrnCM2DcXVFWqtah6FObm8youOrV38hDlkjVX-SZiv2LfZkUKPuXFI8lRIXNVXvbmvX4NK21Y-KuT840MVxUs-buzW-WHL/s1600/915850941_c93f36cdd3394d53.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXdnOsCuOt3IxPTKHcmucYw-Xpa0GhK6fRS8Ea2E0sGWFiCvGrnCM2DcXVFWqtah6FObm8youOrV38hDlkjVX-SZiv2LfZkUKPuXFI8lRIXNVXvbmvX4NK21Y-KuT840MVxUs-buzW-WHL/s400/915850941_c93f36cdd3394d53.jpg" width="336" /></a></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="background: white; color: #38761d; line-height: 150%;">Igarashi Motors India
Limited </span><span style="color: #38761d; line-height: 150%;">incorporated
in </span><span style="color: #38761d; line-height: 150%;">1946, </span><span style="background: white; color: #38761d; line-height: 150%;">is engaged in the business of auto components for
automobiles. The Company offers electric micro motors and motor components. The
Company is engaged in the production and export of permanent magnet direct
current (DC) motors for automotive sector specifically for passenger cars. The
Company's DC motors include SQ-2846, SQ3264, SQ3657, SQ3365, SQ-3655, SQ-2848,
SQ-3458, 3657 and 3665. The Company's products' primary application is
Electronic Throttle Control (ETC). The Company has produced over 500 million DC
motors for usage in actuator application/systems in passenger cars. The
Company's holding company is Agile Electric Sub Assembly Private Limited. The
Company's ultimate holding company is Igarashi Electric Works Limited. The
company specializes in the design and manufacture of small, permanent magnet DC
motors and gear motors. </span><span style="line-height: 150%;"><span style="color: #38761d;">The Indian auto
industry is one of the largest in the world with an annual production of 23.37 million
vehicles in FY 2014-15, following a growth of 8.68 % over the last year. The
automobile industry accounts for 7.1 % of the country's gross domestic product
(GDP). The Two Wheelers segment with 81 % market share is the leader of the
Indian Automobile market owing to a growing middle class and a young population.
Moreover, the growing interest of the companies in exploring the rural markets further
aided the growth of the sector. The overall Passenger Vehicle (PV) segment has
13 % market share. India is also a prominent auto exporter and has strong
export growth expectations for the near future. In FY 2015-16, automobile
exports grew by 15 % over the last year. In addition, several initiatives by
the Government of India and the major automobile players in the Indian market
are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler
(4W) market in the world by 2020. The industry produced a total 14.25 million
vehicles including PVs, commercial vehicles (CVs), three wheelers (3W) and 2W in
April-October 2015 as against 13.83 in April-October 2014, registering a
marginal growth of 3.07 % year-on-year. The sales of PVs grew by 8.51 per cent
in April-October 2015 over the same period last year. The overall CVs segment
registered a growth of 8.02 % in April-October 2015 as compared to same period
last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered very
strong growth of 32.3 % while sales of Light Commercial Vehicles (LCVs) reduced
by 5.24 % during April-October 2015 year-on-year. In April-October 2015,
overall automobile exports grew by 5.78 %. PVs, CVs, 3Ws and 2Ws registered growth
of 6.34 %, 17.95 %, 18.59 % and 3.22 % respectively in April-October 2015 over April-
October 2014. </span><span style="color: #bf9000;">India’s automotive industry is one of the most competitive in the
world. </span></span><span style="color: #bf9000;"><span style="line-height: 150%;">The
Indian auto-components industry has experienced healthy growth over the last
few years. Some of the factors attributable to this include: a buoyant end-user
market, improved consumer sentiment and return of adequate liquidity in the
financial system. The auto-components industry accounts for almost 7 % of India’s
Gross Domestic Product (GDP) and employs as many as 19 million people, both
directly and indirectly. A stable government framework, increased purchasing
power, large domestic market, and an ever increasing development in
infrastructure have made India a favorable destination for investment. </span><span style="line-height: 150%;">The Indian automotive sector has the potential to
generate up to US$ 300 billion in annual revenue by 2026, create 65 million
additional jobs and contribute over 12 per cent to India’s Gross Domestic
Product, as per the Automotive Mission Plan 2016-26 prepared jointly by the
Society of Indian Automobile Manufacturers (SIAM) and government. It is
expected that the g</span><span style="line-height: 150%;">lobal automotive industry vehicle volume to
cross from the current 75mn vehicles per annum to cross 110 mn by 2022, the
share of automotive production in Asia was 33 % in 2000 which went upto 50 % in
2012 and is likely to be upwards of 55 % by 2020. Vehicle sales in Europe are
expected to remain stagnant between 15 to 18 million annually and the main
growth is expected in Asia pacific and to an extent, in Americas. The fixed
investments in automotive capacity in Asia pacific is estimated to be 60 % of
the total global investment, out of the 110million vehicles estimated for 2022,
approximately 90 % is expected to be pure Internal Combustion Engine (ICE)</span><span style="line-height: 150%;"> vehicles</span><span style="line-height: 150%;"> while the balance 10 % will be
a combination of electric vehicles and hybrid electrical vehicles. </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">The Government of India encourages foreign
investment in the automobile sector and allows 100% FDI under the automatic
route.</span><span style="color: #38761d;"> Some of the major initiatives taken by the Government of India are: Government
of India aims to make automobiles manufacturing the main driver of Make in
India initiative, as it expects passenger vehicles market to triple to 9.4 million
units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26. In the
Union budget of 2015-16, the Government has announced to provide credit of Rs.
8,54,000 Cr (US$ 127.5 billion) to farmers, which is expected to boost the
tractors segment sales. The Government plans to promote eco-friendly cars in
the country i.e. CNG based vehicle, hybrid vehicle, and electric vehicle and
also made mandatory of 5 % ethanol blending in petrol. The government has
formulated a Scheme for Faster Adoption and Manufacturing of Electric and
Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to
encourage the progressive induction of reliable, affordable and efficient
electric and hybrid vehicles in the country. The Automobile Mission Plan (AMP)
for the period 2006</span></span><span style="color: #38761d; line-height: 150%;">-</span><span style="color: #38761d; line-height: 150%;">2016, designed by the government is aimed at accelerating
and sustaining growth in this sector. Also, the well-established Regulatory
Framework under the Ministry of Shipping, Road Transport and Highways, plays a
part in providing a boost to this sector. The government initiative and
investments and the potential makes the auto mobile sector lucrative and makes
the prospectus of the Igarashi Motors even brighter. </span><span style="color: #38761d; line-height: 150%;">It is
expected that the growth to be driven by numerous factors like strong economic
growth; continued population growth; expansion of the middle class; strong
rainfall and an increasingly favourable regulatory environment makes Igarashi
Motors best choice from this sector. <b><o:p></o:p></b></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Outlook and Valuation:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Igarashi
Electric Works, Ltd. since its establishment in 1952 has dedicated itself to
the development, manufacture and sale of products specially designed to meet
the needs of its customers. To maintain full satisfaction, the company has
grown and established new manufacturing and sales organizations in USA,
Germany, China, India, and Hong Kong, as well as maintaining its continued
presence in Japan. The company has developing and manufacturing small DC motors
for more than fifty years and has done pioneering work in product development,
improvement and testing for the creation of new manufacturing technologies.
Motors produced by Igarashi Motor Sales are designed in accordance with ISO
9002 regulations to ensure quality products with optimal functionality. Before,
during, and after production, the motors are subject to intense quality
controls and testing methods to ensure reliability. Design FMEA and Process
FMEA are extensively used to secure efficiency and dependability. </span><span style="line-height: 150%;"><span style="color: #bf9000;">Igarashi offers a wide variety of
motors in different sizes and shapes. One can select their small and high performance
motor from flat type, round type or geared motors. Custom designs and value
added components often lead to complete sub-assemblies and assemblies. Igarashi
work with their network of suppliers to further facilitate the incorporation of
their motor into their product by creating a complete assembly that can readily
be adapted to production requirements. D</span></span><span style="line-height: 150%;"><span style="color: #bf9000;">iscussions
with Key customers indicate that the average number of electric motors per
global vehicle will move up from 20 to 25 Electric motors per car to 35 to 40
Electric Motors per car in the next three to four years. Dynamics in
development of electric motors for these actuators continue to remain strong.
Electric motor performance parameters, specifically related to new technologies
resulting in lower weight, smaller volume, lesser current fuel consumption and
favourable overall cost. Due to stringency of fuel efficiency and emission
norms, electric motors for aforementioned actuators is likely to go up steadily
over the next years from the present level of 1 to 2 motors average per global
vehicle to 3 to 4 motors average per global vehicle. The key applications, in
this space continues to be Electronic Throttle Control valves in engines
including air control valves, Exhaust gas recirculation valves, Waste gate actuators
and Bypass valves in Turbo chargers & fluid control valves for thermal
management applications. The market for these motors is estimated to grow at more
than twice the rate of the vehicle growth.</span><span style="color: #38761d;"> On financial side, </span></span><span style="color: #38761d; line-height: 150%;">Igarashi
Motors Ltd achieved a turnover of Rs. 125.40 Cr for the 1st quarter of the FY
2016-17 as against Rs. 108.65 Cr in the corresponding quarter of the previous
year, an increase of 15.41 %. During the quarter, net profit increased by 21.60
% to Rs. 18.99 Cr from Rs. 15.61 Cr in the corresponding quarter ending of
previous year. During the quarter, EBIDTA stood at Rs. 34.47 Cr as against Rs.
30.26 Cr in the corresponding period of the previous year, up by 13.93 %. Profit
before tax (PBT) stood at Rs. 28.84 Cr in Q1 FY17 against Rs. 23.98 Cr in the corresponding
quarter of the previous year, up by 20.24 %. EPS of the company stood at Rs.
6.20 in Q1 FY17 against Rs. 5.10 in the corresponding quarter of the previous
year. Net Sales and PAT of the company are expected to grow at a CAGR of 12 %
and 17 % over 2015 to 2018E; respectively. </span><span style="color: #38761d; line-height: 150%;">Highest
market capitalization among its peers, Igarashi has huge market capitalization
of 2094 Crs. Domestic institution are gradually attracting towards the company.
Igarashi has very less debt to equity ratio of 0.17 and good interest coverage
ratio of 16.75. Continuous increasing positive cash flow from operating
activities. Company has very less interest outgo which has further lowered down
in last year. </span><span style="color: #38761d; line-height: 150%;">Company dividend pay-out has
increased by 23.87%. </span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Igarashi
has Operating profit margin of 19.78% for FY15-16. Igarashi has Net profit
margin of 14.33% for FY15-16. Company has developed an international presence
to provide its quality product and services worldwide. </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 24px;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 730.65, the stock is trading at a PE of 29.81 x FY17E and 26.16 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 24.51 in FY17E and Rs. 27.92 in FY17E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 385.07</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">444.98</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">507.28</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">573.22</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">48.95</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">63.64</span></td><td>75.03</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">85.47</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 15.99</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.79</span></td><td>24.51</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">27.92</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>45.09</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">34.69</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">29.42</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">25.83</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.80</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.13</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.22</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.44</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.34</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.92</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.17</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 19.51</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 21.62</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.82</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.21</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">39.29</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">44.29</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">42.03</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">40.22</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><img src="http://www.bazaartrend.com/images/arrow_1.gif" style="text-align: justify;" /><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold</span><span style="color: #bf9000;"> IGARASHI MOTORS INDIA LTD in my of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><u>Disclaimer</u>: </i></b></span></span></span></span></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com14tag:blogger.com,1999:blog-8296423824543086164.post-69930056573905798872016-09-13T07:00:00.000+05:302016-09-20T11:04:00.760+05:30INTERGLOBE AVIATION LTD (INDIGO AIRLINES) : FLYING HIGHER !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOjjC4oO-Ji4ezphIpmWRvdTtli9CHnjSczbpD5b1pCsmKON0G92DSOzxKlNDiJE96R4hGfsERqhJsvcUUW4sEuFld_v2tZ2wZtMx9VL0DUETPrrcHt87TYTNYECte9FechJp2iZAwfk71/s1600/Aviation.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOjjC4oO-Ji4ezphIpmWRvdTtli9CHnjSczbpD5b1pCsmKON0G92DSOzxKlNDiJE96R4hGfsERqhJsvcUUW4sEuFld_v2tZ2wZtMx9VL0DUETPrrcHt87TYTNYECte9FechJp2iZAwfk71/s320/Aviation.png" width="320" /></a></div>
<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=539448"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">539448</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://nseindia.com/companytracker/cmtracker.jsp?symbol=INDIGO&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">INDIGO</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 864.95; Market Cap: Rs. 441.68 Cr; 52 Week High/Low: Rs. 1,394.85/ Rs.
698.35.</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 36,12,03,806 shares; Promoters : 31,04,38,237 shares – 85.95 %; Total
Public holding : 5,07,65,569 shares – 14.05 %; <span class="apple-style-span">Book
Value: Rs. 75.93; Face Value: Rs. 10.00; EPS: Rs. 53.74; Dividend: 3516.90 %;
P/E: 16.12 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 11.33; EV/EBITDA: 9.85 times.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: Rs. 3,200.79 Cr;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 33,637.74 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> </span></strong><strong><span style="font-family: "verdana" , "sans-serif"; font-size: 8.5pt;"><o:p></o:p></span></strong></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">INTERGLOBE AVIATION
LIMITED: </span></b><span style="color: #38761d; line-height: 150%;">Incorporated in 2004, </span><span style="color: #38761d; line-height: 150%;">and is
based in New Delhi. <span style="background: white;">InterGlobe Aviation Limited,
formerly known as InterGlobe Aviation Private Limited, is an India-based
company engaged in operating passenger airline. InterGlobe Enterprises Ltd is
the holding company of Interglobe aviation Ltd. The Company offers aviation,
hospitality and travel related services. It operates through two geographic
segments: Domestic, which includes air transportation within India, and
International, which includes air transportation outside India. </span>Interglobe
aviation came with an public issue of 26,112,000 equity shares of Rs. 10 each
at Rs. 765 each 0n October 27, 2015 and got listed on November 10, 2015 at Rs.
855.80 and made day high of 899.50 with low of 849. The object of the issue was
</span><span style="color: #38761d; line-height: 150%;">to utilize the funds for the retirement of certain
outstanding lease liabilities and consequent acquisition of aircraft and for
the purchase of ground support equipment for airline operations and general
corporate purposes also to receive the benefits of listing of the Equity Shares
on the Stock Exchanges. </span><span style="color: #38761d; line-height: 150%;">T</span><span style="background: white; color: #38761d; line-height: 150%;">he company has not given any splits in face value of its
shares and has not declared any bonus shares. </span><span style="background: white; line-height: 150%;"><span style="color: #38761d;">Its
business lines include InterGlobe Air Transport, InterGlobe Aviation,
InterGlobe Hotels, InterGlobe Technologies, InterGlobe Technology Quotient and
InterGlobe Education. InterGlobe Technologies provides integrated information
technology and business process outsourcing services. InterGlobe Technology
Quotient distributes Travelport in India and Sri Lanka. It has four trademarks,
namely, IndiGo Airways, IndiGo Airlines, IndiGo and IndiGo Air. It has around
96 aircrafts, and operates scheduled services to approximately 33 airports in
India, with a maximum of around 593 domestic flights per day. INTERGLOBLE
AVIATION LTD is locally compared with </span><span style="color: #bf9000;">Jet Airways ltd, SpiceJet Ltd, Kingfisher
Airlines, Jagson Airlines Ltd, Bluedart Express, MFL India Ltd, Global Vectra
Helicopters Ltd, Patel Integrated Logistics ltd</span><span style="color: #38761d;"> and Globally compared with
</span><span style="color: #bf9000;">Southwest Airlines Co of USA, Virgin America Inc ofUSA, JetBlue Airways
Corporation of USA, Spirit Airlines Inc ofUSA, American Airlines Group of USA,
Delta Airlines Inc, United Continental Holding of USA, Alaska Air Group of USA,
Skywest Inc of USA, Etihad Airways of UAE, Iran Air, British Airways Plc of UK,
AIR CHINA of China, Cathay Pacific Airways Ltd of Hongkong, Qantas Airways of
Australia, Alliance Aviation of Australia, Eva Airways corporation of
Taiwan,Transasia Airways of Taiwan, Thai Airways International of Thailand,
Bangkok Aviation of Thailand, Asia Aviation Pcl of Thailand, Tiger Airways
Holding Of Singapore, Singapore Airlines of Singapore, A-Sonic Aerospace of
Singapore, AirAsia of Malaysia</span><span style="color: #38761d;">. </span></span><span style="color: #38761d; line-height: 150%;"><o:p></o:p></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg43s9MTcVAnFIQxpz-FVzUY6hrwcLzSZPFqcF7IqK7ua2yi-5A1kcqWEFBGHy_GSt-h8-1P3Xg_HMngzMO7idIXHeQDniqbi77X00Df7alszC9tD75zWehPcj7RSWXvSgZfkt0CMOCZ9hk/s1600/914130203_e3d7249e8fe4946d.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg43s9MTcVAnFIQxpz-FVzUY6hrwcLzSZPFqcF7IqK7ua2yi-5A1kcqWEFBGHy_GSt-h8-1P3Xg_HMngzMO7idIXHeQDniqbi77X00Df7alszC9tD75zWehPcj7RSWXvSgZfkt0CMOCZ9hk/s400/914130203_e3d7249e8fe4946d.jpg" width="336" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">Interglobe
Aviation Limited was incorporated in </span><span style="line-height: 150%;"><span style="color: #38761d;">2006,
Interglobe Aviation Ltd is India based aviation, hospitality and travel related
service provider. Company own and operate 'IndiGo', India's largest airline
with over 33 % of domestic passenger market share. IndiGo Airline, the low-cost
airline carries the brand message of providing "</span><i><span style="color: #bf9000;">low fares, on-time flights and a hassle-free experience</span></i><span style="color: #38761d;">" to
air travellers in India. IndiGo has scheduled services to 33 cities within
India and 5 cities like Bangkok, Dubai, Kathmandu, Muscat and Singapore internationally
with 623 daily flights. Company also has a joint venture with Accor Asia
Pacific since 2004 to develop a network of '</span><b style="color: #38761d;"><i>ibis</i></b><span style="color: #38761d;">' hotels throughout
India, Nepal, Sri Lanka and Bangladesh. With 10 </span><b style="color: #38761d;">ibis</b><span style="color: #38761d;"> hotels open and 9 under development, the company shall have a
portfolio of 19 operational hotels with room inventory of about 3500 rooms by
2017. The company have maintained its discipline in execution of the low-cost
carrier business model with single aircraft type, high aircraft utilization,
high operational reliability, no-frills product and low distribution costs.
Company enjoys a structural cost advantage. Large Airbus aircraft orders enable
favorable terms on aircraft, engines and components. Company has Young, modern
and fuel-efficient fleet, Strong brand recognition, maintained consistent
profitability and strong cash flow generation, balance sheet and liquidity
position. </span></span><span style="background: white; color: #38761d; line-height: 150%;">Interglobe Aviation Ltd (IAL) has an ordered
430 aircrafts and expects delivery of 14 aircrafts before this fiscal end. IAL’s
domestic passenger volume increased at a CAGR of 25.8 % during fiscal 2011-2015
from 95 lakhs to 2.37 Cr. </span><span style="color: #bf9000;"><span style="line-height: 150%;">India is one of the world’s largest and
fastest-growing air travel markets, according to the report by <i>Centre for
Asia Pacific Aviation India Private Limited</i></span><span style="line-height: 150%;"> (</span><span style="line-height: 150%;">CAPA) Report. Historically, the Indian air
travel market was comprised of individuals in relatively high income brackets
as well as corporate travellers. Additionally, many members of the Indian
middle class did not have a viable option to meet their long distance travel
requirements as surface transportation infrastructure was relatively poor and air
travel was relatively expensive. Starting in 2003, the Indian government introduced
several measures to further liberalize the air travel market, including a
reduction in fuel excise taxes, elimination of the 15 % Inland Travel Tax and
the awarding of new airline licenses to private operators, which is reflected
in the growth of domestic passenger volume at a CAGR of 19.4 %. Since then a
large number of Low Cost Carriers (LCCs) have entered the Indian air travel
market and stimulated prices through their low-cost business models. By using
price stimulation as a core business strategy, LCCs were able to cater to
India’s middle class segment. In the decade that followed, Indian air travel
entered a period of considerable growth. By 2014, India’s air travel market had
become the sixth largest in the world as measured by total domestic seats of
approx. 9.73 Cr and ninth largest in the world by total domestic and international
seats of approx. 15.59 Cr. Going forward, the domestic Indian aviation market
is forecast to be the world’s fastest growing aviation market with Revenue Passenger
Kilometers (RPKs) growing at a CAGR of 9.5 % between 2013 and 2033. Going
forward, the Indian air travel market is expected to enter a period of accelerated
growth. Between FY2015 and FY2020, domestic ASKs are forecast to grow at a CAGR
of 12.7 %, while domestic passenger volume is forecast to grow at a CAGR of
12.8 %, according to the CAPA Report. India is expected to be one of the
fastest growing major economies in the world over the next four years, with Real
GDP expected to grow at a CAGR of 7.1 % between CY2014 and CY2019. This rate of
Real GDP growth exceeds that of China, APAC, and the world over the same
period, which is forecast to grow at a CAGR of 6.4 %, 4.5 %, and 3.0 %,
respectively. The IMF expects India to surpass China’s Real GDP growth rate in
CY2015 and CY2016, with respective growth rates of 7.5 % compared to 6.8 % and
7.5 % as compared to 6.3 %. India is the second most populous country in the
world with 1.26 billion people through CY2014, according to the IMF. The IMF
projects that India’s population will grow at a CAGR of 1.3 % to reach 1.34
billion by the end of CY2019. The expected growth in India’s population between
CY2014 and CY2019 is higher than the average growth in population of the top 20
domestic air travel markets in the world. The increase in the Indian population
is expected to be a continuing driver of growth in the Indian air travel market.
India’s annual per capita income has grown at a CAGR of 12.6 %, from </span><span style="line-height: 150%;">Rs. </span><span style="line-height: 150%;">46,249 in FY2010 to </span><span style="line-height: 150%;">Rs. </span><span style="line-height: 150%;">74,380 in FY2015. India’s
growth in per capita income and overall population has caused the rapid
expansion in the size of India’s middle class, defined as households with a
disposable income of more than USD 5,000 per year (more than approximately </span><span style="line-height: 150%;">Rs. </span><span style="line-height: 150%;">3,35,000 per year). The number
of Indian middle class households is expected to increase from 5.36 Cr in
CY2014 and reach 10.79 Cr households by 2019 implying a CAGR of 15.0 %. In
addition, Mumbai and New Delhi are expected to have the 25th and 30th highest
increase in household disposable income globally between 2013 and 2030. The
tourism industry in India is fast-growing and an increasingly significant contributor
to India’s economy, according to the CAPA Report. The total contribution of
travel and tourism to India’s GDP was </span><span style="line-height: 150%;">Rs.
</span><span style="line-height: 150%;">7,642.5
billion in CY2014 which was 6.7 % of GDP and is forecast to rise by 7.3 % per
annum to </span><span style="line-height: 150%;">Rs. </span></span><span style="line-height: 150%;"><span style="color: #bf9000;">16,587.2
billion which is 7.6 % of GDP by CY2025, according to the World Travel and
Tourism Council. According to the Ministry of Tourism of India, India witnessed
7.7 million foreign tourist arrivals in CY2014, which had grown at a CAGR of
8.3 % during the period from CY2009 to CY2014. According to the EIU, the number
of foreign tourist arrivals is expected to increase at a CAGR of 9.2 % during
the period from CY2015 to CY2019 to reach 12.0 million in CY2019. This is due
to, among other factors, government initiatives to promote India as a tourist
destination, such as successful implementation of the e-Tourist Visa program
for passport holders of 113 countries, as well as the government’s plan to make
electronic visas available eventually to visitors from over 150 countries. India
has a very large rail travel market in terms of passengers carried, and India’s
domestic air travel market of 70 million passengers carried in FY2015
represents a very small percentage of the total rail passengers carried, according
to the CAPA Report. </span><span style="color: #38761d;">While the size of the rail travel market is not indicative
of the potential addressable market for air travel, and while only a portion of
rail travel can reasonably be expected to be substituted by air travel in the
near future, the substitution of rail travel by air travel presents a
significant growth opportunity, according to the CAPA Report. </span><span style="color: #bf9000;">Rising income
levels are expected to cause the Indian middle class to increasingly prefer air
travel to rail and road travel because of its convenience, shorter duration and
competitive pricing, according to the CAPA Report. The Indian air travel market
is serviced by domestic and international LCCs and full-service carriers (<b>FSCs</b>).
Domestic carriers in India include LCCs such as IndiGo, SpiceJet, GoAir, Air
India Express, and AirAsia India, as well as FSCs such as Jet Airways, Air
India, Air Costa, Alliance Air and Vistara, according to the CAPA Report.</span><span style="color: #38761d;"> These
domestic carriers also compete with international and regional carriers, new
entrants in the airline industry, Indian Railways, the state-owned railway
company of India, and with different forms of road transportation, according to
the CAPA Report. The competitive landscape of the Indian air travel market has
undergone meaningful change as carriers have entered and exited the market and
current carriers have undergone considerable changes, such as in their composition,
market share, load factors, and cities served, according to the CAPA Report. It
is expected that the growth to be driven by numerous factors like strong
economic growth; continued population growth; expansion of the middle class; strong
growth in tourism; rail travel substitution; increasing aircraft penetration
from currently low penetration levels; expansion in aviation infrastructure;
and an increasingly favourable regulatory environment. Looking at these
InterGlobe Aviation Ltd is best placed to be benefited.</span><b style="color: #38761d;"><o:p></o:p></b></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Outlook and Valuation: </span></b></span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidBSNn_Nn2UjJWxrXnTeJm0Xb2aF9-EuGe5aI2aud4iRPbxPnWZ9EEsSJYaDl_QauczQ20hZMmXvo16w8Faz0KsQdj6dZ4SKSfUM6OyakFJDimjpT1Cg6QpuHz19WhGM7x8iMEBhe3t4sF/s1600/InterGlobe+verticals+logo+2011.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidBSNn_Nn2UjJWxrXnTeJm0Xb2aF9-EuGe5aI2aud4iRPbxPnWZ9EEsSJYaDl_QauczQ20hZMmXvo16w8Faz0KsQdj6dZ4SKSfUM6OyakFJDimjpT1Cg6QpuHz19WhGM7x8iMEBhe3t4sF/s320/InterGlobe+verticals+logo+2011.png" width="320" /></a></div>
<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;"><span id="goog_1184983031"></span><span id="goog_1184983032"></span>Incorporated
in 2004, Indigo commenced operations in Aug’06 with a single aircraft, and has grown
its fleet to 97 aircraft, all Airbus A320. It placed an order for 180 A320 neo
aircraft with Airbus in Jun’11. The purchase agreement determined a series of
scheduled deliveries from Nov’15 to Nov’23. Indigo improved its fleet from 25
aircraft in FY10 to 97 in FY16. This has resulted in an increase in market
share to almost one-third that of the industry, placing it as the market
leader. It operates on a low-cost-carrier (LCC) business model and focuses on
the domestic Indian air travel market. It caters to 35 airports in India and
five international destinations.</span><span style="color: #38761d; line-height: 150%;">
</span><span style="line-height: 150%;"><span style="color: #38761d;">The
increase in the number of LCCs combined with macroeconomic factors such as India’s
relatively low per capita income and price-sensitive consumers have led LCCs to
dominate India’s air travel market. LCCs’ share of the Indian air travel market
has increased from 40.5 % in FY2010 to 62.2 % in FY2015, according to DGCA data.
This represents an approximate 55 % increase in LCCs’ market share over FSCs’
market share between FY2010 and FY2015. In addition to macroeconomic and India consumer
factors, the following factors have also contributed to the success of LCCs in
India, the </span><span style="color: #bf9000;">LCC business model, characterized by such features as single
aircraft type fleets, aircraft with greater fuel efficiency and lower
maintenance costs, faster turnaround times to increase aircraft utilization,
and low debt positions; access to capital, when required, through promoter
funding and, in some cases, sale-and-leaseback transactions; superior execution
through sound management and strong delivery systems; competitive aircraft
pricing and favourable maintenance and support contracts; structured systems,
processes, and training; and liberalization of the Indian market.</span><span style="color: #38761d;"> LCCs are
expected to maintain a domestic market share of 65 % to 70 % of passenger volume,
and LCC ticket price is expected to remain a key driver of demand as India is an
extremely price sensitive market. In addition to leisure travelers, LCCs have
also gained acceptance among corporate travelers in India by meeting corporate
market expectations for network density, frequency (particularly at peak
hours), schedules offering same-day returns, on-time performance, reliability,
new aircraft and quality service. LCCs have also been able to gain traction in the
corporate market through the strategic decision to focus on increasing flight frequencies
on metro routes, rather than seeking to stimulate untested, virgin markets. </span><span style="color: #bf9000;">Indigo
has improving Operating metrics, which includes on-time departures and
arrivals, flight cancellations, and number of complaints, are often used in the
air travel industry to evaluate operating performance of carriers. In aviation
maintenance costs are one of the main cost components for any carrier. The maintenance
costs of a carrier are impacted by its business model, fleet composition and
overall fleet management. The maintenance cost per Available Seat Kilometre
(ASK) of the various Indian carriers for FY2015 was US¢0.18 for IndiGo, US¢0.34
for Air India, US¢0.35 for GoAir, US¢0.90 for SpiceJet and US¢0.95 for Jet
Airways. IndiGo’s maintenance costs are the lowest among Indian carriers. The
fuel cost per ASK for FY2015 was US¢2.94 for SpiceJet, US¢3.07 for IndiGo, US¢3.23
for Jet Airways, US¢3.37 for GoAir and US¢3.47 for Air India. The ownership
cost per ASK of the Indian carriers for FY2015 was US¢0.97 for IndiGo, US¢1.20
for SpiceJet, US¢1.23 for GoAir, US¢2.01 for Jet Airways and US¢2.62 for Air
India. IndiGo’s ownership costs are lowest and fuel costs are second lowest, on
per ASK basis, among Indian carriers. The Cost Available Seat Kilometer (CASK)
measures the unit costs of a carrier and is calculated as total costs divided
by ASK. The CASK of the Indian carriers for FY2015 was US¢5.95 for IndiGo,
US¢6.37 for GoAir, US¢6.68 for SpiceJet, US¢9.05 for Jet Airways and US¢9.82
for Air India, according to the SAP Report. IndiGo’s CASK is lowest among
Indian carriers. Air India has the largest fleet of aircraft of an Indian
carrier followed by Jet Airways and IndiGo. IndiGo maintains the largest
orderbook of any Indian carrier with 430 aircraft on order and is seventh
largest LCC in the world by total seats for FY2015. IndiGo was the fastest
growing carrier in India in terms of ASK growth between FY2011 and FY2015,
followed by GoAir and SpiceJet. The average age of a carrier’s fleet is
impacted by its business model, fleet composition and overall fleet management.
The Fleet age can impact the operating costs of a carrier, including fuel costs
and maintenance costs, among Indian carriers with at least six months of
operating history as of March 31, 2015, AirAsia India had the youngest fleet
age of 2.7 years and IndiGo had the second youngest average fleet age of 3.2
years, followed by GoAir at 3.9 years, Air Costa at 3.9 years, SpiceJet at 4.1
years, Jet Airways at 5.9 years, and Air India at 8.9 years, as of March 31,
2015, respectively. The Revenue Availability Seat kilometers (RASK), is a
measurement of unit revenue, minus CASK, is a measure of a carrier’s unit profitability.
Excluding fuel cost from the analysis provides an indicator of a carrier’s unit
profitability before taking in to account fuel costs, which can vary
significantly from region to region. IndiGo had the highest RASK minus CASK of
any carrier in India and a level in line with LCCs operating in Asia during
FY2015. IndiGo’s RASK minus CASK excluding fuel was the highest in India and
higher than all of the LCCs operating in Asia. <b><i>Indigo </i></b>follows the
pure low-cost principle which is intended to provide it with an advantage over
some of other LCC competitors in India who operate hybrid business models
between low-cost and full-service airlines, such as the inclusion of meals and
beverages in the ticket prices for non-corporate passengers, offering business
class seats and operating multiple aircraft types. They have employed a single
type of airframe and engine within their current fleet, which helps them to
reduce their expenses related to maintenance, spare parts, operation, crew training
and labor, as well as helping them to more efficiently manage crew rosters.</span><span style="color: #38761d;">
Indigo’s</span></span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">aircraft utilization in block hours was
11.4 hours per day per aircraft in fiscal 2015, which, was among the highest of
any airline in India. They have maintained
high aircraft utilization rates by keeping a low turnaround time between their
flights. Additionally, they operate a point-to-point route network with no
code-sharing with other airlines for passenger traffic, which further helps to reduce
turnaround time. Indigo has</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">reduce their
distribution costs by increasing direct sales via their website, airport, call
center and mobile app and scaling down commissions paid to online and traditional
travel agents. Approximately 20.6 % and 22.0 % of their ticket sales were made
through these direct channels. </span><span style="color: #38761d; line-height: 150%;">IndiGo
management has highlighted that earlier they were largely passive towards low competitive
fares on key routes. However, the management hinted that they are might become
more aggressive in responding to competitive pressures going ahead. Management
highlighted that yields were lower YoY due to competitive headwinds. IndiGo
continues to look at India as a highly attractive market and is confident that
the market can profitably absorb additional capacity.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">IndiGo
management highlighted that they are maintaining their FY17 fleet guidance.
Last quarter it had guided for 34 % YoY ASK addition.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">And expects
to get in all 24 neo planes by March 2017 they currently have five neo planes.
However, the deliveries will be slowed down to give Pratt & Whitney time to
catch up with the delivery schedule.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Management indicated that they are
facing operational issues in neo which include some software hiccups. For
1QFY17, management guides ASK growth of 25 % and updated that A320Neos have
proven to be 14.5 % fuel efficient vs. A320Ceos. The Rentals on neos are 15 %
higher than ceo planes. On financial side of Q1 FY17 they have added 2 aircraft
in 1Q including 1 A320Neo and now the fleet size is 109. Its </span><span style="color: #38761d; line-height: 150%;">I</span><span style="color: #38761d; line-height: 150%;">nterest
expenses for the quarter included a one-off of Rs. 4.40 Cr due to redelivery of
airplane which resulted in renegotiation of ECB financing.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Their employee
costs included Rs. 2.10 Cr related to issue of ESOPs. Management highlighted
that the excess bench strength earlier is being absorbed now with the delivery
of planes. Employee to aircraft has declined from 121 in 3QFY16 to 112 in
1QFY17. Management guided that tax rate was lower during the quarter due to a writeback
of tax credit which had been written off earlier. Going ahead management guided
normalized tax rates.</span><b style="color: #38761d;"><span style="line-height: 150%;">
</span></b><span style="color: #38761d; line-height: 150%;">Indigo’s superior economics versus
peers should lead to premium valuation. However, management’s recent admission
that it has/intends to respond to competitor’s fares, indicates change in its pricing
stance. This coupled with its planned capacity addition will put pressure on load
factors as well as yields in the near term.</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Sustained low oil price is
strengthening airlines’ balance sheets and emboldening competition to announce
fleet expansion. </span></span><span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">IndiGo is the most profitable carrier in India,
& as measured by EBITDAR margins, with a margin of 19.8 %, while GoAir with
16.9 %, Jet Airways with 5.9 %, SpiceJet with 2.3 % and Air India with (9.0 %) during
the same period. Going forwards the stock can trade at 14 times the EV/EBITDAR
which could be around 20 % premium to its global LCC’s.</span><span style="font-family: "georgia" , serif;"> </span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">A</span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">t the current market price of Rs. 864.95, the stock is trading at a PE of 13.72 x FY17E and 11.45 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 63 in FY17E and Rs. 75.50 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also .</span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16 </span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 13,925.30 </span></td><td>16,140.00</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20,800.00 </span></td><td>27,340.00</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1,304.20</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 2,000.00</span></td><td>2,270.00</td><td>2,720.00</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 42.50</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 55.50</span></td><td>63.00</td><td>75.50</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>19.10</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 17.60</span></td><td>15.50</td><td>12.90</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td>83.40</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 19.10</span></td><td>16.00</td><td>13.40</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.00</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 11.40</span></td><td>10.30</td><td>8.50</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 309.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 177.20</span></td><td>112.70</td><td>113.10</td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">33.60</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 43.00</span></td><td>49.80</td><td>56.90</td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold </span><span style="color: #bf9000;">INTERGLOBE AVIATION LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>-------------------------------------------------------------------------------------------</i></b></span></span></span></span></b><br />
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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Bhavikkshahhttp://www.blogger.com/profile/05910650748306960034noreply@blogger.com4tag:blogger.com,1999:blog-8296423824543086164.post-67282509626316970782016-09-03T06:30:00.000+05:302016-09-03T17:50:21.189+05:30INDIA NIPPON ELECTRICALS LTD : SLOW BUT STEADY !!<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Scrip
Code:</span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><a href="http://www.bseindia.com/stockinfo/index.htm?scripcode=532240"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">532240</span></b></a><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">/ </span></b><a href="http://nseindia.com/companytracker/cmtracker.jsp?symbol=INDNIPPON&cName=cmtracker_nsedef.css"><b><span style="font-family: "georgia" , "serif"; font-size: 13.5pt;">INDNIPPON</span></b></a><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">CMP:
Rs. 390.50; Market Cap: Rs. 441.68 Cr; 52 Week High/Low: Rs. 435.00/ Rs. 315.00.</span></b><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Shares: 1,13,10,712 shares; Promoters : 75,09,166 shares –66.36 %; Total Public
holding : 38,01,546 shares –33.64 %; <span class="apple-style-span">Book
Value: Rs. 207.63; Face Value: Rs. 10.00; EPS: Rs. 23.82; Dividend: 90.00 %;
P/E: 16.62 times;</span></span></b><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">Ind.</span></b></span><span class="apple-converted-space"><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><span class="apple-style-span"><b><span style="color: #bf9000; font-family: "georgia" , "serif"; font-size: 13.5pt;">P/E: 55.23; EV/EBITDA: 9.86 times.</span></b></span><span style="font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Total
Debt: </span></b><b><span style="color: #c00000; font-family: "georgia" , "serif"; font-size: 13.5pt;">ZERO</span></b><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">;</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Enterprise</span></b><span class="apple-converted-space"><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;"> </span></span><b><span style="color: #38761d; font-family: "georgia" , "serif"; font-size: 13.5pt;">Value: Rs. 437.67 Cr.</span></b><strong><span style="font-family: "verdana" , sans-serif; font-size: 8.5pt;"> </span></strong><strong><span style="font-family: "verdana" , "sans-serif"; font-size: 8.5pt;"><o:p></o:p></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><b style="color: #38761d;"><span style="line-height: 150%;">INDIA NIPPON ELECTRICALS
LIMITED: </span></b><span style="color: #38761d; line-height: 150%;">Incorporated in 1984, </span><span style="color: #38761d; line-height: 150%;">and
converted into a joint venture in 1986 between Lucas Indian Service Ltd, a
wholly-owned subsidiary of Lucas-TVS Ltd and Kokusan Denki Co. Ltd, Japan - a
group company of Hitachi Japan</span><span style="color: #38761d; line-height: 150%;">.</span><span style="color: #38761d; line-height: 150%;"> The
company came out with an IPO on September 1986 offering 49,50,000 equity shares
of Rs. 10 each. T</span><span style="background-color: white; color: #38761d; line-height: 150%;">he company has not given any splits in face value of its
shares. The company gave its first bonus in May 1994 in ratio of 1 bonus for
every 2 held, on December 1998 in ratio
of 8 bonus for every 5 held, in October 2002 in ratio of 7 bonus for every 10
held and last bonus was announced in August 2011 in ratio 2 bonus for every
five held. </span><span style="color: #38761d; line-height: 150%;">India Nippon Electricals Ltd is manufactures Electronic
Ignition Systems for two-wheelers, three wheelers and portable engines. Over
the years the company has enlarged its customer base and now supplies to most
of the manufacturers of two-wheelers, three wheelers and gensets. INEL makes
the entire range of 2/3 wheelers, digital and analog ignition products. <span style="background: white;">The company mainly deals with the ignition units,
coils, regulators, flywheel magnetos, capacitor discharge, etc. Its</span></span><span style="color: #38761d; line-height: 150%;"> p</span><span style="color: #38761d; line-height: 150%;">roducts include AC Generator,</span><span style="color: #38761d; line-height: 150%;"> </span><span style="color: #38761d; line-height: 150%;">Capacitor Discharge Ignition &
Transistor Ignition Units, Ignition coil Units, Integral Units (Combined CDI
& Ignition Coil), Regulator / Rectifier Units. The company obtain
certificates of recognition from BVQI for ISO 9001 in the year 1998, QS 9000 in
the year 2001 and ISO 14001 in the year 2002. <span style="background: white;">The
company's manufacturing unit is at </span>Hosur- Thali Road Uliveeranapalli
Krishna giri District Tamil Nadu India, s</span><span style="color: #38761d; line-height: 150%;">econd
one at </span><span style="line-height: 150%;"><span style="color: #38761d;">Madukarai
Road, Nettapakkam Commune Kariamanickam Village Pondicherry and third at Rewari
Masani Village Rewari Haryana State India. </span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"><span style="color: #38761d;">It
also has a wholly owned subsidiary with Lucas TVS Ltd and Kokusan Denki Company
Limited, a member of Hitachi, Japan. And an investment arm IN Investments Ltd
and helds all the 63,010 equity shares making it 100 % subsidiary of the
company. INDIA NIPPON ELECTRICALS LTD is locally compared with </span><span style="color: #bf9000;">Denso India Ltd,
Minda Industries, Majestic Auto Ltd, Igarashi Motors, Remsons Industries, PPAP
Automotive Ltd, Motherson Sumi Systems, REIL Electricals, Lumax Industries</span><span style="color: #38761d;"> and globally
compared with </span><span style="color: #bf9000;">Delphi Automotive of UK, BorgWarner of USA, Federal Mogul Corp of
USA, Denso Corp of Japan, Robert Bosch GmbH of Germany, SEM of Sweden, Mitsubishi
Electric Corporation of Japan.</span><span style="color: #38761d;"> </span></span><span style="color: #38761d;"><o:p></o:p></span></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Investment Rationale:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #38761d; line-height: 150%;">India
Nippon Electricals Limited (INEL) was incorporated in 1984. The company is into
manufacturing of electronic ignition systems, auto components and other related
products for two wheelers, three- wheelers and portable gensets. Offers wide
range of products INEL offers varied range of products to serve 2/3 wheelers,
mopeds and portable engines effectively. Its products are used in different
areas such as power generation, power management, ignition management,
automotive electronics and test kits. The company manufactures rotors, stators,
capacitor discharge ignition and transistor ignition units, ignition coil and
control units, integral units such as combined capacitor discharge ignition and
ignition coil units, regulators and rectifiers. Strong client base INEL is one
of established players in the auto ancillary industry. It operates in both
domestic and international markets. It has strong client base which includes
clients like- TVS Motor, Hero Honda Motor, Honda Motorcycle and scooter, Bajaj
Auto, Royal Enfield, LML, Lombardini India, Piaggio India, Honda SIEL Power
Products, Birla Power Solutions, Kokusan Denki and others. </span><span style="color: #38761d; line-height: 150%;">INEL has successfully demonstrated to the two
wheeler industry its ability to adapt to the changing business and
technological needs of customers in the areas of quality and customer service. </span><span style="color: #bf9000;"><span style="line-height: 150%;">India’s</span><span style="line-height: 150%;"> </span><span style="line-height: 150%;">automotive industry is one of the most
competitive in the world. Leading auto maker expects Indian passenger car
market to reach four million units by 2020, up from 1.97 million units in
2014-15. The Indian automotive sector has the potential to generate up to US$
300 billion in annual revenue by 2026, create 65 million additional jobs and
contribute over 12 per cent to India</span><span style="line-height: 150%;">’s</span></span><span style="line-height: 150%;"><span style="color: #bf9000;"> Gross
Domestic Product, as per the Automotive Mission Plan 2016-26 prepared jointly
by the Society of Indian Automobile Manufacturers (SIAM) and government. The
Indian auto industry is one of the largest in the world with an annual
production of 2.33 Cr vehicles in FY 2015-16, following a growth of 8.68 % over
the last year. The Two Wheelers segment with 81 % market share is the leader of
the Indian Automobile market owing to a growing middle class and a young
population. Moreover, the growing interest of the companies in exploring the
rural markets further aided the growth of the sector. The overall Passenger
Vehicle (PV) segment has 13 % market share. India is also a prominent auto
exporter and has strong export growth expectations for the near future. In FY 2015-16,
automobile exports grew by 15 % over the last year. </span><span style="color: #38761d;">In addition, several initiatives
by the Government of India and the major automobile players in the Indian
market are expected to make India a leader in the Two Wheeler (2W) and Four
Wheeler (4W) market in the world by 2020. The industry produced a total 1.42 Cr
vehicles including PVs, commercial vehicles (CVs), three wheelers (3W) and 2W
in April-October 2015 as against 13.83 in April-October 2014, registering a
marginal growth of 3.07 % year-on-year. The sales of PVs grew by 8.51 % in
April-October 2015 over the same period last year. The overall CVs segment
registered a growth of 8.02 % in April-October 2015 as compared to same period
last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered very
strong growth of 32.3 % while sales of Light Commercial Vehicles (LCVs) reduced
by 5.24 % during April-October 2015 year-on-year. In April-October 2015,
overall automobile exports grew by 5.78 %. PVs, CVs, 3Ws and 2Ws registered growth
of 6.34 %, 17.95 %, 18.59 % and 3.22 % respectively in April-October 2015 over
April- October 2014. During 2015-16, the two three wheeler industry grew 2 %
and India Nippon Electrical sales posted a growth of 4 % over its previous year
despite difficult market conditions. India Nippon achieved a 54 % growth in
export business and the direct sales to aftermarket recorded a growth of around
36 % with the help of expanding the dealer network and product range. The
company have secured business for EGR controller for small diesel engines;
company will work closely with customer to meet BS IV emission norms. The
company is jointly developing other technology oriented products like ECU for
Electronic Fuel Injection (EFI), Integrated starter Generator (ISG) for two
wheeler and off road engines with its technical partners. ISG & EFI are two
critical new technologies that will be disruptive to the industry and with
constant focus on R&D the engineers along with technical partners are
building newer capabilities for the future. The company has planned major
investment which will be fruitful in next two years. Great R&D facility and
product line-up along with the strong clientele, India Nippon looks promising. </span><b style="color: #38761d;"><o:p></o:p></b></span></span></div>
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<span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b><span style="line-height: 150%;">Outlook and Valuation:</span></b><span style="line-height: 150%;"> <o:p></o:p></span></span></div>
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<span style="line-height: 150%;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Incorporated
in 1984, INEL was converted into a joint venture in 1986 between Lucas India
Services Ltd ( a wholly owned subsidiary of Lucas- TVS Ltd) and Kokusan Denki
Co. Ltd, Japan ( a group company of Hitachi Japan) to manufacture electronic
ignition systems for two-wheelers, three wheelers and portable engines. In
1986, the company established its first manufacturing plant in Hosur at Tamil
Nadu and started production to supply to TVS Motor Company for motor cycles.
INEL offers wide range of products which include flywheel magnetos, capacitor
discharge ignition units, ignition coils and others. Its manufacturing
facilities are located in Hosur, Puducherry and Rewari. The company serves to
domestic and international markets with a subsidiary viz- P T Automotive
Systems Indonesia. </span></span><span style="font-family: "georgia" , "times new roman" , serif; line-height: 150%;"><span style="line-height: 150%;"><span style="color: #bf9000;">The Indian auto component industry expects
to grow by over four-fold to US$ 113 billion by 2020, as per the Automotive
Component Manufacturers' Association (ACMA). The total passenger car production
in the country will jump four times to reach 9 million cars in the next ten
years. Although a major chunk of this
will come from the fast growing domestic market, exports are likely to form
around 35 % of the total market by 2020. India would be among the top-five
vehicle producing countries in the world by 2020. The 40 % of the auto
component industry is dominated by body and structural products, 20 % by
engines and exhaust, and 10 % each by suspension and braking parts,
transmission and steering parts, electronics and electrical and interiors. By
2017, body and structural will account for 35 % of the auto component industry,
engines and exhaust 20 %, suspension and braking parts, transmission and
steering parts and electronics and electrical will account for 13 % each and
interiors 9 %. India is turning out to
be an attractive destination as a global outsourcing hub and manufacturing base
for original equipment manufacturers (OEMs), especially after the global
economic downturn.</span><span style="color: #38761d;"> With the finalisation of the Automotive Mission Plan (AMP)
India is expected to become a preferred destination for design and manufacture
of automobile. The plan envisaged an investment of US$ 40 billion and provided
a road map to help transform India into a global automobile player. The AMP
proposed a 25-point plan that included making India a manufacturing and export
hub for small cars, multi-utility vehicles, two and three-wheelers, tractors
and components. The Government has taken many initiatives to promote foreign
direct investment (FDI) in this industry like Automatic approval for foreign
equity investment up to 100 % of manufacture of automobiles and components is
permitted, the automobile industry is de-licensed</span></span><span style="color: #38761d; line-height: 150%;">, </span><span style="color: #38761d; line-height: 150%;">and Import of components
is freely allowed. The Ministry of Heavy Industries and Public Enterprises has
envisaged the Automotive Mission Plan 2006-2016 to promote growth in the
sector. It targets to Increase turnover to US$ 122 billion–US$ 159 billion by
2016 from US$ 34 billion in 2006, </span><span style="color: #38761d; line-height: 150%;">i</span><span style="color: #38761d; line-height: 150%;">ncrease export revenue to US$ 35 billion by
2016 Provide employment to additional 25 million people by 2016. India Nippon Electricals
ltd being a leader in</span><span style="color: #38761d; line-height: 150%;"> manufacturing of Electronic Ignition Systems
for two-wheelers, three wheelers and portable engines, will surely be benefitted
by the increased investments in auto sector and by increase export potentials.
On the financial side INEL posted good numbers. Its June 2016 net Revenue came
in at Rs. 84 Cr as against Rs. 78.33 Cr YoY. It posted total expenses of Rs.
76.83 Cr as against Rs. 71.77 Cr YoY. The company posted Net Profit of Rs. 6.12
Cr as against Rs. 6.11 YoY. India Nippon is a very small company with good financials
and has strong</span><span style="color: #38761d; line-height: 150%;"> cash flow generating capacity;
the company has been able to keep its debt to equity lower and also been able
to expand through internal accruals. India Nippon Electricals ltd is debt free company
and can remain debt free due to its huge cash flow. A</span></span><span lang="EN-US" style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">t the current market price of Rs. 90.50, the stock is trading at a PE of 14.04 x FY17E and 13.01 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 27.75 in FY17E and Rs. 30.00 in FY18E. </span><span style="background-color: white; color: #38761d; font-family: "georgia" , "times new roman" , serif; line-height: 150%;">It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also . </span></div>
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<tr><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">KEY FINANCIALS</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY15</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY16 </span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY17E</span></th><th><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif;">FY18E</span></th></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">SALES (</span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><span style="color: #38761d;"><b>₹</b></span></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"><b> </b>Crs)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 327.73</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">339.65</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">368.90</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">400.25</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">NET PROFIT (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹ </b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">Cr)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">22.66</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">26.93</span></td><td>31.35</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">34.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EPS (</span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif; font-size: small; line-height: normal; text-align: center;"><b>₹</b></span><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 20.05</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">23.83</span></td><td>27.75</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">30.00</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">PE (x)</span></td><td>17.57</td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">14.46</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">13.25</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">12.25</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">P/BV (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.79</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.62</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.48</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">1.80</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">EV/EBITDA (x)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">8.43</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">7.14</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">6.05</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">5.70</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 9.30</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> 10.22</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11.19</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">11.62</span></td></tr>
<tr><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">ROCE (%)</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">17.72</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">21.43</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.08</span></td><td><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;">20.50</span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif; line-height: 24px;"><b style="text-align: justify;"><span style="color: #38761d;">As I always say, I am a long term believer in markets & I do respect the markets and will keep a </span></b><span class="apple-style-span"><b><span style="color: #cc0000;">strict stop loss of 8 %</span></b></span></span><b style="line-height: 24px;"><span style="color: #38761d; font-family: "georgia" , "times new roman" , serif;"> on every purchase</span><span style="color: #38761d; font-family: "georgia" , "serif";">. </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;">(Why Strict stop loss of 8 % ?) - </span></b><b style="font-family: georgia, 'times new roman', serif; line-height: 24px;"><span style="color: #cc0000;"> <span id="goog_804713205"></span><a href="http://bhavikkshah.blogspot.in/2013/03/stop-loss-more-you-delay-more-is-your.html" target="_blank">Click Here</a></span></b></div>
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<span class="apple-style-span" style="text-align: justify;"><b><span lang="EN-US" style="color: #cc0000; font-family: "georgia" , "serif"; font-size: 13.5pt;">*</span></b></span><b style="text-align: justify;"><span lang="EN-US" style="font-family: "georgia" , "serif";"><i><span style="color: #bf9000;">As the author of this blog I disclose that I </span><span style="color: #990000;">do not hold </span><span style="color: #bf9000;">INDIA NIPPON ELECTRICALS LTD in my any of the portfolios.</span></i></span></b></div>
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<b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*</b></span></span></span></i></b><b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">*Dear Reader Friends, if you enjoyed this article then please do share it with your friends & colleagues through Facebook and Twitter, also do drop in your valubale thoughts in comment box...</b></span></span></span></i></b><br />
<b style="font-family: georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;">So, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share</b><b style="text-align: left;"> !! </b></span></span></span></i></b><b style="font-family: Georgia; font-size: 16px;"><i><span class="apple-style-span"><span style="font-family: "georgia";"><span style="color: #bf9000; font-family: "gabriela";"><b style="text-align: left;"><br /></b></span></span></span></i></b></div>
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<b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i>These informations are sourced from publicly available data. </i></b></span></span></span></span></b><b style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="line-height: 1.2em; outline-style: none;"><span class="yiv119040258Apple-style-span" style="color: #cc0000; font-family: "georgia" , "times new roman" , serif; line-height: 1.2em; outline-style: none;"><b style="line-height: normal; text-align: left;"><i><span class="apple-style-span">By using/reading this blog</span><span class="apple-converted-space"> </span><span class="apple-style-span">you agree to</span><span class="apple-converted-space"> </span><span class="apple-style-span">(i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. </span></i></b></span></span></span></span></b></div>
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<span style="color: #660000;"><span lang="EN-US" style="font-family: "gabriela"; font-size: 12pt; line-height: 24px;">As a Disclosures I Confirm that :<span class="apple-converted-space"> </span><br style="box-sizing: border-box;" />I confirm that I shall not deal or trade in securities mentioned in this article within thirty days before and five days after the publication of this article. I also confirm that I will not deal or trade directly or indirectly in securities mentioned in this article in a manner contrary to the ideas put forth in the article. I have not received any financial compensation for writing this article.</span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 48px;"> </span></span></h1>
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<b><span style="color: #bf9000; font-family: "georgia" , "times new roman" , serif; font-size: 12pt;"><b style="color: #454545; font-family: arial, helvetica, sans-serif; font-size: 12px; line-height: 18px; text-align: left;"><span style="color: #bf9000; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;">READ HERE TO KNOW MORE ON LONG TERM INVESTING -</span><span style="color: #38761d; font-family: "georgia" , serif; font-size: 13.5pt; line-height: 20px;"> <a href="http://www.bhavikkshah.blogspot.com/2011/12/why-long-term-investing-pays-you-back.html" rel="nofollow" style="color: #234786; outline: 0px;" target="_blank">CLICK HERE</a></span></b></span></b></div>
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