Professional Documents
Culture Documents
Key Financials
(| Crore) Net Sales EBITDA Net Profit FY11 6,376 1,750 404 FY12E 8,901 2,559 381
EPS (FY13E) ............................................................................. Changed from | 7.2 to | 6.1 EPS (FY14E) ............................................................................................Introduced at | 8.2 RATING ....................................................................................... Changed from Buy to Hold
Valuation summary
FY11 PE (x) Target PE (x) EV to EBITDA(x) Price to book (x) RoNW (%) RoCE (%) 3.7 4.0 5.7 0.5 13.1 9.7 FY12E 4.1 4.5 4.5 0.4 10.4 12.6 FY13E 3.1 3.4 4.5 0.4 12.7 12.0 FY14E 2.3 2.5 3.9 0.4 15.5 12.9
Stock data
Market Capitalisation Debt (Dec-11) Cash (Dec-11) EV 52 week H/L (|) Equity capital Face value MF Holding (%) FII Holding (%) | 1507 crore | 11494 crore | 1578 crore | 11423 crore 29 / 16 | 826.3 crore | 10 11.3 15.2
Price movement
6,000 5,500 5,000 4,500 4,000 Jun-11 Aug-11 Nov-11 Feb-12 Nifty (L.H.S) Price (R.H.S) 35 30 25 20 15 May-12
Valuation
The stock is likely to witness a multiple re-rating when the company reduces its debt through land monetisation and, thereby, saves on interest expenses. We have valued the stock at | 21 (based on an average arrived at by assigning a multiple of 0.4x FY14E book value and 2.5x FY14E EPS). Considering the ongoing equity dilution and high debt levels, we remain cautious on Alok. Therefore, we have, downgraded Alok Industries from BUY to HOLD with a revised target price of | 21.
Exhibit 1: Financial Performance
(| Crore) Net Sales EBITDA Margin (%) Depreciation Interest Other Income Reported PAT EPS (|) Q4FY12 2,595.4 28.1 173.6 334.6 8.7 283.5 3.4 Q4FY12E 2,753.6 26.0 174.7 276.4 2.7 279.8 3.6 Q4FY11 2,195.9 25.4 160.0 166.7 24.3 159.5 2.0 Q3FY12 2,386.7 26.9 187.5 271.3 2.0 (36.6) (0.5) QoQ(Ch %) 8.7 117 bps (7.4) 23.3 330.8 LP LP YoY(Ch%) 18.2 266 bps 8.5 100.7 (64.4) 77.7 69.5
Analysts name
Bharat Chhoda bharat.chhoda@icicisecurities.com Dhvani Modi dhvani.bavishi@icicisecurities.com
Q4FY12 Result Highlights Aloks Q4FY12 topline was marginally lower than our estimate. The company reported a topline of | 2,595.4 crore, up 18.2% YoY as against our estimate of | 2,753.6 crore The operational performance of the company came as a positive surprise. The operating margin increased by 266 bps YoY on the back of reduced other expenditure For nine months ended December 2011, Alok had provided for MTM on forex loans to the tune of | 358.1 crore. However, since the rupee appreciated in Q4FY12, the company wrote back provisions worth | 227.6 crore On the back of the write-back, the company reported a strong growth in PAT despite doubling of interest cost. Alok reported a PAT of | 283.5 crore, up 77.7% YoY (I-direct estimate: | 279.8 crore)
Exhibit 2: Topline growth slows down for first time in over four years
Alok reported the slowest ever topline growth for the first time in over four years. The woven fabric segment, garments segment and polyester yarn segment grew by 31.7%, 73.8% and 52.2% YoY, respectively. However, the yarn segment revenues de-grew by 66.9% YoY
3,000 2,500 2,000 | crore 1,500 1,000 500 1,471 1,099 1,452 1,609 2,196 1,645 2,128 2,387
2,595
Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Sales
While exports continued to grow in absolute terms, the share in the overall sales mix has been on the decline
39.7
740 34.8
| crore
Page 2
26 17 15
13 26 14
17 25 12
60 37
44
45
49
Q4FY12 Garments
32 30 28
%
31.7 29.1 29.7 28.6 27.5 25.9 25.4 26.9 24.6 28.1
26 24 22
Q4FY10 Q1FY11 Q2FY11 Q3FY11
23.6
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
FY13E
Q3FY12 47.0 3.1 23.0
EBITDA Margin
Page 3
FY14E
Alok had incurred a loss of | 36.6 crore in Q3FY12 due to MTM provisions made. Considering that the rupee appreciated in Q4FY12 over Q3FY12, the company wrote back provisions to the tune of | 227.6 crore, resulting in a strong PAT growth in Q4FY12
57.8
Page 4
Valuation
The stock is likely to witness a multiple re-rating when the company reduces its debt through land monetisation and, thereby, saves on interest expenses. We have valued the stock at | 21 (based on an average arrived at by assigning a multiple of 0.4x FY14E book value and 2.5x FY14E EPS). Considering the ongoing equity dilution and high debt levels, we remain cautious on Alok. Therefore, we have downgraded Alok Industries from BUY to HOLD with a revised target price of | 21.
Page 5
Financial summary
Profit and loss statement
(Year-end March) Total operating Income Growth (%) Cost of Goods Sold Employee Expenses Selling Expenses Administrative Expenses Miscellaneous Expenses Total Operating Expenditure EBITDA Growth (%) Depreciation EBIT Interest Other Income PBT Total Tax PAT Growth (%) EPS (|) FY11 6,388.4 48.3 3,997.7 199.8 119.9 321.1 4,638.5 1,749.9 44.8 518.8 1,231.1 654.4 6.4 583.2 178.8 404.4 63.5 5.1 FY12E 8,900.9 39.6 5,401.4 267.3 185.0 488.1 6,341.8 2,559.1 46.2 713.4 1,845.6 1,149.6 65.7 640.5 260.0 380.5 (5.9) 4.6 FY13E 11,112.0 24.8 6,911.1 355.6 255.6 855.6 8,377.9 2,734.1 6.8 877.4 1,856.7 1,104.9 22.2 774.0 255.4 518.6 36.3 6.1 (| Crore) FY14E 13,417.7 20.8 8,332.7 496.5 348.9 1,073.4 10,251.4 3,166.3 15.8 974.7 2,191.6 1,118.2 29.5 1,102.9 363.9 738.9 42.5 8.2
Balance sheet
(Year-end March) Liabilities Equity Capital Reserve and Surplus Total Shareholders funds Total Debt Deferred Tax Liability Minority Interest / Others Total Liabilities Assets Gross Block Less: Acc Depreciation Net Block Capital WIP Total Fixed Assets Investments Inventory Debtors Loans and Advances Other Current Assets Cash Total Current Assets Creditors Provisions Total Current Liabilities Net Current Assets Others Assets Application of Funds FY11 787.8 2,309.8 3,097.6 9,653.6 507.7 13,258.8 FY12E 826.3 2,828.2 3,654.5 11,494.3 637.7 15,786.5 FY13E 853.8 3,217.5 4,071.2 11,630.6 699.7 16,401.5 (| Crore) FY14E 903.8 3,864.1 4,767.8 12,424.9 787.9 17,980.6
Key ratios
(Year-end March) Per share data (|) EPS Cash EPS BV DPS Cash Per Share Operating Ratios EBITDA Margin (%) PBT Margin (%) PAT Margin (%) Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA Debt / Equity Current Ratio Quick Ratio FY11 5.1 11.7 39.3 0.02 14.5 27.4 9.1 6.3 114.6 99.6 53.2 13.1 9.7 3.5 3.7 5.7 1.6 0.2 0.5 5.5 3.1 5.6 3.6 FY12E 4.6 13.2 44.2 0.03 19.1 28.8 7.2 4.3 127.8 94.9 54.8 10.4 12.6 2.8 4.1 4.5 1.3 0.2 0.4 4.5 3.1 5.7 3.5 FY13E 6.1 16.4 47.1 0.04 12.2 24.6 7.0 4.7 124.1 95.6 49.3 12.7 12.0 3.6 3.1 4.5 1.1 0.1 0.4 4.3 2.9 5.9 3.5 FY14E 8.2 19.0 52.8 0.04 18.1 23.6 8.2 5.5 125.0 98.6 43.8 15.5 12.9 4.8 2.3 3.9 0.9 0.1 0.4 3.9 2.6 6.9 4.1
9,014.3 1,587.1 7,427.2 1,061.2 8,488.4 167.2 2,002.6 1,740.2 727.5 1,141.2 5,611.6 862.8 145.3 1,008.1 4,603.5 (0.2) 13,258.8
10,317.4 2,300.6 8,016.8 914.2 8,931.0 179.9 3,115.3 2,314.2 1,068.1 1,578.2 8,075.9 1,335.1 70.0 1,405.1 6,670.7 4.9 15,786.5
10,967.4 3,177.9 7,789.4 695.2 8,484.6 206.9 3,778.1 2,911.3 1,555.7 1,037.6 9,282.6 1,500.1 75.0 1,575.1 7,707.5 2.4 16,401.5
11,467.4 4,152.7 7,314.7 445.1 7,759.8 310.4 4,595.6 3,622.8 1,744.3 1,637.9 11,600.5 1,610.1 80.0 1,690.1 9,910.4 17,980.6
Page 6
Page 7
30
25
20
15 Jun-11 Jul-11 Aug-11 Oct-11 Price Nov-11 Jan-12 Feb-12 Apr-12 May-12
Target Price
1,750
404
381
519
FY12E
FY13E
Net Sales
EBITDA
Net Profit
Page 8
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ANALYST CERTIFICATION
We /I, Bharat Chhoda MBA (FINANCE) Dhvani Modi MBA (FINANCE) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities, its subsidiaries and associated companies, their directors and employees (ICICI Securities and affiliates) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return of investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities and affiliates might have received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings, corporate finance, investment banking or other advisory services in a merger or specific transaction. It is confirmed that Bharat Chhoda MBA (FINANCE) Dhvani Modi MBA (FINANCE) research analysts and the authors of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Our research professionals are paid in part based on the profitability of ICICI Securities, which include earnings from Investment Banking and other business. ICICI Securities or its subsidiaries collectively do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. It is confirmed that Bharat Chhoda MBA (FINANCE) Dhvani Modi MBA (FINANCE) advisory board member of the companies mentioned in the report. research analysts and the authors of this report or any of their family members does not serve as an officer, director or
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. ICICI Securities and affiliates may act upon or make use of information contained in the report prior to the publication thereof. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Page 9