C O M P A N Y              U P D A T E         India   17 Apr 2012                                 KPR Mill               ...
Company Update: KPR Mill                             17 Apr’12                     Performance Update                     ...
Company Update: KPR Mill                      17 Apr’12impacted due to     accounted for 35% of revenues compared to 27% i...
Company Update: KPR Mill                              17 Apr’12                           High    raw           material  ...
Company Update: KPR Mill                                    17 Apr’12                     Company                   EV/Sal...
Company Update: KPR Mill                       17 Apr’12key growth driver    have the full benefit of added capacity.aided...
Company Update: KPR Mill                               17 Apr’12                      40                             33.9 ...
Company Update: KPR Mill                         17 Apr’12                           Financial AnnexureProfit & Loss State...
Company Update: KPR Mill                        17 Apr’12Common Size                                       FY07    FY08   ...
Company Update: KPR Mill                             17 Apr’12Balance Sheet                            FY07     FY08     F...
Company Update: KPR Mill                           17 Apr’12Cash Flow Statement                                       FY08...
Company Update: KPR Mill                    17 Apr’12Ratios                      FY07    FY08    FY09      FY10    FY11   ...
Company Update: KPR Mill                        17 Apr’12About Four-S ServicesFounded in 2002, Four-S Services is a financ...
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Kpr mill report_update_q3_fy12_v17_apr_2012

  1. 1. C O M P A N Y U P D A T E India 17 Apr 2012 KPR Mill Rs 80.85Sector: Textile Underpowered, but ready to soar xxxo... KPR Mill has braved industry headwinds to report 15.4% growth inBSE Sensex 17,358 9mFY12 revenues, EBITDA margin of 14.38% and PAT margin of 2.9%.Nifty 5,29052 week high (Rs) 194 Tamil Nadu’s power crisis affected output in Q3FY12, resulting in reduced52 week low (Rs) 77 utilization and delay in operations of new high-value compact yarn spinning facilities, but the company managed to stay in black. Compact Yarn capacity fully operational from January 5, 2012Bloomberg KPR.IN KPR’s new capacity is fully operational from January 5, 2012, increasingNSE Code KPRMILL the Yarn capacity to 90,000MT p.a.BSE Code 532889 Power situation to improve after JuneEquity Shares 37.68 The power deficit in the state may continue till June when monsoon(m)Face Value (Rs) 10 arrives, and wind-mills produce power. Henceforth, we expect theMarket Cap 3,047 utilization to be in line with historical numbers. The state government has(Rs mn) already fast-tracked power projects. We have revised downward revenue and PAT estimates for FY12. FY13 hasShare Price Performance % also been reduced on account of expected utilization drop due to state’s power issues in Q1. KPR Sensex1 week -1.3 0.7 A cocktail of right fundamentals and future growth potential1 month -4.0 -0.6 With yarn capacity now increased by 60% to 90,000MT, KPR is poised to3 month -10.0 5.4 reap rich benefits from textile demand revival.6 month -15.3 2.0  KPR has the healthiest balance sheet among peers even with1 year -56.8 -10.5 recent capacity expansion, modernization and debt for Sugar Mill.  Growth drivers for FY13: FY13 will benefit from new high value- add Compact Yarn capacity. Power self-sufficiency by H2FY13 will Shareholding Pattern (Mar’11)% save costs and ensure operations continuity year round. Sugar millPromoters 74.48 operations will commence in Q3FY13. Textile sector will witnessFIIs/ FVCIs 8.88 revival as cotton prices have now stabilized worldwide.DII 1.08 We have revised our Mar’13 price target from Rs 240 to Rs 180, asCorporates 3.36 power shortage will result in underperformance in Q1FY13 too,Others 12.5 lowering the FY13 EBITDA and PAT margins. Despite challenges in FY12, KPR remains a quality stock, and amongst the best picks in the textile space. FY13 will see profit revival and FY14 could see return to full profitability. At a likely FY14 PE <2x, and D/E of <1x, KPR offers value at current price. FY07 FY08 FY09 FY10 FY11 FY12e FY13e FY14e Revenue (Rs. Mn) 4,974 6,064 7,477 8,340 11,074 12,755 16,165 19,757 EBITDA (Rs. Mn) 1,359 1,384 1,097 1,641 2,493 1,786 2,942 3,996 PAT (Rs. Mn) 584 793 101 504 722 332 931 1,839 EBITDA margin (%) 27 23 15 20 23 14.0 18 20 Net margin (%) 11.7 13.1 1.4 6.0 6.5 2.6 5.8 9.3 ROE (%) 21 19 2 10 13 5 14 24 ROCE (%) 15 10 5 9 11 6 11 18 P/E Ratio (x) NL 4.6 7.7 8.3 9.7 9.5 3.3 1.7 EV/EBITDA (x) 5.3 6.7 5.1 5.0 5.5 6.9 3.9 2.2 D/E 1.3 1.2 1.0 0.8 1.3 1.6 1.3 0.8 Dividend Yield (%) NL 5.2 9.7 4.9 3.3 4.9 6.2 7.4 NL = Not Listed Four-s reports are available on BLOOMBERG, Reuters, Thomson Publishers and Market Publishers
  2. 2. Company Update: KPR Mill 17 Apr’12 Performance Update Underpowered in Q3FY12 Tamil Nadu power woes affect performanceTN power issues Tamil Nadu is facing power shortage of ~4000MW leading to powerhave impacted cuts of as high as five-six hours in daytime in areas like Coimbatore.Coimbatore-based This has impacted the operations of manufacturing industries.manufacturingfacilities Tamil Nadu Generation and Distribution Ltd (TANGEDCO) estimates power demand in Tamil Nadu to be around 11,500-12,500MW growing by 10% on back of industrial capacity additions. The Supply is pegged to be around 8,500MW at present, leaving the state with a shortage of upto 4,000MW. TANGEDCO has started a day per week as power holiday hitting the Coimbatore textile industry with an estimated Rs 3bn production loss per day. TN’s Distribution utility has demanded a 64% rise in energy charges for FY13. Q3 impacted due to reduced utilizationQ3FY12 utilization KPR’s Q3 performance was affected as utilization reduced to 85%reduced to 85% from 90% levels. Also, KPR had to bear additional power cost of Rsdue to power 45mn has it sought to buy merchant power to partially fill the supplyshortage gap. KPR Mill Q3FY12 Q2FY12 Q-o-Q Q3FY11 Y-0-Y Operating Income 2,820 3,401 -17% 3,037 -7% Raw Material costs 1,873 2,443 -23% 1,819 3% Employee Cost 206 181 14% 253 -19% Other Expenditure 310 312 -1% 262 19% EBITDA 430 465 -7% 703 -39% EBITDA Margin% 15.3% 13.7% 23.1% Depreciation 255 247 3% 191 34% EBIT 175 218 -20% 512 -66% Interest 133 122 9% 52 155% Other Income 13 12 12% 6 136% PBT 55 108 -49% 465 -88% Tax 1 (2) -133% 129 -99% PAT 54 110 -51% 336 -84% PAT Margin % 1.9% 3.2% 11.1% Rs Mn Q3 revenue declined 17% QoQ and PAT declined 51% QoQ. If we exclude the MTM loss of Rs 122.4mn taken as other expenditure in Q2, Q2FY12 EBITDA margin be 17.3%. Hence on a QoQ basis, there was a decline in EBITDA margin as well. Exports growing strongly YTD FY12 revenues boosted by exportsYTD revenues up KPR achieved a nine monthly revenue growth of 15% YoY, at par15% YoY, Margins with peer average. KPR’s exports increased 44.5% YoY andFour-S Research 2
  3. 3. Company Update: KPR Mill 17 Apr’12impacted due to accounted for 35% of revenues compared to 27% in correspondingindustry issues period last year. While Garment exports increased 14% YoY, KPR stepped up exports of other products – Yarn and Fabrics in YTD FY12. KPR Mill 9M FY11 9M FY12 YoY Operating Income 8,072 9,314 15% Raw Material costs 4,745 6,694 41% Employee Cost 595 610 3% Other Expenditure 716 671 -6% EBITDA 2,016 1,339 -34% EBITDA Margin% 25.0% 14.4% Depreciation 548 734 34% EBIT 1,468 605 -59% Interest 172 321 87% Other Income 14 37 166% PBT 1,310 320 -76% Tax 367 50 -86% PAT 942 270 -71% PAT Margin % 11.7% 2.9% Cotton situation normalises While the 9m results show high cotton costs, this is more an impact of Q1, when KPR took a Rs 278mn write-off due to sharp drop in cotton prices. Since then, cotton prices trended towards to historical trading range. Going forward, we expect raw material cost/sales to come down to normal range of around 65%. For company yarn, the ratio would be even better since it enjoys higher margins. KPR has also taken an MTM expense of Rs 122.4mn in Q2FY12 due to rupee depreciation. The depreciation costs are higher on YoY basis as KPR revised the depreciation charges on windmill after reassessment of useful life in Q4FY11. Monthly Average Prices of Benchmark Cotton Variety – Shankar 6/4Steep fall incotton prices inQ1 resulted ininventory write-down of Rs278mn. Priceshave maintainedat stable levels,thereafter. Source: Textile Corporation of IndiaFour-S Research 3
  4. 4. Company Update: KPR Mill 17 Apr’12 High raw material prices lower industry profitabilityRaw Material The higher raw material costs have lowered textile industryprice volatility profitability in this financial year. Average EBITDA margin of peeraffected entire group declined from 17.8% last year to 15.4% in 9mFY12.industry.Company Revenue (Rs mn) EBITDA Margin (%) Net Margin (%) 9mFY12 9mFY12 9mFY12 YoY 9mFY11 9mFY12 9mFY11 reported AdjLarge Integrated PlayersAlok Industries 61,581 48.1% 27.8% 28.5% 5.2% 1.6% 4.5%Arvind Ltd.* 36,539 26.5% 13.1% 14.6% 3.7% 10.1% 5.9%Vardhman 29,996 9.4% 25.0% 12.5% 12.0% 1.8% 1.8%Bombay Rayon 19,388 23.5% 26.9% 26.0% 11.1% 8.5% 8.5%Welspun India 18,602 18.4% 13.2% 16.5% 3.6% 4.2% 4.5%Mid-Size Integrated PlayersNahar Spinning 12,277 17.6% 22.4% -2.9% 10.1% -9.9% -9.9%Mandhana Industries 6,526 20.0% 19.1% 20.3% 9.1% 7.6% 7.6%Mudra Lifestyle 1,632 -50.3% 12.3% -112.4% -1.4% -175.5% -175.5%Garment Focused ExportersHouse of Pearl Fashions* 18,814 20.7% 0.8% 2.4% 0.7% 0.9% 0.9%Gokaldas Exports 7,259 -13.7% -2.9% -0.1% -7.3% -11.2% -10.5%Celebrity Fashions 1,170 -13.3% -4.5% 2.1% -9.8% -9.3% -9.3%Mean 15.7% 17.8% 15.4% 6.9% 5.0% 4.8%KPR Mill* 9,314 15.4% 25.0% 14.4% 11.7% 2.9% 2.9% *Consolidated results **Q3 MTM loss excluded as KPR has not taken it to make results comparable, for Arvind exceptional profit on sale of JV stake in Arvind Brands excluded Negative margins excluded from average calculation Revenue growth at par, profitability marginally lower KPR’s revenue growth was at par with peer group in 9mFY12. Its EBITDA was 100 basis points lower than the peer average and PAT margins were ~200basis points lower than the peer group. Four out of eleven peers posted losses in the period and four others witnessed a decline in profitability. Valuation – ttm multiples at premium KPR is trading at a premium as far as its ttm EV/EBITDA and P/E multiples are concerned, on account of lower profitability. However, its EV/Sales and P/B multiples are at a discount of 28% and 44% with respect to the peer group average.Four-S Research 4
  5. 5. Company Update: KPR Mill 17 Apr’12 Company EV/Sales EV/EBITDA PE P/B D/E (x) (x) (x) (x) Sep-11 Large Integrated Players Alok Industries 1.3 4.6 3.3 0.5 3.1 Arvind Ltd. 0.9 6.5 7.8 1.2 1.5 Vardhman 0.9 5.8 7.0 0.7 1.2KPR trades at a Bombay Rayon 2.5 10.6 15.8 1.2 1.1discount as far as Welspun India 0.8 5.1 NM 0.5 2.5its P/B and EV/ Mid-Size Integrated PlayersSales multiples Nahar Spinning 0.8 35.1 NM 0.3 1.9are concerned. Mandhana Industries 1.5 8.2 12.5 2.2 1.6 Mudra Lifestyle 1.9 NM NM NM 24.2 Garment Focused Exporters House of Pearl Fashions 0.2 6.2 5.8 0.3 0.9 Gokaldas Exports 0.6 NM NM 0.9 1.0 Celebrity Fashions 0.9 50.6 NM NM NM Mean 1.1 6.7 8.7 0.9 1.6 KPR Mill 0.8 7.7 61.2 0.5 1.2 Note: CMP as of 17th April 2012, Outstanding shares as on 31st march 2012, except for Alok Industries. Projections and Price Target We revise the revenue and PAT for FY12 and 13Estimates are We have revised our estimates for KPR Mill in FY12 and FY13 takingrevised due to the YTD performance and state’s power shortage into account.unexpectedpower issues in While we had already projected a low margin of 4% for FY12, takingCoimbatore into account the cotton price volatility, unforeseen factors such as rupee depreciation and state power shortage has further affected YTD performance. Hence, we further reduce the FY12 projections. As the TN State power shortage will take some time to resolve, and wind-power will get efficient in monsoon season, we can expect first quarter of FY13 also to be impacted. Hence, we have downward revised FY13 as well. FY12e FY13e FY14e Revised Previous Var% Revised Previous Var% Added Revenue (Rs. Mn) 12,755 14,003 -9% 16,165 17,743 -9% 19,757 EBITDA (Rs. Mn) 1,786 2,231 -20% 2,942 3,472 -15% 3,996 PAT (Rs. Mn) 332 566 -41% 931 1,367 -32% 1,839 EBITDA margin (%) 14.0 15.9 18.2 19.6 20.2 Net margin (%) 2.6 4.0 5.8 7.7 9.3 Fundamental growth drivers in place Growth from higher value addition, increased exportsHigh-value Yarn KPR has increased its yarn capacity by 60% with addition of high-capacity addition value compact yarn and melange yarn capacities. The compact yarnof 60% will be a unit has gone fully operational from 5th January, 2012. FY13e willFour-S Research 5
  6. 6. Company Update: KPR Mill 17 Apr’12key growth driver have the full benefit of added capacity.aided by KPR has gained traction in exports with FY08-11 CAGR of 28% toincreased tractionin exports and reach ~Rs 3bn by FY11 by mainly exporting garments. In 9mFY12, itcommencement of has stepped up yarn exports as well, and achieved an exports growthSugar Mill of 44.5% YoY. We expect the momentum to continue.operations KPR Sugar Mills will also commence operations from H2FY12. State’s Power Situation to improve by June 2012TN State has fast- TANGEDCO expects the power deficit to be overcome once wind-milltracked many generation increases from June 2012 onwards. Many new powerpower projects, projects, including the Kudankulam Nuclear Power Project areand expects to expected to be commissioned this year.resolve theshortage TN’s Chief Minister has also planned Udangudi Power Corporation’s 1,600MW project as a state government project and fast tracked it. 100% self-sufficiency in PowerWith Co-Gen cum While KPR is already meeting 75% of its power requirements throughSugar Mill going Wind-Mills, its Co-gen cum Sugar Mill will give it 100% power self-operational in sufficiency in FY13. This will help it save on power costs (powerFY13 sugar tariffs are expected to be increased this year) and increase itsseason, KPR will utilization levels.get year aroundself-sufficiency Compared to other peers, KPR will have a competitive advantage in power. Cotton costs have stabilized, expected to remain flat World cotton prices have stabilized with Production expected to surpass consumption in cotton season 2011-12. ICAC predicts world cotton production to rise 7% YoY to 26.78MT in 2011-12 whereas Global cotton mill use will remain stable at 23.73MT, significantly lower than production. As per Cotton Corporation of India, the area under cotton cultivation will increase to 121.9 lakh hectares in 2011-12, an increase of 9.4% YoY. Cotton Advisory Board predicts closing stock to increase by 14.5% in 2011-12 season at estimated production levels and reduced mill consumption. Hence, cotton prices would face flat to downward pressures.Four-S Research 6
  7. 7. Company Update: KPR Mill 17 Apr’12 40 33.9 34.5 35 30 25Cotton prices are 22.1 21.6expected to be 20stable going 15forward 8.4 10 6.9 4.8 5.5 5 0 Production Mill Use Exports Closing stock 2010-11 2011-12 Source: Office of Textile Commissioner Valuation and Price target KPR is trading at a P/E of 3.3x and EV/ EBITDA of 3.9X its FY13 numbers, much lower than peer average of 8.7x and 6.7x, respectively. At current prices, KPR gives a strong dividend yield as well.Valuations will We expect valuations to move towards historical numbers of 8x P/Erestore to and 5X, EV/ EBITDA as industry challenges are mitigated. Withhistorical levels power situation expected to be normal from June 2012 onwards,by end of FY13 stable cotton prices and increase of utilization to normal numbers, we expect KPR to cross Rs 180 per share mark by March 2013.Four-S Research 7
  8. 8. Company Update: KPR Mill 17 Apr’12 Financial AnnexureProfit & Loss Statement FY07 FY08 FY09 FY10 FY11 FY12E FY13E FY14ENet Sales 4,816 5,739 7,182 8,032 10,494 12,089 14,452 15,631Other Operating Income 158 324 295 308 581 666 708 776Revenue from Sugar Mill 1,005 3,350Revenue from Operations 4,974 6,064 7,477 8,340 11,074 12,755 16,165 19,757(Increase) / Decrease InStock In Trade & WIP (132) (47) 14 (119) (605) (335) 116 58Consumption of Raw Materials 3,175 3,888 5,231 5,171 7,243 8,745 9,615 10,366Manufacturing Expenses 230 152 216 344 431 440 526 568Power and Fuel expenses - 193 236 261 336 575 609 442Personnel Expenses 161 315 493 609 821 915 1,066 1,119Administrative & OtherExpenses 51 46 55 274 163 288 226 245Selling & DistributionExpenses 131 133 134 160 192 219 262 283MTM expenses done inQ2FY12 122Expenses for Sugar Mill 804 2680Total Expenses 3,615 4,679 6,380 6,699 8,581 10,969 13,224 15,761EBITDA 1,359 1,384 1,097 1,641 2,493 1,786 2,942 3,996Depreciation 364 470 560 705 1,257 952 1,311 1,316EBIT 995 914 537 936 1,236 834 1,631 2,680Other Income 16 88 29 31 21 49 84 109Financial Expenses 209 176 384 273 323 440 474 338PBT 802 826 183 693 934 443 1,241 2,451Provision for Taxes 218 33 82 189 212 111 310 613Profit after Tax beforeMinority Interest 584 793 101 504 722 332 931 1,839Minorities Interest and Others - - - - - - -Reported Net Profit 584 793 101 504 722 332 931 1,839 (Rs mn)Four-S Research 8
  9. 9. Company Update: KPR Mill 17 Apr’12Common Size FY07 FY08 FY09 FY10 FY11 FY12E FY13E FY14ENet sales 96.8% 94.6% 96.1% 96.3% 94.8% 94.8% 89.4% 79.1%Other Operating Income 3.2% 5.4% 3.9% 4.1% 5.2% 5.2% 4.4% 3.9%Sugar Mill Income 6.2% 17.0%Revenue from Operations 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 % % % % % % % %(Increase) / Decrease In Stock In -2.7% -0.8% 0.2% -1.4% -5.5% -2.6% 0.7% 0.3%TradeConsumption of Raw Materials 63.8% 64.1% 70.0% 62.0% 65.4% 68.6% 59.5% 52.5%Manufacturing expenses 4.6% 2.5% 2.9% 4.1% 3.9% 3.4% 3.3% 2.9%Power and Fuel expenses 0.0% 3.2% 3.2% 3.1% 3.0% 4.5% 3.8% 2.2%Personnel expenses 3.2% 5.2% 6.6% 7.3% 7.4% 7.2% 6.6% 5.7%Administrative & Other expenses 1.0% 0.8% 0.7% 3.3% 1.5% 2.3% 1.4% 1.2%Selling & Distribution expenses 2.6% 2.2% 1.8% 1.9% 1.7% 1.7% 1.6% 1.4%MTM expenses done in Q2FY12 1.0%Operational expenses for Sugar Mill 5.0% 13.6%Total Expenses 72.7% 77.2% 85.3% 80.3% 77.5% 86.0% 81.8% 79.8%EBITDA 27.3% 22.8% 14.7% 19.7% 22.5% 14.0% 18.2% 20.2%Depreciation 7.3% 7.8% 7.5% 8.5% 11.3% 7.5% 8.1% 6.7%EBIT 20.0% 15.1% 7.2% 11.2% 11.2% 6.5% 10.1% 13.6%Other Income 0.3% 1.5% 0.4% 0.4% 0.3% 0.6% 1.0% 1.3%Financial Expenses 4.2% 2.9% 5.1% 3.3% 2.9% 3.4% 2.9% 1.7%Profit before tax 16.1% 13.6% 2.4% 8.3% 8.4% 3.5% 7.7% 12.4%Provision for taxes 4.4% 0.5% 1.1% 2.3% 1.9% 0.9% 1.9% 3.1%Profit after tax before minority 11.7% 13.1% 1.4% 6.0% 6.5% 2.6% 5.8% 9.3%interestMinorities Interest and others 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Reported net profit 11.7% 13.1% 1.4% 6.0% 6.5% 2.6% 5.8% 9.3%Four-S Research 9
  10. 10. Company Update: KPR Mill 17 Apr’12Balance Sheet FY07 FY08 FY09 FY10 FY11 FY12E FY13E FY14EShare Capital 318 377 377 377 527 556 556 556Reserves and Surplus 3,009 4,711 4,722 4,985 5,437 5,581 6,280 7,843Total equity capital 3,327 5,087 5,099 5,362 5,964 6,137 6,836 8,399Secured Loans 3,938 6,032 5,118 4,392 7,130 9,312 8,381 5,881Unsecured Loans 225 212 190 158 122 145 173 188Deferred Tax Liability 317 337 396 534 419 177 496 981Total Liabilities 7,807 11,669 10,803 10,446 13,634 15,772 15,887 15,448Goodwill - - - - - 7 7 7Gross Block 6,053 9,494 9,924 10,104 11,764 13,918 17,114 17,363 Less: Depreciation 698 1,160 1,719 2,414 3,620 4,572 5,883 7,199Net Fixed Assets 5,355 8,333 8,206 7,690 8,144 9,346 11,231 10,165Work-in-progress 1,328 136 3 255 1,775 2,557 - -Investments 3 50 - - - 600 600 600Inventory 1,219 1,679 2,070 1,360 2,944 2,625 3,138 3,394Debtors 599 942 1,184 1,161 1,252 1,474 1,762 1,905Cash and Bank Balance 272 594 462 522 397 110 102 304Other Current Assets 133 182 229 149 70 158 158 153Loans and Advances 383 562 551 668 564 631 634 614Total Current Assets 2,607 3,959 4,497 3,860 5,226 4,997 5,796 6,376Current Liabilities 1,365 581 1,792 1,117 1,372 1,577 1,584 1,536Provision 121 228 112 242 139 158 158 154Total Current Liabilities 1,486 809 1,903 1,359 1,511 1,735 1,743 1,690Net Current Assets 1,121 3,150 2,594 2,501 3,715 3,262 4,049 4,676Miscellaneous expenditure - - - - - 0 - -Total Assets 7,807 11,669 10,803 10,446 13,634 15,772 15,887 15,448 (Rs mn)Four-S Research 10
  11. 11. Company Update: KPR Mill 17 Apr’12Cash Flow Statement FY08 FY09 FY10 FY11 FY12E FY13E FY14ENet Profit/(Loss) before Tax 826 183 693 934 443 1,241 2,451Add Depreciation 470 560 705 1,257 952 1,311 1,316Loss on Fixed Assets 6 1 3 20 - - -Interest Expense 176 384 273 323 440 474 338Interest Income (49) (21) (20) (15) - - -Dividend Income (10) (4) (10) (6) - - -(Increase)/Decrease inTrade/Other Receivables (343) (242) 4 (92) (221) (288) (144)(Increase)/ Decrease in Loans andAdvances (177) 11 (97) (38) (67) (3) 19(Increase)/Decrease in Inventories (460) (391) 710 (1,584) 319 (513) (256)(Increase)/Decrease in OtherCurrent Assets (48) (78) 80 77 (88) (1) 5Increase/(Decrease) inTrade/Other Payables (784) 1,211 (674) (55) 224 8 (53)Direct Taxes Paid (10) (65) (94) (186) (352) 9 (129)Increase/(Decrease) in DeferredTax Liabilities 20 59 138 (115) (241) 319 484Operating Cash-flow- A (403) 1,547 1,574 638 1,649 2,238 3,548Purchase of Fixed Assets (2,282) (302) (454) (2,815) (2,944) (639) (249)Proceeds from Sale of Fixed Assets 20 2 10 26 - - -Purchase of Investments (50) - (2,745) (3,625) (600) - -Proceeds from Sale of Investment 5 50 2,745 3,625 - - -Dividend Received 7 4 10 6 - - -Interest Received 49 21 20 17 - - -Cash from Investing activities- (2,767B (2,250) (225) (414) ) (3,544) (639) (249)Proceeds from Share Capital 59 - - 29 - -Proceeds from Securities Premium 1,129 (1)(Repayment)/ Proceeds of SecuredLoans 2,094 (914) (707) 2,715 2,183 (931) (2,500)(Repayment)/ Proceeds ofUnsecured Loans (13) (22) (32) (37) 24 28 14Interest Paid (176) (384) (273) (301) (440) (474) (338)Dividend Paid (85) (113) (75) (320) (161) (237) (274)Tax on Dividend (32) (19) (13) (53) (27) (39) (46)Cash from Financing activities- (1,653 (3,143C 2,975 (1,453) (1,100) 2,004 1,608 ) )Change in Cash= A+B+C 322 (132) 60 (125) (287) (54) 155Opening Balance 272 594 462 522 397 110 56Closing Balance 594 462 522 397 110 56 211 (Rs mn)Four-S Research 11
  12. 12. Company Update: KPR Mill 17 Apr’12Ratios FY07 FY08 FY09 FY10 FY11 FY12E FY13E FY14EPer ShareNumbersEPS 21.1 2.7 13.4 19.0 8.5 24.4 48.5CEPS 33.5 17.5 32.1 52.3 33.8 59.2 83.4DPS 5.0 2.0 5.5 6.0 4.0 5.0 6.0Adjusted BookValue per Share 135.0 135.3 142.3 154.3 158.9 177.4 218.9ProfitabilityEBITDA margin 27.3% 22.8% 14.7% 19.7% 22.5% 14.0% 18.2% 20.2%Pre-tax margin 16.1% 13.6% 2.4% 8.3% 8.4% 3.5% 7.7% 12.4%Net margin 11.7% 13.1% 1.4% 6.0% 6.5% 2.6% 5.8% 9.3%ROAE 21.0% 18.9% 2.0% 9.6% 12.8% 5.5% 14.3% 24.1%ROACE 15.5% 9.7% 4.9% 9.2% 10.7% 5.8% 10.5% 18.0%GrowthRevenue growth - 21.9% 23.3% 11.5% 32.8% 15.2% 26.7% 22.2%EBITDA growth - 1.9% -20.8% 49.6% 51.9% -28.3% 64.7% 35.8%Net profit growth - 3.0% -77.9% 278.9% 43.2% -54.0% 179.9% 97.5%TurnoverNet Asset turnover 0.6 0.6 0.6 0.7 0.9 0.8 1.0 1.2Net Working Capturnover 6.2 2.8 2.6 3.3 3.6 3.7 4.4 4.6Debtors turnover 9.8 7.9 7.0 7.1 9.2 9.4 10.0 10.8Debtor Days 37 46 52 51 40 39 37 34Inventory turnover 5 4.2 4.0 4.9 5.1 4.6 5.6 6.0Inventory Days 75 87 92 75 71 80 65 60Payables turnover 4 6 6 6 9 9 10 13Payables Days 93 59 58 64 41 42 36 29Liquidity RatiosCurrent Ratio 1.8 4.9 2.4 2.8 3.5 2.9 3.3 3.7Quick Ratio 0.9 2.8 1.3 1.8 1.5 1.4 1.5 1.7Cash Ratio 0.1 0.2 0.7 0.2 0.4 0.3 0.1 0.0SolvencyDebt Equity 1.3 1.2 1.0 0.8 1.3 1.6 1.3 0.8Leverage Ratio 2.3 2.3 2.1 1.9 2.3 2.6 2.4 1.9Net Debt / EBITDA 2.9 4.1 4.4 2.5 2.8 5.3 2.9 1.5Interest Coverage 4.8 5.2 1.4 3.4 3.8 1.9 3.4 7.9Valuation RatiosP/E NM 4.6 7.7 8.3 9.7 9.5 3.3 1.7P/BV NM 0.7 0.2 0.8 1.2 0.5 0.5 0.4EV/EBITDA 5.3 6.7 5.1 5.0 5.5 6.9 3.9 2.2EV/Sales 1.5 1.5 0.8 1.0 1.2 1.0 0.7 0.5Dividend Payout 24% 75% 41% 31% 47% 21% 12%Dividend Yield 5.2% 9.7% 4.9% 3.3% 4.9% 6.2% 7.4% (Rs mn)Four-S Research 12
  13. 13. Company Update: KPR Mill 17 Apr’12About Four-S ServicesFounded in 2002, Four-S Services is a financial boutique providing Research, FinancialConsulting and Investment Banking services. We have executed more than 100+ mandatesacross diverse range of industries for Indian as well as global companies, investment firmsand private equity and venture capital firms.Our clients value our focused, actionable advice which is based on deep domain expertise inEducation, Financial Services, Media & Entertainment, Healthcare, Consumer Goods,Automotive, Energy, Logistics and Manufacturing. For further information on the companyplease visit www.four-s.comDisclaimerThe information contained herein has been obtained from sources believed to be reliable butis not necessarily complete and its accuracy cannot be guaranteed. No representation,warranty, guarantee or undertaking, express or implied, is made as to the fairness,accuracy or completeness of any information, projections or opinions contained in thisdocument. Four-S Services Pvt. Ltd. will not accept any liability whatsoever, with respect tothe use of this document or its contents. This Company commissioned document has beendistributed for information purposes only and does not constitute or form part of any offeror solicitation of any offer to buy or sell any securities. This document shall not form thebasis of and should not be relied upon in connection with any contract or commitmentwhatsoever. This document is not to be reported or copied or made available to others.Four-S may from time to time solicit from, or perform consulting or other services for anycompany mentioned in this document.For further details/clarifications please contact:Rupam Prasad Ajay JindalRupam.prasad@four-s.com Ajay.jindal@four-s.comTel: +91-124-4251442 Tel: +91-22-42153659Four-S offices:Delhi Office: 214, Udyog Vihar Phase I, Gurgaon – 122016. Tel: +91-124- 425 1442Mumbai office: 101, Nirman Kendra, Opposite Star TV, Off Dr E Moses Road, Mahalaxmi,Mumbai – 400011 Tel: 022 - 42153659Four-S Research 13

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