Vidhi Dyestuffs: To keep its growth story in the coming quarters also; Buy #BrokerAdvice http://goo.gl/xe2tZp

1. CMP 45.15
Target Price 52.00
ISIN: INE632C01026
AUGUST 12th
2015
VIDHI DYESTUFFS MANUFACTURING LTD
Result Update (PARENT BASIS): Q1 FY16
BUYBUYBUYBUY
Index Details
Stock Data
Sector Specialty Chemicals
BSE Code 531717
Face Value 1.00
52wk. High / Low (Rs.) 53.30/6.00
Volume (2wk. Avg. Q.) 345000
Market Cap (Rs. in mn.) 2258.40
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 1887.73 2189.77 2496.33
EBITDA 275.00 314.12 345.24
Net Profit 124.22 146.61 162.73
EPS 2.48 2.93 3.25
P/E 18.18 15.40 13.88
Shareholding Pattern (%)
As on June-15 As on March-15
PROMOTER 64.27 64.27
FIIs 0.00 0.00
DIIs 0.00 0.00
OTHERS 35.73 35.73
1 Year Comparative Graph
VIDHI DYESTUFFS MANUFACTURING LTD BSE SENSEX
SYNOPSIS
Vidhi Dyestuffs Manufacturing Ltd. “VDML” is a
leading manufacturer of Superior Synthetic Food
Grade Colours.
The company’s net sales registered 47.32% increase
in Q1 FY16 and stood at a record Rs. 600.45 million
from Rs. 407.59 million over the corresponding
quarter of previous year.
In Q1 FY16, Net profit stood to Rs. 38.02 million
increase of 55.76% against Rs. 24.41 million in the
corresponding quarter of previous year.
During the quarter operating profit is Rs. 78.08
million as against Rs. 53.13 million in the
corresponding period of the previous year, grew by
46.96%.
Profit before tax (PBT) at Rs. 58.12 million in Q1
FY16 compared to Rs. 36.49 million in Q1 FY15, an
increase of 59.28%.
EPS of the company stood at Rs. 0.76 in Q1 FY16 as
against Rs. 0.49 in the corresponding quarter of the
previous year, grew by 55.76%.
The company has approved and declared first
Interim Dividend @ 20% (i.e. Rs. 0.20 paisa per
Equity Share of Rs. 1/- each) for the year 2015-16.
Net Sales and PAT of the company are expected to
grow at a CAGR of 20% and 41% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Vidhi Dyestuffs Manufacturing Ltd 45.15 2258.40 2.48 18.18 4.99 50.00
Bhansali Engineering Polymers Ltd 15.00 2488.60 0.33 45.45 2.46 10.00
Dharamsi Morarji Chemical Co.Ltd 49.55 1053.30 6.58 7.53 4.73 0.00
India Gelatine & Chemicals Ltd 87.95 826.70 7.63 11.53 0.69 18.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 FY16,
The company has achieved a turnover of Rs. 600.45 million for the 1st quarter of the financial year 2015-16 as
against Rs. 407.59 million in the corresponding quarter of the previous year. EBITDA of Rs. 78.08 million in Q1
FY16, an increase of 46.96% against the corresponding period of last year. In Q1 FY16, net profit of Rs. 38.02
million against Rs. 24.41 million in the corresponding quarter of the previous year. The company has reported an
EPS of Rs. 0.76 for the 1st quarter as against an EPS of Rs. 0.49 in the corresponding quarter of the previous year.
Break up of Expenditure
Rs. In million June-15 June-14 % Change
Net Sales 600.45 407.59 47.32
PAT 38.02 24.41 55.76
EPS 0.76 0.49 55.76
EBITDA 78.08 53.13 46.96
Break up of Expenditure
(Rs in millions)
Q1 FY16 Q1 FY15 % Chng
Cost of materials
consumed
159.56 146.16 9%
Purchase of traded goods 275.02 117.60 134%
Employees Benefit
Expense
7.23 6.82 6%
Depreciation 4.64 3.48 33%
Other Expenses 72.61 63.73 14%

3. COMPANY PROFILE
Vidhi Dyestuffs Manufacturing Ltd. “VDML” is a leading manufacturer of Superior Synthetic Food Grade Colours.
“VDML” provides customers superior colour solutions in applications for various industries such as Food &
Beverage, Confectionary, Pharmaceuticals, Feeds, Cosmetics, Confectionary, Dairy etc. the company’s colours are
being distributed and consumed in over 80 countries across 6 continents to some of the largest Consumer /
Healthcare / Food & Feed companies in the world.
“VDML” is an ISO 9001:2008, ISO 22000:2005 and HACCP certified company. The Manufacturing facilities have
been audited and found satisfactory by the U.S. FDA. “VDML” via its vast network of actual users, distributors &
re‐sellers made a very strong progress in establishing its presence in over 80 countries worldwide and is
presently one of the top 4 globally recognized players in the synthetic food colour market.
VDML’s Vision for 2020:
1. To be a global player of repute on the lines of Sensient, US.
2. To focus on 3Cs – Capacities, Capabilities and Customers. To be 20% of global capacities.
3. To broad base categories and deepen presence in Colors.
4. To increase margins by moving into value add segments; target EBITDA margins of 20%.
5. To be cognizant of all stakeholders and be counted as amongst the most transparent, shareholder friendly
company.

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds
a) Share Capital 50.02 50.02 50.02 50.02
b) Reserves and Surplus 309.17 402.18 502.73 603.27
Sub-Total-Net worth 359.19 452.20 552.75 653.29
B. Non-Current Liabilities:
a) Long-term borrowings 21.93 19.82 17.96 16.52
b) Deferred Tax Liabilities [Net] 11.76 12.06 12.54 12.92
Sub-Total-Long term liabilities 33.69 31.88 30.50 29.44
C. Current Liabilities:
a) Short-term borrowings 402.44 441.63 476.96 505.58
b) Trade Payables 170.75 286.20 343.44 398.39
c) Other Current Liabilities 29.53 53.57 65.36 76.47
d) Short Term Provisions 7.12 43.32 53.72 63.39
Sub-Total-Current Liabilities 609.84 824.72 939.47 1043.82
TOTAL-EQUITY AND LIABILITIES (A+B+C) 1002.72 1308.80 1522.72 1726.55
II. ASSETS:
D. Non-Current Assets:
Fixed Assets
i. Tangible Assets 179.43 170.04 173.44 176.91
ii. Capital work-in-progress 0.00 87.03 95.73 103.39
a) Sub-Total-Fixed Assets 179.43 257.07 269.17 280.30
b) Non Current Investments 1.26 1.26 1.31 1.38
c) Long Term Loans and Advances 9.34 11.68 13.78 15.44
Sub-Total-Non-Current Assets 190.03 270.01 284.27 297.11
E. Current Assets:
a) Inventories 263.80 384.01 499.21 609.04
b) Trade Receivables 435.48 470.07 507.68 543.21
c) Cash and Bank Balances 34.22 68.09 85.11 102.14
d) Short Term Loans and Advances 66.99 104.02 133.09 161.04
e) Other Current Assets 12.20 12.60 13.36 14.00
Sub-Total-Current Assets 812.69 1038.79 1238.45 1429.44
TOTAL-ASSETS (D+E) 1002.72 1308.80 1522.72 1726.55

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 1427.65 1887.73 2189.77 2496.33
Other Income 3.81 8.01 18.50 20.72
Total Income 1431.46 1895.74 2208.27 2517.05
Expenditure -1267.09 -1620.74 -1894.15 -2171.81
Operating Profit 164.37 275.00 314.12 345.24
Interest -53.37 -61.08 -67.80 -73.90
Gross profit 111.00 213.92 246.32 271.34
Depreciation -19.75 -16.30 -17.60 -18.66
Exceptional Items 0.00 -4.89 0.00 0.00
Profit Before Tax 91.25 192.73 228.72 252.68
Tax -31.50 -68.51 -82.11 -89.95
Net Profit 59.75 124.22 146.61 162.73
Equity capital 50.02 50.02 50.02 50.02
Reserves 309.17 402.18 502.73 603.27
Face value 1.00 1.00 1.00 1.00
EPS 1.19 2.48 2.93 3.25
Quarterly Profit & Loss Statement for the period of 31st Dec, 2014 to 30th Sep, 2015E
Value(Rs.in.mn) 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15E
Description 3m 3m 3m 3m
Net sales 487.71 502.04 600.45 672.50
Other income 0.59 1.43 7.14 5.36
Total Income 488.30 503.47 607.59 677.86
Expenditure -412.31 -417.40 -529.51 -592.48
Operating profit 75.99 86.07 78.08 85.38
Interest -14.48 -18.03 -15.32 -17.16
Gross profit 61.51 68.04 62.76 68.22
Depreciation -4.81 -4.43 -4.64 -4.83
Exceptional Items -4.14 0.00 0.00 0.00
Profit Before Tax 52.56 63.61 58.12 63.40
Tax -17.02 -26.39 -20.10 -22.24
Net Profit 35.54 37.22 38.02 41.16
Equity capital 50.02 50.02 50.02 50.02
Face value 1.00 1.00 1.00 1.00
EPS 0.71 0.74 0.76 0.82

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 1.19 2.48 2.93 3.25
EBITDA Margin (%) 11.51 14.57 14.34 13.83
PBT Margin (%) 6.39 10.21 10.44 10.12
PAT Margin (%) 4.19 6.58 6.70 6.52
P/E Ratio (x) 37.80 18.18 15.40 13.88
ROE (%) 16.63 27.47 26.52 24.91
ROCE (%) 23.50 31.88 31.66 30.96
Debt Equity Ratio 1.18 1.02 0.90 0.80
EV/EBITDA (x) 16.11 9.64 8.49 7.76
Book Value (Rs.) 7.18 9.04 11.05 13.06
P/BV 6.29 4.99 4.09 3.46
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 45.15, the stock P/E ratio is at 15.40 x FY16E and 13.88 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.2.93 and Rs.3.25
respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 41% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 8.49 x for FY16E and 7.76 x for FY17E.
Price to Book Value of the stock is expected to be at 4.09 x and 3.46 x for FY16E and FY17E respectively.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.52.00 for Medium to Long term investment.

8. INDUSTRY OVERVIEW
The Indian chemical industry stands as the third largest producer in Asia and 12th in world, in terms of volume.
This industry could grow at 14 per cent per annum to reach a size of US$ 350 billion by 2021. India accounts for
approximately 7 per cent of the world production of dyestuff and dye intermediates and is currently the world's
third largest consumer of polymers and fourth largest producer of agrochemicals.
The market size of the chemical industry is expected to grow to US$ 350 billion by 2021. With 71 per cent of the
total production share, alkali chemicals form the largest segment in the Indian chemical industry. During FY14,
the production of alkali chemicals stood at 6,265 million tonnes (MT). Total exports of chemicals grew from US$
3.5 billion in FY03 to US$19.2 billion in FY14, a compound annual growth rate (CAGR) of 16.9 per cent.
The Government of India has approved 100 per cent foreign direct investment (FDI) in the chemicals sector and
reduced excise duty from 14 per cent to 10 per cent. Policies have been initiated to set up integrated Petroleum,
Chemicals and Petrochemicals Investment Regions (PCPIR). PCPIR will be an investment region spread across
250 square kilometres for manufacturing of domestic and export-related products of petroleum, chemicals and
petrochemicals.
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it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
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the recipients’ investment decision based on this document.

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