This document provides an analysis of Atul Limited, an Indian agrochemical company. It includes the company's current stock price and target price, as well as financial highlights such as revenue, earnings, ratios and outlook. The analysis recommends buying the stock based on expected revenue and earnings growth, reasonable valuation multiples, and the company's leadership position in the agrochemical industry in India.

1. CMP 1167.90
Target Price 1300.00
ISIN: INE100A01010
MAY 6th
2015
ATUL LIMITED
Result Update (PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Agrochemicals
BSE Code 500027
Face Value 10.00
52wk. High / Low (Rs.) 1514.00/527.75
Volume (2wk. Avg.) 7134
Market Cap (Rs. in mn.) 34639.91
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 25556.50 27856.59 30196.54
EBITDA 3910.30 4147.31 4468.76
Net Profit 2174.20 2329.69 2510.83
EPS 73.30 78.55 84.65
P/E 15.93 14.87 13.80
Shareholding Pattern (%)
1 Year Comparative Graph
ATUL LIMITED S&P BSE SENSEX
SYNOPSIS
Atul Ltd is one of the largest integrated chemical
companies of India and amongst the first five
manufacturers of its chosen chemicals in the world.
The company’s net sales stood at Rs. 6190.40
million for the 4th quarter of the FY 2015 as against
Rs. 6679.90 million in the corresponding quarter of
the previous year.
In Q4 FY15, net profit stood at Rs. 448.60 million
compared to Rs. 515.60 million in Q4 FY14.
The company has reported its Operating profit of
Rs. 820.80 million in Q4 FY15 against Rs. 1002.80
million in Q4 FY14.
In Q4 FY15, Revenue drives from performance &
other chemicals division of Rs. 4947.40 million
compared to Rs. 4924.90 million in Q4 FY14.
The company has recommended a dividend of 85%
i.e., Rs. 8.50/- per Share on face value of Rs. 10.00/-
each for the year 2014-15.
Atul Ltd has received the USFDA approval for its
Dapsone manufacturing facility.
During the quarter, total expenditure decreased by
6% per cent mainly on account of Cost of Material
Consumed by 18%, Depreciation & Amortization
Expenses are 18% and power, fuel & water by 7%.
Net Sales and PAT of the company are expected to
grow at a CAGR of 8% and 6% 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 (%)
Atul Ltd 1167.90 34639.91 73.30 15.93 3.41 85.00
UPL Ltd 498.30 213573.50 10.81 46.10 5.66 250.00
PI Inds Ltd 651.75 137146.20 10.84 60.12 19.86 200.00
Rallis India Ltd 220.00 42783.20 7.48 29.41 4.98 390.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
Rs. In million MAR-15 MAR-14 % Change
Net Sales 6190.40 6679.90 (7.33)
Net profit 448.60 515.60 (12.99)
EPS 15.12 17.38 (12.99)
EBITDA 820.80 1002.80 (18.15)
Atul Ltd achieved a turnover of Rs. 6190.40 million for the 4th quarter of the financial year 2015 as against Rs.
6679.90 million in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs.
820.80 million against Rs. 1002.80 million. In the same quarter, net profit stood at Rs. 448.60 million against Rs.
515.60 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 15.12
for the 4th quarter as against an EPS of Rs. 17.38 for the corresponding quarter of the previous year.
Break up of Expenditure
During the quarter, total expenditure decreased by 6% per cent mainly on account of Cost of Material Consumed
by 18%, Depreciation & Amortization Expenses are 18% and power, fuel & water by 7% are the main impact of
decrease of expenditure when compared to corresponding quarter of previous year. Whereas Employee Benefits
expenses rose by 10%, purchase of stock in trade 13% and along with other expenditure by 12%. Total
expenditure in Q4 FY15 stood to Rs. 5525.30 million as against Rs. 5853.50 million in Q4 FY14.
Break up of Expenditure
(Rs. millions)
Q4 FY15 Q4 FY14
Cost of Material Consumed 2925.4 3549
Purchase of stock in trade 58.4 51.7
Employee Benefit Expenses 366.5 331.9
Depreciation & Amortization
Expenses
142 173
Power, Fuel & Water 734.6 790.5
Other Expenses 1051.9 941

3. Segment Revenue
COMPANY PROFILE
Atul Ltd. is one of the largest integrated chemical companies of India and amongst the first five manufacturers of
its chosen chemicals in the world. The Company serves about 4,000 customers belonging to the Adhesives,
Agriculture, Animal Feed, Automobile, Chemical, Composites, Construction, Cosmetic, Defence, Dyestuff,
Electrical and Electronics, Flavour and Fragrance, Food, Glass, Home Care, Horticulture, Hospitality, Paint and
Coatings, Paper, Personal Care, Pharmaceutical, Plastic, Polymer, Rubber, Soap and Detergent, Textile and Tyre
industries. The Company sells about 1,350 diverse products and formulations, placed under 41 (2012-13)
product groups. Atul Ltd is an integrated chemical company serving about 4,000 customers belonging to 27
industries across the world.
Industries served

4. Business Areas
In order to enhance focus, the company has placed the products belonging to the two Reporting Segments,
namely Life Science Chemicals and Performance & Other Chemicals under seven Businesses, namely, Aromatics,
Bulk Chemicals, Colors, Crop Protection, Floras, Pharmaceuticals and Polymers.
Subsidiary and Joint Venture Companies
The Company has established subsidiary companies in the USA (1994), the UK (1996), Germany (1998), China
(2004) and Brazil (2012) to serve its customers and thus enhance breadth and depth of its business. The
Company has nine subsidiary companies namely, Atul Bioscience Ltd, Atul Rajasthan Date Palms Ltd, Atul USA
Inc, Atul Europe Ltd, Atul Deutschland GmbH, Atul China Ltd, Atul Brasil Quimicos Ltda and Ameer Trading
Corporation Ltd.
Atul established successful joint venture companies with world-renowned multi-national companies namely
American Cyanamid Company (now a part of BASF AG and Pfizer Inc) in 1947, Imperial Chemical Industries plc
(now a part of Akzo Nobel and Astra Zeneca plc) in 1955 and Ciba-Geigy Ltd (now a part of BASF AG and
Huntsman Corporation) in 1960.

5. FINANCIAL HIGHLIGHTS (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at 31st
March, 2014-2017E. FY-14A FY-15A FY-16E FY-17E
I SOURCES OF FUNDS
A) Shareholder's Funds
Share Capital 296.80 296.80 296.80 296.80
Reserves and Surplus 9119.10 9861.00 10551.27 11226.55
Sub-Total Net worth 9415.90 10157.80 10848.07 11523.35
B) Non Current Liabilities
long term borrowing 1133.60 540.80 416.42 324.80
Deferred Tax Liability (net) 353.90 444.10 546.24 655.49
Other Long term liabilities 178.00 201.30 217.40 232.62
Long term Provisions 151.60 158.60 174.95 188.95
Sub-Total -Non Current liabilities 1817.10 1344.80 1355.01 1401.87
C) Current Liabilities
Short term borrowings 1842.70 1641.40 1477.26 1364.99
Trade payables 3190.10 2626.30 2232.36 2009.12
Other Current liabilities 1159.30 1422.20 1678.20 1946.71
Short term Provisions 332.40 425.60 536.26 664.96
Sub-Total-Current Liabilities 6524.50 6115.50 5924.07 5985.77
Total Liabilities (a + b + c) 17757.50 17618.10 18127.15 18910.99
II APPLICATION OF FUNDS
1) Non-Current Assets
Fixed Assets 5725.80 5783.40 5922.20 6218.31
Non Current Investments 1364.70 1488.20 1607.26 1719.76
Long Term loans and advances 312.00 448.20 573.70 676.96
Other non-current assets 643.10 541.30 476.34 501.52
Sub-Total- Non-Current Assets 8045.60 8261.10 8579.50 9116.55
2) Current Assets
Inventories 3757.50 3496.50 3370.63 3212.65
Trade receivables 4472.60 4391.90 4629.06 4953.10
Cash and Bank Balances 88.00 64.00 76.80 90.62
Short-terms loans & advances 1025.40 1074.60 1121.88 1160.03
Other current assets 368.40 330.00 349.28 378.04
Sub-Total Current Assets 9711.90 9357.00 9547.65 9794.44
Total Assets (1+2) 17757.50 17618.10 18127.15 18910.99

6. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs. mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 23654.50 25556.50 27856.59 30196.54
Other Income 396.20 153.10 163.82 180.85
Total Income 24050.70 25709.60 28020.40 30377.39
Expenditure -20223.20 -21799.30 -23873.09 -25908.63
Operating Profit 3827.50 3910.30 4147.31 4468.76
Interest -314.30 -236.40 -243.49 -255.67
Gross profit 3513.20 3673.90 3903.82 4213.10
Depreciation -542.30 -552.80 -580.44 -621.07
Profit Before Tax 2970.90 3121.10 3323.38 3592.02
Tax -843.00 -946.90 -993.69 -1081.20
Net Profit 2127.90 2174.20 2329.69 2510.83
Equity capital 296.60 296.60 296.60 296.60
Reserves 8095.10 9861.00 11833.20 14010.51
Face value 10.00 10.00 10.00 10.00
EPS 71.74 73.30 78.55 84.65
Quarterly Profit & Loss Statement for the period of 30th Sept, 2014 to 30th June, 2015E
Value(Rs.in.mn)
30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 6624.10 6271.20 6190.40 6338.97
Other income 85.60 38.60 13.70 19.45
Total Income 6709.70 6309.80 6204.10 6358.42
Expenditure -5654.40 -5329.10 -5383.30 -5419.82
Operating profit 1055.30 980.70 820.80 938.60
Interest -57.30 -62.50 -54.90 -50.51
Gross profit 998.00 918.20 765.90 888.10
Depreciation -136.70 -138.50 -142.00 -134.90
Profit Before Tax 861.30 779.70 623.90 753.20
Tax -270.60 -242.60 -175.30 -214.66
Net Profit 590.70 537.10 448.60 538.54
Equity capital 296.60 296.60 296.60 296.60
Face value 10.00 10.00 10.00 10.00
EPS 19.92 18.11 15.12 18.16

7. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 71.74 73.30 78.55 84.65
EBITDA Margin (%) 16.18% 15.30% 14.89% 14.80%
PBT Margin (%) 12.56% 12.21% 11.93% 11.90%
PAT Margin (%) 9.00% 8.51% 8.36% 8.31%
P/E Ratio (x) 16.28 15.93 14.87 13.80
ROE (%) 25.36% 21.40% 19.21% 17.55%
ROCE (%) 37.11% 33.54% 30.63% 28.63%
Debt Equity Ratio 0.40 0.31 0.27 0.24
EV/EBITDA (x) 9.91 9.65 9.13 8.51
Book Value (Rs.) 282.93 342.47 408.96 482.37
P/BV 4.13 3.41 2.86 2.42
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs. 1167.90, the stock P/E ratio is at 14.87 x FY16E and 13.80 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.78.55 and
Rs.84.65 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 6% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 9.13 x for FY16E and 9.13 x for FY17E.
Price to Book Value of the stock is expected to be at 2.86 x and 2.42 x respectively for FY16E and FY17E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.1300.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
Agriculture plays a vital role in the Indian economy. Over 70 per cent of the rural households depend on
agriculture as their principal means of livelihood. Agriculture, along with fisheries and forestry, accounts for one-
third of the nation’s GDP and is its single largest contributor.
The total Share of Agriculture & Allied Sectors (Including agriculture, livestock, forestry and fishery sub sectors)
in terms of percentage of GDP is 13.9 percent during 2013-14 at 2004-05 prices. [As per the estimates released
by Central Statistics Office]
Agricultural exports constitute a fifth of the total exports of the country. In view of the predominant position of
the Agricultural Sector, collection and maintenance of Agricultural Statistics assume great importance.

9. The country is also the largest producer, consumer and exporter of spices and spice products in the world and
overall in farm and agriculture outputs, it is ranked second. From canned, dairy, processed, frozen food to
fisheries, meat, poultry, and food grains, the Indian agro industry has plenty of areas to choose for business.
The crop protection industry in India was generic in nature with ~80% of molecules non-patented. Hence, a
strong distribution network and brand acted as competitive drivers. Insecticides formed the largest segment of
the domestic crop protection chemicals market, accounting for 65% of the total market. The market was mostly
dependent on rice and cotton crops. Herbicides were the largest growing segment and accounted for 16% of the
total crop protection chemicals market. Sales were seasonal, owing to the fact that weeds flourished in damp,
warm weather and died in cold spells. Rice and wheat crops consumed the major share of herbicides. Increasing
costs of farm labour will drive sales of herbicides going forward. Fungicides, accounting for 15% of the total crop
protection market, were used for fruit and vegetables and rice. Farmers moved from cash crops to fruit and
vegetables while government support for exports increased fungicides usage.
Outlook
The Indian agriculture sector is expected to grow with better momentum in the next few years owing to increase
in investment in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Factors
such as reduced transaction costs, time, better port gate management and fiscal incentives will also contribute to
this upward trend. Furthermore, the increased use of genetically modified crops is also expected to better the
yield of the Indian farmers.
The 12th Five Year Plan’s estimates of expanding the storage capacity to 35 MT and the target of achieving an
overall growth of 4 per cent will also go a long way in modifying the overall face of the Indian agriculture sector
in the next few years.
The Indian crop protection industry is expected to grow at compound annual growth rate (CAGR) of 12 per cent
to reach $7.5 billion by FY19, according to FICCI (Federation of Indian Chambers of Commerce & Industry. It was
estimated to be $4.25 billion in FY14.
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