Professional Documents
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"SUBSCRIBE"
Housing and Urban Development Corporation Ltd 8th May 2017
HUDCO is a wholly-owned Government company with more than 46 years of experience in providing loans for housing and urban infrastructure
projects in India. HUDCOs AUM stands at ~Rs 36800Cr out of which 89% is to state government and their agencies. The loan book of the company
has till date been growing at 7.5% CAGR for last 4 years which appears low considering other listed housing finance company. GNPA of the
company stands at 6.80% while NNPA at 1.51% which is again higher than its listed peers. However the company is expected to benefit hugely from
Pradhan Mantri Awas Yojna under Housing for All by 2022. As the CAR is high at 63.9%, risk of any equity dilution in the near term gets eliminated.
The company is attractively priced at 1.4 times BV with Return on Equity at 7.6% . We recommend SUBSCRIBE.
.......................................................... (Page : 7-9)
40%
35%
Currently, the stock is trading at 8.0x FY19E P/BV. We maintain BUY' with
30% the target price of Rs. 28009 .
25%
20%
15%
10%
5%
Financials/Valu FY15 FY16 FY17 FY18E FY19E
0% ation
Net Sales 8,738 6,173 7,033 7,923 8,915
EBITDA 1,115 1,690 2,174 2,448 2,902
EBIT 895 1,553 2,020 2,278 2,608
Shareholding patterns % PAT 615 1,338 1,667 1,872 2,148
4QFY17 3QFY17 2QFY17 EPS (Rs) 227 493 613 688 790
Promoters 50.6 50.6 50.6 EPS growth (%) 56% 117% 24% 12% 15%
Public 49.4 49.4 49.4 ROE (%) 24% 37% 31% 27% 25%
Total 100.0 100.0 100.0 ROCE (%) 36% 43% 38% 33% 30%
BV 928 1,345 1,964 2,532 3,202
Stock Performance % P/B (X) 16 14 13 11 8
1Mn 3Mn 1Yr P/E (x) 66 39 41 39 34
Absolute 4.4 12.7 33.1
Rel.to Nifty 3.1 6.5 12.7 RECENT DEVELOPMENT: Commencement of Vallam Vadagal plant
140
EICHERMOT NIFTY
Earlier the company was facing capacity constraints because of huge
demand for its classic models. But the management of the company took
130 right decision to increase the capacity in phased manner and in-line with
the demand.
120
110
The Vallam Vadagal facility is likely to commence production from August
2017 and with this expansion total capacity for two wheelers will reach to
100 825000 units per annum in FY18.
90 The company has target to take the production capacity to 900000 units per
annum by FY2018-19. Eicher Motors has planned Rs.800 crore of capex in
80 this regard in FY19.
Jul-16
Sep-16
Feb-17
Jan-17
Dec-16
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Aug-16
May-16
May-17
Oct-16
Nov-16
Apr-17
Mar-17
Net sales grew by 23%YoY to Rs.1888 crore which was in-line with our estimates (Rs.1915 crore).
Volumes grew by 21%YoY and realization have also grown by 2%YoY.
Higher sales of Classic 350 motorcycles led to this volume growth. These motorcycles have more
than 2 months of waiting period in the domestic market. Export volumes have seen sharp increase of
41%YoY during the quarter. On the commercial vehicle front VECV reported volume growth of
20%YoY in 4QFY17. The growth was supported by higher sales of Medium and Heavy Commercial
vehicles on the back of BS-IV transition.
Reported EBITDA grew by 30.9%YoY to Rs.585 crore. Lower advertising and promotion expenses
helped company to post 31% of EBITDA margin.
Depreciation and Amortization expenses remain higher in the quarter due to operationalization of
valam vadagal facility.
PAT stood Rs.459 crore at a growth of 34%YoY due to higher other income.
100,168
100,730
103,522
102,878
101,968
102,147
105,504
104,258
105,121
105,544
105,935
60000
106613
127611
125690
148186
147483
166941
173838
178228
20% 99,000
74131
81977
82215
92846
40000 1%
20000 10% 98,000
0 0% 97,000 0%
Gross Margin improved by 180 bps YoY to 47.4% on the back of lower commodity prices and higher
realization during the quarter.
The company has been taking the advantage of high operating leverage based on the higher volumes
which led the EBITDA margin to 31% during the quarter up by 180 bps YoY.
PAT margin increased by 190 bps owning to minimal finance cost and higher other income in the
4QFY17.
EBITDA and EBITDA Margin trend PAT and PAT Margin trend
EBITDA (Rs. Crore) EBITDA Margin PAT (Rs. Crore) PAT Margin
165
154
195
237
285
279
343
376
413
418
285
305
303
366
286
351
358
447
470
542
577
100 5% 50
- 0% - 0%
Concall Highlights:
The company has robust order book for classic 350 models
Valam vadagal facility will start from August 2017 and the total capcity will reach to 825000 units p.a.
Capex Rs.800 crore
Waiting period of more than 2 months for classic 350
Exports: RE sales is higher in developed markets than developing market. (UK, Germany, Italy and
France has on around 40-60 dealers in each countries)
The company has 1 store in Bangkok, 1 in Jakarta and 4 in Columbia.
22 new exclusive stores will be added in the international market.
Currently the company has 675 dealers and the company does not have any plans for expanding through
sub-dealers.
The outlook for commercial vehcles can be subdued going ahead.
Management expects that the rollout of GST on July 1 and it will benefit the consumers tax wise and so
may incentivize them to buy more trucks.
The company will come out with refresh versions of existing Royal Enfield models the current fiscal.
Spare parts stands 5-6 percent of total revenue.
On the BS-III inventory, the management has stated that the company has left with very minimal BS-III
stocks which can be sold to export markets.
Capacity addition in-line with demand- Considering the 3 months waiting period the company
increased the capacity from 720000 units to 825000 units per annum looking at the demand scenario.
We expect that the Eicher Motors will enjoy the benefit of operating leverage with increasing volumes
going ahead.
Expanding footprints in export markets- RE has expanded its footprint in the exports by opening up
stores in the various export markets like; Latin America, indonesia, bangkok and Madrid. The
investments are becoming fruitful in terms of higher volumes from exports. The company has already
more than 150 RE stores in UK, Germany, Italy and France. However considering the potential in the
developing economies Royal Enfield has started looking for the big opportunity in the fast growing
Brazilian market.
VECV prepared to take advantage of recovery in the commercial vehicles space- Currently the CV
segment is going through the pain of BS-IV transition from BS-III. GST roll out and monsoon will also
keep the situation haizy for few months. However we are optimistic about the growth in the commercial
vehicle space because of growing infrastructure activity in the country. The Govt. of India and SIAM is in
talk to bring scrappage policy in the country, which will bring the huge demand for commercial vehicles in
the country.
VECV volume trend Growth in RE and VECV to drive ROE and ROCE
12128
11657
12687
15492
16071
13408
17341
11306
11784
4000 0%
9544
9217
-7% 10%
2000
0 -10% 5%
0%
FY16
FY17
FY18
FY19
CY13
CY14
Type 100% Book Building Housing and Urban Development Corporation Ltd (HUDCO) incorporated in 1970,which is a
wholly-owned Government company with more than 46 years experience in providing loans for
Issue Size Rs. 1224 Crore housing and urban infrastructure projects in India. They provides long term finance for
Offer Price *Rs (56-60)/Equity Share construction of houses and to undertake housing and urban infrastructure development
programs. Apart from the financing operations, Hudco offers consultancy services, promotes
Min App Size 200 Shares
research and studies and help propagate use of local building materials, cost-effective and
Issue Open 8-May-17 innovative construction technologies.
Issue Close 11-May-17
Shares Offer 20.40 Cr. HUDCO offers loans for housing projects, such as urban and rural housing, co-operative
Face Value Rs 10 housing, community toilets, slum upgradation, staff housing, repairs and renewals, private
ICICI Securities Ltd,IDBI
sector projects, land acquisition, and housing programs. They also offers take out finance for
Capital Market Services Ltd, housing and infrastructure projects to state government, public agencies, and private
Nomura Financial Advisory corporate sector agencies. Company provide loans for implementing agencies comprising
Lead Mgrs state government bodies, co-operative societies, corporate employers, and community
And Securities (India) Pvt Ltd
, SBI Capital Markets Ltd sectors; and building technology and rent to own schemes. It also provides finance for
infrastructure projects in the sectors of water supply, sewerage, drainage, solid waste
Listing BSE, NSE management, roads and transport, and electricity in the urban areas; and social infrastructure
component, such as play/primary schools, health centers, play grounds, police stations,
Registrar Alankit Assignments Ltd courts, jails, crematorium, etc. In addition, the company offers consultancy services, including
URP services, environmental engineering, and government programs and disaster mitigation
Market Cap (Post Issue) 11210.6 services.
Bid allocation pattern Company continue to participate in the implementation of govt housing and urban
QIB 50% infrastructure programme such as DAY- NULM , JNNURM & PMAY HFA among other.
Non-Institutional 15% Company is increaseing geographical footprint in smaller cities to cater to incresing financing
Retail 35% requirment in these cities.
OBJECTS OF ISSUE:
To carry out the disinvestment of 204,058,747 Equity Shares by the Selling Shareholder
Rubi Burman constituting 10.19% of the companys pre-Offer paid up Equity Share Capital
rubi.burman@narnolia.com To achieve the benefits of listing the Equity Shares on the stock exchanges
RECOMMENDATION :
HUDCO is a wholly-owned Government company with more than 46 years of experience in providing loans for housing and urban infrastructure
projects in India. HUDCOs AUM stands at ~Rs 36800Cr out of which 89% is to state government and their agencies. The loan book of the
company has till date been growing at 7.5% CAGR for last 4 years which appears low considering other listed housing finance company. GNPA
of the company stands at 6.80% while NNPA at 1.51% which is again higher than its listed peers. However the company is expected to benefit
hugely from Pradhan Mantri Awas Yojna under Housing for All by 2022. As the CAR is high at 63.9%, risk of any equity dilution in the near
term gets eliminated.
The company is attractively priced at 1.4 times BV with Return on Equity at 7.6%
We recommend SUBSCRIBE
India Ratings (Fitch Group), ICRA and CARE have assigned a rating of AAA to HUDCOs long-term bonds, long-
term bank facilities and fixed deposit programme
Average Maturity
Amount (INR
Borrowing Type Period (From date of Residual Maturity Interests Rate Range
bn)
allotment)
Tax Free Bonds 173.88 10-20 years 4.83-17.25 years 7.00%-9.01%
Refinance Assistance
21.2 7-10 years 1.83-8.08 years 6.25%-8.00%
from NHB
Fixed: 2.10%
ECB 4.89 25-30 years 6.58-13.75 years Floating USD 6M
LIBOR + (18-40bps)
COMPETITIVE RISKS
If the level of non-performing assets in their outstanding loans, advances and investments in project-linked
bonds were to increase or the NHB-mandated provisioning requirements were to increase.The results of
operations and financial condition would be adversely affected.
If borrowers default on their obligations to company, they may be unable to foreclose on their loans on a timely
basis, or at all, or realise the expected value collaterals and this may have a material adverse effect on results
of operations and financial condition.
Company operations are substantially dependent upon the amount of our NII and NIM. The interest rates
company pay on their borrowings and the interest rates company charge on their loans are sensitive to many
factors, many of which are beyond our control, including the RBIs monetary policies . Volatility in interest rates
could adversely affect our business, net interest income and net interest margin, which in turn would adversely
affect our results of operations and financial condition.
Company business is dependent upon timely access to, and the costs associated with, borrowings. The debt
funding requirements historically have been primarily met from a combination of the issuance of tax-free
bonds,the issuance of unsecured taxable bonds, foreign currency loans, refinance assistance from NHB, public
deposits . Company may be unable to secure funding on commercially acceptable terms and at competitive
rates, which could adversely affect business and results of operations.
-10.0% FY14 FY15 FY16 FY17E FY18E FY19E Cosmo films announced thr launch of a Low Noice Tape film, used in
making of low noice tapes.
Return on capital employed Return on Equity The BOPP based low noise tape film with a proprietary release surface
treatment enables easy release and generates low noise on unwinding.
Share Holding patterns % low noise tape film take significantly less release force as compared to a
3QFY17 2QFY17 1QFY17 normal tape film. The film can easily take up any adhesive be it water
Promoters 43.5 43.5 43.5 based, solvent based, rubber based or hot melt type.
Public 56.5 56.5 56.5 Value added tape film does not come at a significant incremental cost and
Total 100.0 100.0 100.0 therefore is easier to switch to. In most of the tape applications, printing
Stock Performance % on the filmtakes place on the other side of the release coating. However,
1Mn 3Mn 1Yr the release side could also be made printable.
Absolute 14.6 21.7 21.8
Rel.to Nifty 13.5 14.3 0.7 Financials/Valu FY15 FY16 FY17E FY18E FY19E
130 COSMOFILMS NIFTY
ation
Net Sales 1,647 1,621 1,715 2,276 2,461
125 EBITDA 104 191 183 285 314
120
EBIT 70 156 144 234 263
115
110 PAT 28 96 95 155 169
105 EPS (Rs) 14 50 49 80 87
100 EPS growth (%) - 248% -1% 64% 9%
95
ROE (%) 7% 21% 18% 25% 23%
90
85 ROCE (%) 11% 23% 16% 26% 28%
80 BV 196 235 269 325 381
Jul-16
Feb-17
Sep-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Apr-17
Mar-17
Cosmo Films Ltd, a leading global speciality films company, manufacturing multiple types of Bi-axially
Oriented Polypropelene (BOPP) and Cast Polypropelene (CPP) films has announced plans to install a
new product line for Speciality-Polyester BOPET (Bixially Oriented Polyethylene Terephthalate) films by
the third quarter of 2018-19.
The new line will be commisioned at the Waluj plant site in Aurangabad, Maharashtra, India with a
capacity of 36000 MT per annum. The project for the new line will entail an investment of Rs. 250 crores
and shall be funded through a mix of internal accruals and debt. As per management guidance, Debt-
Equity mix for this new project will be in the ratio of 75:25.
This plant already houses BOPP lines, extursion coating lines, chemical coating lines, metallizers and a
CPP line. The new production line will complement the existing BOPP capacity of 200000 MT per
annum and allow Cosmo Films to offer a more comprehensive speciality product basket to flexible
packaging , labeling and industrial applications.
According to Mr. Pankaj Poddar, CEO, Cosmo Films, Speciality BOPET is one of the fastest growing
substrates and we anticipate a strong demand for these films. This will enable Cosmo to do import
substitution as well as take global market share.
BOPET offr high tensile strength, chemical and dimensional stability, tranparency reflectivity, gas and
aroma barrier properties and electical insulation.
Key Competetors
In BOPET segment, Cosmo will have competetion with other packaging players Like Jindal Polyfilms,
Polyplex Corporation, Uflex and others. Jindal Poly is the largest BOPET manufacturer in India with a
total capacity of 127000 mt per annum. A big part of the Indian demand for BOPET films is fulfilled
through imports as of now.
ABOUT BOPET
BOPET- Thin
Thin( 8-36 microns) BOPET films constitute nearly
three fourth of the worlds consumption of BOPET
films and are mainly used in packaging.
BOPET- Thick Industrial
Thick (50-350- microns) PET film is suitable for
various industrial applications.
Opportunities for BOPET
Asia (excluding Japan and Korea) has emerged as
the largest market for BOPET films accounting for
nearly 50% of the world consumption.
Penetration of flexible packaging in developing
countries in Asia still is low and huge opportunity
exist for growth with increase in organized retail,
small serve packs and increasing consumerism all
Image: BOPET film roll requiring better & attractive packaging.
Narnolia Securities Ltd Please refer to the Disclaimers at the end of this Report
Details of New Product Launch
Cosmo films recently announced the launch of a low noise tape film, used in making of low noise tapes. The
BOPP based low noise tape film with a proprietary release surface treatment enables easy release and generates
low noise on unwinding. This feature becomes extremely significant in industrial settings where multiple packing
lines work in tandem and auto dispensing machines are installed and packing takes place atrelatively higher
speeds. In most developed countries, factory guidelines require manufacturers to adhere to low decibel levels
and therefore low noise tapes become significantly relevant.
The low noise tape film also take significantly less release force as compared to a normal tape film. The film can
easily take up any adhesive be it water based, solvent based, rubber based or hot melt type. The value added
tape film does not come at a significant incremental cost and therefore is easier to switch to. In most of the tape
applications, printing on the film takes place on the other side of the release coating. However, the release side
could also be made printable.
100 The company has launched a new Demand Sensing model which will
improve response to within month forecasting changes thereby lowering the
90
possibility of stock-outs.
80
The company has entered into super-premium oil segment with the launch
of Saffola Aura whereas Saffola multigrain flakes introduced in selected
markets.
RAJEEV ANAND
rajeev.anand@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
Quarterly Performance
Financials 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY % QoQ% FY16 FY17 YoY %
Net Sales 1,291 1,754 1,443 1,417 1,322 2% -7% 6,024 5,936 -1%
Other Income 27.77 27.52 24.7 23.28 22.28 -20% -4% 93.33 97.31 4%
COGS 599 842 685 686 637 6% -7% 3,078 2,849 -7%
Ad & P Expenses 161 209 189 151 111 -31% -27%
Employee Cost 95 105 105 96 98 3% 2% 373 404 8%
Other Expenses 220 224 211 212 217 -1% 3% 1,522 1,523 0%
EBITDA 214 374 253 272 259 21% -5% 1,051 1,159 10%
Depreciation 31 21 21 21 27 -12% 28% 95 90 -5%
Interest 7 5 2 4 5 -30% 7% 21 17 -20%
PBT 204 375 255 270 250 22% -8% 1,029 1,150 12%
Tax 68 107 74 78 78 16% 0% 305 338 11%
PAT 136 268 181 192 171 26% -11% 723 811 12%
Domestic MARICOs revenue for this quarter grew by 2%YoY to Rs1322 cr led by robust volume growth in
Parachute rigid portfolio(grew by 15% YoY) and VAHO(grew by 10%) while Suffola maintained its
business
growth of 6% in this quarter.
volume grew
by 10% YoY. Domestic business has clocked double digit volume(10%) growth after four quarters while overall
realization declined by ~4%.
International business declined by 8% YoY and 5% YoY in constant currency(CC) term impacted by
46% decline in MENA business in CC terms.
Gross margin for this quarter declined by 170 bps YoY to 51.9% due to sharp increase in copra
prices(up by 25%QoQ), Rice Bran oil(up by 20% YoY), Liquid Paraffin (LP)(up by 27% YoY) and
HDPE(up by 5% YoY).
EBITDA margin improved by 301 bps YoY to 19.6% backed by 413 bps decline in Advertisement
expenses.
PAT grew by 26% YoY to Rs171 and PAT margin improved by 237 bps YoY in Q4FY17.
Robust volume gr. of 15% YoY in Parachute Rigid Portfolio VAHO grew by 10% YoY
Parachute Rigid Volume growth YoY Value added Hair Oils volume growth YoY
-1% 0%
0%
-5%
-6%
-5% -12%
-10%
-10% -15%
Gross margin for this quarter declined by 170 bps YoY to 51.9% due to sharp increase input prices. On
yearly basis companys gross margin improved by 309 bps to 52% from 48.9%.
EBITDA margin improved by 301 bps YoY to 19.6% backed by 413 bps decline in Ad. expenses in
Q4FY17. On yearly basis EBITDA margin improved by 208 bps to 19.5% led by lower COGS.
PAT for this quarter grew by 26% YoY to Rs 171 cr whereas PAT for FY17, grew by 12% to Rs 811 cr.
PAT margin improved by 237 bps YoY for Q4FY17 and 166 bps for FY17.
Margin improvement led by lower ad expenses Lower ad expense due to postponement of new launches
25.0% 16.0%
23.0% 21.3% 13.1% 13.1%
14.0% 11.8%11.7% 12.5%
11.9%
21.0% 18.9% 19.2%19.6% 11.2% 11.1%
18.2% 12.0% 10.5% 10.6%
19.0% 16.4% 17.5% 9.8%
16.3% 16.6%
15.7% 15.3% 10.0% 8.4%
17.0%
13.6% 14.0% 13.4% 13.5%12.9%
15.0% 13.1% 12.5% 8.0%
13.0% 11.4% 11.0% 10.5% 10.6% 6.0%
11.0% 8.3%
9.0%
4.0%
9.0%
7.0% 2.0%
5.0% 0.0%
Concall Highlights:
More than half of the product portfolio improved market shares on 12 months MAT basis.
Bangladesh business: Momentum to continue going forward.
Going forward, the volume growth in Parachute rigid is likely to remain in the range of 5-7%.
The company expects copra prices to increase further over the next two quarters due to lower
supplies. Company will take pricing action to make balance between volume growths and
threshold margins.
The Company aims to become the volume market leader in the Amla hair oil category in FY18.
The company plans to add 14000 outlets in FY18.
Company launched Project Marval EDGE in Q1FY17 to improve efficiency and effectiveness of
current trade and marketing spends. Management expects Rs 35 cr gain from this project in
FY18.
Ad&P
expenses The Company will try maintaining international margins at ~16-17%
will remain The estimated capital expenditure in each of the years FY18 and FY19 is likely to be around Rs
in the band 100125 cr .
of 11-12%. Ad&P expenses: The Company expects to operate in a band of 11-12% in the medium term.
The expected effective tax rate during FY18 and FY19 would be around 27-28%.
Ad expenses: will move up marginally in FY18.
Innovation led growth: The Company is focusing on innovation and new products
launches going forward. The company has entered into super-premium oil segment with the
launch of Saffola Aura whereas Saffola multigrain flakes introduced in selected markets.
Parachute Advansed Aloe Vera Hair Oil was launched in the markets of Andhra Pradesh,
Telangana & Tamil Nadu in the month of November 2017. Going forward we expect new
launches will drive growth for the company.
Strong Volume growth in Q4FY17: Maricos domestic volume grew by 10% in a situation
where most of the FMCG players are struggling for volume growth. Parachute Rigid volume
grew by 15%YoY best in 18 months. VAHO grew by 10% in Q4FY17 as compared to 12%
decline in Q3FY17. Going forward management expects 8-9% overall volume growth which
is positive considering tough economic environment.
10.0% 10.4%
7.1% 7.1% Financials/Valu FY15 FY16 FY17E FY18E FY19E
5.0%
ation
Net Sales 449,509 355,927 581,260 605,700 609,900
0.0%
EBITDA 10,550 23,197 38,362 38,949 39,653
EBIT 5,331 17,278 31,289 31,275 31,142
Shareholding patterns % PAT 4,912 11,219 19,778 20,133 19,539
4QFY17 3QFY17 2QFY17 EPS (Rs) 20 46 41 41 40
Promoters 57.3 58.3 58.3 EPS growth (%) -31% 128% -12% 2% -3%
Public 42.7 41.7 41.7 ROE (%) 7% 15% 22% 20% 17%
Total 100.0 100.0 100.0 ROCE (%) 5% 16% 24% 22% 20%
BV 68,832 75,994 88,501 101,413 113,930
Stock Performance % P/B (X) 1.3 1.3 2.4 2.1 1.9
1Mn 3Mn 1Yr P/E (x) 18.2 8.5 10.8 10.6 10.9
Absolute 17.6 107.4 63.3
Rel.to Nifty 16.2 88.8 54.8 RECENT DEVELOPMENT:
200 IOC NIFTY National Green Tribunal (NGT) has confirmed its order dated August 2,
2016, permitting IndianOil to go ahead with its LPG import terminal project
180
at Puthuvypeen, Kerala. This will enable the company to cater growing LNG
160 demand in future.
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Apr-17
Mar-17
card transactions.
IOC keen to buy 26% stake in GSPC's Mundra LNG terminal. With a view
ADITYA GUPTA to expand its gas business, IOC invests Rs. 4500 Cr in Mundra project.
aditya.gupta@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
Quarterly Performance
Financials 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ% FY15 FY16 YoY %
Petroleum products 93,261 93,276 102,802 95,732 111,212 19% 16% 419,264 332,270 -21%
Petrochemicals 4205 5172 4683 4474 4714 12% 5% 20264 16992 -16%
Other business activities 2,758 2,925 2,247 2,836 2,940 7% 4% 17,176 13,651 -21%
Net Sales 82,676 78,401 86,081 80,370 93,117 13% 16% 449,509 355,927 -21%
Other Income 648 722 470 854 793 22% -7% 4,204 2,246 -47%
COGS 69,055 64,134 63,701 66,330 73,872 7% 11% 399,121 289,225 -28%
Employee Cost 1,716 1,288 1,772 1,872 1,813 6% -3% 7,662 8,228 7%
Other Expenses 6,550 8,230 6,925 6,397 9,483 45% 48% 32,175 35,277 10%
EBITDA 5,355 4,750 13,684 5,772 7,949 48% 38% 10,550 23,197 120%
Depreciation 1,191 1,439 1,435 1,505 1,554 30% 3% 5,219 5,919 13%
Interest 641 1,085 680 615 997 56% 62% 4,175 3,630 -13%
PBT 4,172 2,948 12,039 4,507 6,191 48% 37% 5,346 15,894 197%
Tax 1,549 1,255 3,770 1,385 2,196 42% 59% 2,143 5,653 164%
PAT 3,096 1,685 8,269 3,122 3,995 29% 28% 4,912 11,219 128%
8,269
10%
4% 4%
13,684
8,000 7% 4,000 4%
6,591
6,285
6% 6% 8% 4%
10,287
6,000 3,000 2%
9,284
3,995
6%
7,949
3,122
3,096
2,000 2%
1,685
4,000
5,772
4%
5,355
4,750
1,000 -1%
1% 0%
666
2,000 2% -
(450)
- 0% (1,000) -2%
Concall Highlights:
Management expecting a volume growth of between 3- 4 million tonne(MT) going forward.
IOC's management indicated merger with Chennai Petro,but no timeline yet
All units of Paradip refinery are fully commissioned with capacity utilization of 80% in
3QFY17.Management expects 95% capacity utilization by March 2017.
Management has guided for provisioning of Rs. 20000 Cr for the Entry tax. Out of which provision of Rs.
10000 Cr already made.
Capex guidance for FY18 is Rs. 19600 Cr and FY19 is ~ Rs. 25000 Cr.
Anticipated VAT for Paradip refinery is Rs. 150 Cr per month.
Growth in Gasoline volume - Management indicated that volume growth of gasoline is gaining traction
from March17.Liquefied Petroleum Gas (LPG) volume is also growing at double digits. But, diesel
growth has remained flat.
Upcoming Projects- IOCL is investing Rs 34,000 Cr. on the petrochemical complex. The entire
petrochemical complex is expected to be commissioned by 2021. The polypropylene unit would have a
capacity of 7,000 kilo tonne per annum (KTPA) would be integrated with the oil refinery.
High Operational Efficiency- Paradip is expected to achieve GRM of USD 12/BBL post 95% capacity
utilisation. This will improve core GRM to USD 8/BBL.
LPG pipeline- The company is on track to construct 710km Paradip-Haldia-Durgapur LPG pipeline,
which will facilitate LPG transportation from Paradip and Haldia to the LPG bottling plants at Balasore,
Budge-Budge, Kalyani and Durgapur.
Volume Trend GRM Trend
> The Net Proceeds will be used to repay and replace a significant portion of the Project SPVs'
existing indebtedness. The resulting low leverage will provide them with debt capacity to grow
their business, including by financing future acquisitions. They intend on financing future
development and acquisitions through the issuance of additional Units .
Recommendation
IRB InvIT FUND is India's first registered infrastructure investment trust. IRB has bundled six of its operational toll road assets and transferred
them to the Trust.
The Trust generates income in the form of toll collection from these road assets and interest on cash in their books. According to SEBI guidelines,
the Trust needs to distribute at least 90 percent of this distributable cash to the unit holders in the form of dividend, which will be tax free. The
Trust also is exempted from dividend distribution tax.
Based on projected cash flow on the basis of estimated growth in traffic and inflation-linked increase in toll charges, at an upper price band of
IPO (Rs 102), the dividend yield will be close to 10%. Excessive investor interest may also lead to some price appreciation post-listing.
Risk attached to the issue is that the regulatory framework governing infrastructure investment trusts in India is untested and the interpretation
and enforcement thereof involve uncertainties.
Objects of Issue:
The object and purpose of the Trust, as described in the Indenture of Trust, is to carry on the activity of an infrastructure investment trust
under the InvIT Regulations, to raise resources in accordance with the InvIT Regulations, and to make investments in accordance with the
investment strategy of the Trust. The Trustee and the Investment Manager shall ensure that the subscription amounts are kept in a separate
bank account in the name of the Trust and are only utilised for adjustment against Allotment of Units or refund of money to the applicants until
such Units are listed.
Ratings
The Trust has been assigned a rating of CARE AAA(Is) stable by CARE ratings indicating an opinion on the general creditworthiness of the trust
and has not rated the Units of the Trust. India Ratings has assigned IND AAA Outlook Stable to Trusts external senior debt reflecting combined
credit quality of the underlying assets and has not rated the Units.
Competitive Risks
> The debt financing proposed to be provided by the Trust to each of the Project SPVs comprises certain unsecured, interest-free and interest-
bearing loan as well as loans that will be secured by a charge on (i) the cash flows deposited in the escrow account and (ii) the escrow account
of such Project SPV which shall be subordinated to the charge created to secure the debt owed to the senior lenders of the respective Project
SPVs (the Secured Trust Financing). The Project SPVs propose to undertake additional obligations in relation to such deposits, including,
among other things, the creation of a cash reserve of not less than 15% of the amount of the deposits maturing during a financial year and the
immediately succeeding financial year, the appointment of a security trustee for secured deposits and obtaining deposit related insurance
> The escrow arrangements mandated under the concession agreements require all monies that are received by each Project SPV, including
funds constituting the financing package, the fees collected from the operation of the Initial Road Assets and any termination payments
received from the NHAI, to be deposited in an escrow account and utilised only in accordance with the order prescribed under the escrow
agreement. The consent of the NHAI is required to amend the order of outflow of payments from such escrow account.
> The regulatory framework governing infrastructure investment trusts in India is untested and the interpretation and enforcement thereof
involve uncertainties, which may have a material, adverse effect on the ability of certain categories of investors to invest in the Units, our
business, financial condition and results of operations and our ability to make distributions to Unitholders.
> The Sponsor currently holds 74% of the equity share capital of MITPL, and its ability to acquire the residual 26% of the equity share capital
from the other shareholders of MITPL is subject to obtaining NHAI's consent. In case of any delay or failure to obtain such consent, the Sponsor
may be unable to acquire such equity shares in a timely manner or at all and the Trust may be unable to acquire 100% of the shareholding in
MITPL from the Sponsor prior to listing of the Units or at all.
Profit & Loss Account ( Cr.) 31 Mar 14 31 Mar 15 31 Mar 16 Ratio 31 Mar 14 31 Mar 15 31 Mar 16
Balance Sheet ( Cr.) 31 Mar 14 31 Mar 15 31 Mar 16 Cash Flow ( Cr. ) 31 Mar 14 31 Mar 15 31 Mar 16
Share Capital 1111.6 1114.6 1114.6 Profit/(Loss) before tax (45.2) (126.1) (59.1)
Subordinated debt (in nature of equity) 695.6 698.5 698.5 Adjustments
Other equity 215.6 91.6 15.2 Interest expense 347.4 413.9 398.7
Net Worth 2022.7 1904.7 1828.2 Depreciation and amortisation expenses 356.4 425.4 467.6
Borrowings 4006.9 3868.2 3655.2 Dividend income on current investments (0.0) (0.0) (0.4)
Other financial liabilities 6959.2 6867.3 6662.6 Interest income (12.2) (10.1) (9.6)
Provisions 121.5 73.5 109.4 Operating profit before working capital changes646.4 703.0 797.3
Non - current liabilities 11087.6 10809.0 10427.2 Movement in working capital
Borrowings 677.8 677.8 643.6 Increase/(decrease) in trade payables (44.3) 35.4 (29.5)
Trade payables 7.6 43.0 13.4 Increase/(decrease) in other liabilities 9.8 0.6 (10.9)
Other financial liabilities 383.8 421.0 545.4 Increase/(decrease) in other financial liabilities(139.3) (163.9) (152.1)
Other current liabilities 12.9 13.9 3.0 Increase/(decrease) in provisions 0.2 43.8 35.8
Provisions 0.2 0.1 0.1 Decrease/(increase) in trade receivables (0.7) 0.8 0.7
Current tax liabilities 3.8 3.3 1.4 Decrease/(increase) in financials assets-loans (4.0) (129.9) (70.2)
Current liabilities 1086.1 1159.0 1206.9 Decrease/(increase) in others financial assets 18.0 3.0 1.9
Total Liability 14196.5 13872.7 13462.3 Decrease/(increase) in others assets 139.5 8.3 (4.2)
Fixed Asset 13047.0 13466.3 13940.6 Cash generated from / (used in) operations 625.6 501.1 568.7
Deferred tax assets 44.8 49.2 36.7 Direct taxes paid (net of refunds) 0.8 1.3 7.6
Other non-current assets 3.0 1.1 0.5 Net cash flows from operating activities 624.9 499.8 561.1
Total Non-current assets 13094.8 13516.6 13977.9 Net cash flows from investing activities (454.0) (26.6) (37.2)
Trade receivables 20.4 17.8 14.8 Net cash flows from financing activities (271.8) (463.3) (548.3)
Cash and cash equivalents 173.8 180.8 160.6 Net increase/(decrease) in cash (100.9) 9.9 (24.5)
Loans 0.1 125.3 190.4 Cash at the beginning of the year 173.5 72.5 82.4
Current tax assets 3.5 2.2 3.2 Cash at the end of the year 725.4 824.0 579.4
Other current assets 10.7 4.3 9.0
Total asset 13303.2 13846.9 14355.9
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