atul limited isin… · 2019-01-21 · atul limited result update (parent basis): q3 fy19 cmp:...

Document code: FOTL_190120194_3 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved

ATUL LIMITEDResult Update (PARENT BASIS): Q3 FY19

CMP: 3541.90 JAN 19th, 2019

Overweight ISIN:INE100A01010

Index DetailsSYNOPSIS

Atul Ltd is an integrated products and serviceschemical company includes basic chemicals andother chemical products.

The company achieved a turnover of Rs. 10194.90mn for the 3rd quarter of the FY19 as against Rs.8036.80 mn in the corresponding quarter of theprevious year, an increase of 26.85%.

During the quarter, net profit rose by 77.13% andstood at Rs. 1168.90 mn as against Rs. 659.90 mn inthe corresponding quarter ending of previous year.

During the quarter, EBIDTA stood at Rs. 2067.90mn as against Rs. 1265.70 mn in Q3 FY18.

Profit before tax (PBT) stood at Rs. 1783.30 mn inQ3 FY19 as against Rs. 988.10 mn in thecorresponding quarter of the previous year.

EPS of the company stood at Rs. 39.41 in Q3 FY19against Rs. 22.25 in the corresponding quarter of theprevious year.

Revenue of the company registered a growth of27.79% at Rs. 29149.70 mn in 9M FY19 as againstRs. 22809.80 mn in 9M FY18.

During 9M FY19, PAT rose by 87.75% at Rs.3201.00 mn as against Rs. 1704.90 mn in 9M FY18.

Net Sales and PAT of the company are expected togrow at a CAGR of 16% each over 2017 to 2020E.

Stock DataSector AgrochemicalsBSE Code 500027Face Value 10.0052wk. High / Low (Rs.) 3618.00/2500.00Volume (2wk. Avg.) 1631Market Cap (Rs. in mn.) 105052.75

Annual Estimated Results(A*: Actual / E*: Estimated)Years (Rs. in mn) FY18A FY19E FY20ENet Sales 31475.60 39854.35 47028.13EBITDA 5109.30 7589.07 8544.14Net Profit 2704.10 4242.00 4897.84EPS 91.17 143.02 165.13P/E 38.85 24.76 21.45

Shareholding Pattern (%)

As on Dec 2018 As on Sep 2018

Promoter 44.68 44.67

Public 55.32 55.33

Others -- --

1 Year Comparative Graph

ATUL LIMITED S&P BSE SENSEX

PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDENDCompany Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Atul Ltd 3541.90 105052.75 141.61 25.01 4.78 120.00UPL Ltd 765.25 389774.50 10.19 75.10 4.89 400.00PI Industries Ltd 848.00 117050.00 26.24 32.32 6.12 400.00Bayer Crop-Science Ltd 4281.00 146982.10 83.80 51.90 8.27 180.00


QUARTERLY HIGHLIGHTS (PARENT BASIS)

Results updates- Q3 FY19,

(Rs. in million) Dec-18 Dec-17 % Change

Revenue 10194.90 8036.80 26.85%

Net Profit 1168.90 659.90 77.13%

EPS 39.41 22.25 77.13%

EBIDTA 2067.90 1265.70 63.38%

Atul Ltd has achieved a turnover of Rs. 10194.90 million for the 3rd quarter of the FY 2018-19 as against Rs. 8036.80

million in the corresponding quarter of the previous year, an increase of 26.85%. During the quarter, net profit rose by

77.13% and stood at Rs. 1168.90 million as against Rs. 659.90 million in the corresponding quarter ending of previous

year. Reported earnings per share of the company stood at Rs. 39.41 in Q3 FY19 as against Rs. 22.25 in the corresponding

quarter of previous year. Profit before interest, depreciation and tax stood at Rs. 2067.90 million as against Rs. 1265.70

million in the corresponding period of the previous year, up by 63.38%.

Break up of Expenditure

Break up ofExpenditure

Value in Rs. Million

Q3 FY19 Q3 FY18 %Change

Cost of MaterialConsumed 5444.70 4113.70 32%

Purchase of Stock inTrade 8.20 12.50 -34%

Power, Fuel & Water 923.30 871.60 6%

Employee BenefitExpense 550.20 456.30 21%

Depreciation &Amortisation Expense 276.40 259.10 7%

Other Expenses 1245.90 1089.50 14%


Segment Revenue

COMPANY PROFILE

Atul Ltd is an integrated products and services chemical company includes basic chemicals and other chemical products.

The Company operates through two segments: Life Science Chemicals, and Performance and Other Chemicals. The Life

Science Chemicals segment includes two sub-segments, including Crop Protection and, Pharmaceuticals and

Intermediates. The Life Science Chemicals segment consists of active pharmaceutical ingredients (APIs), API

intermediates, fungicides and herbicides, among others. The Performance and Other Chemicals segment consists of

adhesion promoters, bulk chemicals, epoxy resins and hardeners, intermediates, perfumery and textile dyes, among others.

It serves industries, such as adhesives, agriculture, animal feed, automobile, composites, construction, cosmetic, defense,

footwear, fragrance, glass, home care, horticulture, hospitality, paint and coatings, paper, personal care, soap and

detergent, sports and leisure, textile, tire and wind energy.


FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20EASSETS1) Non-Current Assets

a) Property, plant and equipment 9276.90 9188.70 9648.14 10227.02b) Capital work in Progress 369.90 695.60 890.37 1112.96c) Investment Property 32.20 32.20 33.81 35.16d) Intangible Assets 0.20 0.10 0.08 0.06e) Financial Assets

i) Investments 5315.70 5948.10 6542.91 7131.77ii) Loans 70.10 50.30 27.67 20.75iii) Other Financial Assets 46.50 24.80 18.60 15.25

f) Income Tax Assets 0.00 6.70 7.04 7.46g) Other Non Current Tax Assets 746.30 440.40 361.13 306.96Sub - Total Non- Current Assets 15857.80 16386.90 17529.73 18857.40

2) Current Assetsa) Inventories 3678.90 3789.50 3978.98 4138.13b) Financial Assets

i) Trade Receivables 5070.60 7176.80 9903.98 13370.38ii) Cash and Cash equivalents 53.80 201.90 258.43 323.04iii) Bank Balance other than cash and cash equivalents 18.30 19.80 21.19 22.46iv) Loans 51.80 20.40 15.30 12.24v) Other Financial Assets 251.20 319.40 399.25 479.10

c) Other current assets 1215.00 1276.80 1327.87 1394.27Sub - Total Current Assets 10339.60 12804.60 15905.00 19739.62

Total Assets (1+2) 26197.40 29191.50 33434.73 38597.01EQUITY AND LIABILITIES1) EQUITY

a) Equity Share Capital 296.80 296.80 296.80 296.80b) Other Equity 18911.40 21678.60 24280.03 27679.24

Total Equity 19208.20 21975.40 24576.83 27976.042) Non Current Liabilities

a) Financial Liabilitiesi) Borrowings 0.00 0.00 0.00 0.00ii) Other Financial Liabilities 214.40 225.70 239.24 251.20

b) Provisions 200.40 177.10 166.47 159.82c) Deferred Tax Liabilities 997.50 1246.50 1470.87 1706.21

Sub - Total Non Current Liabilities 1412.30 1649.30 1876.59 2117.233) Current Liabilities

a) Financial Liabilitiesi) Borrowings 1340.00 0.10 0.00 0.00ii) Trade Payables 3290.60 4704.60 6134.98 7643.23iii) Other Financial Liabilities 688.20 551.80 496.62 456.89

b) Provisions 76.20 83.60 90.29 95.71c) Current Tax Liabilities 19.90 80.10 120.15 174.22d) Other Current Liabilities 162.00 146.60 139.27 133.70Sub - Total Current Liabilities 5576.90 5566.80 6981.31 8503.74

Total Equity and Liabilities (1+2+3) 26197.40 29191.50 33434.73 38597.01


Annual Profit & Loss Statement for the period of 2017 to 2020E

Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Description 12m 12m 12m 12mNet Sales 28482.70 31475.60 39854.35 47028.13

Other Income 424.60 384.60 218.50 196.65

Total Income 28907.30 31860.20 40072.85 47224.78

Expenditure -23780.70 -26750.90 -32483.77 -38680.63

Operating Profit 5126.60 5109.30 7589.07 8544.14

Interest -210.20 -89.00 -35.84 -29.39

Gross profit 4916.40 5020.30 7553.23 8514.75

Depreciation -911.20 -1047.80 -1112.28 -1201.27

Profit Before Tax 4005.20 3972.50 6440.94 7313.48

Tax -1152.20 -1268.40 -2198.94 -2415.64

Net Profit 2853.00 2704.10 4242.00 4897.84

Equity capital 296.60 296.60 296.60 296.60

Reserves 18911.40 21678.60 25920.60 30818.44

Face value 10.00 10.00 10.00 10.00

EPS 96.19 91.17 143.02 165.13

Quarterly Profit & Loss Statement for the period of 30th June, 2018 to 31st Mar, 2019E

Value(Rs.in.mn) 30-June-18 30-Sep-18 31-Dec-18 31-Mar-19E

Description 3m 3m 3m 3mNet sales 8880.60 10074.20 10194.90 10704.65

Other income 132.90 187.90 -46.50 -55.80

Total Income 9013.50 10262.10 10148.40 10648.85

Expenditure -7460.90 -8174.20 -8080.50 -8768.17

Operating profit 1552.60 2087.90 2067.90 1880.67

Interest -9.10 -11.00 -8.20 -7.54

Gross profit 1543.50 2076.90 2059.70 1873.13

Depreciation -269.80 -273.10 -276.40 -292.98

Profit Before Tax 1273.70 1803.80 1783.30 1580.14

Tax -431.80 -613.60 -614.40 -539.14

Net Profit 841.90 1190.20 1168.90 1041.00

Equity capital 296.60 296.60 296.60 296.60

Face value 10.00 10.00 10.00 10.00

EPS 28.39 40.13 39.41 35.10


Ratio Analysis

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 96.19 91.17 143.02 165.13

EBITDA Margin (%) 18.00% 16.23% 19.04% 18.17%

PBT Margin (%) 14.06% 12.62% 16.16% 15.55%

PAT Margin (%) 10.02% 8.59% 10.64% 10.41%

P/E Ratio (x) 36.82 38.85 24.76 21.45

ROE (%) 14.85% 12.31% 16.18% 15.74%

ROCE (%) 29.38% 18.48% 24.70% 23.60%

Debt Equity Ratio 0.07 0.00 0.00 0.00

EV/EBITDA (x) 20.74 20.52 13.81 12.25

Book Value (Rs.) 647.61 740.90 883.92 1049.06

P/BV 5.47 4.78 4.01 3.38

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 3541.90, the stock P/E ratio is at 24.76 x FY19E and 21.45 x FY20E respectively.

Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 143.02 and Rs. 165.13

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 16% each over 2017 to 2020E.

On the basis of EV/EBITDA, the stock trades at 13.81 x for FY19E and 12.25 x for FY20E.

Price to Book Value of the stock is expected to be at 4.01 x and 3.38 x for FY19E and FY20E respectively.

Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

INDUSTRY OVERVIEWCrop Protection:

Product groups: Herbicides, Insecticides, Fungicides, Others:

The products falling under these product groups are used by customers belonging to Agriculture and Crop Protection

Chemicals industries. The product groups comprise about 20 products and 40 formulations. 2,4-D, Indoxacarb and

Isoprothiolane are some of the key products.

The size of the world Crop Protection Chemicals industry is estimated at US$ 53.7 bn and is growing at about 0.2%. The

size of the world Agrochemicals industry is estimated at US$ 61 bn and is growing at about 0.5%. The size of the world

Agriculture industry is estimated at US$ 3.2 tn.

The main user industries, namely Agriculture and Crop Protection Chemicals, are growing well because of the need to

feed a growing population under constraints of related resources. The Company will participate in this growth by i)

building a strong sales and marketing organization and broadening and deepening its presence in other countries,

particularly in Africa and South America, ii) promoting its brand sales, iii) improving its manufacturing and working

capital efficiencies, iv) generating and adding capacities and v) introducing new products and formulations.

Floods or famines may adversely affect the demand. Fluctuations in foreign exchange may impact sales realizations.

Given that some of these chemicals can be toxic, it is essential to take due care in their manufacture and use. Registration

costs are high in certain countries.

Pharmaceuticals and Aromatics – I

Product groups: API intermediates, Active Pharmaceutical Ingredients, Others:

The products falling under these product groups are used by customers belonging to Pharmaceutical industry for various

therapeutic categories, such as anti-depressant, anti-diabetic, anti-infective, anti-retroviral and cardiovascular. The product


groups comprise about 72 products. Carbonates, chloroformates, isocyanates and organic ureas are some of the key

classes of products.

The size of the world Pharmaceutical industry is estimated at US$ 1.75 tn, of which the conventional pharmaceutical

segment is estimated to be US$ 1.3 tn. Of this, the size of the world API industry is estimated to be US$ 160 bn.

There are about 20 major companies which dominate the world marketplace.

The main user industry, namely, Pharmaceutical, is growing well because of increasing awareness about diseases and

health. The Company along with ABL will participate in this growth by i) widening its market reach, ii) increasing its

manufacturing efficiencies, iii) generating and adding capacities, iv) introducing new products and v) forming long-term

strategic alliances with other companies.

The prices of some products may come down in a short time. Fluctuations in foreign exchange may impact sales

realizations. Performance and Other Chemicals Segment consists of 4 Sub-segments, namely, Aromatics - II, Bulk

Chemicals and Intermediates, Colors and Polymers.

Aromatics – II

Product groups: Intermediates, Perfumery, Others

The products falling under these product groups are mainly used by customers belonging to Fragrance and Personal Care

industries. The product groups comprise about 20 products. Para Cresol, Sodium Sulphate and Sodium Sulphite are some

of the key products.

The world market for para Cresol (a key product) is estimated at 64,000 mt and is growing at about 2%. Though earlier

the product used to be manufactured in the UK and the USA, China and India are now major suppliers of the product. The

size of the world Fragrance industry is estimated at US$ 12.5 bn and is growing at about 4%. The size of the world

Personal Care industry is estimated at US$ 400 bn of which personal care ingredients segment is US$ 21 bn and is

growing at about 4%.

The main user industries, namely, Fragrance and Personal Care, are growing well due to an improved standard of living.

The Company will participate in this growth by i) broadening its market reach, ii) increasing its manufacturing

efficiencies, iii) generating and adding capacities and iv) introducing new products.

Higher raw material prices which cannot be passed on to customers impacted profitability. Fluctuations in foreign

exchange may impact sales realizations.

Bulk Chemicals and Intermediates

Product groups: Bulk chemicals, Adhesion promoters, others

The products falling under these product groups are used mainly for internal consumption and by customers belonging to

Cosmetic, Dyestuff and Tyre industries. The product groups comprise about 21 products. Resorcinol, Resorcinol

Formaldehyde Resins, Sulphur Trioxide, Chlorosulphonic Acid and Caustic Soda are some of the key products.


The world market for Resorcinol (a key product) is estimated at US$ 426 mn and is growing at about 2.5%. The size of

the world Tyre industry is estimated at US$ 220 bn and is growing at about 3.7%. The size of the world Chlor-alkali

industry is estimated at US$ 44 bn and is growing at about 3.2%.

The Tyre Industry expected to grow further because of increasing population on the one hand and improving standard of

living on the other. The captive consumption of bulk chemicals is expected to grow as the Company expands

manufacturing capacities of its various products. The Company will participate in this growth by i) widening its market

reach, ii) increasing its manufacturing efficiencies, iii) generating and adding capacities and iv) introducing downstream

products.

The demand and prices of bulk chemicals are cyclical in nature. Fluctuations in foreign exchange may impact sales

realizations.

Colors:

Product groups: Textile dyes, Pigments, Paper dyes,

Inks, Textile chemicals, Others The products falling under these product groups are used by customers belonging to

Textile, Paint and Coatings and Paper industries. The product groups comprise about 603 products. Vat Green, Pigment

Red and Sulphur Black are some of the key products.

The size of the world Dyestuff industry is estimated at US$ 5.6 bn and is growing at about 3.5%. China is the largest

manufacturer of dyes, followed by India. The world market for high performance pigments is estimated at US$ 4.7 bn and

is growing at about 3.8%.

The main user industries, namely, Paint and Coatings and Textile, will continue to grow because of increase in

discretionary spending. The Company along with RACL will participate in this growth by i) broadening its market reach

in new geographies, ii) increasing its manufacturing and working capital efficiencies and iii) introducing new dyes,

pigments and products for non-textile applications.

Fluctuations in foreign exchange and availability of raw materials may impact sales realizations. Treatment costs are

expected to remain high given that the manufacture of dyes and pigments generates significant pollutants.

Polymers

Product groups: Epoxy Resins, Curing agents, Reactive diluents, Sulfones, Protective paints and Adhesives based on

Epoxy, Synthetic rubber, Polyurethane, Cyanoacrylate, PVC and PVA.

The products falling under these product groups are used by customers belonging to Aerospace, Automobile, Composites,

Construction, Defence, Electrical and Electronics, Footwear, Paint and Coatings, Paper, Sport and Leisure and Wind

Energy industries. The product groups comprise about 96 synthetic products and 300 formulations. B11, P62 and P101 are

some of the key products. Synthetic and formulated products are versatile and have significant applications in Aerospace,

Automobile, FRP Composites, Wind Energy, Electrical and Electronics, Paint and Coatings, Construction, Defence, Sport

and Leisure and Paper industries.


The world market for epoxy resins and curing agents is estimated at US$ 6.8 bn and is growing at about 2% and Indian

market is estimated at US$ 260 mn and is growing at about 6%. There are about 7 major companies which dominate the

world marketplace. The world market for sulfones (curing agents) is estimated at US$ 350 mn and is growing at about

5%.

The user industries, Construction, Defence, Electrical and Electronics, Paint and Coatings are growing well, particularly

in India. The Company will participate in this growth by i) widening its market reach, ii) increasing its manufacturing and

working capital efficiencies, iii) generating and adding new capacities of epoxy resins and curing agents and v)

introducing new products and formulations.

Cheaper imports of epoxy resins and curing agents may keep the margins under pressure. Since the 2 main raw materials,

namely Bisphenol-A and Epichlorohydrin, are imported, fluctuations in foreign exchange may impact margins.


Disclosure Section

The information and opinions in Firstcall Research was prepared by our analysts and it does not constitute an offer orsolicitation for the purchase or sale of any financial instrument including any companies scrips or this is not an officialconfirmation of any transaction. The information contained herein is from publicly available secondary sources and dataor other secondary sources believed to be reliable but we do not represent that it is accurate or complete and it should notbe relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damagethat may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/or its affiliates and/or employees will not be liable for the recipients’ investment decision based on this document.

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The following analysts hereby state that their views about the companies and sectors are on best effort basis to the best oftheir knowledge. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Theanalyst qualifications, sectors covered and their exposure if any are tabulated hereunder:

Name of the Analyst Qualifications SectorsCovered

Exposure/Interest tocompany/sector UnderCoverage in the CurrentReport

Dr.C.V.S.L. Kameswari M.Sc, PGDCA,M.B.A,Ph.D (Finance)

Pharma &Diversified

No Interest/ Exposure

U. Janaki Rao M.B.A CapitalGoods


B. Anil Kumar M.B.A Auto, IT &FMCG


V. Harini Priya M.B.A Diversified No Interest/ Exposure

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atul limited isin… · 2019-01-21 · atul limited result update (parent basis): q3 fy19 cmp:...

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