godrej industries ltd isin… · godrej industries ltd result update (consolidated basis): q2 fy19...

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GODREJ INDUSTRIES LTDResult Update (CONSOLIDATED BASIS): Q2 FY19

CMP: 543.60 DEC 17th, 2018

Overweight ISIN:INE233A01035

Index Details SYNOPSIS

Godrej Industries Limited manufactures fatty acid,fatty alcohol and surfactant.

Consolidated revenue for the 2nd quarter registeredat Rs. 26240.20 mn from Rs. 22866.20 mn, in thecorresponding period of the previous year, up by14.76%.

During Q2 FY19, consolidated EBIDTA was Rs.2689.30 mn as against Rs. 2241.70 mn in thecorresponding period of the previous year, up by19.97%.

Consolidated PBT of the company for Q2 FY19registered at Rs. 935.30 mn as against Rs. 743.30mn in Q2 FY18.

Consolidated net profit rose by 58.82% and stood atRs. 1895.40 mn in the current quarter as against Rs.1193.40 mn in Q2 FY18.

EPS of the company registered at Rs. 5.63 as againstRs. 3.55 in the corresponding period of previousyear.

The Revenue of the company registered a growth ofRs. 58659.70 mn in H1 FY19 as compared to Rs.51781.40 mn in H1 FY18, up by 13.28%.

During H1 FY19, PAT of the company rose by17.27% at Rs. 3184.80 mn which stood at Rs.2715.70 mn in H1 FY18.

Net Sales and PAT of the company are expected togrow at a CAGR of 14% and 45% over 2017 to2020E, respectively.

Stock DataSector Commodity ChemicalsBSE Code 500164Face Value 1.0052wk. High / Low (Rs.) 656.90/434.10Volume (2wk. Avg.) 25000Market Cap (Rs. in mn.) 182867.04

Annual Estimated Results(A*: Actual / E*: Estimated)Years(Rs in mn) FY18A FY19E FY20ENet Sales 94050.50 110979.59 127626.53EBITDA 10055.00 12205.58 13959.84Net Profit 6311.00 7217.32 8066.78EPS 18.77 21.45 23.98P/E 28.97 25.34 22.67

Shareholding Pattern (%)

As on Sep 2018 As on June 2018

Promoter 74.72 74.72

Public 25.28 25.28

Others -- --

s1 Year Comparative Graph

BLUE STAR LTD 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 (%)

Godrej Industries Ltd 543.60 182867.04 21.60 25.16 4.68 175.00India Glycols Ltd 316.80 9808.60 52.00 6.09 1.04 40.00Deepak Ferts & petrochemicals Corp Ltd 144.60 12754.40 16.82 8.60 0.61 60.00

Cosmo Films Ltd 209.15 4065.90 28.32 7.39 0.66 60.00


QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)

Results updates- Q2 FY19,

(Rs in millions) Sep-18 Sep-17 % Change

Revenue 26240.20 22866.20 14.76%

Net Profit 1895.40 1193.40 58.82%

EPS 5.63 3.55 58.78%

PBIDT 2689.30 2241.70 19.97%

The consolidated net profit rose by 14.76% and registered at Rs. 1895.40 million in the current quarter as against Rs.

1193.40 million in the corresponding period of the previous year. Revenue for the 2nd quarter stood at Rs. 26240.20

million from Rs. 22866.20 million, up by 14.76% when compared with the prior year period. Reported earnings per share

of the company stood at Rs. 5.63 per share during the quarter from Rs. 3.55 a share during the corresponding previous

year quarter. Profit before interest, depreciation and tax is Rs. 2689.30 million as against Rs. 2241.70 million in the

corresponding period of the previous year, up by 19.97%.

Break up of Expenditure

Break up ofExpenditure

Value in Rs. Million

Q2 FY19 Q2 FY18 %Change

Cost of MaterialConsumed 14620.10 12667.00 15%

Cost of PropertyDevelopment 3276.00 2221.10 47%

Purchase of Stock inTrade 2479.10 1980.20 25%

Employee Benefitexpenses 1375.20 1418.60 -3%

Depreciation &AmortizationExpenses

431.40 404.50 7%

Other Expenses 3133.80 2639.90 19%


Financial Performance – H1 FY19:

The Revenue of the company registered a growth of Rs. 56552.80 mn in H1 FY19 as compared to Rs. 50042.40 mn in

H1 FY18, up by 13.01%.

During H1 FY19, PAT of the company rose by 17.27% at Rs. 3184.80 mn which stood at Rs. 2715.70 mn in H1

FY18.

CONSUMER (GCPL):

Business and Financial Highlights for Q2 FY 2018-19:

Consolidated constant currency sales increased by 8% year-on-year.

Consolidated constant currency EBITDA declined by 2%

Consolidated net profit increased by 60%.(without exceptional and one-offs, declined by 1%)

Category Review

Household Insecticides –Household Insecticides, delivered soft quarter.

Soaps– Delivered double-digit volume led sales growth of 11%.

Hair Colours – Delivered double-digit volume led sales growth of 21%. Godrej Expert RichCreme continues to

consistently deliver robust growth and has achieved the highest ever market share on an exit basis

CHEMICALS

Financial Highlights for Q2 & H1 FY 2018-19:

Chemicals Segment of the company registered a growth of 18% at Rs. 4458 mn in Q2 FY19 which was stood at Rs.

3763.40 mn in Q2 FY18.

During H1 FY19, Revenues registered at Rs. 8290 mn as compared to Rs. 7740 mn in H1 FY18, up by 7.10%.

PBIT for Q2 FY19 increased by 137% as compared to Q2 FY18.

Exports for Q2FY19 stood at Rs. 1390 mn a growth of 11% as compared to Q2 FY18.

Product Portfolio Q2 FY 2018-19:


REAL ESTATE:

Financial Highlights for Q2 & H1 FY 2018-19:

Real Estate Segment of the company registered a growth of 35.91% at Rs. 4730 mn in Q2 FY19 which was stood at

Rs. 3480 mn in Q2 FY18.

During H1 FY19, Revenues registered at Rs. 15290 mn as compared to Rs. 12360 mn in H1 FY18, up by 23.70%.

Business & Sales Highlights for Q2 FY 2018-19

Total booking value stood at Rs. 8070 mn and total booking volume stood at 1.07 million sq.ft.

Added 2 new projects with 2.9 million sq.ft. of saleable area

GPL was ranked 4th in Asia & 8th globally by GRESB (Global Real Estate Sustainability Benchmark) 2018- An

industry driven organization which assesses Environmental, Social and Governance (ESG) performance of real estate

globally.

Awards and Recognitions: GPL received 21 awards in Q2 FY19.

AGRI BUSINESS

Consolidated Total Income for Q2 FY19 stood at Rs. 1622, a growth of 13%.

Animal Feed: Strong volume growth in layer and broiler feed continued. Segment had a volume growth of 16% in Q2

FY19 as compared to the corresponding quarter of the previous year.

Vegetable Oil During Q2 FY19 Fresh Fruit Bunches (FFB) arrival volume declined year-on-year due to postponement

of the palm oil season. Total revenues for the quarter stood at Rs. 2670 mn

Crop Protection Business: Plant growth regulators and insecticides categories registered a good growth. PBIT for the

quarter registered a growth of 15% as compared to the corresponding quarter of the previous year.

Dairy: Segment revenue has registered a marginal growth of 2.3% in Q2FY19 over the corresponding quarter of the

previous year; profitability for first half of the year was impacted by higher provisioning costs/loss incurred due to

declining butter prices.

EMERGENT

Natures Basket (Nbl) (Fresh Food And Gourmet Stores)

Q2 FY 19 sales performance at Rs. 860 mn.

Online business clocked sale of Rs. 70 mn in Q2 FY19, a growth of 26% over the previous year.

Four New Stores & Three Replacement stores were opened in Q2 FY19. As at September 30, 2018, the Company has

30 operating stores across 3 cities viz. Mumbai, Pune and Bangalore.


COMPANY PROFILE

Godrej Industries Limited manufactures fatty acid, fatty alcohol and surfactant. The Company's segments include

Chemicals, Animal Feed, Veg Oils, Estate & Property Development, Finance & Investments and Others. The Chemicals

segment includes the production and sale of Oleochemicals and Surfactants, such as Refined Glycerin, Alpha Olefin

Sulfonates and Sodium Lauryl Ether Sulfate. The Animal Feed segment includes production and sale of compound feeds

for cattle and poultry. The Veg Oils segment includes the processing and bulk trading of refined vegetable oils and Oil

Palm Plantation. The Estate & Property Development segment includes the development and sale of real estate and

leasing, and leave and licensing of properties. The Finance & Investments segment includes investments in associates

companies and other investments. The Others segment includes integrated poultry, dairy, tissue culture, seeds business,

energy generation through windmills and gourmet foods and fine beverages.


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

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20E

ASSETS1) Non-Current Assets

a) Property, plant and equipment 25915.60 26050.20 28655.22 30947.64b) Capital Work in Progress 540.90 2698.30 1484.07 1113.05c) Investment Property 1262.10 1403.10 1473.26 1561.65d) Goodwill 5002.90 5003.10 5253.26 5463.39e) Other Intangible Assets 630.60 566.70 521.36 495.30f) Intangible Assets Under Development 2.50 6.80 11.42 15.77g) Bio-Logical Assets 46.70 42.60 51.97 61.33h) Equity Accounted Investees 24802.80 28997.20 30737.03 32273.88i) Financial Assets

i) Other Investments 3536.70 7569.60 8477.95 9325.75ii) Trade Receivables 133.30 133.90 149.97 164.96iii) Loans 1019.50 1095.30 525.74 420.60iv) Other Financial Assets 77.60 126.20 132.51 137.81

j) Deferred Tax Assets (net) 2893.20 2936.80 2555.02 2376.16k) Current Tax Assets (net) 1527.50 1324.20 1562.56 1796.94l) Other Non Current Assets (net) 954.30 737.20 1142.66 1691.14Sub - Total Non- Current Assets 68346.20 78691.20 81591.33 86154.22

2) Current Assetsa) Inventories 50203.40 34292.90 27434.32 24690.89b) Financial Assets

i) Investments 3693.30 5469.70 15588.65 21044.67ii) Trade Receivables 9058.60 10439.10 13779.61 17224.52iii) Cash and Cash equivalents 1790.30 2809.90 3315.68 3846.19iv) Bank Balance other than Cash 559.00 1921.50 2152.08 2345.77v) Loans 7356.90 11012.20 11562.81 12256.58vi) Other Financial Assets 8357.90 9604.20 10564.62 11409.79

c) Current Tax Assets 8.70 9.90 8.51 7.92d) Other Current Assets 2828.90 4212.00 4001.40 3881.36Sub - Total current assets 83857.00 79771.40 88407.68 96707.68

Total Assets (1+2) 152203.20 158462.60 169999.02 182861.89EQUITY AND LIABILITIES1) EQUITY

a) Equity Share Capital 336.10 336.30 336.40 336.40b) Other Equity 31620.10 38752.60 45969.92 54036.70c) Non-Controlling Interest 14745.90 17968.80 21203.18 24383.66

Total Equity 46702.10 57057.70 67509.51 78756.762) Non Current Liabilities

a) Financial Liabilitiesi) Borrowings 15082.60 9522.90 7427.86 6536.52

ii) Other Financial Liabilities 353.30 0.00 0.00 0.00b) Provisions 171.10 253.20 324.10 388.92c) Deferred Tax Liabilities 2292.50 2424.80 2570.29 2673.10d) Other Non-Current Liabilities 152.40 154.50 177.68 195.44Sub - Total Non Current liabilities 18051.90 12355.40 10499.92 9793.98

3) Current Liabilitiesa) Financial Liabilities

i) Borrowings 55923.10 53117.80 54593.65 55685.52ii) Trade Payables 16912.30 16856.10 19384.52 21007.83iii) Other Financial Liabilities 8583.50 11660.80 11077.76 10634.65

b) Other Current Liabilities 5564.80 6392.40 5433.54 4998.86c) Provisions 309.40 403.70 912.36 1414.16d) Current Tax Liabilities 156.10 618.70 587.77 570.13Sub - Total current liabilities 87449.20 89049.50 91989.59 94311.15

Total Equity and Liabilities (1+2+3) 152203.20 158462.60 169999.02 182861.89


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

Value(Rs.in.mn) FY17A FY18A FY19E FY20EDescription 12m 12m 12m 12mNet Sales 84825.30 94050.50 110979.59 127626.53Other Income 1688.70 5637.80 6201.58 7131.82Total Income 86514.00 99688.30 117181.17 134758.35Expenditure -78416.00 -89633.30 -104975.59 -120798.51Operating Profit 8098.00 10055.00 12205.58 13959.84Interest -4018.20 -4131.50 -5288.32 -6081.57Gross profit 4079.80 5923.50 6917.26 7878.27Depreciation -1481.40 -1752.70 -1748.05 -1835.45Exceptional Items 227.60 120.50 0.00 0.00Profit Before Tax 2826.00 4291.30 5169.20 6042.81Tax -1674.10 -1836.60 -2193.81 -2557.32Profit After Tax 1151.90 2454.70 2975.39 3485.49Share of Profit & Loss of Assoc 3436.30 3856.30 4241.93 4581.28Net Profit 4588.20 6311.00 7217.32 8066.78Equity capital 336.10 336.30 336.40 336.40Reserves 31620.10 38752.60 45969.92 54036.70Face value 1.00 1.00 1.00 1.00EPS 13.65 18.77 21.45 23.98

Quarterly Profit & Loss Statement for the period of 31st Mar, 2018 to 31st Dec, 2018E

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

Description 3m 3m 3m 3mNet sales 23169.10 30312.60 26240.20 27814.61Other income 3404.80 775.50 1331.40 1531.11

Total Income 26573.90 31088.10 27571.60 29345.72

Expenditure -23470.10 -28316.80 -24882.30 -26571.30

Operating profit 3103.80 2771.30 2689.30 2774.42

Interest -1029.60 -1260.70 -1322.60 -1401.96

Gross profit 2074.20 1510.60 1366.70 1372.47

Depreciation -528.20 -412.20 -431.40 -457.28

Profit Before Tax 1546.00 1098.40 935.30 915.18

Tax -69.00 -698.30 -288.10 -301.55

Profit After Tax 1477.00 400.10 647.20 613.63Share of Profit & Loss of Assoc 1293.90 889.30 1248.20 1435.43

Net Profit 2770.90 1289.40 1895.40 2049.06Equity capital 336.30 336.40 336.40 336.40

Face value 1.00 1.00 1.00 1.00

EPS 8.24 3.83 5.63 6.09


Ratio Analysis

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 13.65 18.77 21.45 23.98EBITDA Margin (%) 9.55% 10.69% 11.00% 10.94%PBT Margin (%) 3.33% 4.56% 4.66% 4.73%PAT Margin (%) 1.36% 2.61% 2.68% 2.73%P/E Ratio (x) 39.82 28.97 25.34 22.67ROE (%) 3.60% 6.28% 6.43% 6.41%ROCE (%) 6.43% 8.16% 9.65% 10.40%Debt Equity Ratio 2.22 1.60 1.34 1.14EV/EBITDA (x) 30.87 23.87 18.79 16.05Book Value (Rs.) 95.08 116.23 137.65 161.63P/BV 5.72 4.68 3.95 3.36

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 543.60, the stock P/E ratio is at 25.34 x FY19E and 22.67 x FY20E respectively.

Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 21.45 and Rs. 23.98,

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 45% over 2017 to 2020E,

respectively.

On the basis of EV/EBITDA, the stock trades at 18.79 x for FY19E and 16.05 x for FY20E.

Price to Book Value of the stock is expected to be at 3.95 x and 3.36 x for FY19E and FY20E respectively.

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


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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

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


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