hsil ltd - result update

8/6/2019 HSIL Ltd - Result Update

http://slidepdf.com/reader/full/hsil-ltd-result-update 1/4Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: [email protected]

ONG TERM INVESTMENT CALL

BUY27 July 2011

Company Report | Q1FY12 Result Update

Q1FY12 Result Highlights

HSIL announced its Q1FY12 results and reported a very strong

performance. Its revenues increased to INR 3280 mn, an increase of 41.5%

as compared to Q1FY11. The EBITDA posted by the company was INR

627 mn, an increase of 55.5% YoY. EBIDTA margins increased by 180

basis points to 20.4%

The Profit before Tax (PBT) increased to INR 417 mn, a rise of 130% as

compared to the first quarter of the previous financial year. The Profit

after Tax (PAT) showed a robust growth of 111% to INR 285 mn. The

PAT margins increased substantially by 309 basis points to 9.36% Cash

profits showed strong growth of 32% to INR 410 mn.

The two divisions of the company i.e. the Building Products division and

the Container Glass division recorded robust sales growing by 29% and

53% YoY.

The company has reported outstanding results for Q1FY12 beating most

forecasted estimates. Both divisions of the company i.e. the Building

Products division and the Container Glass division have performed well

both on absolute as well as margin parameters. Currently, all plants of

the company are running at full capacity. The sanitary ware division is

running at 116% capacity and the Container glass division is running at100% capacity.

The Building Products division recorded 29% growth in revenue and a

10% growth in volume for this quarter. The Container Glass division

recorded a 53% growth of which 31% was due to volume growth and

22% was due to realization and product mix growth.

Outlook and Valuation

The management of the company has focused on certain key parameters,

which resulted in a stellar performance for this quarter. The efficiency ofthe plants has been improved. The company has launched new designs

across product segments. There has been a focus on premium products

and segments, which have higher profit margins. The company has

expanded its distribution network and has ~1550 distributors and ~12,000

retailers. .

The management is confident of achieving more than 30% growth in both

sales and profits for the entire year. For FY12, the management has given

revenue guidance of ~INR 15000 mn and EBIDTA estimates between

~INR 2900-3000 mn.

IndustryBuilding Products

& Container GlassCMP (INR) 219

Target (INR) 265

52 week High/Low (INR) 229.80/106

Market Cap (INR Mn) 14450

3M Avg. Daily Volumes

(‘000)166.8

Company PE (FY12e) 10.5x

Shareholding Pattern (%)

Stock Performance

Performance (%)

1 Month 3 Months 1 Year

HSIL 24.3 38.9 83.4

NIFTY 1.9 -5.0 2.9




In future, HSIL plans to focus on Brass Chrome Plated Bath Fittings (Faucets)

segment with a target to become the second largest player in the faucet market in

India, having an estimated size of ~INR 30000 mn. After the acquisition of the

faucets division of Havells India at Bhiwadi, Rajasthan, the company is now

running it at 100% capacity. It has discontinued Crab Tree brand and markets it

under the Vanilla brand. It currently manufactures 3 lac pieces per annum, and

capacity is expected to increase to 5 lac pieces per annum once the expansion is

complete in September 2011. The faucets division contributed 17% of the Building

Products revenue last year.

It has acquired a 100% stake in Garden Polymers Pvt Ltd (turnover of INR 1050

mn). The company manufactures PET bottles, caps and closures with two plants

strategically located at Dharwad, Karnataka and Selaqui, Uttrakhand. This

company should grow at 20 to 25%

For FY2011-2012 the company has planned capex of INR 6500 mn, which is

expected to be completed as per projected schedule. This capex has been spread

over 2.5 years, with INR 1600 mn having already been invested, it is projected that

INR 2000 mn will be invested this year; the remaining amount will be invested

during the next 18-24 month time-frame. The company is looking to have a presence

in every city having a population of over 25,000 people.

At current market price of INR 219, the stock is trading at a P/E of 10.5x for FY12

est. earnings. Looking at the robust performance by the company in the first quarter

and given the expansion plans in place and management capabilities to drive the

business, we re-rate and recommend a “BUY” on the stock with a price target of

INR265.




Financials(INR in mn)

Q1 FY12 Q1 FY11 Y-o-Y Q4 FY11 Q-o-Q

Net Revenue 3,048 2,159 41.2 11,093 -72.5

Other Operating income 20 14 37.1 740 -97.3

Net revenue & Other operating income 3,067 2,173 41.2 11,832 -74.1

Other income 11 3 251.6 36 -69.7

Total Income 3,078 2,176 41.5 11,868 -74.1

Operating Exp. 2,451 1,773 38.3 8,392 -70.8

EBITDA 627 403 55.5 3,476 -82.0EBITDA (%) 20.4 18.6 188 bps 29.4 -894 bps

Depreciation 132 127 4.4 535 -75.3

EBIT 495 277 78.8 2,941 -83.2

EBIT (%) 16.1 12.7 336 bps 24.8 -871 bps

Financial charges 78 96 NA 356 -78.1

PBT 417 181 130.3 2,585 -83.9

Tax Provision 132 46 188.8 399 -66.9

Tax Rate (%) 31.7 25.2 641 bps 15.4 1622 bps

PAT285 135 110.6 2,186 -87.0Reported PAT 285 135 110.6 2,186 -87.0

Reported PAT (%) 9.3 6.2 304 bps 18.4 -916 bps

EPS 4.3 2.5 75.7 13.3 -67.4Source: Company, Unicon Research *Standalone Financials



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hsil ltd - result update

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