· Finolex Cables reported a top-line growth of 16.3% yoy with sales of Rs539cr (Rs464cr), which was slightly above our estimates of Rs526cr. OPM came in at 7.4%, 276bp below our estimates of 10.2%. However, PAT came in above our estimates owing to lower than expected forex losses and low tax rate for the quarter. Overall, PAT increased to Rs19cr, vis-à-vis a loss of Rs5cr in 4QFY2010.
· OPM was suppressed at 7.4%, mainly on account of lower than expected gross margins and higher other expenditure.
· Exceptional items came in at Rs12cr, compared to Rs24cr in 4QFY2010. Overall for FY2011, the figure was at Rs34cr, vis-à-vis Rs76cr in FY2010. Tax rate for the quarter was low at 2.3%.
Going ahead, we expect demand from the Low Tension (LT) cables segment to remain strong due to bright prospects in the user industries. Sales would receive a boost in FY2012 when High Tension (HT) and Extra High Voltage (EHV) cables plants start meaningful contribution to the company’s sales. We maintain a Buy on the stock. We may revise our numbers post the management call.
Exhibit 1: 4QFY2011 Actual vs. Estimates | |||
(Rs cr) | Actual | Estimates | Var (%) |
Revenue | 539 | 526 | 2.6 |
EBITDA | 40 | 53 | (25.3) |
OPM (%) | 7.4 | 10.2 | (276)bp |
PAT | 19 | 16 | 20.1 |
Exhibit 2: 4QFY2011 Financial Performance
Y/E March (Rs cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) | FY2011 | FY2010 | % chg |
Net Sales | 539 | 513 | 5.2 | 464 | 16.3 | 2,036 | 1,619 | 25.8 |
Consumption of RM | 433 | 403 | 7.3 | 375 | 15.5 | 1,619 | 1,221 | 32.6 |
(% of Sales) | 80.2 | 78.7 | 80.8 | 79.5 | 75.4 | |||
Staff Costs | 19 | 16 | 18.2 | 13 | 44.2 | 65 | 59 | 9.3 |
(% of Sales) | 3.5 | 3.1 | 2.8 | 3.2 | 3.7 | |||
Other Expenses | 48 | 42 | 12.9 | 43 | 10.7 | 180 | 143 | 25.7 |
(% of Sales) | 8.9 | 8.3 | 9.3 | 8.8 | 8.8 | |||
Total Expenditure | 500 | 462 | 8.2 | 431 | 15.8 | 1,864 | 1,424 | 30.9 |
Operating Profit | 40 | 51 | (21.5) | 33 | 21.7 | 172 | 195 | (12.0) |
OPM | 7.4 | 9.9 | 7.1 | 8.4 | 12.1 | |||
Interest | 4 | 5 | (23.2) | 4 | (2.3) | 17 | 17 | 3.0 |
Depreciation | 9 | 10 | (7.9) | 8 | 9.4 | 39 | 37 | 4.2 |
Other Income | 4 | 1 | 225.6 | 5 | (17.1) | 26 | 24 | 7.6 |
PBT (excl. Extr. Items) | 31 | 37 | (16.6) | 25 | 21.9 | 142 | 165 | (14.3) |
Extr. Income/(Expense) | (12) | (7) | (24) | (34) | (76) | |||
PBT (incl. Extr. Items) | 19 | 30 | (37.2) | 2 | 1132.9 | 107 | 89 | 20.2 |
(% of Sales) | 3.5 | 5.9 | 0.3 | 5.3 | 5.5 | |||
Provision for Taxation | 0 | 4 | (89.9) | 7 | (93.8) | 20 | 32 | (35.3) |
(% of PBT) | 2.3 | 14.0 | 447.7 | 19.0 | 35.4 | |||
Reported PAT | 19 | 26 | (28.7) | (5) | - | 87 | 58 | 50.5 |
PATM | 3.5 | 5.1 | (1.2) | 4.3 | 3.6 | |||
Equity shares (cr) | 15.3 | 15.3 | 15.3 | 15.3 | 15.3 | |||
EPS (Rs) | 1.2 | 1.7 | (28.7) | (0.4) | - | 5.7 | 3.8 | 50.5 |
Adjusted PAT | 30 | 32 | (5.3) | 25 | 19.1 | 115 | 107 | 7.4 |
Key Financials
Y/E March (Rs cr) | FY2010 | FY2011 | FY2012E | FY2013E |
Net Sales | 1,619 | 2,036 | 2,419 | 2,768 |
% chg | 20.7 | 25.8 | 18.8 | 14.4 |
Net Profit | 58 | 87 | 142 | 173 |
% chg | - | 50.6 | 63.8 | 21.6 |
EBITDA Margin (%) | 12.2 | 8.4 | 9.8 | 9.7 |
FDEPS (Rs) | 3.8 | 5.7 | 9.3 | 11.3 |
P/E (x) | 13.4 | 8.9 | 5.4 | 4.5 |
P/BV (x) | 1.2 | 1.1 | 0.9 | 0.8 |
RoE (%) | 9.3 | 10.8 | 18.2 | 18.9 |
RoACE (%) | 17.1 | 13.6 | 18.1 | 18.4 |
EV/Sales (x) | 0.5 | 0.4 | 0.3 | 0.2 |
EV/EBITDA (x) | 3.7 | 4.5 | 3.1 | 2.5 |
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