First Call- Haldyn Glass Gujarat Ltd Detailed Report

7/31/2019 First Call- Haldyn Glass Gujarat Ltd Detailed Report

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SYNOPSIS

We initiated coverage of HALDYN

GLASS GUJARAT Ltd and set a

target price of Rs.18.00 for Medium

term investment.

HALDYN GLASS GUJARAT LTD

manufactures a very wide variety of

glass bottles and containers of

different sizes and volume.

During the quarter ended, the Net

profit of the company increased to

Rs.80.95 millions and registering a

growth of 191.50%.

The company has recommended a

Dividend of Rs. 0.75 per equity

Share of Re. 1 each (75%) for the

year ended March 31, 2012.Net Sales and PAT of the company

are expected to grow at a CAGR of

13% and 29% over 2011 to 2014E

respectively.

YearsNet sales(Rs.Mn)

EBITDA(Rs.Mn)

Net Profit(Rs.Mn)

EPS(Rs.) P/E

FY 12 1769.19 456.77 242.55 4.51 3.53

FY 13E 2034.57 529.21 291.88 5.43 2.94

FY 14E 2278.72 599.54 336.58 6.26 2.55

Stock Data:

Sector: Containers& Packaging

Face Value Rs. 1.00

52 wk. High/Low (Rs.) 17.50/10.02

Volume (2 wk. Avg.) 99448.00

BSE Code 515147

Market Cap (Rs.In mn) 857.31

Share Holding Pattern

1 Year Comparative Graph

BSE SENSEX HADYN GLASS GUJARAT

C.M.P: Rs. 15.95Target Price: Rs. 18.00Date: June 14th, 2012 BUY

HALDYN GLASS GUJARAT LTD

Result Update: Q4 FY 12


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Peer Group Comparison

Name of the company CMP(Rs.)Market Cap.

(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%

Haldyn Glass Gujarat 15.95 857.31 4.51 3.53 1.10 25.00

Piramal Glass 105.10 8504.30 9.67 10.87 1.65 35.00

La Opala RG 106.20 1125.50 11.89 8.93 1.94 15.00

Uflex 102.30 7423.30 19.87 5.17 0.57 75.00

Investment Highlights

Q4 FY12 Results Update

Haldyn Glass Gujarat Ltd disclosed a phenomenon rise in standalone net profit

for the quarter ended March 2012. During the quarter, the profit of the company

surged 191.50% to Rs 80.95 million from Rs 27.77 million in the same quarter

previous year. Net sales for the quarter rose 24.66% to Rs 510.36 million from Rs

409.41 million, when compared with the prior year period. It reported earnings of

Rs 1.51 a share during the quarter, registering 191.50% increase over previous

year period.

Quarterly Results - standalone (Rs in mn)

As At Mar-12 Mar-11 %change

Net sales 510.36 409.41 24.66%

PAT 80.95 27.77 191.50%

Basic EPS 1.51 0.52 191.50%


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Break up of Expenditure

Recommends Dividend

Haldyn Glass Ltd has recommended a Dividend of Rs. 0.75 per equity Share of Re.

1 each (75%) for the year ended March 31, 2012.

Company Profile

Haldyn Glass Gujarat Limited (H.G.G.L) incorporated in 1991, promoted by Haldyn

Glass Limited in the state of Gujarat, India. Haldyn Glass Limited is a closely held

company engaged in manufacture of Soda Lime Flint & Amber Glass containers since

1964. The company creates new design and shapes of bottles to give cutting-edge

advantage to the products of our esteemed clients of food, pharmaceutical, beverages

and liquor industries. Company try to produce most sophisticated and ahead of times

designs to suit the quality standard of its clients.

HGGL a listed company at Mumbai Stock Exchange, currently has total melting

capacity 320 tons per day. The two Glass Melting Furnaces capable of producing (220

+ 100) tons per day on 10 I.S. machines give them leverage over the competition in


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manufacturing a wider range of containers from 10 ml to 1000 ml. The I.S. machines

installed at the modern plant are capable of producing 1.5 million high quality

containers every day to their discerning customers which are supplied at a very short

lead time.

Containers manufactured by the company go through various stages of stringent

quality tests.The Company is re-accredited for Quality Management System ISO 9001:

2008 certification and for Environment Management System ISO 14001: 2004

certification.

Products

VialsPharmaceutical industry use these Clear glass Vials of various shapes and sizes

to package injectibles, eye-drops, ear-drops and other life saving drugs.

LiquorLiquor manufacturing industry use these bottles with capacities ranging from

60ml to 1000 ml in various shapes and sizes for packaging Whisky, Gin,

Brandy, Vodka and other liquor products. Industry uses these bottles with

capacities ranging from 60ml to 1000ml in various shapes.

Cosmetics

Cosmetics industry uses these clear bottles for packaging products like nail-

polish, perfumes, hair oil and toiletries that look vibrant in different colours.

Industry uses these bottles with capacities ranging from 60ml to 1000ml in

various shapes.

Food and Beverages

Food and Beverages industry uses these bottles to package consumableproducts. The clear transparency of the Bottles gives shelf appeal to the

products. Industry uses these bottles with capacities ranging from 60ml to

1000ml in various shapes.


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Clients

Local clients United Spirits Limited Pernod Ricard Tilaknagar Industries Amul Bajaj Consumer Care Champagne Indage

Fosbel Sarabhai Zydus Denischem Khemani Distilleries Shiva Distilleries Empee Distileries

Export (International) Mohd Ali - Yemen

Dabur - Dubai Bentos Pharma - Nigeria Saga Concept - Beirut Al-Maya Dubai Weikfield International Dubai


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Financials Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 1563.04 1769.19 2034.57 2278.72

Other Income 0.12 0.20 0.22 0.24

Total Income 1563.16 1769.39 2034.79 2278.96

Expenditure -1221.20 -1312.62 -1505.58 -1679.41

Operating Profit 341.96 456.77 529.21 599.54

Interest -46.53 -36.34 -32.71 -34.34

Gross profit 295.43 420.43 496.50 565.20

Depreciation -98.62 -82.27 -88.85 -97.74

Profit Before Tax 196.81 338.16 407.65 467.47

Tax -38.30 -95.61 -115.77 -130.89

Profit After Tax 158.51 242.55 291.88 336.58

Equity capital 53.75 53.75 53.75 53.75

Reserves 528.02 723.72 1015.60 1352.17

Face value 1.00 1.00 1.00 1.00

EPS 2.95 4.51 5.43 6.26


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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E

Description 3m 3m 3m 3m

Net sales 415.28 463.22 510.36 525.67

Other income 0.00 0.00 0.11 0.00

Total Income 415.28 463.22 510.47 525.67

Expenditure -317.27 -342.87 -370.14 -392.15

Operating profit 98.01 120.35 140.33 133.52

Interest -9.60 -8.32 -6.86 -7.20

Gross profit 88.41 112.03 133.47 126.32

Depreciation -20.94 -20.63 -20.24 -21.25

Profit Before Tax 67.47 91.40 113.23 105.07

Tax -16.58 -29.53 -32.28 -29.63

Profit After Tax 50.89 61.87 80.95 75.44

Equity capital 53.75 53.75 53.75 53.75

Face value 1.00 1.00 1.00 1.00

EPS 0.95 1.15 1.51 1.40


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Key Ratios

Particulars FY11 FY12 FY13E FY14E

No. of Shares(in mn) 53.75 53.75 53.75 53.75

EBITDA Margin (%) 21.88% 25.82% 26.01% 26.31%

PBT Margin (%) 12.59% 19.11% 20.04% 20.51%

PAT Margin (%) 10.14% 13.71% 14.35% 14.77%

P/E Ratio (x) 5.41 3.53 2.94 2.55

ROE (%) 27.25% 31.20% 27.29% 23.94%

ROCE (%) 48.14% 47.81% 43.01% 38.91%

Debt Equity Ratio 0.57 0.45 0.34 0.27

EV/EBITDA (x) 2.51 1.88 1.62 1.43

Book Value (Rs.) 10.82 14.46 19.89 26.16

P/BV 1.47 1.10 0.80 0.61

Charts:

Net Profit & PAT


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P/E Ratio (X)

Debt Equity Ratio


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EV/EBITDA(X)

P/BV Ratio


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Outlook and Conclusion

At the current market price of Rs.15.25, the stock is trading at 2.94 x FY13E

and 2.55 x FY14E respectively.

Earning per share (EPS) of the company for the earnings for FY13E and FY14E

is seen at Rs.5.43 and Rs.6.26 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 13% and

29% over 2011 to 2014E respectively.

On the basis of EV/EBITDA, the stock trades at 1.62 x for FY13E and 1.43 x for

FY14E.

Price to Book Value of the stock is expected to be at 0.80 x and 0.61 x

respectively for FY13E and FY14E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend BUY in this particular scrip with a target price of

Rs.18.00 for Medium to Long term investment.

Industry Overview

Indian glass packaging industry is poised to grow at 12 - 15% compounded annual

growth rate [CAGR]. It is buoyant due to the growth shown by its user industries

especially the liquor sector, which is projected to sustain 12% CAGR on account of

changing lifestyles and rise in disposable incomes. 65% of the Indian demand for glass

bottles arises from Southern & Western Indian regions. The Indian Pharmaceutical

domestic market is currently growing at CAGR of 12 - 15%. The retail food sector in

India is expected to double by 2025 on account of a growing health consciousness

resulting in the increased use of glass packaging. In India, 10-12% of all food and

beverages are packed in glass containers as against 40-50% in developed economics.

Beverages and processed food industries are expected to have 14-15% CAGR. The

demand for Glass Containers is expected to increase driven by growing consumer

awareness about health and hygiene and eco friendly products.


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The global glass packaging industry is about $30 bn in size and out of this $28 bn is

the moulded glass industry. It can be further divided into Cosmetics and Perfumery

(8.2%), Pharma (7.1%) and Specialty F&B (4.6%). Balance 80% is Food and Beverages.

PGL is present in the niche high value added flacconage segment and thus it has an

addressable market of 20% of the total market size. The Indian glass industry is

pegged at $2.7 billion. Glass consumption growth is expected in construction (9 per

cent), automotive (19 per cent), consumer goods (10-12 per cent) and pharmaceuticals

(12-15 per cent) sectors.

As per industry sources, the Indian packaging industry was valued at around $14 bn

in the year 2009 and it registered a growth rate of more than 15% annually in the last

few years. Within the packaging industry, glass containers occupy an important

position with a share of ~9%. Despite the development of other packaging alternatives,

glass, being chemically inert and transparent, is most suitable for liquor,

pharmaceutical, life-saving drugs and food articles.

The market for glass containers in India has been growing at more than 10% during

the last few years. Despite this growth, Indias per capita consumption of glass


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over the next 12-18 months. For this, it would set up a new plant at Naidupeta in

Andhra Pradesh and expand capacity of its Nasik plant.

City-based AGI Glaspac will also invest Rs 600 crore to double its capacity at its

Bhongir plant here to 900 tpd by January 2012, company president Arun Kumar

Dukkipati said.

The per capita glass consumption in India is 1.2 kg, compared with 8-9 kg in

developed countries and 30-35 kg in the US.

The flat glass market, at present, stands at 4,500 tpd and is growing at 16 per cent

year-on-year while the container glass is at 7,000 tpd and contributes 55-60 per cent

to the overall glass market. Other glass (lighting, bangles, and beads) market is at

1,500 tpd.

Around 1.3 pounds waste is generated per person per day in India, whereas it is 4.6

pounds in the US. The glass recycling was very high in developed countries at 70-80

per cent. In Denmark, 98 per cent of bottles are refillable and 98 per cent of those are

returned to consumers. However, in India, only 40-45 per cent of the finished

products come for recycling and the rest goes for land filing.

________________ ____ _________________________

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitationfor the purchase or sale of any financial instrument or as an official confirmation of anytransaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of itsaffiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as thebasis for an investment decision.


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First Call- Haldyn Glass Gujarat Ltd Detailed Report

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