INDIAN HUME PIPE CO - Myirisbreport.myiris.com/firstcall/INDHUMPC_20130613.pdfThe Indian Hume Pipe...
Transcript of INDIAN HUME PIPE CO - Myirisbreport.myiris.com/firstcall/INDHUMPC_20130613.pdfThe Indian Hume Pipe...
CMP 95.50
Target Price 105.00
ISIN: INE323C010130
June 13th
, 2013
INDIAN HUME PIPE CO.LTD Result Update: Q4 FY13
BUYBUYBUYBUY
Stock Data
Sector Cement Products
BSE Code 504741
Face Value 2.00
52wk. High / Low (Rs.) 146.70 / 86.25
Volume (2wk. Avg ) 600
Market Cap ( Rs in mn ) 2313.49
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY13A FY14E FY15E
Net Sales 6957.91 8001.60 8961.79
EBITDA 661.74 774.17 894.07
Net Profit 228.44 287.26 357.06
EPS 9.43 11.86 14.74
P/E 10.13 8.05 6.48
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX INDIAN HUME PIPE CO. LTD
SYNOPSIS
Indian Hume Pipe Ltd is manufacturing,
popularizing and marketing Hume Pipes and
allied products.
Indian Hume Pipe supplies concrete Railway
sleepers to Indian Railways.
Indian Hume Pipe Company Ltd has have
recommended Dividend of Rs. 2.20/- per
share on Equity Shares of the Company of
the face value of Rs. 2/- each for the
financial year ended March 31, 2013.
The company’s National Rifle Division at
Ahmedabad introduced 2 models i.e., 0.177
Compressed Air Rifle & 0.177 Compressed Air
Pistol.
Indian Hume purchased land near Dhule,
Maharashtra for setting up pipe
manufacturing factory and the production
commence during the year.
During the year, the plants produced 41.78
Kms of BWSC pipes valued at Rs.3,019.49 Lacs
and the total number of factories of the
Company as at the end of period stands at 22.
Net Sales and PAT of the company are
expected to grow at a CAGR of 20% and 59%
over 2012 to 2015E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Indian Hume Pipe Co. Ltd 95.50 2313.49 9.43 10.13 0.98 110.00
Everest Industries 171.00 2597.00 34.57 4.95 0.86 70.00
Visaka Industries Ltd 93.00 1476.90 31.92 2.91 0.45 50.00
HIL 344.75 2572.70 81.26 4.24 0.65 185.00
Investment Highlights- Standalone
Results updates- Q4 FY13,
The Indian Hume Pipe Co. Ltd manufacturing,
popularizing and marketing Hume Pipes and allied
products, reported its financial results for the
quarter ended 31st, ,March 2013. The fourth quarter
witnesses a healthy increase in overall sales as well
as profitability of the company.
Months Mar-13 Mar-12 % Change
Net Sales 2026.14 1544.59 31.18%
PAT 48.04 29.89 60.72%
EPS 1.98 1.23 60.72%
EBITDA 164.43 120.72 36.21%
The company’s net profit jumps to Rs. 48.04 million against Rs. 29.89 million in the corresponding quarter
ending of previous year, an increase of 60.72 %. Revenue for the quarter rose 31.18 % to Rs. 2026.14 million
from Rs. 1544.59 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 1.98 a share during the quarter, registering 60.72 % increase over previous year period.
Profit before interest, depreciation and tax is Rs. 164.43 millions as against Rs. 120.72 millions in the
corresponding period of the previous year.
Expenditure :
Break up of Expenditure
Rs in millions
Q4 FY13 Q4 FY12
Cost of Material Consumed 279.08 190.54
Construction Expenses 1324.90 886.23
Other manufacturing Expenses 18.26 26.48
Works & Office Establishment 68.06 65.30
Employee Benefit Expenses 100.52 91.91
Depreciation & Amortization 20.89 17.83
Other Expenses 102.39 116.87
Segment Revenue
Latest Updates
Indian Hume Pipe Company Ltd has have recommended Dividend of Rs. 2.20/- per share (110%) on
2,42,23,585 Equity Shares of the Company of the face value of Rs. 2/- each for the financial year ended March
31, 2013 and Books of the Company will remain closed from July 12, 2013 to July 25, 2013 for the purpose of
Payment of Dividend & 87th Annual General Meeting of the Company to be held on July 25, 2013.
• Railway Sleepers
The Company has manufactured 82,828 sleepers amounting to Rs.1104.39 Lacs against the order received
from Ministry of Railway Board, New Delhi.
• Bar Wrapped Steel Cylinder (BWSC) pipes
The Company has received orders worth Rs.17, 798 Lacs for BWSC pipes and orders worth Rs.4, 291 Lacs for
PCCP pipes along with other civil works.
• National Rifle Division
The National Rifle Division at Ahmedabad has introduced two models namely 0.177 Compressed Air Rifle &
0.177 Compressed Air Pistol enable shooters to acquire efficiency in target shooting and gain recognition in
the State, National and International shooting competitions.
The Company has purchased land near Dhule, Maharashtra for setting up pipe manufacturing factory will
commence production during the current financial year.
Company Profile
The Indian Hume Pipe Co. Ltd is established in the year 1926 with object of manufacturing, popularizing and
marketing Hume Pipes and allied products. Over a period of time, it has developed Prestressed Concrete Pipes
(Non-Cylinder), Prestressed Concrete Cylinder Pipes, Bar Wrapped Steel Cylinder Pipes, Hume Steel Pipes,
Welded Steel Penstocks, Prestressed Concrete Railway Sleepers and specialized in execution of Turnkey Water
Supply and Sewerage Projects.
The Company has wide network of over 20 factories and over 100 projects under execution in India. It has
earned a reputation for excellence through employing modern technology, stringent quality control measures,
timely execution and continuous Research and Development. As a result the company's products have found
acceptance in highly competitive markets. The company's Expertise is at work right from designing of custom
made pipes to the company's total engineering packages for pipeline projects.
The Company is actively involved in the strengthening of the nation's infrastructure in varied fields viz. Water
Supply, Irrigation, Drainage, Power Generation and Rail transport by executing numerous turnkey pipeline
projects for Water Supply, Sewerage and Hydroelectric Power Generation and supplying millions of Concrete
Sleepers for the track modernization of Railways in India. IHP has also executed projects in neighboring
countries like Nepal, Srilanka, Burma, Malaysia and Republic of Iraq.
� Products
• Prestressed Concrete pipe
• Prestressed concrete cylinder pipe
• Bar wrapped steel cylinder pipe
• Steel pipe
• Reinforced cement concrete pipe
• Penstock pipe
• Prestressed concrete monoblock sleeper for railways
• Air rifles & pistols
� Projects
• Water Supply
The business of executing turnkey projects for the supply of drinking water and irrigation water to many
parts of India has completed & are executing a number of prestigious turnkey projects involving various
components such as intake wells, electrical transmission lines, pumping stations with pumping machineries,
water treatment plants, water transmission mains, ground level reservoirs, elevated service reservoirs along
with supplying, laying, jointing, testing, commissioning of various pipe materials along with allied civil works
• Drainage /Sewerage
The setting up sewer and drainage pipelines for cities and towns has completed and are executing a number
of projects involving various components of such schemes such as pumping stations with pumping
machineries, manhole construction, supplying and installing of sewer pipeline along with allied civil works,
pipe jacking. During the last eight decades, it supplied precast concrete pipes to 80 such projects undertaken
by us around the country and 65,000 km to various projects taken up by other civil contractors.
The pipe material, because of its inherent qualities such as durability, strength, economy etc. soon found
acceptance and still enjoys the confidence of government authorities. These pipes have been used for water
supply, sewerage, drainage, irrigation road culverts, etc.
• Power
The company is contributing to the power sector by designing, fabricating and installing, penstock pipes for
hydro electric projects and cooling water pipelines for thermal power plants.
Hydro Power Projects
A high pressure steel pipeline that conveys water from storage reservoir to the turbines to generate Hydro
power which is one of the vital sections of a hydro electric power project. The design, fabrication and
erection of penstock pipes demand a high degree of skill & quality control. Penstocks and even the
technicians had to be brought from abroad but however in 1937 the company decided to take up the
challenge of manufacturing penstock in India and offered its services to the madras government for the
prestigious Papanasam Hydel Project.
Thermal Power Projects
The Company installs and fabricates cooling water pipelines for Thermal & Combined cycle power plants has
successfully designed, fabricated & installed cooling water pipelines for Asea Brown Boveri Ltd for Anta and
Gandhar Combined Cycle power plant, for Tata Electric Companies for Trombay Thermal Power station unit
6 and Trombay Combined Cycle Power Plant
• Manufacturing
The company has successfully managed operations overseas and delivered concrete pipes and sleepers in
Iraq and Burma.
� Customers
• Central Government
� Indian Railways
� Indian Railway Construction Company (IRCON)
� Rail India Technical And Engineering Services (RITES)
� Bharat Heavy Electricals Limited (BHEL)
� National Hydro Power Corporation (NHPC)
� National Thermal Power Corporation (NTPC)
� Indian Farmers Fertiliser Co Operative Limited (IFFCO)
� Satlaj Jal Vidyut Nigam Limited (SJVN)
� Private sector
Financial Highlight- Standalone
Balance sheet as at March31st, 2013
INDIAN HUME PIPE CO. LTD. (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at 31st March, 2012. FY-12A FY-13 FY-14E FY-15E
SOURCES OF FUNDS
Shareholder's Funds
Capital 48.45 48.45 48.45 48.45
Reserves and Surplus 2156.05 2322.17 2461.50 2584.58
Sub-Tota-l Net worth 2204.50 2370.62 2509.95 2633.03
Non Current Liabilities
Differed Tax Liabilities 0.05 11.45 12.60 13.22
Other Long term liabilities 156.78 230.86 288.58 331.86
Long term Provisions 13.03 16.72 19.06 20.59
Sub-Total- Non Current liabilities 169.86 259.03 320.23 365.67
Current Liabilities
Short term borrowings 1485.10 1763.74 2028.30 2231.13
Trade payables 1204.50 1483.78 1632.16 1730.09
Other Current liabilities 1666.11 1550.89 1473.35 1547.01
Short term Provisions 90.40 94.43 92.54 93.47
Total Liabilities (a + b + c) 6820.47 7522.49 8056.53 8600.40
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets 738.59 806.01 854.37 880.00
Non- Current Investments 15.19 17.81 19.41 20.38
Long Term loans and advances 69.51 84.37 92.81 88.17
Other non-current investments 181.60 232.98 291.23 334.91
Sub-Total-Non-Current Assets (d) 1004.89 1141.17 1257.82 1323.46
Current Assets
Inventories 2920.40 3152.79 3310.43 3409.74
Trade receivables 1395.18 1631.58 1839.70 2119.13
Cash and Bank Balances 266.45 212.24 180.40 162.36
Short-terms loans & advances 1227.67 1381.96 1464.88 1582.07
Other current assets 5.88 2.75 3.30 3.63
Sub-Total- Current Assets (e) 5815.58 6381.32 6798.71 7276.93
Total Assets (d+e ) 6820.47 7522.49 8056.53 8600.39
Annual Profit & Loss Statement for the period of 2012 to 2015E
Value(Rs.in.mn) FY12 FY13 FY14E FY15E
Description 12m 12m 12m 12m
Net Sales 5171.69 6957.91 8001.60 8961.79
Other Income 85.56 52.02 67.63 94.68
Total Income 5257.25 7009.93 8069.22 9056.46
Expenditure -4815.53 -6348.19 -7295.06 -8162.40
Operating Profit 441.72 661.74 774.17 894.07
Interest -236.80 -253.67 -268.89 -279.65
Gross profit 204.92 408.07 505.28 614.42
Depreciation -69.44 -73.99 -76.21 -80.78
Profit Before Tax 135.48 334.08 429.07 533.64
Tax -46.89 -105.64 -141.81 -176.58
Profit After Tax 88.59 228.44 287.26 357.06
Extraordinary Items 70.66 0.00 0.00 0.00
Net Profit 159.25 228.44 287.26 357.06
Equity capital 48.45 48.45 48.45 48.45
Reserves 2156.10 2322.17 2461.50 2584.58
Face value 2.00 2.00 2.00 2.00
EPS 6.57 9.43 11.86 14.74
Quarterly Profit & Loss Statement for the period of 30th September, 2013 to 30th June, 2013E
Value(Rs.in.mn) 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13E
Description 3m 3m 3m 3m
Net sales 1739.77 1638.67 2026.14 1985.62
Other income 5.62 6.91 5.16 15.74
Total Income 1745.39 1645.58 2031.30 2001.36
Expenditure -1570.63 -1492.96 -1866.87 -1811.08
Operating profit 174.76 152.62 164.43 190.27
Interest -65.73 -66.06 -67.16 -65.82
Gross profit 109.03 86.56 97.27 124.46
Depreciation -17.42 -20.09 -20.89 -18.80
Profit Before Tax 91.61 66.47 76.38 105.66
Tax -22.38 -22.30 -28.34 -33.76
Net Profit 69.23 44.17 48.04 71.90
Equity capital 48.45 48.45 48.45 48.45
Face value 2.00 2.00 2.00 2.00
EPS 2.86 1.82 1.98 2.97
Ratio Analysis
Particulars FY12 FY13 FY14E FY15E
EPS (Rs.) 6.57 9.43 11.86 14.74
EBITDA Margin (%) 8.54% 9.51% 9.68% 9.98%
PBT Margin (%) 2.62% 4.80% 5.36% 5.95%
PAT Margin (%) 1.71% 3.28% 3.59% 3.98%
P/E Ratio (x) 14.53 10.13 8.05 6.48
ROE (%) 4.02% 9.64% 11.44% 13.56%
ROCE (%) 13.85% 17.80% 18.74% 20.04%
Debt Equity Ratio 0.67 0.74 0.81 0.85
EV/EBITDA (x) 8.00 5.84 5.38 4.90
Book Value (Rs.) 91.00 97.86 103.61 108.69
P/BV 1.05 0.98 0.92 0.88
Charts
Outlook and Conclusion
� At the current market price of Rs.95.50, the stock P/E ratio is at 8.05 x FY14E and 6.48 x FY15E respectively.
� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.11.86 and Rs.
14.74 respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 59% over 2012 to 2015E
respectively.
� On the basis of EV/EBITDA, the stock trades at 5.38 x for FY14E and 4.90 x for FY15E.
� Price to Book Value of the stock is expected to be at 0.92 x and 0.88 x respectively for FY14E and FY15E.
� We recommend ‘BUY’ in this particular scrip with a target price of Rs.105.00 for Medium to Long term
investment.
Industry Overview
Cement is one of the core industries which plays a vital role in the growth and development of a nation. The
industry occupies an important place in the Indian economy. India ranks as the second largest producer of
quality cement in the world.
There are 139 large cement plants and over 365 mini cement plants in India. The country has a total of 40
players in the industry currently.
The demand for cement, being a derived one, depends mainly on the industrial activities, real estate business,
construction activities and investment in the infrastructure sector. With the ever-increasing requirement for
infrastructure, in addition to the onset of various Special Economic Zones (SEZs) being developed across the
country, there is a huge demand for cement. India's 330 million tonne (MT) cement industry grew by 6.4 per cent
in FY12, on back of robust demand revival in the second half of the year. The industry sold 223.02 MT of the
building material, compared with 209.5 MT in FY11.
"India's cement market is expected to see demand growth rate double and pricing power improve in FY13-14,"
as per a research report by Anand Rathi.
Market Size
The cement and gypsum products sector has attracted foreign direct investments (FDI) worth US$ 2,618.30
million between April 2000 to August 2012, according to the data published by the Department of Industrial
Policy and Promotion (DIPP).
The demand for cement is expected to grow at 10 per cent over 2011, as per ACC Ltd's annual report. India's total
installed capacity of cement stood at 320 million tonnes per annum (MTPA).
The cement industry plans to add new capacity of about 71 MT in the next two financial years. At present, it has
an installed capacity of over 315 MT to cater to the demand of about 230 MT.
"It is anticipated that the cement industry players will continue to increase their annual cement output in coming
years and the country's cement production will grow at a compound annual growth rate (CAGR) of around 12 per
cent during 2011-12 - 2013-14 to reach 303 MMT," according to a RNCOS report titled 'Indian Cement Industry
Forecast to 2012'.
Investments
• Cement Corporation of India (CCI) plans to set up a cement grinding unit with an installed capacity of 82,500
tonnes per annum, on a single shift basis at a cost of Rs 39.68 crore (US$ 7.18 million) in district of Cachar,
Assam
• German cement major Heidelberg and domestic firms including Ultratech and Reliance Cements have evinced
interest to be the joint venture (JV) partner in the state-run Rashtriya Ispat Nigam's proposed Rs 1,000 crore
(US$ 180.31 million) 3 MTPA cement plant at Vizag
• Reliance Cement Company Pvt Ltd (RCC), a subsidiary of Reliance Infrastructure Ltd, has commenced
production of cement from its first manufacturing unit at Butibori, Nagpur in Maharashtra. RCC is building
two cement plants with a total capacity of 10 MT in Madhya Pradesh and Maharashtra with associated
grinding plants
• India Cements has started the paper work on a brownfield expansion to add over three MT at two of its
cement plants in Tamil Nadu
• Kolkata-based real estate company Roofers Group will commission a 200 tonnes-a-day cement plant this
week at Lodhasuli in the Midnapore district of the State
• Total operational capacity of the North-East region's cement units is likely to exceed 7 MT in 2013-14 from 6
MT now. The projected compound annual cement demand growth rate for the region is around 20 per cent
for the next few years
• Ambuja Cements' integrated plant unit at Chandrapur, in Maharashtra, the Maratha Cement Works (MCW)
has bagged the gold award for the best safety systems at the Safety Excellence System Awards
Government Initiatives
India would require overall cement capacity of around 480 MT. This would mean the industry will have to add
another 150 MT of capacity during the period, according to the latest report from the working group on the
industry for the 12th Five Year Plan (2012-17).
Road Ahead
Indian cement majors, including ACC Ltd, Shree Cement Ltd and Ultratech, have signed a co-operation pact to
support low-carbon investments in India. The pact was signed in Geneva with member companies of the World
Business Council (WBC) for Sustainable Development's Cement Sustainability Initiative and International
Finance Corporation (IFC). The roadmap will pave a possible transition path for the Indian cement industry to
reduce its direct emissions by 18 per cent by 2050. This is the first roadmap to focus on one specific industrial
sector in a single country, as per a WBC release.
The initiatives taken by the Government of India to various infrastructure projects, road network and housing
activities has provided the required stimulus for growth of the cement industry in India.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. 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 it’s affiliates 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 the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods
A.Nagaraju Cement, Reality & Infra, Oil & Gas
Ashish.Kushwaha IT, Consumer Durable & Banking
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