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International business drives topline…
Nitin Fire Protection Industries’ results were ahead of our expectation as
sales jumped 167.1% to | 155.5 crore on the back of a rise in volumes
from international sales. International sales grew ~400% to | 122.1 crore
led by exports from the Middle East. EBITDA margins dipped a bit from
15.1% to 13.5% in the corresponding quarter. Interest cost increased by
41.5% to | 2.8 crore. Higher sales resulted in a 109% increase in net profit
to | 13.8 crore from | 6.6 crore in the corresponding quarter.
Highlights of the quarter
The company has acquired Dubai-based New Age LLC, a fire protection
engineering company that provides end-to-end solutions for fire
protection system, fire detection system, emergency lighting system and
water mist protection system. The company is engaged in projects for
municipal corporations, international airport, ports, telecommunication
cell sites and cement plants in Dubai.
Valuation
At the current market price of | 79, the stock is trading at 9.7x and 8.4x its
FY11 and FY12 estimated EPS of | 40.9 and | 47, respectively. With crude
prices recovering, sales of CNG cylinders are expected to improve. Also,
with higher demand growth seen in international markets, we believe
sales and margins would remain sustainable, going ahead. The only
concern would be efficient management of rising raw material prices,
which may have to be passed on to consumers. We are recommending
an ADD rating on the stock after valuing it at 9x its FY12E EPS of | 47.
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