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Roofing
• For Q3FY2011, we estimate Y‐o‐Y revenue and PAT de‐growth for Hyderabad Ind and Visaka Ind. We expect Everest Ind
to however buck this trend, and show out‐performance verses industry
• For the roofing industry, FY11 continues to be the year of consolidation after dream run of last two fiscals. Volume
demand and realizations in the peak season of June quarter were subdued while September quarter is seasonally the
weakest due to rains and remained sluggish
• We prefer Everest Industries due to improvement in the Asbestos operations and expected break even in Prefabricated
Steel Building business
Roofing – Top Picks
Everest Industries
• Second largest player present across value chain in the roofing segment right from the Asbestos Cement Fibre Sheet
(CFS) to a complete Building Solution Player
• Marked improvement witnessed in Building Products division (80‐83% of the revenue) as new plant is stabilized which
has reduced rejections and will save raw mat cost subsequently improving the margins
• Prefabricated Steel Building division is at an inflection point (18‐20% of the revenue) with good order book of Rs. 1.3 bn
(1x FY10 segment revenue). This segment is expected to break even in Q3FY11 augurs well in margin improvement
• Well planned distribution leading to a pan India reach with five manufacturing units and more than 6000 retailers
• Remains our top pick in the sector based on comfortable financial leverage (0.6xFY11E), declining interest costs, well
managed operating cash flows and impressive return ratios (FY11E ROE projected at 27% and ROCE at 24%)
• Currently trades at 5.5x and 4.9x FY11E and FY12E earnings respectively. We reiterate a BUY with target price of Rs. 313
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