Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NI's 23% sales CAGR in last five years is impressive and seems sustainable. Its ongoing
capex clearly indicates management's confidence in growth. NI's payback period on capex
have been impressive in the past; however the stock is expensive, given the near-term
earnings outlook. We downgrade to Hold.
NI has embarked on a US$500m capex plan to position itself for volume growth
At the recent analysts meeting, NI management said it had begun to expand its distribution
aggressively in smaller towns (460,000 outlets added in 2010), and these markets are
growing very strongly. We believe NI’s ongoing capex of US$500mn to increase capacities
across its product segments indicates the potential, and management confidence in driving a
faster growth going forward. NI’s domestic sales has grown at a CAGR of 23% in last 5
years, and we believe, it can conservatively sustain at least a 20% growth going forward.
We are unconcerned about NI’s rising capex and its payout implications
NI, in the last five years, has run up capex of Rs12.71bn and has generated Rs36.24bn of
cash from operations (after tax payouts). It has paid out dividends of Rs18bn in the last five
years, after paying Rs2.95bn to the government in corporate dividend tax. Based on
management indications, NI will run up capex of Rs22bn over the next two years, and we
expect it to generate cash of Rs20bn over the same period. We expect the company to
reduce the dividend payout from the five-year average of 81% to 55% over the next three
years. NI’s cash generation record is impressive and we expect the company to revert back
to zero debt status in the 3-4 years. The ongoing investment should, thus, significantly
improve NI’s earning power, given the company’s strong focus on penetrating smaller towns.
We downgrade to Hold, due to stretched near-term valuations
NI currently faces volatile raw material prices, coupled with the financial impact of higher capex
on near-term earnings. We cut our FY11-12F EPS by 5% and introduce FY13 estimates. We
expect FY11 growth to be subdued at 10%, but expect stronger growth of 24% beyond. We set
our DCF-based TP at Rs3,559.42.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NI's 23% sales CAGR in last five years is impressive and seems sustainable. Its ongoing
capex clearly indicates management's confidence in growth. NI's payback period on capex
have been impressive in the past; however the stock is expensive, given the near-term
earnings outlook. We downgrade to Hold.
NI has embarked on a US$500m capex plan to position itself for volume growth
At the recent analysts meeting, NI management said it had begun to expand its distribution
aggressively in smaller towns (460,000 outlets added in 2010), and these markets are
growing very strongly. We believe NI’s ongoing capex of US$500mn to increase capacities
across its product segments indicates the potential, and management confidence in driving a
faster growth going forward. NI’s domestic sales has grown at a CAGR of 23% in last 5
years, and we believe, it can conservatively sustain at least a 20% growth going forward.
We are unconcerned about NI’s rising capex and its payout implications
cash from operations (after tax payouts). It has paid out dividends of Rs18bn in the last five
years, after paying Rs2.95bn to the government in corporate dividend tax. Based on
management indications, NI will run up capex of Rs22bn over the next two years, and we
expect it to generate cash of Rs20bn over the same period. We expect the company to
reduce the dividend payout from the five-year average of 81% to 55% over the next three
years. NI’s cash generation record is impressive and we expect the company to revert back
to zero debt status in the 3-4 years. The ongoing investment should, thus, significantly
improve NI’s earning power, given the company’s strong focus on penetrating smaller towns.
We downgrade to Hold, due to stretched near-term valuations
NI currently faces volatile raw material prices, coupled with the financial impact of higher capex
on near-term earnings. We cut our FY11-12F EPS by 5% and introduce FY13 estimates. We
expect FY11 growth to be subdued at 10%, but expect stronger growth of 24% beyond. We set
our DCF-based TP at Rs3,559.42.
No comments:
Post a Comment