Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Higher capacity utilisation to drive sales growth: Surya Roshni
has expanded its capacity across products in the lighting and
steel divisions, including a capacity increase of 358% in compact
fluorescent lamps (CFL) and 29% in steel pipes. Higher utilisation
of this capacity is expected to result in high growth of 17.8%
CAGR in sales and 19.4% CAGR in operating profits over
FY2011-13E. Post the substantial capex, sales contribution from
the high-RoIC lighting division is expected to increase, thereby
increasing the company's RoCE from 10.7% to 12.7% over
FY2011-13E.
Strong brand name: Surya Roshni has a strong brand name
and substantial market share in the lighting industry. In the GLS
and FTL segments, the company has a market share of ~25.0%.
In the CFL segment, we expect the company to increase its market
share to 15.0% by FY2013 from 10.7% in FY2010. The company
maintains an advertisement spend of ~2.0% of the lighting
division's top line. The company has a strong distributor network
as well, with presence in over 100,000 retail outlets.
Promoters are hiking their stake substantially: Surya Roshni's
promoters have subscribed to three rounds of warrant
allocations, amounting to a total investment of `194cr. The three
rounds of warrants were allocated at a price of `59/share, `83/
share and `111/share. The first two tranches have already been
converted into equity, increasing the promoters' stake to 55.0%
from 24.1%. In the consequent open offer, the promoters'
shareholding increased further to 62.3%. We expect the
remaining warrants to be converted by FY2012, which will
increase the promoters' stake further.
PAT growth boosted by lower interest, higher margins: Going
ahead, the company's net debt-to-equity is expected to reduce
to 0.8x in FY2013E from 1.2x in FY2011, thereby saving on
interest cost. Besides, margins would improve because of higher
contribution from the high-margin lighting division. As a result,
we expect PAT to increase at a 30.3% CAGR to `113cr by
FY2013E.
Currently trading at attractive valuations: At the CMP, the stock
is trading at attractive valuations of 3.9x FY2013E EPS and 0.5x
FY2013E BV. We have valued the company using the SOTP
method to arrive at a target price of `137. We have a Buy rating
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Higher capacity utilisation to drive sales growth: Surya Roshni
has expanded its capacity across products in the lighting and
steel divisions, including a capacity increase of 358% in compact
fluorescent lamps (CFL) and 29% in steel pipes. Higher utilisation
of this capacity is expected to result in high growth of 17.8%
CAGR in sales and 19.4% CAGR in operating profits over
FY2011-13E. Post the substantial capex, sales contribution from
the high-RoIC lighting division is expected to increase, thereby
increasing the company's RoCE from 10.7% to 12.7% over
FY2011-13E.
Strong brand name: Surya Roshni has a strong brand name
and substantial market share in the lighting industry. In the GLS
and FTL segments, the company has a market share of ~25.0%.
In the CFL segment, we expect the company to increase its market
share to 15.0% by FY2013 from 10.7% in FY2010. The company
maintains an advertisement spend of ~2.0% of the lighting
division's top line. The company has a strong distributor network
as well, with presence in over 100,000 retail outlets.
Promoters are hiking their stake substantially: Surya Roshni's
promoters have subscribed to three rounds of warrant
allocations, amounting to a total investment of `194cr. The three
rounds of warrants were allocated at a price of `59/share, `83/
share and `111/share. The first two tranches have already been
converted into equity, increasing the promoters' stake to 55.0%
from 24.1%. In the consequent open offer, the promoters'
shareholding increased further to 62.3%. We expect the
remaining warrants to be converted by FY2012, which will
increase the promoters' stake further.
PAT growth boosted by lower interest, higher margins: Going
ahead, the company's net debt-to-equity is expected to reduce
to 0.8x in FY2013E from 1.2x in FY2011, thereby saving on
interest cost. Besides, margins would improve because of higher
contribution from the high-margin lighting division. As a result,
we expect PAT to increase at a 30.3% CAGR to `113cr by
FY2013E.
Currently trading at attractive valuations: At the CMP, the stock
is trading at attractive valuations of 3.9x FY2013E EPS and 0.5x
FY2013E BV. We have valued the company using the SOTP
method to arrive at a target price of `137. We have a Buy rating
on the stock.
No comments:
Post a Comment