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A c c r u e s b e n e f i t s o f e n h a n c e d c a p a c i t i e s …
Alok Industries’ (Alok) Q1FY12 results were ahead of our expectations on
the revenue and operating margin front. Net sales increased 49.7% YoY
to | 1,644.9 crore (I-direct estimate: | 1,483.6 crore) led by strong volume
and value growth across segments. Exports registered growth of 38.5%
YoY to | 602.2 crore. The company reported an EBITDA margin of 27.5%
against our expectation of 24.7%. The EBITDA margin declined by 224
bps YoY due to increased raw material costs and higher share of
polyester segment (low margin business). Alok’s Q1FY12 PAT stood at |
57.8 crore in line with our estimate of | 57.1 crore. Higher interest cost
and increased depreciation led to PAT growth of 24.2% YoY. The
company has been able to monetise some of its real estate portfolio and
is hopeful of being free cash flow positive by FY13E. The management
also envisages debt reduction over the next three years and targets a
debt/equity of 1.5x by FY16E (from the current levels of 3.1x).
ƒ Real estate monetisation begins
Alok has commenced its real estate monetisation process and has
contracted three deals, thus far. Alok expects to garner | 1,800–
2,000 crore through real estate monetisation over the next three
years. Of this, ~ | 1,400 crore is likely to be received in FY12,
another | 200 crore is likely to be realised in FY13E while the
balance would flow in by FY14E.
ƒ Operating leverage to kick in
Alok has completed a large part of its capex over the last few years.
We believe optimum utilisation of expanded capacities and reduced
costs will augur well for the company.
V a l u a t i o n
Alok has continued its robust performance for the last three to four years
on the back of expanded capacities. While revenues grew at a CAGR of
37%, PAT growth was a healthy 23% during FY07-11. Going forward, we
expect topline and bottomline to grow at a CAGR of 22% and 21%,
respectively, during FY11-13E. We value the stock at 3.8x FY13E EPS to
arrive at a target price of | 28. We have a BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A c c r u e s b e n e f i t s o f e n h a n c e d c a p a c i t i e s …
Alok Industries’ (Alok) Q1FY12 results were ahead of our expectations on
the revenue and operating margin front. Net sales increased 49.7% YoY
to | 1,644.9 crore (I-direct estimate: | 1,483.6 crore) led by strong volume
and value growth across segments. Exports registered growth of 38.5%
YoY to | 602.2 crore. The company reported an EBITDA margin of 27.5%
against our expectation of 24.7%. The EBITDA margin declined by 224
bps YoY due to increased raw material costs and higher share of
polyester segment (low margin business). Alok’s Q1FY12 PAT stood at |
57.8 crore in line with our estimate of | 57.1 crore. Higher interest cost
and increased depreciation led to PAT growth of 24.2% YoY. The
company has been able to monetise some of its real estate portfolio and
is hopeful of being free cash flow positive by FY13E. The management
also envisages debt reduction over the next three years and targets a
debt/equity of 1.5x by FY16E (from the current levels of 3.1x).
ƒ Real estate monetisation begins
Alok has commenced its real estate monetisation process and has
contracted three deals, thus far. Alok expects to garner | 1,800–
2,000 crore through real estate monetisation over the next three
years. Of this, ~ | 1,400 crore is likely to be received in FY12,
another | 200 crore is likely to be realised in FY13E while the
balance would flow in by FY14E.
ƒ Operating leverage to kick in
Alok has completed a large part of its capex over the last few years.
We believe optimum utilisation of expanded capacities and reduced
costs will augur well for the company.
V a l u a t i o n
Alok has continued its robust performance for the last three to four years
on the back of expanded capacities. While revenues grew at a CAGR of
37%, PAT growth was a healthy 23% during FY07-11. Going forward, we
expect topline and bottomline to grow at a CAGR of 22% and 21%,
respectively, during FY11-13E. We value the stock at 3.8x FY13E EPS to
arrive at a target price of | 28. We have a BUY rating on the stock.
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