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D u l l q u a r t e r a f t e r a b um p e r F Y 1 1…
JBF Industries Ltd’s (JBF) Q1FY12 numbers were ahead of our estimates
on the revenue and EBITDA front; however, on the PAT front they were in
line with our estimates. Consolidated net sales increased 12.5% YoY to
| 1,590.6 crore as against our estimate of | 1,293.4 crore. Domestic and
international volumes were in line with our estimates (we modelled ~
12% blended volume de-growth); blended realisations increased ~35%
YoY (higher than our estimate). Key raw material prices (PTA, MEG) too
increased ~35% YoY. As a result, JBF was able to maintain its EBITDA
margin at 10.1% in Q1FY12 versus 11.0% in Q1FY11 and 14.4% in
Q4FY11. Due to higher forex and derivative losses of | 45.4 crore (| 13.0
crore in Q1FY11), JBF witnessed a YoY PAT de-growth of 4.8% to | 52.3
crore (I-direct estimate: | 49.4 crore). We have trimmed our FY12E and
FY13E estimates considering factors like plant shutdowns due to raw
material availability issues and slowdown in demand due to softening
cotton prices (which reduces substitution demand). Also due to inventory
pile up we expect some pressure on the operating margin and have
reduced our EBITDA margin expectations from 14.6% to 12.2% and
13.6% to 12.6% for FY12E and FY13E respectively.
ƒ Capacity expansion on track
JBF’s expansion plans seem to be on track. During Q1FY12, the
domestic chips capacity has increased by 58,000 tonnes per annum
(TPA) to 6,08,800 TPA. Also the domestic POY (polyester oriented
yarn) capacity has also increased from 1,72,000 TPA in FY11 to
2,45,000 TPA.
V a l u a t i o n
FY11 was an exceptionally good year for JBF backed by strong
realisations across all products, more so in the BOPET films segment.
However Q1FY12 does not seem to reflect the same story and hence we
have reduced our EBITDA margin and EPS estimates for FY12E and
FY13E. Bearing in mind a weak outlook, lowered estimates, pressure on
the balance sheet and increasing interest burden due to the capex plans,
we have further downgraded our target price from | 185 to | 154 (based
on an average of 3.0x FY13E EPS and 0.4x FY13E book value). We have a
BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D u l l q u a r t e r a f t e r a b um p e r F Y 1 1…
JBF Industries Ltd’s (JBF) Q1FY12 numbers were ahead of our estimates
on the revenue and EBITDA front; however, on the PAT front they were in
line with our estimates. Consolidated net sales increased 12.5% YoY to
| 1,590.6 crore as against our estimate of | 1,293.4 crore. Domestic and
international volumes were in line with our estimates (we modelled ~
12% blended volume de-growth); blended realisations increased ~35%
YoY (higher than our estimate). Key raw material prices (PTA, MEG) too
increased ~35% YoY. As a result, JBF was able to maintain its EBITDA
margin at 10.1% in Q1FY12 versus 11.0% in Q1FY11 and 14.4% in
Q4FY11. Due to higher forex and derivative losses of | 45.4 crore (| 13.0
crore in Q1FY11), JBF witnessed a YoY PAT de-growth of 4.8% to | 52.3
crore (I-direct estimate: | 49.4 crore). We have trimmed our FY12E and
FY13E estimates considering factors like plant shutdowns due to raw
material availability issues and slowdown in demand due to softening
cotton prices (which reduces substitution demand). Also due to inventory
pile up we expect some pressure on the operating margin and have
reduced our EBITDA margin expectations from 14.6% to 12.2% and
13.6% to 12.6% for FY12E and FY13E respectively.
ƒ Capacity expansion on track
JBF’s expansion plans seem to be on track. During Q1FY12, the
domestic chips capacity has increased by 58,000 tonnes per annum
(TPA) to 6,08,800 TPA. Also the domestic POY (polyester oriented
yarn) capacity has also increased from 1,72,000 TPA in FY11 to
2,45,000 TPA.
V a l u a t i o n
FY11 was an exceptionally good year for JBF backed by strong
realisations across all products, more so in the BOPET films segment.
However Q1FY12 does not seem to reflect the same story and hence we
have reduced our EBITDA margin and EPS estimates for FY12E and
FY13E. Bearing in mind a weak outlook, lowered estimates, pressure on
the balance sheet and increasing interest burden due to the capex plans,
we have further downgraded our target price from | 185 to | 154 (based
on an average of 3.0x FY13E EPS and 0.4x FY13E book value). We have a
BUY rating on the stock.
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