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Quarterly Analysis
Essel Propack Global operations reported a jump in net sales 18.2% YoY and marginally down by 0.5% QoQ to Rs. 412 crs. The revenue was up on account of growth in all four regions comprising AMESA (12% YoY), Europe (49.1% YoY), EAP (16.9% YoY) and America (18.9% YoY), in Q4FY12.
The company reported a 12.7% YoY jump in EBITDA to the tune of Rs. 65 crs in Q4FY12 and down by 3% QoQ. The margin was 15.8% in Q4FY12 as compared to 16.5% in Q4FY11 and 16.2% in Q3FY12. The margin declined due to the jump in input cost and employee expenses.
The Net profit increased by 202.4% YoY to Rs. 25.4 cr and was up by 86.9% QoQ. The PAT margin was 6.2% in Q4FY12 as compared to 2.4% in Q4FY11 and 3.3% in Q3FY12. This was on account of forex gain of Rs. 3.54 crores in Q4FY12 as against forex loss of Rs. 0.5 crores in each of Q3FY12 and Q4FY11 and write back of income tax on account of merger of Ras Propack and Ras Extrusion.
The company had closed down the UK manufacturing facility and consolidated the laminated tube operations at the Poland unit. Relocation cost of Rs. 1.3 cr has been taken under the exceptional cost in the Q4FY12 result.
Guidance for FY13E: Management has maintained its guidance of 12% growth in FY13E led by two new large contracts each in Europe and AMESA. Management has further given a guidance of operating margin improvement by 200bps in FY13E led by reduction in scraps, rising average selling prices and stabilization in raw-material prices. Tax rate is expected to remain 35-37% in FY13E. The PAT margin is expected to be around 4%.
Valuation & Recommendation
Essel Propack posted good revenue increase across different region led by volume growth but continued to face margin pressure owing to high input cost, rupee depreciation and rising losses in Europe. We feel that the company will maintain its volume growth momentum in all the four geographies going forward led by richer product mix and addition of new customers. We expect margin to improve from hereon led by higher price realization and stabilization of raw-material prices. At CMP of Rs. 37, the stock is trading at a PE of 9.7x in FY13E and 7.3x in FY14E. We have rolled out FY14E numbers. We maintain our target price of Rs. 46 per share with a “HOLD” rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Quarterly Analysis
Essel Propack Global operations reported a jump in net sales 18.2% YoY and marginally down by 0.5% QoQ to Rs. 412 crs. The revenue was up on account of growth in all four regions comprising AMESA (12% YoY), Europe (49.1% YoY), EAP (16.9% YoY) and America (18.9% YoY), in Q4FY12.
The company reported a 12.7% YoY jump in EBITDA to the tune of Rs. 65 crs in Q4FY12 and down by 3% QoQ. The margin was 15.8% in Q4FY12 as compared to 16.5% in Q4FY11 and 16.2% in Q3FY12. The margin declined due to the jump in input cost and employee expenses.
The Net profit increased by 202.4% YoY to Rs. 25.4 cr and was up by 86.9% QoQ. The PAT margin was 6.2% in Q4FY12 as compared to 2.4% in Q4FY11 and 3.3% in Q3FY12. This was on account of forex gain of Rs. 3.54 crores in Q4FY12 as against forex loss of Rs. 0.5 crores in each of Q3FY12 and Q4FY11 and write back of income tax on account of merger of Ras Propack and Ras Extrusion.
The company had closed down the UK manufacturing facility and consolidated the laminated tube operations at the Poland unit. Relocation cost of Rs. 1.3 cr has been taken under the exceptional cost in the Q4FY12 result.
Guidance for FY13E: Management has maintained its guidance of 12% growth in FY13E led by two new large contracts each in Europe and AMESA. Management has further given a guidance of operating margin improvement by 200bps in FY13E led by reduction in scraps, rising average selling prices and stabilization in raw-material prices. Tax rate is expected to remain 35-37% in FY13E. The PAT margin is expected to be around 4%.
Valuation & Recommendation
Essel Propack posted good revenue increase across different region led by volume growth but continued to face margin pressure owing to high input cost, rupee depreciation and rising losses in Europe. We feel that the company will maintain its volume growth momentum in all the four geographies going forward led by richer product mix and addition of new customers. We expect margin to improve from hereon led by higher price realization and stabilization of raw-material prices. At CMP of Rs. 37, the stock is trading at a PE of 9.7x in FY13E and 7.3x in FY14E. We have rolled out FY14E numbers. We maintain our target price of Rs. 46 per share with a “HOLD” rating.
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