52-WEEK BLOCKBUSTER: NITIN FIRE PROTECTION ::Business Line

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Sell Nitin Fire; Target :Rs 30 ::ICICI Securities

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V a  l u a t i o n s   s t r e t c  h e  d …
Nitin Fire’s (NFPIL) Q2FY12 results were in line with our estimates as net
sales witnessed a 6.7% de-growth on the back of the muted performance
of the domestic business. Net sales  stood at | 145.2 crore as against |
155.5 crore in Q2FY11. EBITDA margins for the company improved YoY
from 13.5% to 15.7%. Employee cost as a percentage of sales improved
from ~5% to ~3% while rationalisation of other expenditure from 8.5%
to 7.5% also resulted in higher margins for the company. Net profit grew
24.3% to | 17.1 crore on the back of higher EBITDA led by lower cost.
ƒ Standalone performance review
On a standalone basis, sales stood at | 26.5 crore, de-growth of 45.6%.
The raw material cost has declined from | 41.1 crore to | 19.1 crore.
Employee cost has gone up from | 0.92 crore to | 1.53 crore while other
expenditure increased from | 1.5 crore to | 2.5 crore. Net profit declined
from | 4.3 crore to | 2.2 crore. Despite higher EBITDA, NFPIL has posted a
dip in net profit due to lower other income and increase in tax liability.
ƒ Sales break-up  
During the quarter, NFPIL’s domestic sales witnessed de-growth of 19.0%
to | 27.1 crore from | 33.4 crore in Q2FY11. Consequently, the
international business also witnessed a 3.3% de-growth to | 118.1 crore
compared to | 122.1 crore in the corresponding quarter.
V a l u a t i o n
At the CMP, the stock is trading at 15.4x and 14.5x its FY12E and FY13E
EPS of | 2.4 and | 2.6, respectively. Though the company has posted two
consecutive quarters of strong results on the back of strong results from
the fire fighting business, we believe the stock is expensively valued after
the run up in the last six months. We recommend investors book profit in
the stock and exit at current levels. We are  terminating coverage on the
stock due to lack of operational information.

Hold Nitin Fire; Target : Rs 112 ::ICICI Securities

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I n t e r n a t i o n a  l   s a l e s   d r i v e   r e v e  n u e   g r o w t h …
Nitin Fire Protection Industries Ltd’s (NFPIL) Q1FY12 results witnessed a
robust increase in topline to | 161.5 crore against | 89.7 crore in Q1FY11
led by a significant increase in international sales. Margins also improved
~220 bps to 16.5% over 14.3% in Q1FY11. Margin improvement was led
by the company’s rationalisation of other expenses and marginal savings
in employee cost though the raw material cost pressure continued during
the quarter. Other manufacturing expenses were lower by ~380 bps
while employee expenses were lower by ~20 bps to 3.0% and 2.7% of
net sales, respectively. Consequent  to the higher sales and margins,
earnings during the quarter jumped to | 23.6 crore over | 9.6 crore in the
corresponding quarter last year.
ƒ Standalone performance review
On a standard basis, sales grew 8.2% to | 29.3 crore vs. | 27.1 crore in
Q1FY11. Though raw material cost to sales was lower at 71.7% vs. 73.5%
in Q1FY11, standard employee cost and other manufacturing expenses
were comparatively higher at 4.5% (higher by 120 bps YoY) and 6.2%
(higher by 70 bps YoY), respectively. Hence, margins were sustained at
17.6% vs. 17.8% in Q1FY11. Earnings during the quarter stayed in line
with that of the corresponding quarter last year at | 3.3 crore.
ƒ Sales break-up
During the quarter, NFPIL’s domestic sales witnessed growth of 32.2% to
| 42.1 crore from | 31.8 crore in Q1FY11. Comparatively, the growth in
the international business was robust at ~106% to | 119.3 crore over |
57.9 crore in the corresponding quarter last year.
V a l u a t i o n
At the CMP, the stock is trading at 9.1x and 8.3x its FY12E and FY13E EPS
of | 12.2 and | 13.3, respectively. With strong growth in the fire fighting
segment, increasing sales volumes of CNG cylinders overseas and higher
realisations of CNG cylinders, we believe the company would continue to
witness robust revenue growth. The stock had run up before the results
and we believe it is fairly valued at the CMP. We have valued the stock at
9x its FY12E EPS of | 12.2 with a target price | 112 and  HOLD rating

Nitin Fire- Hold Target : Rs 91; ICICI Securities,

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S t r o  n g   r e  s u l t s ,   f a  i r l y   v a  l u e d  …
Nitin Fire reported its Q4FY11 results. The company’s standalone sales for
the quarter witnessed robust growth of ~67% to | 52.5 crore against |
31.4 crore in Q4FY10. Margins also increased ~240 bps to 16.8% against
14.3% in the corresponding quarter last year. The major contributors to
the company’s higher margins were lower employee costs and lower
other expenditure. Employee costs to sales were lower by 140 bps to
2.5% while the other expenditure declined by 530 bps to 7.8%. However,
higher commodity prices increased the raw material cost to sales ratio to
~73% in Q4FY11 from ~69% in Q3FY10. Despite higher EBITDA margin,
PAT margins witnessed a marginal decline and stood at 11.7% in Q4FY11
against 11.9% in Q4FY10. This was mainly on account of higher tax of |
2.3 crore paid during the quarter against a tax write-back of | 0.7 crore in
the corresponding quarter last year.
ƒ Consolidated results
Nitin Fire’s consolidated Q4FY11 results are not comparable with the
corresponding period last year due to an associate company becoming a
step down subsidiary (from April 1, 2010). Prior to this, it was an associate
while a wholly-owned subsidiary became an associate (from December
29, 2010).
The company’s consolidated Q4FY11 and FY11 sales stood at | 83.6 crore
and | 437.8 crore, respectively. The  margins for the quarter stood at
22.5% and for the year at 15.3%. The PAT for the quarter ended was |
10.6 crore and for the year was | 53.4 crore. For 2011, the company
reported other income of | 12.9 crore (profit from sale of business).
Hence, the adjusted PAT for FY11 stood at | 40.5 crore.
V a l u a t i o n
At the CMP, the stock is trading at 13.3x and 12.7x its FY12E and FY13E
EPS of | 7.2 and | 7.6, respectively. The stock has run up significantly in
the past two or three months from | 60 (February, 2011) to | 100 (May,
2011). Hence, we believe it is fairly priced. We value the stock at 12x its
FY13E EPS of | 7.6, assigning it a HOLD rating with a TP of | 91.

Add Nitin Fire : International sales to drive topline; Target : Rs 67 :ICICI Securities

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Nitin Fire : International sales to drive topline… 
Nitin Fire reported its Q3FY11 results. The company’s topline during the
quarter grew 11% to  | 109 crore against  |  98.2 crore in Q3FY10. The
growth was mainly on account of the increase in international sales that
grew ~16% to | 89.6 crore. Margins, however, dipped significantly by
593 bps to 11.9% in Q3FY11 against 17.8% in the corresponding quarter
last year. The pull down was due to higher employee cost that rose
~121% to | 5.7 crore. Also, depreciation was higher by ~110% to | 1.7
crore against | 0.9 crore in Q3FY10. In spite of lower EBITDA margins,
the earnings inched up ~38% to  |  19.3 crore led by a substantial
increase in other income to  |  14.4 crore against  |  1 crore in the
corresponding quarter last year.

Nitin Fire:International business drives topline:: ICICI Sec

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International business drives topline…
Nitin Fire Protection Industries’ results were ahead of our expectation as
sales jumped 167.1% to | 155.5 crore on the back of a rise in volumes
from international sales. International sales grew ~400% to | 122.1 crore
led by exports from the Middle East. EBITDA margins dipped a bit from
15.1% to 13.5% in the corresponding quarter. Interest cost increased by
41.5% to | 2.8 crore. Higher sales resulted in a 109% increase in net profit
to | 13.8 crore from | 6.6 crore in the corresponding quarter.