Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr Pranab Ghosal - Executive Director and Corporate
CEO of International Tractors, who shared his outlook on the industry and
company.
Key highlights
n ITL is a leading tractor manufacturing company in India (4th largest), with ~8% market
share (44,591 units sold in FY11). It has a capacity of 60,000 units, which it plans to
double by FY14. Promoters hold 82% of the company followed by 12.6% with Yanmar
of Japan and 5 % with JM Financial.
n ITL expects the industry to grow by ~13% to 538,000 units in FY12, driven by various
government initiatives like increasing irrigation potential, NREGA schemes and
improved credit facilities to farmers like Kisan credit card, farm credit package etc.
Moreover, with 65-70% of tractor sales through retail finance, improved credit availability
is likely to drive demand growth for tractors.
n Long term demand outlook remains favorable (~18% CAGR for next 4-5 years to 1 mn
tractors) driven by low tractor penetration in India, increased mechanization due to
rising labor costs and increased use of tractors for non agricultural
purposes(contributes ~20% of tractor sales).
n Certain pockets in Rajasthan, Gujarat, Maharashtra etc have witnessed >50% growth
driven by state specific initiatives. Water availability in Eastern region (laggard
previously) to drive strong growth.
n ITL targets a market share of ~15% over the next 3 years driven by - 1) its presence in
the fast growing markets of Rajasthan, Maharashtra etc and 2) its aggressive initiatives
to tap Southern markets like AP, Karnataka, TN etc.
n ITL is a major player in >50 HP segment. Demand outlook for this segment remains
favorable (~17% CAGR FY04-09) driven by increased preference for various farming
applications. Company plans to foray into lower HP segment too. Expects growth to
remain buoyant on account of increased application of lower HP tractors for smaller
grounds / private lawns, narrow spaces, orchards, cropping etc
n ITL targets exports of ~25,000 units (~5,000 units in FY11) over the next 3 years. It
recently entered into the Malaysian market through Yanmar and strengthened its
presence in Africa (across 31 countries) and SAARC region. It expects growing
affordability in these regions and its tie ups with global players to aid strong exports.
n ITL enjoys higher EBITDA margins at ~20% against industry average of 12-14%. Margins
have doubled in the last 5 years on account of economies of scale, higher production
at free zone, successful implementation of several cost reduction and value engineering
initiatives and better product mix (higher share of >40 HP tractors). Company was also
able to retain partial benefit of lower excise duty on components.
n Structural margin improvement is supported by its strong integration level since ITL
manufactures almost all the auto parts by itself. ITL expects its EBITDA margins to
improve to 24% over the next three years.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr Pranab Ghosal - Executive Director and Corporate
CEO of International Tractors, who shared his outlook on the industry and
company.
Key highlights
n ITL is a leading tractor manufacturing company in India (4th largest), with ~8% market
share (44,591 units sold in FY11). It has a capacity of 60,000 units, which it plans to
double by FY14. Promoters hold 82% of the company followed by 12.6% with Yanmar
of Japan and 5 % with JM Financial.
n ITL expects the industry to grow by ~13% to 538,000 units in FY12, driven by various
government initiatives like increasing irrigation potential, NREGA schemes and
improved credit facilities to farmers like Kisan credit card, farm credit package etc.
Moreover, with 65-70% of tractor sales through retail finance, improved credit availability
is likely to drive demand growth for tractors.
n Long term demand outlook remains favorable (~18% CAGR for next 4-5 years to 1 mn
tractors) driven by low tractor penetration in India, increased mechanization due to
rising labor costs and increased use of tractors for non agricultural
purposes(contributes ~20% of tractor sales).
n Certain pockets in Rajasthan, Gujarat, Maharashtra etc have witnessed >50% growth
driven by state specific initiatives. Water availability in Eastern region (laggard
previously) to drive strong growth.
n ITL targets a market share of ~15% over the next 3 years driven by - 1) its presence in
the fast growing markets of Rajasthan, Maharashtra etc and 2) its aggressive initiatives
to tap Southern markets like AP, Karnataka, TN etc.
n ITL is a major player in >50 HP segment. Demand outlook for this segment remains
favorable (~17% CAGR FY04-09) driven by increased preference for various farming
applications. Company plans to foray into lower HP segment too. Expects growth to
remain buoyant on account of increased application of lower HP tractors for smaller
grounds / private lawns, narrow spaces, orchards, cropping etc
n ITL targets exports of ~25,000 units (~5,000 units in FY11) over the next 3 years. It
recently entered into the Malaysian market through Yanmar and strengthened its
presence in Africa (across 31 countries) and SAARC region. It expects growing
affordability in these regions and its tie ups with global players to aid strong exports.
n ITL enjoys higher EBITDA margins at ~20% against industry average of 12-14%. Margins
have doubled in the last 5 years on account of economies of scale, higher production
at free zone, successful implementation of several cost reduction and value engineering
initiatives and better product mix (higher share of >40 HP tractors). Company was also
able to retain partial benefit of lower excise duty on components.
n Structural margin improvement is supported by its strong integration level since ITL
manufactures almost all the auto parts by itself. ITL expects its EBITDA margins to
improve to 24% over the next three years.
No comments:
Post a Comment