BUY RSWM LTD SYNOPSIS. CMP Target Price SEPTEMBER 1 st Result Update(PARENT BASIS): Q1 FY16

Transcription

1 BUY CMP Target Price RSWM LTD Result Update(PARENT BASIS): Q1 FY16 SEPTEMBER 1 st 2015 ISIN: INE611A01016 Index Details Stock Data Sector Textiles BSE Code Face Value wk. High / Low (Rs.) / Volume (2wk. Avg.) Market Cap (Rs. in mn.) Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) As on June-15 As on March-15 PROMOTER FIIs DIIs OTHERS Year Comparative Graph RSWM LTD BSE SENSEX SYNOPSIS RSWM Ltd is one of the largest textile manufacturers and sells yarns, fabrics, and denims primarily in India. Net profit stood at Rs million in June quarter compared to Rs million in the corresponding quarter of the previous year, grew by 22.26% y-o-y. In Q1 FY16, company achieved a turnover of Rs million, an increase of 3.69% y-o-y as against Rs million in Q1 FY15. Profit before interest, depreciation and tax is Rs million in Q1 FY16 as against Rs million in the corresponding period of the previous year, grew by 23.71%. Earnings per Share for the company were Rs in Q1 FY16 as compared to Rs in Q1 FY15. In Q1 FY16, Profit before Tax at Rs million grew by 47.61% against Rs million in Q1 FY15. During Q1 FY16, Fabrics segment increased by 5% to Rs million from Rs million over the corresponding quarter last year. The Long Term Credit rating has been upgraded to IND A+ from IND A and Short Term Credit Rating has been upgraded to 'IND A1+ from IND A1'of the company by India Ratings & Research. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 19% over 2014 to 2017E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) RSWM Ltd RAYMOND Ltd KPR Mill Ltd Sangam (India) Ltd

2 QUARTERLY HIGHLIGHTS (PARENT BASIS): Results updates- Q1 FY16, RSWM Limited, the flagship Company of the LNJ Bhilwara Group, is one of the largest textile manufacturers in the country, primarily producing the best quality of yarns like synthetic, blended, mélange, cotton, specialty yarns reported its financial results for the Fourth quarter ended 30 th June, Months June-15 June-14 % Change Net Sales PAT EPS EBITDA The Company s revenue for the quarter stood at Rs million, an increase of 3.69% y-o-y from Rs million, when compared with the prior year period. Net profit increased by 22.26% to Rs million from Rs million, when compared with the prior year period. Reported earnings per share of the company stood at Rs a share during the quarter, as against Rs over previous year period. EBITDA was at Rs million as against Rs million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Rs in Million Q1 FY16 Q1 FY15 Chg% Cost of material consumed % Purchase of stock in trade % Employee benefits exp % Dep & amortization exp % Power & Fuel % Other Expenditure %

3 Segment Revenue COMPANY PROFILE RSWM Limited, the flagship Company of the LNJ Bhilwara Group, is one of the largest textile manufacturers in the country, primarily producing the best quality of yarns like synthetic, blended, mélange, cotton, specialty yarns and the value added - suiting and denim fabrics. RSWM has built one of the most impressive textile manufacturing infrastructures in the country: 11 state-of-theart manufacturing plants; spindles; 176 looms; 1,40,000 MTA yarn capacity; 36 MMA fabric capacities, including denim fabric. The Company also owns a fabric process house at Mordi (Rajasthan). RSWM is self-reliant in captive power generation of 46 MW that feeds to its integrated units spread across the state of Rajasthan, located at Kharigram, Banswara, Mordi, Mandpam, Rishabhdev and Ringas. The main competitive strength of the Company is its innovative product range that includes specialty, functional and technical yarns and fabrics. The Company recently has shifted its focus to produce more and more ecofriendly and natural textiles in order to meet the emerging needs of the market. RSWM exports its range of yarn and fabric to over 78 countries worldwide. Exports RSWM exports a complete range of yarn and fabric to over 78 countries across Europe, South Africa, Australia, Korea, Belgium, Singapore, Italy, Egypt and the Gulf countries. With nearly 50% of RSWM's production exported, the Company has a significant presence in the world of textiles.

4 FINANCIAL HIGHLIGHT (PARENT BASIS): (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, E EQUITY AND LIABILITIES Shareholder's Funds RSWM LTD FY14A FY15A FY16E FY17E Share Capital Reserves and Surplus ) Sub Total - Net worth Non Current Liabilities Government Capital Grants Long-term borrowings Deferred Tax Liabilities Other Long Term Liabilities Long Term Provisions ) Sub Total - Non Current Liabilities Current Liabilities Short-term borrowings Trade Payables Other Current Liabilities Short Term Provisions ) Sub Total - Current Liabilities TOTAL EQUITY AND LIABILITIES (1+2+3) ASSETS: Non Current Assets Fixed Assets i. Tangible Assets ii. Intangible Assets iii. Capital work-in-progress a) Sub-Total Fixed Assets b) Other non-current assets c) Non-Current Investments d) Long Term Loans and Advances ) Sub Total - Non Current Assets Current Assets Inventories Trade receivables Cash and Bank Balances Short-terms loans & advances Other Current Assets ) Sub Total - Current Assets TOTAL ASSETS (1+2)

5 Annual Profit & Loss Statement for the period of 2014A to 2017E Value(Rs.in.mn) FY14A FY15A FY16E FY17E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 31 st Dec, 2014 to 30 th Sep, 2015E Value(Rs.in.mn) 31-Dec Mar Jun Sep-15E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

6 Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) EBITDA Margin (%) PBT Margin (%) PAT Margin (%) P/E Ratio (x) ROE (%) ROCE (%) Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

7 OUTLOOK AND CONCLUSION At the current market price of Rs , the stock P/E ratio is at 5.53 x FY16E and 5.02 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs and Rs respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 19% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 3.96 x for FY16E and 3.73 x for FY17E. Price to Book Value of the stock is expected to be at 1.25 x and 1.06 x for FY16E and FY17E respectively. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. INDUSTRY OVERVIEW India is a prominent player in the global textiles and garments space. It is one of the few nations with a strong presence across the textile value chain from natural and synthetic fibres to yarn, fabrics and finished products. The abundant availability of raw materials (cotton, wool, silk and jute) and skilled workforce have graduated India into a global textiles sourcing hub. Besides, the sector is a major economic contributor through direct and indirect employment and net foreign exchange earnings. The most significant change in the Indian textiles industry has been the gradual increase in the role of manmade fibres. India has established a presence for its innovative MMF textiles range in almost all countries.

8 Cotton overview Cotton is the leading crop in India s textile sector, accounting for more than half the country s fibre consumption. Its production, however, is largely dependent on climatic conditions, nearly 65% of the cultivation area being rain-fed. In , the Cotton Advisory Board pegged cotton production at 40 million bales. Due to China s decision to liquidate its substantial cotton stock, cotton prices are declining globally. Outlook India s US$108 billion textile industry retains the potential to cross the US$500-billion mark by 2025 following adequate government support. This could create another 35 million jobs and draw US$200 billion in investments. Disclaimer: This document is prepared by our research analysts and it does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for the recipients investment decision based on this document.

9 Firstcall India Equity Research: C.V.S.L.Kameswari Pharma & Diversified U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified G. Amarender Diversified Firstcall Research Provides Industry Research on all the Sectors and Equity Research on Major Companies forming part of Listed and Unlisted Segments For Further Details Contact: Tel.: / / Telefax: / info@firstobjectindia.com