Sei sulla pagina 1di 4

Upgrade in price target

December 31, 2010

Our recent interaction with the management suggests that Previous Reco Buy Target Price Rs 100
11 / 10 10 6,135 20,509

Reco Buy CMP Rs 73

industry demand remains encouraging helping it to boost revenues from higher trading, +75% in H1FY11 to 30% by FY12E

Capacity in high end segment to increase from 10% in FY10 Capex plans are on schedule 1) New vitrified plant to

EPS change FY11E/12E (%) Target Price change (%) Nifty Sensex

commission by Jan11; 2) Conversion of ceramic floor tiles into vitrified tiles by Feb11

Upgrade FY11E EPS by 12% to Rs 7.5 and FY12E by 10% to

Price Performance
(%) Absolute Rel. to Nifty
Source: Bloomberg

Rs 10, and price target by 10% to Rs 100 and maintain BUY

1M (6) (8)

3M (4) (5)

6M 12M 14 (0) 46 26

Strong demand in higher end ceramics segment to help boost revenues


Kajaria Ceramics is likely to benefit from strong growth in the higher end vitrified tiles segment. Growth in this segment has helped the company leverage its strong brand and distribution network to boost revenues through higher trading. Trading revenues increased by ~75% yoy in H1FY11 (contributed 40% to revenues as against 27% previous year). Management expects that growth in trading revenues is likely to remain buoyant in the near future.

Relative Price Chart


90 Rs % 40 80 30

70

20

60

10

Upgrade FY11E and FY12E estimates on back of higher revenues


On account of higher revenues driven by increased trading, we have revised our revenue estimates for FY11E by 4.8% to Rs 9.1 bn and for FY12E by 9.4% to Rs 10.7 bn. Though we estimate there may be some pressure on EBITDA margins (since margins in trading business are lower than own manufacturing) yet we have upgraded our overall EBITDA by 2.4% in FY11E and 4.2% in FY12E. Consequently, we upgrade our FY11E EPS by 10.7% to Rs 7.5 and FY12E by 9.9% to Rs 10.

50

40 Dec-09

-10 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10

Kajaria Ceramics (LHS)

Rel to Nifty (RHS)

Source: Bloomberg

Stock Details
Sector Bloomberg Equity Capital (Rs mn) Face Value(Rs) No of shares o/s (mn) 52 Week H/L Market Cap (Rs bn/USD mn) Daily Avg Volume (No of sh) Daily Avg Turnover (US$mn) Ceramics KJC@IN 147 2 74 84/47 5/111 381039 0.7

Capex on schedule, to be completed by end of FY11


1) Conversion of ceramic floor tiles at Unit-3, Sikandrabad plant (with capacity of 4 mn sqmt) into vitrified tiles (capacity of 2.4 mn sqmt) with cost of Rs 194 mn is on scheduled and expected to complete by Feb11. 2) The companys capex plan to put vitrified tiles (polished and glazed) is as per schedule (expected completion by Jan11) and should drive the volume growth for FY12. Due to continued focus on increasing / shifting the capacity towards higher end vitrified tiles segment - capacity in high end (vitrified / polished / glazed) tiles should increase to 30% by FY12E from 10% in FY10. We expect this shift to help the company improve its average realisations and margins.

Shareholding Pattern (%)


S10 Promoters FII/NRI Institutions Private Corp Public
Source: Capitaline

J10 51.3 2.5 5.8 18.2 22.2

M10 51.3 3.5 6.5 17.6 21.2

51.3 3.3 4.1 14.1 27.2

Upgrade price target by 10%, maintain BUY


Driven by upgrade in earnings, we upgrade our price target by 10% to Rs 100 (10x FY12E EPS) and re-iterate our BUY recommendation on the stock. Kajaria Ceramics has witnessed 22% growth in revenues in H1FY11 and we expect the momentum to continue on the back of strong demand growth. Financial Snapshot Rs Mn
EBITDA (Core) 949 1,148 1,432 1,754 (%) 14.3 15.6 15.8 16.5 PAT 89 359 549 737 EPS (Rs) 1.2 4.9 7.5 10.0 EPS % chg (40.7) 302.8 53.1 34.3 RoE (%) 5.6 20.4 25.9 27.9 P/E 61.2 15.2 9.9 7.4 EV/ EBITDA 9.0 7.0 6.1 4.6 P/BV 3.4 2.9 2.3 1.9

Rohan Gupta rohan.gupta@emkayglobal.com +91 22 6612 1248 Pragya Bhardwaj pragya.bhardwaj@emkayglobal.com +91 22 6612 1272

Net YE-Mar FY09 FY10 FY11E FY12E Sales 6,649 7,355 9,055 10,663

Emkay Global Financial Services Ltd

Company Update

Kajaria Ceramics

Kajaria Ceramics Revision Table


FY11E Rs mn Net sales EBITDA EBITDA % PAT EPS Old Estimates 8,644 1,399 16.2% 496 6.7 New Estimates 9,055 1,432 15.8% 549 7.5 % Change 4.8% 2.4% -40 10.7% 10.7% Old Estimates 9,747 1,684 17.3% 671 9.1

Company Update

FY12E New Estimates 10,663 1,754 16.5% 737 10.0 % Change 9.4% 4.2% -80 9.8% 9.9%

Emkay Research

31 December 2010

Kajaria Ceramics

Company Update

Key Financials
Income Statement
Y/E, Mar (Rs. mn) Net Sales Growth (%) Expenditure Materials Consumed Employee Cost Other Exp EBITDA Growth (%) EBITDA margin (%) Depreciation EBIT EBIT margin (%) Other Income Interest expenses PBT Tax Effective tax rate (%) Adjusted PAT Growth (%) Net Margin (%) (Profit)/loss from JVs/Ass/MI Adjusted PAT After JVs/Ass/MI E/O items Reported PAT PAT after MI Growth (%) FY09 6,649 32.3 5,700 3,602 505 1,593 949 15.9 14.3 249 700 10.5 10 582 127 38 30.2 89 (40.7) 1.3 89 89 89 (40.7) FY10 7,355 10.6 6,207 3,644 613 1,951 1,148 21.0 15.6 267 881 12.0 8 375 514 156 30.3 359 302.8 4.9 359 359 359 302.8 FY11E 9,055 23.1 7,623 4,743 724 2,155 1,432 24.7 15.8 322 1,110 12.3 10 336 784 235 30.0 549 53.1 6.1 549 549 549 53.1 FY12E 10,663 17.8 8,908 5,622 800 2,486 1,754 22.5 16.5 351 1,403 13.2 10 360 1,053 316 30.0 737 34.3 6.9 737 737 737 34.3 Gross Block Less: Depreciation Net block Capital work in progress Investment Current Assets Inventories Sundry debtors Cash & bank balance Loans & advances Other current assets Current lia & Prov Current liabilities Provisions Net current assets Misc. exp Total Assets 5,015 1,738 3,277 0 34 2,968 1,385 678 79 827 872 830 42 2,096 5,407 5,435 1,988 3,448 25 34 2,976 1,403 773 45 756 1,413 1,198 216 1,563 5,070 6,711 2,310 4,401 40 34 3,509 1,737 868 148 756 1,597 1,364 233 1,911 6,386 6,751 2,661 4,090 30 34 4,140 2,045 1,022 217 856 1,728 1,461 267 2,412 6,566

Balance Sheet
Y/E, Mar (Rs. mn) Equity share capital Reserves & surplus Net worth Minority Interest Secured Loans Unsecured Loans Loan Funds Net deferred tax liability Total Liabilities 2,927 325 3,252 535 5,407 2,588 40 2,628 549 5,070 3,388 40 3,428 619 6,386 2,888 40 2,928 699 6,566 FY09 147 1,474 1,621 FY10 147 1,746 1,893 FY11E 147 2,192 2,339 FY12E 147 2,792 2,939

Cash Flow
Y/E, Mar (Rs. mn) PBT (Ex-Other income) Depreciation Interest Provided Other Non-Cash items Chg in working cap Tax paid Operating Cashflow Capital expenditure Free Cash Flow Other income Investments Investing Cashflow Equity Capital Raised Loans Taken / (Repaid) Interest Paid Dividend paid (incl tax) Income from investments Others Financing Cashflow Net chg in cash Opening cash position Closing cash position FY09 118 249 274 3 (92) -33 519 (121) 398 10 10 (121) (274) (17) 0 0 -412 -4 83 79 FY10 506 267 241 7 406 -117 1,310 (471) 839 8 8 (623) (241) (17) 0 0 -882 -34 79 45 FY11E 774 322 336 (262) -165 1,005 (1,290) -285 10 10 800 (336) (86) 0 0 378 103 45 148 FY12E 1,043 351 360 (466) -236 1,052 (30) 1,022 10 10 (500) (360) (103) 0 0 -963 69 148 217

Key Ratios
Y/E, Mar Profitability (%) EBITDA Margin Net Margin ROCE ROE RoIC Per Share Data (Rs) EPS CEPS BVPS DPS Valuations (x) PER P/CEPS P/BV EV / Sales EV / EBITDA Dividend Yield (%) Gearing Ratio (x) Net Debt/ Equity Net Debt/EBIDTA Working Cap Cycle (days) 1.9 3.3 68 1.3 2.2 49 1.4 2.3 50 0.9 1.5 55 61.2 16.1 3.4 1.3 9.0 0.3 15.2 8.7 2.9 1.1 7.0 1.4 9.9 6.3 2.3 1.0 6.1 1.6 7.4 5.0 1.9 0.8 4.6 2.2 1.2 4.6 22.0 0.2 4.9 8.5 25.7 1.0 7.5 11.8 31.8 1.2 10.0 14.8 39.9 1.6 14.3 1.3 13.1 5.6 13.2 15.6 4.9 17.0 20.4 17.2 15.8 6.1 19.6 25.9 20.0 16.5 6.9 21.8 27.9 22.5 FY09 FY10 FY11E FY12E

Emkay Research

31 December 2010

Kajaria Ceramics

Company Update

Recommendation History: Kajaria Ceramics KJC IN


Date 12/10/2010 14/07/2010 29/04/2010 Reports Kajaria Ceramics Q2FY11 Result Update Kajaria Ceramics Q1FY11 Result Update Kajaria Ceramics Initiating Coverage Reco Buy BUY Buy CMP 80 67 66 Target 91 91 91

Recent Research Reports


Date 29/12/2010 27/12/2010 16/12/2010 10/12/2010 Reports United Phosphorus Company Update Rallis India Management Meet Update GSFC Company Update Rallis India Event Update Reco Buy Buy Buy Buy CMP 161 1,391 349 1,283 Target 230 1,800 530 1,800

Emkay Global Financial Services Ltd. Paragon Center, H -13 -16, 1st Floor, Pandurang Budhkar Marg, Worli, Mumbai 400 013. Tel No. 6612 1212. Fax: 6624 2410

DISCLAIMER: This document is not for public distribution and has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. The manner
of circulation and distribution of this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves of, and to obs erve, such restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. No person associated with Emkay Global Financial Services Ltd. is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this document. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. Neither Emkay Global Financial Services Ltd., nor any person connected with it, accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. We and our affiliates, officers, directors, and employees world wide, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company (ies) discussed herein or may perform or seek to perform investment banking services for such company(ies)or act as advisor or lender / borrower to such company(ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. The same persons may have acted upon the information contained here. No part of this material may be duplicated in any form and/or redistributed without Emkay Global Financial Services Ltd.'s prior written consent. No part of this document may be distributed in Canada or used by private customers in the United Kingdom. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

Emkay Research

31 December 2010

www.emkayglobal.com

Potrebbero piacerti anche