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VISHNU CHEMICALS LTD

Result Update (PARENT BASIS): Q2 FY16

BUY

CMP

401.20

Target Price

460.00

NOVEMBER 21st 2015


ISIN: INE270I01014

12th h, 2013

Index Details

Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg.)
Market Cap (Rs. in mn.)

SYNOPSIS
Commodity Chemicals
516072
10.00
539.90/152.10
6086
4792.74

Vishnu Chemicals produces variety of chromium


chemicals including: Basic Chromium Sulphate
(Vishnuchrome), Sodium Dichromate, Potassium
Dichromate, Chromic Acid and Chrome Oxide Green.

In Q2 FY16, Net profit jumps to Rs. 66.76 million an


increase of 67.23% against Rs. 39.92 million in the
corresponding quarter of previous year.

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS

FY15A

Net Sales
EBITDA
Net Profit
EPS
P/E

4180.71
773.61
219.07
18.34
21.88

FY16E

The companys net sales registered 7.50% increase


in Q2 FY16 and stood at Rs. 1190.02 million from Rs.
1107.00 million over the corresponding quarter of
previous year.

FY17E

4682.40
861.22
274.08
22.92
17.50

5150.63
946.98
313.45
26.24
15.29

During the quarter, operating profit is Rs. 221.32


million as against Rs. 179.12 million in the
corresponding period of the previous year, an
increase of 23.56%.

Shareholding Pattern (%)

PROMOTER
FIIs
DIIs
OTHERS

As on Sep-15
75.00
0.00
0.00
25.00

EPS of the company stood at Rs. 5.59 in Q2 FY16 as


against Rs. 3.34 in the previous year quarter.

As on June-15
75.00
0.00
0.00
25.00

In Q2 FY16, Profit before tax stood at Rs. 111.79


million as compared to Rs. 69.08 million in Q2 FY15,
registering a growth of 61.83%.
Revenue for the H1 FY16 rose by 17.62% to Rs.
2285.57 million from Rs. 1943.18 million, when
compared with the prior year period.

1 Year Comparative Graph

During H1 FY16, the companys net profit stood at


Rs. 130.70 million as against Rs. 62.30 million in H1
FY15, grew by 109.78%.

The Company has made investments in 'Solvay


Vishnu Barium Private Limited', Hyderabad and
acquired 100% share capital of the said Company by
making the said Company as Subsidiary with 100%
holding.
VISHNU CHEMICALS LTD

Net Sales and PAT of the company are expected to


grow at a CAGR of 12% and 44% over 2014 to 2017E
respectively.

S&P BSE SENSEX

PEER GROUPS

CMP

MARKET CAP

EPS

P/E (X)

P/BV(X)

DIVIDEND

Company Name

(Rs.)

Rs. in mn.

(Rs.)

Ratio

Ratio

(%)

401.20
195.00
366.00
414.90

4792.74
1996.60
2149.20
2130.00

18.34
32.30
32.82
46.09

21.88
6.04
11.15
9.00

5.27
1.32
2.87
1.59

20.00
40.00
50.00
15.00

Vishnu Chemicals Ltd


Thirumalai Chemicals Ltd
Transpek Industry Ltd
Camphor and Allied Products Ltd

QUARTERLY HIGHLIGHTS (PARENT BASIS)


Results Updates- Q2 FY16
Months

Sep-15

Sep-14

% Change

1190.02

1107.00

7.50

PAT

66.76

39.92

67.23

EPS

5.59

3.34

67.23

221.32

179.12

23.56

Net Sales

EBITDA

The companys net profit jumps to Rs. 66.76 million against Rs. 39.92 million in the corresponding quarter

ending of previous year, an increase of 67.23%. Revenue for the quarter rose by 7.50% to Rs. 1190.02 million
from Rs. 1107.00 million, when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 5.59 a share during the quarter as against Rs. 3.34 over previous year period. Profit before

interest, depreciation and tax is Rs. 221.32 million as against Rs. 179.12 million in the corresponding period of
the previous year.

Break up of Expenditure

(Rs in millions)
Break up of Expenditure
Q2 FY16

Q2 FY15

% Chng

Consumption of raw
materials

784.12

682.26

15%

Employees Benefit Exp

37.97

35.59

7%

Depreciation

29.63

30.67

-3%

Other Expenses

344.23

307.57

12%

COMPANY PROFILE
Vishnu Chemicals Limited was founded in 1989, it manufactures, markets, and exports chromium chemicals and

other specialty chemicals. It offers chrome chemicals, such as sodium dichromate, basic chromium sulphate,
chromic acid, and potassium dichromate; and specialty chemicals, including sodium saccharin, saccharin
insoluble, and menadione.

The company also provides process research and development, scale-up and pilot studies, analytical services,
and custom manufacturing of fine chemicals. Its products are used in various applications in pharmaceutical, fine

chemical, leather tanning, pigments, dyes, chrome plating, metallurgy, animal feeds, artificial sweeteners,

adhesives, and ceramic industries. The company markets its products in India, China, South East Asia, Europe,
the United Kingdom, Africa, North America, and South and Central America, as well as internationally.

Vishnu Chemicals has an annual capacity of producing over 70,000 MT of Basic Chromium Sulphate, 70,000 MT
of Sodium Dichromate, 1000 MT of Chromic Acid, 1000 MT of Potassium Dichromate, 1200 MT of Sodium
Saccharine and 400 MT of Vitamin K3.

Vishnu Chemicals has identified Research and Development (R&D) as one of the major components for continued
growth. It has established a world-class state of the art research laboratory to offer reliable, high quality
products. The research and development division at Vishnu chemicals is driven by the philosophy of continuous
improvement, in order to develop new products that add value and strengthens the industries that we serve. The
Technology Development Centre supported by an Analytical Development Facility has enabled Vishnu Chemicals

to serve the chemical industry by offering services in custom synthesis, contract research and contract
manufacturing to its clients in US, Europe and Asia.

Vishnu Chemicals employees more than 1000 people in India and across the world, Headquartered in Hyderabad

(India), Vishnu operates three world class facilities in Pharma City Vishakapatnam, Bhilai (Chattisgarh) and
Hyderabad.

FINANCIAL HIGHLIGHT (PARENT BASIS)

(A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March 31, 2014 -2017E


FY14A

FY15A

FY16E

FY17E

Share Capital

594.46

594.46

594.46

594.46

Reserves and Surplus

601.73

790.59

1064.67

1378.12

1196.19

1385.05

1659.13

1972.58

Long term borrowing

436.78

561.10

617.21

666.59

Deferred Tax Liabilities (net)

272.36

289.16

300.73

312.76

Other Long term Liabilities

535.40

699.23

825.09

924.10

0.00

6.71

7.31

7.75

1244.54

1556.20

1750.34

1911.20

Short term Borrowings

1052.01

1046.53

1077.93

1034.81

Trade Payables

452.20

587.30

657.78

730.13

Other Current Liabilities

257.33

262.13

277.86

291.75

Short Term Provisions

52.30

87.51

98.01

107.81

3. Sub Total - Current Liabilities

1813.84

1983.47

2111.57

2164.50

Total Liabilities (1+2+3)

4254.57

4924.72

5521.05

6048.28

i. Tangible assets

1964.27

1860.06

1953.06

2031.19

ii. Intangible assets

0.27

0.00

0.00

0.00

iii. Capital Work in Progress

363.48

440.91

485.00

523.80

a) Sub-Total Fixed Assets

2328.02

2300.97

2438.06

2554.99

b) Non-current investments

3.04

3.12

15.65

16.90

c) Long Term loans and advances

88.07

62.78

59.01

62.55

d) Other non-current assets

0.07

0.00

0.00

0.00

2419.20

2366.87

2512.73

2634.44

Inventories

860.51

1156.13

1304.30

1496.88

Trade receivables

624.68

893.86

1019.00

1120.90

Cash and Bank Balances

67.48

117.53

133.98

150.06

Short-terms loans & advances

251.74

347.63

504.06

594.79

Other current assets

30.96

42.70

46.97

51.20

2. Sub Total - Current Assets

1835.37

2557.85

3008.32

3413.83

Total Assets (1+2)

4254.57

4924.72

5521.05

6048.28

SOURCES OF FUNDS
Shareholder's Funds

1. Sub Total - Net worth


Non Current Liabilities

Long Term provisions


2. Sub Total - Non Current Liabilities
Current Liabilities

APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets

1. Sub Total - Non Current Assets


Current Assets

Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn)

FY14A

FY15A

FY16E

FY17E

12m
3521.69

12m
4180.71

12m
4682.40

12m
5150.63

Other Income

0.00

18.05

9.03

9.57

Total Income

3521.69

4198.76

4691.42

5160.20

Expenditure

-2894.96

-3425.15

-3830.20

-4213.22

Operating Profit

626.73

773.61

861.22

946.98

Interest

-285.93

-306.76

-300.62

-318.66

Gross profit

340.80

466.85

560.60

628.32

Depreciation

-130.26

-122.18

-128.29

-134.70

Exceptional Items

0.36

-2.89

-0.42

0.00

Profit Before Tax

210.90

341.78

431.89

493.62

Tax

-79.69

-122.71

-158.07

-180.17

Net Profit

131.21

219.07

273.82

313.45

Equity capital

119.46

119.46

119.46

119.46

Reserves

601.73

790.59

1064.67

1378.12

Face value

10.00

10.00

10.00

10.00

EPS

10.98

18.34

22.92

26.24

Description
Net Sales

Quarterly Profit & Loss Statement for the period of 31st Mar, 2015 to 31st Dec, 2015E
Value(Rs.in.mn)

31-Mar-15

30-Jun-15

30-Sep-15

31-Dec-15E

3m
1214.20

3m
1095.55

3m
1190.02

3m
1118.62

Other income

18.05

2.67

-1.79

1.50

Total Income

1232.25

1098.22

1188.23

1120.12

Expenditure

-982.33

-892.53

-966.91

-903.84

Operating profit

249.92

205.69

221.32

216.27

Interest

-73.30

-74.50

-79.93

-75.13

Gross profit

176.62

131.19

141.39

141.14

Depreciation

-27.72

-29.78

-29.63

-30.52

Exceptional Items

-2.47

-0.45

0.03

0.00

Profit Before Tax

146.43

100.96

111.79

110.62

Tax

-48.37

-37.02

-45.03

-40.27

Net Profit

98.06

63.94

66.76

70.36

Equity capital

119.46

119.46

119.46

119.46

Face value

10.00

10.00

10.00

10.00

EPS

8.21

5.35

5.59

5.89

Description
Net sales

Ratio Analysis
Particulars

FY14A

FY15A

FY16E

FY17E

10.98

18.34

22.92

26.24

EBITDA Margin (%)

17.80%

18.50%

18.39%

18.39%

PBT Margin (%)

5.99%

8.18%

9.22%

9.58%

PAT Margin (%)

3.73%

5.24%

5.85%

6.09%

P/E Ratio (x)

36.53

21.88

17.50

15.29

ROE (%)

18.19%

24.07%

23.13%

20.93%

ROCE (%)

34.25%

35.58%

34.37%

33.82%

Debt Equity Ratio

2.06

1.77

1.43

1.14

EV/EBITDA (x)

9.92

8.12

7.38

6.70

Book Value (Rs.)

60.37

76.18

99.10

125.34

P/BV

6.65

5.27

4.05

3.20

EPS (Rs.)

Charts

OUTLOOK AND CONCLUSION

At the current market price of Rs. 401.20, the stock P/E ratio is at 17.50 x FY16E and 15.29 x FY17E
respectively.

Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs. 22.92 and Rs.
26.24 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 44% over 2014 to 2017E
respectively.

On the basis of EV/EBITDA, the stock trades at 7.38 x for FY16E and 6.70 x for FY17E.

Price to Book Value of the stock is expected to be at 4.05 x and 3.20 x for FY16E and FY17E respectively.

We recommend BUY in this particular scrip with a target price of Rs. 460.00 for Medium to Long term
investment.

INDUSTRY OVERVIEW
India, with its skilled manpower and flourishing end-user industries, has the right ingredients to emerge as the
global hub for chemical manufacturing provided the government undertakes tax & labour reforms and facility

land availability for the industry. At present, India is the net importer of chemicals as the availability to feedstock
is a major challenge. Add to this woe is the inverted duty structure as a result of which raw materials (inputs) are
taxed at higher rate than the end product. This discourages local manufacturing. India is highly import dependent
for most of its chemical needs. However, it is placed at a point of inflection for rapid growth. India can explore

many alternative feedstock options such as coal gasification, syngas, pet coke, etc. If right technologies are used,

the challenge of feedstock can be solved, provided the government encourages investment in new technologies.
Finance Minister has taken a few steps towards removing anomalies in the duty structures in this years budget.

The government is also aiming to improve business environment by adopting transparent policy changes and
facilitating processes to solve some of the problems faced by the industry.

Make in India will play a pivotal role in driving some of the key initiatives to stimulate growth in the chemical

industry. With GST planned to be rolled out in April 2016, the chemical industry will gain immensely. The
government is committed to its Make in India initiative and chemical industry can play a major role in this
campaign by making India a manufacturing hub for chemicals, especially knowledge and specialty chemicals. The
industry strive hard to adopt eco-friendly technologies for sustainable development and to increase its spend on
research and development.
Outlook

The Company is one of the competitive manufacturing facilities in the world; therefore, there is no risk in shortterm or long-term. The company is always upgrading technologies and product mix in accordance with market
requirements. If the Company utilise full capacity, it can reach Rs.1000 crore Sales by 2016 end.

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.

Firstcall India Equity Research: Email info@firstobjectindia.com

C.V.S.L.Kameswari
U. Janaki Rao
B. Anil Kumar
M. Vinayak Rao
G. Amarender

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