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BUY
CMP
401.20
Target Price
460.00
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
YEARS
FY15A
Net Sales
EBITDA
Net Profit
EPS
P/E
4180.71
773.61
219.07
18.34
21.88
FY16E
FY17E
4682.40
861.22
274.08
22.92
17.50
5150.63
946.98
313.45
26.24
15.29
PROMOTER
FIIs
DIIs
OTHERS
As on Sep-15
75.00
0.00
0.00
25.00
As on June-15
75.00
0.00
0.00
25.00
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
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%
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.
FY15A
FY16E
FY17E
Share Capital
594.46
594.46
594.46
594.46
601.73
790.59
1064.67
1378.12
1196.19
1385.05
1659.13
1972.58
436.78
561.10
617.21
666.59
272.36
289.16
300.73
312.76
535.40
699.23
825.09
924.10
0.00
6.71
7.31
7.75
1244.54
1556.20
1750.34
1911.20
1052.01
1046.53
1077.93
1034.81
Trade Payables
452.20
587.30
657.78
730.13
257.33
262.13
277.86
291.75
52.30
87.51
98.01
107.81
1813.84
1983.47
2111.57
2164.50
4254.57
4924.72
5521.05
6048.28
i. Tangible assets
1964.27
1860.06
1953.06
2031.19
0.27
0.00
0.00
0.00
363.48
440.91
485.00
523.80
2328.02
2300.97
2438.06
2554.99
b) Non-current investments
3.04
3.12
15.65
16.90
88.07
62.78
59.01
62.55
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
67.48
117.53
133.98
150.06
251.74
347.63
504.06
594.79
30.96
42.70
46.97
51.20
1835.37
2557.85
3008.32
3413.83
4254.57
4924.72
5521.05
6048.28
SOURCES OF FUNDS
Shareholder's Funds
APPLICATION OF FUNDS
Non-Current Assets
Fixed 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
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
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
17.80%
18.50%
18.39%
18.39%
5.99%
8.18%
9.22%
9.58%
3.73%
5.24%
5.85%
6.09%
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%
2.06
1.77
1.43
1.14
EV/EBITDA (x)
9.92
8.12
7.38
6.70
60.37
76.18
99.10
125.34
P/BV
6.65
5.27
4.05
3.20
EPS (Rs.)
Charts
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.
C.V.S.L.Kameswari
U. Janaki Rao
B. Anil Kumar
M. Vinayak Rao
G. Amarender