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We initiated this stock at Rs.288 for a target price of Rs.365 on 28-Jul-2016, but considering the gradual improvement in the fundamentals of the
company we upgraded our target price from Rs.365 to Rs.465. The stock has achieved our recommended target and the current price reflects that
the stock has discounted all the positives and going ahead we may see some slowdown in demand of scooters and mileage segment motorcycles
for a couple of months due to higher sales of BS-III vehicles. Hence, we advise our investors to 'BOOK PROFIT' at current levels (up by 64% from our
initiating price of Rs.288). ............................................ ( Page : 2-4)
Revenue growth for 9MFY17 was subdued due to lower commodity prices and demonetization. But the operating margin continues to remain
accretive during the same period. We expect 5% and 15% revenue growth in FY17E and FY18E respectively based on the strong traction in
Transmission and railway business with strong operating margin. We recommended this stock at Rs. 148 for the target price of Rs. 217 and the
stock have achieved our recommended target price. Fundamentally we remain bullish on the stock based on strong order book position and
improving operating margin but on the valuation front, we are not comfortable at current price level (currently stock is trading at 3.2x of P/B of
FY17). Hence, we advise our investors to Book profits at the current price..................... ( PAGE : 9-13)
Result Update
New launches and bottoming out of exports to drive growth
CMP 472
Target Price NA
TVS Motors reported strong volume growth of 9%YoY in FY17. 23%YoY
Previous Target Price growth in the Moped segment during the year led to 11%YoY in two wheelers
Upside segment. Three wheelers segment de-grew by 38%YoY in FY17. Exports
Change from Previous witnessed a tough time during FY17 because of currency availability issue in
the various African countries where the company has good export exposure.
In March 2017 the company posted 24%YoY growth in the exports which
Market Data suggest that the weakness in the export has bottomed out. The management
BSE Code 532343 is also very auspicious based on the robust pipeline of launches across all
NSE Symbol categories in FY18. Scooters and premium segment motorcycles will drive the
TVSMOTOR
higher realization and margins for the company. The most awaited concept
52wk Range H/L 474/278 bike in alliance with BMW will also be launched in 2017. TVS-BMW alliance
Mkt Capital (Rs Cr) 22,258 will further strengthen company's presence in premium bike segment which in
Av. Volume 99639 turn boost company's margin by the change in product mix and give an
Nifty 9,198 opportunity to expand it's footprint in foreign markets.
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Apr-17
Mar-17
Concall Highlights
Management expects double digit growth in FY18.
Capex plan Rs.400 crore in FY17.
BMW project going as per plan and the product will be launched in 2017.
Urban and rural mix are 55% and 45% respectively. Urban sales is higher due to scooterization.
Newly launched Victor monthly run-rate is 20000 units.
Moped segment growth is coming from new model launches and 40% contribution of total sales is from North region.
Management is also looking into non permit driven markets for 3 wheelers.
Exports have been sluggish due to restricted availability of dollars and currency devaluation in some countries.
Market share target 18% in 2 wheelers and 27-28% for 3 wheelers in exports.
25 crore of investment in Indonesian subsidiary in 4QFY17 looking at the growth on 9 month basis.
The Indonesian subsidiary has started showing improvements in topline with 55% growth in 1HFY17 vs HFY16.
Margin guidance of 10 percent by FY18.
Inventory days-28 in 3QFY17 and it will be 30-32 days in 4QFY17.
No big pressure on commodity prices of rising steel price.
The company will review prices in 4QFY17 depending on the commodity price increases.
Tax benefit in Himachal plant will lapse in FY17. It contributes around 10% of total production.
Tax rate would be in the range of 24-25% in FY17.
Plant Detail
Key Risks
Company Update Recently Reliance Jio has withdrawn Jio summer surprise offer on TRAI's
CMP 1434 advice. Now to avail Jio services users have to opt for subscription plans.
We expect that this move will further boost the revenues from Jio.
Target Price 1680
According to management 72mn customers have already opted for Jio
Previous Target Price 1408 prime membership till 31 March 2017. As per the Jios management
Upside 17% estimates, EBITDA margin for Jio in FY18 will be more than 50%. Recently
Change from Previous 19% Jio has announced booster packages starting from Rs 11 going up to Rs
301 to provide additional data to its users. . On the Petro-chemicals front,
Reliance has commissioned the first phase of new Paraxylene (PX) project
Market Data at Jamnagar in Q3FY17 and with the commissioning of this plant, PX
BSE Code 500325 capacity will be more than double from 2.0 to 4.2 MTPA. Further
NSE Symbol RELIANCE management has guided for re-opening of its 1400 retail outlets, which will
52wk Range H/L boost the revenue of petrochemicals segment.
1448/925
Mkt Capital (Rs Cr) 465956 Outlook
Av. Volume(,000) 677 Jio is rapidly capturing market share by providing attractive offers to its
Nifty 9258 prime members and has also promised to offer 20% more data than any
other rivals. Now Jio is targeting to boost its revenue by retaining its
customers. Recently Reliance has rallied smartly and has crossed our target
Stock Performance price of Rs. 1408. We are still optimistic in this stock and hence we
1M 3M 12M recommend HOLD rating for our long-term investors with the revised
Absolute 8.4 36.9 39.3 target price of Rs. 1680
Rel.to Nifty 4.9 16.8 30.7 Corporate Highlights For The Quarter
Gross Refining Margin (GRM) of USD 10.8/bbl for the quarter
Share Holding Pattern-% In December 2016, RIL commissioned the first phase of new Paraxylene
3QFY17 2QFY17 1QFY17 project at Jamnagar
Promoters 46.5 46.7 46.7 Outstanding debt as on 31st December 2016 was Rs.194,381 cr
Public 53.5 53.3 53.3 compared to Rs. 180388 cr as on 31st March 2016.
Others 0.0 0.0 0.0 The capital expenditure for 3Q FY 17 was Rs. 37,791 crore.
Total 100.0 100.0 100.0 Interest cost was at Rs. 1,209 crore in 3QFY17 as against Rs. 945 crore
in corresponding period of FY16, increase is primarily on account of higher
Company Vs NIFTY average exchange rate for the quarter.
140 RELIANCE NIFTY Reliance has operated 1,151 petroleum retail outlets in the country in
130
3QFY17.
120 Exports from India operations were higher by 4.0% at Rs. 38,038 crore
110 Rs,Cr
Financials 2012 2013 2014 2015 2016
100
90
Sales 358501 397062 434460 375435 276544
EBITDA 34508 33045 34799 37364 44257
80
Net Profit 19724 20879 22493 23566 27630
Jul-16
Sep-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Apr-17
Mar-16
Mar-17
EPS 60 65 70 73 85
Aditya Gupta P/E 12.4 12.0 13.4 11.3 12.3
aditya.gupta@narnolia.com
Narnolia Securities Ltd 5
Please refer to the Disclaimers at the end of this Report
Petrochemical business
3Q FY17 revenue from the Petrochemicals segment increased by 17.8% YoY to Rs. 22,854 crore, primarily due to increase in
prices across polymers and polyester chain.Petrochemicals segment EBIT increased sharply by 25.5% to Rs. 3,301 crore,
supported by favorable product deltas and marginal volume growth.
E&P Business
3Q FY17 revenues for the Oil & Gas segment decreased by 31.0% YoY to Rs. 1,215 crore. The decline in revenue was led by
lower upstream production and lower domestic gas price realization. The unfavorable upstream price environment impacted
segment EBIT which was at Rs. (295) crore, as against Rs. 258 crore in the corresponding period of the previous year. Domestic
production (RIL share) was at 23.1 Bcfe, down 24% YoY. For the accounting quarter, upstream production (RIL Share) in US
Shale business was 41.4 Bcfe, down 19% YoY basis.
Organised Retail:
Revenues for 3Q FY17 grew by 47.2% Y-o-Y to Rs. 8,688 crore from Rs. 5,901 crore. The increase in turnover was led by growth
across all consumption baskets. The business delivered strong PBDIT of Rs. 333 crore in 3Q FY17 as against Rs.237 crore in the
corresponding period of the previous year. During the quarter, Reliance Retail added 111 stores across various store concepts.
Trends crossed a milestone of 300 stores during the quarter. At the end of the quarter, Reliance Retail operated 3,553 stores
across 686 cities with an area of over 13.25 million square feet.
During 3Q FY17, revenue from the Refining and Marketing segment increased by 7.5% YoY to Rs. 61,693 crore ($ 9.1 billion).
Segment EBIT was at Rs. 6,194 crore, down 4.3% YoY on account of lower volumes and decline in GRMs. GRM for 3Q FY17
stood at $ 10.8/bbl as against $ 11.5/bbl in 3Q FY16. Reliance GRM outperformed Singapore complex margins by $ 4.1/bbl.
Reliance Jamnagar refineries processed 17.8 MMT in 3Q FY17, marginally lower on QoQ. As at the end of the quarter, Reliance
operated 1,151 petroleum retail outlets in the country.
Digital service
During the quarter, Jio announced the launch of the Jio Happy New Year Offer (JNO) effective from 4th December 2016. Under
the JNO, all the Jio subscribers are entitled to certain special benefits, which comprise of Jios Data, Voice, Video and the full
bouquet of Jio applications and content, absolutely free, up to 31st March 2017.Till 31st Dec 2016 there were 72.4 million
subscribers on the network.Jio is the only operator in India to deploy pan-India LTE on a sub-GHz band, in addition to pan-India
1800MHz and 2300MHz spectrum band.
2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Petrochemicals Revenue 27,128 27,121 26,541 25,398 26,651 23,001 21,754 20,858 21,239 19,398 20,915 20,718 22,422 22,854
Petrochemicals EBIT 2,381 2,115 2,150 1,863 2,361 2,064 2,003 2,338 2,531 2,639 2,713 2,806 3,417 3,301
Petrochemicals EBIT Margin 9% 8% 8% 7% 9% 9% 9% 11% 12% 14% 13% 14% 15% 14%
Exploration & Production
2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Oil and Gas Revenue 2,682 2,926 2,798 3,178 3,002 2,841 2,513 2,057 2,067 1,765 1,638 1,340 1,327 1,215
Oil and Gas EBIT 956 607 762 1,042 818 832 489 32 242 90 14 (312) (491) (295)
Oil and Gas EBIT Margin 36% 21% 27% 33% 27% 29% 19% 2% 12% 5% 1% -23% -37% -24%
Retail
2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Organized Retail Revenue 3,470 3,941 3,653 3,999 4,167 4,686 4,788 4,698 5,091 6,042 5,781 6,666 8,079 8,688
Organized Retail EBIT 70 38 24 81 99 133 104 111 117 147 131 148 162 231
Organized Retail EBIT Margin 2% 1% 1% 2% 2% 3% 2% 2% 2% 2% 2% 2% 2% 3%
Investment Rationale
Massive Capex programme coming onstream: RIL has spent ~70% of the planned USD1850Cr capex (this number was
USD1650Cr earlier) on its four key projects (petcoke gasification, polyester expansion, off-gas cracker and ethane sourcing).
We believe that the three expansion projects: petcoke gasifier, refinery off-gas cracker, and ethane intake facilities will be
fully operational by FY17E.The companys massive capex programme will push future earnings.
Telecom launch in FY18: The commercial launch will give us better visibility on execution, business outlook, and earnings.
RIL is the largest private player in the refining, petrochemical and E&P sectors in India.The petrochemicals segment includes
production and marketing operations of petrochemical products which include, polyethylene, polypropylene, polyvinyl chloride, poly
butadiene rubber, polyester yarn, polyester fibre, purified terephthalic acid, paraxylene, ethylene glycol, olefins, aromatics, linear
alkyl benzene, butadiene, acrylonitrile, caustic soda and polyethylene terephthalate. The refining segment includes production and
marketing operations of the petroleum products. The oil and gas segment includes exploration, development and production of
crude oil and natural gas. RIL has made significant investments in US shale gas. In terms of EBIT, Refining contribute 60% and
Petrochemicals 30%. RIL is also expanding its presence in the areas of consumer retailing and telecom.
Net sales de grew by the 6.5% YoY to Rs. 1965 Cr in Q3FY17 as compared to Rs. 2101 Cr in Q3FY16
EBITDA margin has improved by 135 bsp to Rs. 182 Cr as against Rs 167 Cr on account of 10% plus margin in T&D and
improved performance of railway and SAE business.
KEC has reported 102% YoY growth in PAT with 200 bps improvement on back of higher EBITDA
During the quarter KEC has secured Rs.2706 Cr of new orders in Q3FY17 (up by 20% YoY) and Rs. 8634 Cr in 9 months of
FY17, which is up by 26% YoY
Order book as on 31st December stands at Rs.11175 Cr, ie. 1.3x of TTM revenue.
Demonetization, delay in conversation of L1 orders into firm order and land acquisition issue at Jammu and Kashmir project led
to de growth in revenue
Management has guided 5% and 10-15% revenue growth in FY17 and FY18 respectively.
EBITDA margin in FY17 will be 9% and it will improve further in FY18
EBITDA margin of SAE tower was 8-9% in Q3FY17
Faced some serious issue in logistic in November and December month due to demonization but now situation is under control.
Losses in Cable segment has come down significantly on YoY
Revenue loss of 50-60 Cr due to demonization
Maintain revenue guidance in railway segment of Rs. 450-500 Cr and Rs.1000 cr in FY18
Interest cost as % of sales will be 2.7% in FY18
Significant improvement in solar business from next year as the KEC is in L1 position of large project. EBITDA margin is slightly
below than normal margin but cash generating on PBT level
Expect to bring down AR collection days to 180 from 218 days based on the release of retention money from Saudi projects
Land acquisition issue at Jammu and Kashmir project has been resolved
Expect more orders from SEBs compare to PGCIL
Order Book 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Transmission 7,356 6,921 7,131 7,903 7,207 7,028 7,087 7,334 7,442 8,054 15% 8%
SAE 931 876 951 948 1,086 937 1,134 1,769 1,510 1,342 43% -11%
Cables 279 263 570 632 592 469 472 104 216 224 -52% 4%
Railways 279 263 475 738 691 562 567 936 1,186 1,342 139% 13%
Water 466 438 380 316 - 281 189 208 216 112 -60% -48%
Solar 9 9 - - 296 75 38 52 183 101 34% -45%
Total 9,320 8,770 9,508 10,537 9,872 9,351 9,487 10,403 10,753 11,175 20% 4%
Order Intake
Transmission 583 1,478 1,909 2,375 1,024 1,595 1,370 1,469 1,738 1,651 4% -5%
SAE 231 485 421 123 181 247 206 678 465 298 20% -36%
Cables 253 412 393 309 181 270 206 198 279 244 -10% -13%
Railways - 48 84 278 90 90 56 424 528 460 412% -13%
Water - - - - - - - - - -
Solar 11 5 3 - 30 45 38 57 93 54 20% -42%
Total 1,078 2,428 2,811 3,085 1,506 2,246 1,877 2,825 3,103 2,706 20% -13%
11
Narnolia Securities Ltd
KEC International Limited is an India-based company, engaged in infrastructure engineering, procurement and construction (EPC).
The Company is also a manufacturer of power cables and telecom cables in India. The Company operates in four business
verticals, which include power transmission and distribution, cables, railways and water. The Company is also a provider of turnkey
solution in the railway infrastructure EPC space. The Company has powered infrastructure development across 50 countries in
developed, developing and emerging economies of South Asia, the Middle East, Africa, Central Asia, the United States and South
East Asia. The Company has eight manufacturing facilities for lattice towers, monopoles, hardware and cables.
Power Transmission
Cabels Railways Water
& Distribution
Electrification
Supply EPC
Manufacturing Facilities
Tower Manufacturing
India, Brazil and Vadodara (Gujarat)
Mexico Mysore (Karnataka)
(SAE Annual Silvassa (Union
production capacity Territory)
100000 MTs)
Company Update Aurobindo Pharma clears USFDA inspection for Unit-11 in Srikakulam,
CMP 681 Andhra Pradesh with zero observations. The Unit-11 plant produces non-
antibiotic active ingredients,which is used for both the captive purpose of
Target Price 890
Aurobindos formulation manufacturing and for supplies to external
Previous Target Price 890 customers. The US formulation business contributes 45 percent of
Upside 31% Aurobindos total revenue Rs.13,890 cr. The acquired business(Agile
Change from Previous 0% Pharma) continues to see profitable during Q3FY17. As on 31 Dec 2016,
Auro pharma has transferred manufacturing of 60 products from Europe to
Vizag facility in India. Management expects supply from this facility to EU
Market Data markets from FY18E. The estimated sales revenue from this facility is Rs.
BSE Code 524804 1300 Cr. per annum. Apart from that recent approvals from USFDA in
NSE Symbol AUROPHARMA various segment will enable the company to launch multiple products in
52wk Range H/L FY18E
895/622
Mkt Capital (Rs Cr) 39900 Outlook
Av. Volume(,000) 232924
Nifty 9237 We expect Auropharma will be able to register growth from the US and EU
business, on the back of 40-45 launches which are expected in FY18. Apart
from that management is focusing to develop dermatology, Ophthalmology
Stock Performance
segments which will help the company to diversify its portfolio in future.
1M 3M 12M
Currently the stock is trading at 5 times FY17 P/B and 17 times FY17 P/E.
Absolute -0.3 0.9 -9.0 Considering the above arguments we maintain HOLD rating in this stock
Rel.to Nifty -3.6 -12.3 -27.6 with the target price of Rs.890
Result Update
CMP 322 Recent Development :-
Target Price 350 Recently, KALPATPOWR has received orders worth of Rs. 1202 Cr in
Previous Target Price 320 Transmission and Railway segment. Company has secured 738 Cr worth of
Upside 9% transmission projects in Telengana (Rs.402 Cr) and Abu Dhabi (Rs.336 Cr)
Change from Previous 9% and big ticket size order worth of Rs.464 Cr in key Railway segment from
Railway Vikas Nigam Limited. With this order win KALPATPOWR standalone
order book stands at Rs.9502 Cr, which gives strong revenue visibility (1.95x
Market Data
of TTM revenue) going forward. Managements has reiterated 15-20%
BSE Code 522287 revenue growth in FY 18 based on the current order book and company will
NSE Symbol KALPATPOWER continue to build portfolio of projects in Railway EPC sector, which will be key
52wk Range H/L 333/202 growth driver going forward. Companys real estate arm JMC has also won
Mkt Capital (Rs Cr) 4,942 orders in Residential and commercial building worth of Rs.1058 Cr.
Av. Volume 23737
Nifty 9174
Strong Opportunity in Infra Segment :-
Stock Performance Currently, Infra segment (Pipeline and Railway) contributes only 10% of the
1Month 3 Month 1Year Order book but we see huge opportunity going forward especially in Railway
Absolute 14.5 29.9 57.4 segment. KALAPTPOWER has strong order pipeline of 3000 Cr and 1500 Cr
Rel.to Nifty 12.0 17.8 38.8 in Railway and Pipeline business respectively. Railway Ministry has set a
target to award 2000 Km, 4000 Km and 6000 km of overhead electrification
orders in FY17, FY18 and FY19 respectively which provides huge opportunity
Share Holding Pattern-%
going forward. Shri Shubham logistics business remained muted in Q3FY17
3QFY17 2QFY17 1QFY17 due to demonization and we do not expect significant improvement in it
Promoters 59% 59% 59% inFY17
Public 41% 41% 41%
Others 0% 0% 0%
Outlook & Valuation:-
Total 100% 100% 100%
The current order win of Rs.1202 Cr further strengthen the standalone order
Company Vs NIFTY book position, which provides strong revenue visibility (1.95x of TTM
155 revenue) going ahead. Advanced stage of overseas projects in transmission
KALPATPOWR NIFTY
will help to register strong revenue growth of 20% in FY17. Considering the
145 railway ministries ambitious target, we see tremendous growth opportunity for
135 the company like KAPLATPOWR. Based on the recent order win, especially
from Railway we have revised our target price to Rs.350 (Standalone
125
business at 290 per share and Subsidiaries at 60 per share) and we
115 recommend HOLD on the stock.
105
Financials Q3FY17 Q2FY17 Q3FY16 YoY % QoQ %
95 Sales 1158 1143 899 29% 1%
Dec-16
Jun-16
Oct-16
Nov-16
Jul-16
Apr-16
Sep-16
Feb-17
Mar-16
Mar-17
EBITDA
Jan-17
Aug-16
Result Update BMC Blacklisting will not hurt Revenue and Profitability
CMP 260 BMC has issued show cause notice to JKIL for irregularities in execution of
Target Price 330 three projects namely I) W 266 -concreting of various roads in western
Previous Target Price suburbs II) W 277 improvement of side strips of linking roads in mastic
Upside 27% asphalt in H/W and K/W wards in western suburbs III) AW 90- improvement
of various roads in Asphalt in P/N ward in western sunburns. These projects
Change from Previous
were awarded by Municipal Corporation of Greater Mumbai (MCGM) to the
Joint Venture of J Kumar and KR construction. If the liabilities are crystallized
Market Data than JV has to pay penalty of 19 Cr, 1Cr and 1 Cr respectively and
BSE Code 532940 cumulatively J Kumars share will be 10 Cr. Further the same can be
NSE Symbol JKIL recovered from the sub-agencies to whom work has been given for the
52wk Range H/L 303/105 execution. So we assume there could be minimal impact on bottom line.
Mkt Capital (Rs Cr) 1,967 Around 70% of the current order book contribute by Metro projects and rest
Av. Volume 172674 from Road projects but very minimal orders from BMC. So we believe it will
Nifty 9174 not impact execution and order inflow going ahead. So we remain bullish on
the stock despite BMC issue.
Stock Performance
1Month 3 Month 1Year Key Growth Driver:- Mumbai Metro projects
Absolute 15.8 26.8 -5.1 Mumbai metro projects are continue to be a growth driver for the JKIL for
Rel.to Nifty 13.3 14.7 -23.6 next 3-4 years. The unexecuted work on all 3 Mumbai metro projects
contributes nearly 67% to current order book. All the initial ground work is
Share Holding Pattern-% completed and we expect full swing in execution and management is
confident to complete significant portion of line 2A and 7 by FY19.We expect
3QFY17 2QFY17 1QFY17
Rs. 1275 Cr of revenue from 3 Mumbai metro projects in FY18, around
Promoters 44% 44% 43%
Rs.1000 Cr revenue from line 3 only in FY19 and Rs.770 Cr of revenue from
Public 56% 56% 57% line 2A & 7 in FY19. This will not only support the better revenue growth but
Others 0% 0% 0% also strengthen the operating margin as the metro projects have better
Total 100% 100% 100% margin compare to normal road projects.
Company Vs NIFTY
Strong Order Pipeline :-
130 JKIL NIFTY
Around Rs. 10000 Cr of new metro projects in state of Maharashtra will be
110
bided out in next 1-2 years. JKIL will bid for the Mumbai metro line 2B and 4,
90 total of 10 packages of 500 Cr each, tunnel work of Mumbai- Pune
70 expressway, Mumbai- Nasik expressway, Vijayawada and Bangalore metro
projects. But JKIL will go slow in terms of new order acquisition in order to
50
focus on execution.
30
Financials Q3FY17 Q2FY17 Q3FY16 YoY % QoQ %
10 Sales 369 310 310 19% 19%
Jul-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Mar-17
Will Maintain top line of 1600 Cr in FY17 and Rs. 2000 Cr in FY18
Employee expense has gone during the quarter as the JKIL has started metro project in big way and full fledge revenue yet to
come
Preliminary work has completed on Mumbai metro project and work is in full swing
Debtors of 563 Cr at the end of the Q3FY17, but has come down to 440 Cr in Feb
Inventory at the end of Q3FY17: - 106 Cr of RM, 280 Cr of WIP
Protest by localized people against tree cutting but its awarding authority concern and it will not hamper execution.
Advances of 125 Cr has taken from line 3 & 7 and in month time advances will receive from line 2A
Payment cycle for Mumbai metro project is 45 days from date of bill raised
No significant revenue during the Q3FY17 from JNPT project due to utility work is going on
Mgt. expects 200-250 Cr of revenue from Mumbai metro, 200 Cr from other road and flyover projects
Pending work on Delhi metro is tune of 250 Cr at the end of the Q3FY17
Unexecuted portion of JNPT road project is 1050 Cr
Utility revenue of 30 Cr was booked from JNPT road project in Q3FY17
480 Cr of Debt as on 31st Dec 2016
FY18 Top line :- 1300-1400 Cr from Mumbai metro, 400 Cr from JNPT, 200 cr from others
Will maintain 17-18% EBITDA margin going forward
Debt FY17:- 350-400 Cr, FY18 :- 500-550 Cr
Current Working capital days is 174 and expect to bring down to 160 days
1000 Cr of revenue from Line 3, 700-800 Cr of revenue from line 2A &7 in FY19
Strong order book and execution of Mumbai metro projects boosted revenue in Q3FY17and we expect it to continue. We believe
that the black listing from BMC projects and penalty will not affect the top and bottom line of the company in bigger way as 70% of
current order book is comes from metro projects. The current downfall in stock price is irrational and we believe it is the opportunity
for the investors. We continue to expect 9%, 20% and 27% revenue growth in FY17, FY18 & FY19 respectively based on the strong
order book and robust execution of Mumbai metro projects. Despite blacklisting from BMC projects we remain bullish on the
stock and maintain our BUY rating on the stock with unchanged target price of 330.
J. Kumar Infraprojects Limited is engaged in construction activities. The Company designs and constructs roads, bridges, flyovers,
subways, over bridges, skywalks and railway terminus/stations, among others. The Company's offerings in civil construction
segment include office/commercial buildings, sports complexes and swimming pools. In Irrigation Projects segment, the Company
builds dams, canals, aqueducts and irrigation tanks, and spillways. The Company has approximately 20 hydraulic piling rigs, which
are used to build pile foundations for buildings and flyovers, marine structures and offshore platforms. Its Piling segment caters to
various real estate and infrastructure companies. The Company's projects include Underground Metro CC-24, Delhi Metro Tunnel,
Ahmedabad Metro, Balewadi Bridge and Dhankawadi Flyover. Its other projects include Kapurbawadi Flyover, Kherwadi Flyover,
Amarmahal Flyover, Amarmahal Flyover, Thakur Flyover, Bhivandi Flyover and Aurangabad Flyover.
JKIL
Key Clinets
Vidharbh Irrigation
DMRC,MEGA, UPRNN, MCX, Development,
PWDs, Indian Pimpari Irrigation HCC,HDIL, Punj
MSRDC, MMRD, M
railway Division, Bambla Lloyd, JSW, LANCO
CMG
Canal Division
Margin Profile 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY (+/-) QoQ (+/-)
Gross Margin 42.3% 43.0% 38.8% 33.0% 35.1% 40.9% 38.9% 30.9% 37.0% 34.2% (670 bps) (280 bps)
EBIDTA 20.8% 19.7% 16.9% 18.5% 18.1% 18.3% 15.7% 16.9% 18.2% 17.1% (120 bps) (110 bps)
EBIT 16.7% 15.6% 13.7% 15.1% 14.3% 14.2% 12.4% 13.6% 13.9% 13.2% (100 bps) (70 bps)
PAT 6.7% 7.9% 6.8% 7.1% 6.6% 7.7% 7.1% 7.3% 7.4% 7.2% (50 bps) (20 bps)
Growth YoY
Sales Growth 27% 11% -11% 8% 10% 2% 0% 11% -6% 19%
EBIDTA Growth 45% 19% -7% 11% -4% -5% -7% 1% -6% 11%
EBIT Growth 44% 14% -10% 9% -6% -7% -9% 0% -9% 11%
PAT Growth 15% 21% -13% 13% 8% 0% 5% 14% 5% 11%
Operating Matrix FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 YoY% Q3FY16 Q3FY17 YoY%
Opening Order Book 737 1219 1480 1266 2512 3661 3122 3024 -3% 3658 10000 173%
Revenue Booking 365 723 878 879 955 1146 1285 1328 3% 310 369 19%
Order Intake 847 984 664 2125 2104 607 1187 1518 28% 32 0 -100%
Closing Order Book 1219 1480 1266 2512 3661 3122 3024 3214 6% 3380 9700 187%
Strong revenue growth of 19% in Q3FY17 was on account of work commencement on Mumbai metro projects.
JKIL will slow and selective in terms of new order intake in order to focus on execution. Management has guided for Rs.2000 Cr
of new order inflow for the next year to maintain 10000 Cr + order book.
We anticipate healthy operating margin in range of 16-18%, margin depend on revenue mix (tunnel work has better margin comparatively)
10,000
9,700
12000 2.5
8,646
10000 2 new order intake to focus
8000 1.5 more on execution. Avg.
order intake will be in
3658.3
6000 1
3,380
2915.4
3,214
3198
3100
3024
4000 0.5 range of Rs.2000 Cr in
2000 0
order to maintain 10000 Cr
0 -0.5
plus Order book
Sales Growth %
450 30%
393 390 391
400 355 369 25%
350 322 20%
296 297 299 303
300 15%
250 10%
200 5%
Mumbai metro projects
150 0%
100 -5% will drive the revenue
50 -10% growth going ahead
- -15%
Line2 A
1,506 Line 7
4.00
3.58 3.52
3.50 3.23
2.97
3.00 2.65
2.50 D/E will remain strong
2.00 in range of 0.25 to 0.38
1.50
1.00 0.80
0.55
0.33 0.42
0.50 0.25
-
FY12 FY13 FY14 FY15 FY16
Disclaimer..15
Target Price
Cosmo is a leading manufacturer of BOPP ( Biaxially Oriented
CMP 380 Polypropylene) films in India with a 20% market share. It provides cost-
Target Price 490 effective innovative packaging solutions to leading FMCG & global brands.
Previous Target Price - Company was first to manufacturer BOPP film in India. Now its products
encompass newer categories of valued added products viz: Thermal,
Upside 29%
Coating, Metalizing films besides the traditional BOPP films. Cosmo is the
Change from Previous - larget manufacturer of value added thermal films in the world with 15%
market share. It has diversified portfolio of marquee clients which like
Market Data Britannia, Cadbury, Colgate, Cipla, ITC, Parle, UB, Uniliver etc. Cosmo has
wide manufacturing footprint with 4 state of the art mfg. units in India and 2
BSE Code 508814
outside,one is situated in US and another in South Korea. Cosmo's
NSE Symbol COSMOFILMS consistent efforts towards itroducing innovative products has put it in a
52wk Range H/L 431/262 different categary of film maker with highest margins among industry peers
Mkt Capital (Rs Cr) with commanding industry size.
740
Av. Volume READY FOR A NEW GROWTH PHASE ... Key Growth Drivers
69931
Nifty 9,144 Cosmo has expanded its capacity in BOPP films by 60000 mt from 136000
mt/annum to 196000 mt/annum (44% increase), which is going to be the next
Stock Performance growth driver for the company.
1Month 1Year YTD Current positioning of BOPP film indust players augurs well, as there is no
Absolute 5.2 15.4 40.4 overcapacity in the industry at present and almost all the capacities in India
running at 100% utilisation level. Increasing demand of BOPP to boost
Rel.to Nifty 3.5 2.8 23.2
growth in the industry as demand for BOPP is expected to grow at 15% p.a.
Share Holding Pattern-%
3QFY17 2QFY17 1QFY17 In recent years, with launch of value added newer and speciality products
Promoter 43.5 43.5 43.5 through innovations, Cosmo has positioned itself as a leader among its peers
through growth in sales with sustainable high margins vs peers..
Public 56.5 56.5 56.5
Others -- -- --
Total 100.0 100.0 100.0 New BOPP line which has commisioned from Feb 2017, to boost margins
in BOPP film segment as new line is cost effective through higher production
Company Vs NIFTY with lesser manufacturing cost vs its existing line..
160 COSMOFILMS NIFTY Cosmo's focus to increase share of value added films in its total product
160
150 COSMOFILMS NIFTY portfolio will augur well for the company in long run. By FY16 end, share of
150
140 value added films in total reveue was 49%, improved from 40% in FY14. In
140
130 volume terms speciality films contributed 40% in FY16. Management has
120
130 targeted 50% volume from speciality films in long run.
110
120
100
Cosmo has been working upon to improve its balance sheet and financial
110
dynamaics in the past, which has given favourable results. Cosmo has
90
100
positioned itself best financially structured player among its peer which will
80
90
offer benifits in future and comfortable investment opportunity for investors.
Jul-16Jul-16
Sep-16
Feb-17
Jan-17Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Mar-17
80
Sep-16
Feb-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Cosmo is well poised to grow its sales and profitablity with changing
Apr-16
Mar-16
Mar-17
consumption pattern and increasing demand for flexible packaging, which will
enhance capacity utilisation in Speciality and new added BOPP line, thus
benefit of operating leverage will arise.
Anurag Arora
anurag.arora@narnolia.com
Narnolia Securities Ltd3
26
o the Disclaimers at the end of this Report
To cater to the growing demand of BOPP film, Cosmo has undertaken capacity expansion in its BOPP line situated at Baroda
plant. Cosmo has enhanced its BOPP capacity from 136000 mt /annum to 196000 mt /anuum, an increase of 44% and 60000
mt/annum. Currently company's BOPP capacity was running at full utilisation. Now with this new BOPP line, which has been
commisioned now from Feb 2017, Cosmo is set to realise next level of growth through sales from new BOPP line. As per
management, at full utilisation level, new line will add upto 600 cr to the topline, which is a significant revenue increase. Also
Cosmo has increased its metalised films capacvity by 7200 MTPA, which will increase revenue in speciality film segment.
Cosmo films has not only grown as a Key BOPP Player within the
country with 20% market share and became the largest exporter of
BOPP film from India, also it has been able to sustain as a value
added player with launching new innovative packaging film
products through focus on R&D and technology. Now Cosmo's
value added films contribute 49% to its revenue in FY16, grown
from 40% in FY14. In value terms, speciality films now contribute
almost 40% to the total volume. In traditional commodity (BOPP)
films, industry is competetive and one could not enjoy edge over
others as prices are largely dependent on prices of homopolymer,
(key raw material) ,a derivative of crude oil; However unlike other
BOPP players, Cosmo has been able to position and prove itself
as a value added high margin packaging film player, through
consistant innovations and R&D, providing Cosmo, big comfort on
margins, generating above normal returns on shareholder's equity.
70%
Continious focus on R&D and introduction of value added
speciality films has helped company to position itself from a
60%
commodity film maker to value added industry player, which has
been helping company to sustain its gross margin to higher level
50%
Speciality Vs. its industry peers.. Gross margins of the company has
films improved consistantly over years and company has been able to
40%
sustain its margins even in the adverse quarters at much higher
BOPP levels through increasing revenue share of speciality films.
30%
20% GM %
According to management, value addition in normal BOPP films is
Rs.25-50 on PPE (Raw material) prices, whereas in Speciality
10%
films, value addition is upto Rs.90-100, which improves overall
0% margins significantly.
FY14 FY15 FY16 FY17E Due to higher share of value added films, Cosmo's gross margins
has seen significant jump from 30-32% to 38-40% from FY13 to
FY16.
Cosmo's consistent focus on R&D is giving it space to grow higher vs its peers and a reason for outperformance in adverse and
difficult times when industry is depressed.. It is evident from the fact that Cosmo has been able to deliver above average industry
margins in after FY12, when industry was going through the phase of overcapacity, low demand and adverse commodity cycle.
Though management has indicated for comparatively lower gross margins initially after commisioning of new BOPP line, they are
also confident of achieving 50% revenue contribution back from speciality films, and 50% volume (slightly longer term target),
which will give boost ROEs of company in longer term. Till date, Speciality films capacity is running at 60% utilisation on name
plate capacity and they according to them, this is enough for next one year. After achieving 70% utilisation on name plate
capacity.(considered 100% when 70% on name plate capacity).
The new BOPP line added by Cosmo at its Vadodara Plant with the cost of INR 2 bn (80% finance by debt and 20% by internal
accruals) has started commercial production from Feb 2017. Based on the management guidance, this new line at its peak
production will add approx. 6 bn to the topline. Also management is confident of achieving full utilisation within 5-6 months from
start of commercial operations.
Sales gross Profit EBITDA Gross % EBITDA% This new line will have 10.4 mtr width line. Currently, maximum 8.6
mtr width line is available in Indian films industry. On account of
3000 45% higher width line, management has indicated there will be
42% 41% 42%
40% substantial reduction in per unit power consumtion and also
2500 37%
35% wastage during production process. Management expects
32% electricity consumption of new line to be 30% lower as compared
2000 30% 30%
to the current most efficient line of Cosmo Films. The new line is
25%
1500 likely to reduce cost of production by Rs. 3./kg from the cost it
20% currently incurs. Around 1 cr. savings on the electricity side could
1000 15% be seen with this new line, every quarter. Management expects the
12% 13% 13% new line will play critical role in improvement in EBITDA margins.
11% 10%
500 7% 6% 5%
We strongly believe, with this line Cosmo will not only be able to
0 0%
achieve sales growth, also it will be able to command and sustain
FY14 FY15 FY16 FY17E FY18E FY19E higher gross and EBITDA margins, outperforming industry.
On the back of strong product portfolio consisting high magin speciality films, higher bargain power, Cosmo has been able to
generate healthy operating cash flows, resultant recuction in gross debt level over year. Cosmo has stengthened its financial
health through improved balance sheet. Continious reuction in Debtor, Inventory days lead to overall reduction in working capital
requirement. This had an effect of generating higher FCFF, Return on equity and Return on capital employed, resultant value
creation for business and investors.
14.0 60
12.0
50
10.0
40
8.0
30
6.0
4.0 20
2.0 10
0.0
0
FY15 FY16 FY17E FY18E FY19E
FY12 FY13 FY14 FY15 FY16 FY17E FY18E
Interest Coverage Ratio Working Capital Turnover Ratio Debt/Equity Debtors Days Investory Days Payable Days
Polypropelene which is by product of petrochemical industry is a key raw material for the company with a strong co-relation with
crude prices. The relationship is not leniear with less volatility, however the trend in the price movement of PPE is similar too that
of the crude prices. There are about 4-5 domestic suppliers of PPE, and largest is Reliance Industries. Management commented
that sourcing of this raw material is mainly done through a major private Oil & Gas refinery company. Nominal rebate and
favourable terms are offered to the buyers of PPE who buy PPE in bulk form these suppliers.
Also there is transparent index globally known as PLATT index, which releases prices of PPE every fortnightly. Suppliers of PPE
use this data for price identification and post this they supply PPE to domestic BOPP film producers with applicable rebate
structure as discussed with each BOPP manufacturer. Cosmo films in turn revise its price list on the same day for all its
cusotmers. THis practice is followed by the entire BOPP industry in India. This there is no or minimal commodity pricing risk for
the companies and any fluctuations in te prices of PPE is fully passed-on to the customers.
WELL DIVERSIFIED PRODUCT PORTFOLIO AND MARKETS
Cosmo is fairly immune to the risk related to mamcro-economic environment of a particular country as it has strategically
diversified its presence into 80 countries across the world. It does not have exposure of more than 4% of total turnover to a
particular country except for US. Company will face minimal impact from Brexit, either directly or indirectly (through forex
fluctuations) owing to raw material imports, which nullify and provies a natural hedge for the same, as Cosmo's valu added films
contributes almost 50% of the total turnover till FY17.
HEALTHY DIVIDEND YIELD WITH CONSISTENCY IN PAYOUT
Cosmo has long history of sharing its profits with the investors in form of dividend. Cosmo has been sustaining its dividend payout
in the range of 20-30% depending on the capital which company needs from time to time for expansion and other capital needs.
At CMP Cosmo's stock price offering 3% dividend yield as distributed by the company for FY16, providing investment opportunity
with healthy dividend yield on the invested capital.
In FY15, Cosmo incurred a loss of $5mn in its US subsidiary and this got reduced to $2.2 mn in FY16. Of this loss in FY16, 50%
was booked in only Q1FY16. Though the whole picture of US operations is not very rosy in FY17 despite serious steps taken by
the company for turning it around through restructuring of business and launching of newer value added products epciality for US
markets, Management has guided for much better numbers and break even of US business by FY18. Cosmo is working for
making US business cost efficient through manufacturing new value added producs in US. In past, US business loss was mainly
attributed from forex losses incurred by the US Subsidiary. We believe US break even will give major boost to company's
consolidated performance which has been a drag on stock priceSecurities
Narnolia since long,
Ltd leading to rerating of stock in near future.
INDUSTRY STRUCTURE & DEMAND POSITIONING: GLOBAL & DOMESTIC
The Size of global packaging industry is $700 bn and that of India is at $ 32bn. Te size of global packaging industry is expected to
see a CAGR of 7.5% to $ 1tn over FY15-20. Indian packaigng industry is expected to reach $73bn, to be more double over the
same period.
Both organised and unorganised industry are established in Indian Packaging industry, and also giving intense competetion to
each other.
Indian Packaging industry is divided into rigid and flexible packaging. Rigid is expected to grow at 15% whereas flexible
packaging is expected to grow at 25% annually, thereby gaining share from rigid packaging.
Growing consumption of packaged food, FMCG, personal care and other packaged products in level in Tier II and tier II cities
leading to uge demand and growth for flexible packaging. The continious improvement in lifestyle and per capital income level will
aid significant benifit to flexible packaging industry over medium to long term.
FLEXIBLE PACKAGING TAKING ON RIGID PACKAGING: BOPP EDGE
200000
Currently Indian BOPP Industry total production capacity is 560000
MTPA. Jindal Polyfilms is the largest player with total production
150000
capacity of 210000 MTPA. After recent expansion with total
196000 MTPA capacity, Cosmo has become neck to neck player
100000 with JindalPoly.
There is balance prevailing amongst players unlike 2011-2012,
50000 where there was sudden increase in supply on account of
substantial capacity expansions by all major players in industry at
same time.
0
With the growing demand of BOPP films over years, these excess
Jindal Poly Cosmo Max Polyplex Nahar Poly SRF
Films Speciality Polyster capacities of those time got absorbed now and almost all the
BOPP players are running at 100% utilisation currently.
DOMESTIC DEMAND SCENARIO FOR FLEXIBLE PACKAGING
The Indian Food & Beverage industry has nearly 25% yearly growth and major application of plastics in food products is in
packaging. Thus growth in food and beverage sector highlights the growth potential for plastics in packaging. Similarly, personal
care sector, which is growing at nearly 15%, will also drive demand for rigid plastics, as it is the most used material for packaging
of personal care products. Other industrial sectors such as, pharmaceutical that is proposed to grow at 13-15% over next five
years, retail industry, that is currently witnessing the shift from unorganized to organized retail; will also stimulate the demand of
plastic in packaging material. Government's current campaign on "Make in India" which aims to turn the country into a global
manufactruing hug will have positive impact on the growth packaging industry.
Narnolia Securities Ltd
31
KEY GROWTH DRIVERS FOR FLEXIBLE PACKAGING INDUSTRY
KEY POINTS
Packaging is one of the fastest growing industries stands at $700
bn globally. It has grown higher than GDP in most of countries. In
developing countries like India, it grew at a CAGR of 16% in last
five years and touched $32bn in FY15.
PRODUCT PORTFOLIO
1. Printing & Pouching Films 1.Dry Thermal Lam.Films 1.Pressure Sensitive Label stock 1. Pressure Sensitive films
2. Barrier Films 2.Wet Print Lam. Films Films 2. Tape & textile Films
3. Overwrap Films 2. Direct Thermal Printable Film
3. In-mould films
4. Wrap around label films
REVENUE SHARE AMONG PRODUCT CATEGARIES
70%
Chart showing export share over years Cosmo Films Limited is Pioneer of BOPP Industry in
60%
India and one of the global leaders and
50% manufacturers of BOPP Films. Company is also the
40% largest BOPP film exporter from India.
30%
CF Global Holdings Limited GK (CGHG) (Japan) Cosmo has fairly large Board with 3/4th number of
Cosmo Films (Netherlands) Cooperatief U.A independent directors on the Board with persons
CF (Netherlands) Holdings Limited B.V. having decent qualification and rich experience in
Cosmo Films Japan, GK different industry working..
Cosmo Films Singapore Pte Limited Mr. Ashok Jaipuria, Chairman & MD
Cosmo Films Korea Limited Mr. A.K Jain, Whole time Director
Cosmo Films Inc Mr. H.K Aggarwal, Independent Director
CF Investment Holding Private (Thailand) Company Mr. Rajeev Gupta, Independent Director
Cosmo Films Inc. (US) Ms. Alpana, Non Ecex. Non Independent Director
Mr. Ashish Kumar Guha, Independent Director
Mr. Pratip Chaudhary, Independent Director
Mr. H.N. Sinor, Independent Director
COSMO FILMS: HOW COMPANY OPERATES
In BOPP Industry in India and across globe, name plate ( a unit measurement) capacity is calculated based on 25 micron film
under standard 24 hour unit of production for 365 days. Based on customer requirements, Cosmo can produce different micron
films. If a company produces 70% of total name plate capacity, it is considered as 100% utilisation. In FY16, Cosmo has produced
100000 MT on a name plate installed capacity of 136000 MT. p.a., thereby implying a 100% capacity utilisation. Currently Cosmo
is operating at 72-73% utilisation on name plate capacity which is more than 100%, as guided by management.
FINANCIALS & VALUATIONS
35
Ratios
36
COMPARISON WITH KEY INDUSTRY PEERS
35
25.0
Return on equity 30 EV/EBITDA comparison
20.0
25
15.0 20
15
10.0
10
5.0
5
0.0 0
201209
201212
201303
201306
201309
201312
201403
201406
201409
201412
201503
201506
201509
201512
201603
201606
201609
-5.0
1.4
1.8
Asset Turnover 1.2
1.6
Price/Book
1.4 1
1.2 0.8
1
0.6
0.8
0.4
0.6
0.4 0.2
0.2 0
0 FY13 FY14 FY15 FY16
1 2 3 4 5
Jindal Poly Polyplex Cosmo Jindal Poly Polyplex Cosmo
9
A quick look into comparison between Cosmo ans its
Return on Assets nearest listed industry peers suggest that Cosmo will
8
be able to command higher valutation vis a vis its
7 peers such as JindalPoly (Highest Capacity in BOPP)
6 and Polyplex.
5 Cosmo has highest ROE, Assets Turnover, ROCE,
4 Return on Assets and Book value in comparison to
Jindal Poly Films and Polyplex Corp. as shown here
3
in the respective charts, however its stock price
2 quoting at approx. similar valuations on EV/EBITDA,
1 EV/Sales and oter valuations parameters.
0
-1 FY13 FY14 FY15 FY16 With ROE to enhance further in FY18&FY19, with
Jindal Poly Polyplex operating leverage to come in play and higher
Cosmo margins management intent of consistently growing
share of value added films in total portfolio, We
strongly believe Cosmo will be able to command
premium valutations in future.
RECENT DEVELOPMENTS TOWARDS FUTURE GROWTH
Cosmo Has recently acquired 34 acres of adjoining land available for sale close to its Waluj plant. Cosmo has entered into a
definite agreement to purchase this land, for which advance has been paid and deal will be concluded by FY17 end. This land is
acquired to target future growth plans of Cosmo. Management has guided that whatever the growth plans will be, it will be in
direction to create value addition in current portfolio. New land will only be used to either to add speciality film capacity or any
related value added project complementary to packaging business, of which company Cosmo possess knowledge.
KEY RISKS TO OUR EARNING PROJECTIONS
FOREX FLUCTUATIONS
Cosmo's almost 40% sales comes from the export markets. Cosmo has been incurring huge losses in the past due to adverse
currency movements. Cosmo is being exposed to USD/INR and USD/YEN . It sells its products in US and is exposed to USD/INR
fluctuation risk. Also It sells it products manufactured in Korean plant to Japanese local markets in yen and pays to Korean
Subsidiary in USD, thus exposed to cross currency fluctiation risk. Any future adverse movement may impact Cosmo's earnings.
PRICING RISK
As per management there is no raw material commodity risk as far as product pricing is concerned as any increase or decrease in
raw material is passed on to customers every time whenever PPE prices are updated through Global PLATT Index, however lots
of economic conditions play role in product pricing. Thus any delay in pass on of raw material price hike may hamper gross
margins for the short duration.
DELAY IN RAMP UP OF NEWLY EXPANDED CAPACITY
As per management , within 5-6 months of the commercial production start in new capacity, Company is hopeful of achieving
100% utilisation, however any delay in ramp up of utilisation may adversly impact our revenue and profit projections.
38
Narnolia Securities Ltd
201 | 2nd Floor | Marble Arch Building | 236B-AJC Bose Road |
Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com, website
: www.narnolia.com
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