WPIL

@a_basumallick
http://valueinvstr.blogspot.in
WPIL is in the business of water pumps
• The company is engaged in the business of fluid handling – from supply of pumps
to turnkey project execution. It supplies a comprehensive range of pumps to the
Industrial, municipal, irrigation and power sector. The company also has a strong
project division which undertakes water management contracts in the above
sectors.
• Promoter holding increased from 66% to 68.8% on Mar-2018 to Jun-2018
• About 33% of revenues come from Pumps and 66% come from spares &
accessories. About 60% of revenues come from overseas subsidiaries / clients
outside India
• WPIL has ~20% market share in domestic conventional/engineered pumps in
power, irrigation, city and industrial segments. It is the only dominant player in
sewage and slurry pump (Government projects like Namami Ganga and clean
Narmada in addition to most of municipal corporations going for sewerage
treatment plants).
The co has 3 main divisions and strong international
operations
Engineered Pump Division
• Offers specialized water handling solution to conventional power generation, nuclear power solutions and industrial sector.
• In FY18, supply of firewater pump package to ONGC, large axial flow submersibles to Thailand, metallic volute pumps to Telengana Irrigation was
done

Conventional Pump Division

• Standard pumps, largely utilized in the irrigation and water treatment systems
• In FY18, execution of a major package for Telangana Water Grid, large order for Royal irrigation Dept., large number of high horsepower
Submersibles for irrigation and water supply was done.

Infrastructure Division
• Revenues of 170 cr in FY18
• In FY18, execution on large water distribution projects in Madhya Pradesh and Rajasthan and an Irrigation system in Africa was done

International Operations
• Company closed its operations at Mathers UK in July 2017 due to the continued downturn in the offshore oil market. The consolidated operations
results were significantly affected by these onetime closure costs.
The co has many subsidiaries across geographies
Subsidiaries are key to operating performance and
margins
• Mathers Foundry
has been closed
down, so FY19 will
see losses removed
from it
• Strong performance
from Grouppo
Aturia is expected
to continue
Operations show improvement
SALES
900.00 900.00 18.00%
800.00
700.00
800.00
700.00
16.00%
14.00%
• Sales, margins
600.00
500.00
600.00
500.00
12.00%
10.00%
and profits are
on an uptick
400.00
400.00 8.00%
300.00
300.00 6.00%
200.00
200.00 4.00%
100.00
100.00 2.00%
-
Sales - 0.00%
2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
Sales OPM

DEPRECIATION & TAX RATE PROFIT

Profit before tax Net profit EPS
Depreciation rate Tax Rate
174.4%

68.73
68.10

53.62
51.41
118.5%

41.04
40.96

40.08
37.93

31.34
30.22

18.93
48.1%

18.49
40.2%
34.4%

31.8%

31.7%
31.2%

27.9%

10.28
19.8%

12.9%

12.1%
12.0%

7.27
7.10
5.32
6.8%
6.7%

6.3%

5.1%
4.9%

4.4%
3.2%

1.03
1.01
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Receivables seem to be a significant problem
INVENTORY & RECEIVABLES DEBT / EQUITY • Debt has reduced
significantly from the
Inventory / Sales Receivables / Sales
past, but continues to

3.84
55.1%

3.63
be very high.
52.0%

3.53
46.8%
46.5%

45.1%

3.05

3.04
43.6%
43.2%

42.8%
• Receivables % is down
42.2%

41.9%

2.71

2.40
2.38
to historical average

2.13
27.7%

27.7%
27.4%
levels, though still
quite high on an
14.9%
14.5%
14.0%

0.97
absolute basis
9.7%
8.7%

6.6%
6.4%

• Receivables % is down
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
to historical average
levels, though still
quite high on an
Receivables
Within Credit
0-181 days < 1 yr > 1 yr Bad loans Total
absolute basis
Period
123.59 175.76 17.16 73.41 2.08 387.8 • In 2018, receivables >
2018
31.9% 45.3% 4.4% 18.9% 0.5% 1 year has jumped
2017
83.25 214 16.95 14.95 1.44 327.7 nearly 3x
25.4% 65.3% 5.2% 4.6% 0.4%
69.35 220.73 15.27 21.27 0.86 325.8
2016
21.3% 67.8% 4.7% 6.5% 0.3%
All return ratios are improving; current ROE is less than
half 2009-2010 ROE
• Return Rations
RETURN RATIOS
RoE RoNW RoA RoCE
are again on an
uptrend
39%

38%
36%

32%

31%
26%
24%

23%
21%
18.1%

18.0%

19%
16.5%

16.2%

17%
16%

14.7%
13.8%

14%
12.3%
13%
9.6%

9.1%
8.8%

8.4%
7.7%

8%
7%
6.5%

5.8%

4.7%

4.0%
4.0%
3.8%

3%
3%
2%

0.9%
0.1%
0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Recent ROE improvement on the back of increasing
margins
DUPONT ANALYSIS
• ROE has increased
6.00 45% mainly due to a
5.00
40% jump in margins
35%
in the last 3 years
4.00 30%

3.00
25% • Further ROE
20%
improvement
2.00 15%

10%
possible from
1.00
5% improved asset
0.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0% turnover
Net margin Asset turnover ratio Financial leverage RoE

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net margin 0.05 0.06 0.07 0.06 0.08 0.06 0.04 0.00 0.01 0.05
Asset turnover ratio 1.48 1.51 1.21 1.06 1.05 0.98 0.99 0.88 0.88 0.85
Financial leverage 4.63 4.05 3.71 4.84 4.53 4.04 1.97 3.38 3.13 3.40
RoE 36% 39% 32% 31% 38% 23% 7% 0% 3% 14%
Risks & Issues
• Company has very high debt.
• Company has about 19% of receivables which are pending for more than 1 year.
• Performance of the company depends on infrastructure spending. Any reduction can
impact the prospects.
• Since the performance is linked to infrastructure there is cyclicality in results. The company
works across geographies to minimize such risk.
• Currency fluctuations can alter revenues and profits as a large proportion comes for
subsidiaries
• As the company operates across many countries, political & currency stability is important
for the company.
• Company operates in a space where expenditure by clients is mainly discretionary. During
down cycles, demand can shrink drastically.
• The company does not publish consolidated results on a quarterly results. It is difficult to
understand & track operations across subsidiaries.
Long term price chart shows a new high
Financial details
2013 2014 2015 2016 2017 2018
Sales 508.01 509.10 481.59 729.65 708.42 844.55
Expenses 438.12 427.50 416.90 681.10 658.04 753.76
Operating Profit 69.89 81.60 64.69 48.55 50.38 90.79
Other Income 24.34 1.78 2.43 11.04 9.06 22.48
Depreciation 6.74 6.75 7.21 26.85 21.71 22.14
Interest 19.38 23.01 28.58 27.42 27.44 22.40
Profit before tax 68.10 53.62 31.34 5.32 10.28 68.73
Tax 13.49 14.94 12.60 9.28 12.18 33.06
Net profit 40.96 30.22 18.49 1.01 7.10 40.08
EPS 51.41 37.93 18.93 1.03 7.27 41.04

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Equity Share Capital 7.97 7.97 9.77 9.77 9.77 9.77
Reserves 99.15 120.93 237.85 235.05 248.82 283.57
Borrowings 190.86 194.70 103.12 268.42 272.59 173.37
Other Liabilities 187.23 197.64 137.90 313.07 278.12 531.95
Total 485.21 521.24 488.64 826.31 809.30 998.66

Net Block 136.71 153.11 141.00 207.43 180.45 182.26

Capital Work in Progress 1.70 0.43 1.00 0.65 2.20 0.01
Investments - - - 0.27 13.57 13.33
Other Assets 346.80 367.70 346.64 617.96 613.08 803.06
Total 485.21 521.24 488.64 826.31 809.30 998.66
 Twitter : @a_basumallick
http://valueinvstr.blogspot.in

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I may or may not hold the stock of the company discussed above in my personal portfolio. Please consult your financial
advisors before taking any buy/sell/hold decision. I may change my opinion post publication of this note and may not be
able to update because of time constraints. The post is for educational purposes only. It is NOT a buy/sell recommendation.