Eveready Industries
BSE SENSEX
31,146
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
Financials & Valuations (INR b)
2017
2018E
Y/E Mar
Net Sales
13.6
15.3
EBITDA
1.3
1.6
PAT
0.9
1.0
EPS (INR)
12.9
14.4
Gr. (%)
35.5
12.1
BV/Sh (INR)
39.8
49.6
RoE (%)
37.7
32.3
RoCE (%)
27.5
25.1
P/E (x)
24.8
22.1
P/BV (x)
8.0
6.4
S&P CNX
9,621
EVRIN IN
Appliance and Lighting to drive growth ahead
73
Revenue in-line, PAT beats estimates:
EVRIN reported overall revenue of
17.5 / 0.3
INR3,046m in 4QFY17 (est. of INR2,946m) v/s INR2,834m in 4QFY16,
335 / 190
marking an increase of 7.5%, mainly due to significant turnover growth in
0/30/19
lighting and appliances segments. Lighting grew robustly by 26% in 4QFY17.
47
EBITDA rose 24% YoY to INR177m (est. of INR162m), with the margin
56.0
31 May 2017
4QFY17 Results Update | Sector: Others
CMP: INR319
TP: INR368(+15%)
Buy
2019E
16.8
1.8
1.3
17.5
21.4
61.2
31.6
26.9
18.2
5.2
Estimate change
TP change
Rating change
expanding 80bp to 5.8% (est. of 5.5%). Adj. PAT thus grew from INR93m to
INR105m (est. INR68m), marking YoY growth of 12.3%. For FY17, EBITDA
margin stood at 10% (+60bp YoY) and PAT at INR935m (+35% YoY).
Significant opportunity in appliance:
Revenue from appliance segment
stood at INR400m in FY17 – the first year of operations. EVRIN plans to
achieve revenue of INR1b in FY18 from appliance (making the segment
EBITDA breakeven) and then ~INR2,500m by FY20. The size of fan &
appliance market stands at INR150b, with average industry growth at 10-
15%. We believe EVRIN has significant opportunity to grow this business,
with access to 6,000 retail outlets (200 distributors). It plans to increase
outlets to 10,000 by FY18. The business can generate asset turnover of 5x.
JV with McLeod to develop packet tea business:
EVRIN will initiate
discussions with McLeod for a JV to develop its packet tea business.
Management cited McLeod will invest required capital for marketing of tea
business and will bring in its expertise/sourcing capabilities. EVRIN has
access to 1m outlets, allowing it to aggressively grow the business.
Valuation and view:
We believe that appliances and LED businesses will
drive growth for Eveready, leveraging upon its strong brand and distribution
network. We thus maintain our earnings estimates. We expect revenue
CAGR of 11% and PAT CAGR of 17% over FY17-19E. We value the stock at
21x FY19E, and maintain
Buy
with a target price of INR368.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554