30 January 2018
3QFY18 Result Update I Industry: Plastic Products
Nilkamal Limited
BSE SENSEX
36,283
S&P CNX
11,130
CMP: INR1,876
TP: INR2,215 (+18%)
Buy
Good performance continues for Nilkamal in 3QFY18. Revenue growth
at 5%, EBITDA growth strong at 35% and PAT growth at 17%.
Steady financial performance:
For 3QFY18, Nilkamal's Revenue grew
5.1% YoY to INR5.2bn, largely driven by plastic and mattress segment.
EBITDA growth was strong at 34.6% YoY mainly on account of lower
cost of raw materials (down ~350bps as % of sales). EBITDA margins
expanded 275bps to 12.7%. However, increased interest cost and tax
expenses resulted in PAT growth of 17.1% YoY.
Plastic and mattress segment drives growth, @home flat:
in 3QFY18,
Plastic segment saw volume/value growth of 2%/5% YoY (11%/16%
QoQ). Mattress segment saw robust performance with revenue growth
of 42% YoY to INR151mn.This was largely on account of commencement
of manufacturing units in east (Barjora) and west (Bhiwandi) leading
to better geographic penetration. Performance of @home business
was flat, in-line with expectation. Revenue was down 3% to INR561mn,
however, significant improvement in operational efficiency led to PBT
of INR30mn compared to INR9mn in 3QFY17).
Capex run rate in-line with management guidance for FY18:
The
company incurred a capex of INR227mn in Q3FY18 (9MFY18 at
INR701mn) which is in-line with company's guidance of INR1000mn
capex for FY18. The capex was mainly towards the new plant &
machinery, moulds and factory buildings. Further, the credit rating for
the company's long term & short term bank facilities has been
reaffirmed to CARE AA and CARE A1+ respectively.
Valuation:
Nilkamal has steady growth, healthy balance sheet, stable
RoEs and improving operating margin. Given in-line performance for
3QFY18, we continue to maintain our earnings estimates for FY19/20.
At CMP of INR1876 it trades at 18.6x FY19PE and we believe that with
improving product mix, better operational efficiency and market share
shift to organized players, Nilkamal could command higher valuations.
Hence we maintain our buy rating on the stock with a TP of INR2215
(20x Sept'FY19 P/E).
Quarterly Standalone Performance (INR mn)
3QFY18
5,228
662
12.7
37
125
504
173
331
6.3
3QFY17
4,955
492
9.9
27
122
381
99
282
5.7
YoY (%)
5.5
34.6
274bps
38.2
2.0
32.2
75.2
17.1
63bps
2QFY18
4,647
573
12.3
28
130
425
147
278
6.0
QoQ (%)
12.5
15.6
34bps
35.1
-4.1
18.5
17.7
18.9
34bps
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Turnover, INR m
Free float (%)
Financials Snapshot (INR b)
Y/E Mar
Net Sales
EBITDA
PAT
EPS (INR)
Gr. (%)
BV/Sh (INR)
P/E (x)
P/BV (x)
EV/E (x)
Div. PO (%)
RoE (%)
RoCE (%)
2018E
21.1
2.5
1.3
87.3
14.2
571.0
21.5
3.3
11.5
15.5
16.3
15.3
2019E
23.1
2.8
1.5
100.9
22.9
651.6
18.6
2.9
10.1
20.1
16.5
15.7
2020E
25.8
3.2
1.8
120.6
38.1
747.4
15.5
2.5
8.7
20.5
17.2
16.6
NILK IN
14.9
2275 / 1491
-4 / -4 / -13
28.0
0.44
143
36
* Closing price as on 29th Jan , 2018
Shareholding pattern (%)
As On
Promoter
MFs
FPIs
Others
Dec-17 Sept-17
64.1
64.1
10.9
9.6
3.4
3.6
21.6
22.7
Jun-17
64.1
7.2
4.0
24.7
Y/E December
Revenue
Investors are advised to refer through
EBITDA
disclosures made at the end of the Research
EBITDA Margin %
Report.
Interest
Depreciation
Siddhartha Khemka
PBT
siddhartha.khemka@MotilalOswal.com
Tel: +91 22 3010 2452
Tax
Alpesh Thacker
PAT
Alpesh.thacker@motilaloswal.com
PAT Margin %
Tel: +91 9920483790
Source: Company, MOSL