Price ` 81 Upside - Div Yield 3.7% Tenure 2-3 years Sensex 31944.78 Nifty 10018.20 Group/Index XD M.cap (` in cr) 78 Equity (` In cr) 9.70 52 wk H/L ` 78.60/31.75 Face Value ` 10.00 NSE code - BSE code 526492 Growth Drivers RONW 9.34% P/E 13.88 P/BV 1.3 EV/EBIDTA 9.30 IN ` EV (`in cr) 78.16 BV (`in cr) 62.90 NW(`in cr) 61.01 Adjst.EPS (TTM) 5.80 FY 19Est. Earnings 6.29 Equity Share Capital 9.70 10.00 0.97 EPS(FY19 Est.) 6.49 Estimated P/E Ratio 15 Estimated Price/share 102 Year End 201703 201603 201503 201403 Tax Rate % 28.19 20.71 21.91 28.06 Receivable day 58.00 53.00 62.00 60.00 Source: Google Div. Payout % 27.79 40.23 30.04 31.32 VALUATION (` In Cr except per share) FV No. of Equity Shares Corporate Governance Transparency Ratio's INVESTMENT RESEARCH DARK HORSE - RISHIROOP LTD. (formerly known as Puneet resins ltd.) Dated : 10th Oct. 2017 ACCUMULATE Investment Rationale Key Valuation Ratios Key Financial Data Rising Income levels & increase in Motor vehicle ownership rates, especially in developing nations would need additional consumption of rubber. Global demand for rubber processing chemicals forecasted to increase by 50% to 1.5 million MT in next 3-5 years High performance tyres & extended life, Automotive & Industrial products will increase rubber processing chemical loadings Share Holding Pattern In the current year, the demand for Company’s products have not improved significantly, however, with demonetization of Indian economy and with the implementation of GST, the economy is expected to pick up during the second half of the year. Company aims to achieve larger product portfolio, economies of scale, efficiency, optimization of logistics and distribution network and other related economies of scale. The primary segment that your Company operates in is Polymers, Compounds, and their related products. During the year under review, the prevailing economic conditions in the industry have not improved significantly. The rubber industry witnessed a general rise in prices of synthetic rubber in line with dramatic movements in global prices which saw increasing trend during the last two quarters. But since then prices have started falling back to earlier levels. The current economic environment continues to be challenging for the industry. However, prices are expected to gradually stabilize and demand in auto ancillary industry is expected to pick up. Till now, china used to meet the requirement of chemical due to low cost & favorable currency. Now, high regulatory compliance in china coupled with associated uncertainties & discomfort about overdependence on a single source country has lead MNC's to diversify itself & add India as an additional source destination. Moreover, Government initiatives in the form of port based chemical parks in SEZ, FDI relaxations, improvement in infrastructure, Tax concessions etc. would further boost this sector. Moreover, The outlook for FY 2017-18 for India, continues to be positive. Financial liquidity coupled with relatively subdued crude prices augur well for the Indian economy. India continues to be and is expected to remain the fastest growing economy of the world. Multibagger Stock Details 70% 30% Promoter Others Page 1 www.rudrashares.com
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Price ` 81
Upside -
Div Yield 3.7%
Tenure 2-3 years
Sensex 31944.78
Nifty 10018.20
Group/Index XD
M.cap (` in cr) 78
Equity (` In cr) 9.70
52 wk H/L ` 78.60/31.75
Face Value ` 10.00
NSE code -
BSE code 526492
Growth DriversRONW 9.34%
P/E 13.88
P/BV 1.3
EV/EBIDTA 9.30
IN `
EV (`in cr) 78.16
BV (`in cr) 62.90
NW(`in cr) 61.01
Adjst.EPS (TTM) 5.80
FY 19Est. Earnings 6.29
Equity Share Capital 9.70
10.00
0.97
EPS(FY19 Est.) 6.49
Estimated P/E Ratio 15
Estimated Price/share 102
Year End 201703 201603 201503 201403
Tax Rate % 28.19 20.71 21.91 28.06
Receivable days 58.00 53.00 62.00 60.00
Source: Google Div. Payout % 27.79 40.23 30.04 31.32
VALUATION (` In Cr except per share)
FV
No. of Equity Shares
Corporate Governance Transparency Ratio's
INVESTMENT RESEARCH
DARK HORSE - RISHIROOP LTD. (formerly known as Puneet resins ltd.)
Dated : 10th Oct. 2017
ACCUMULATE Investment Rationale
Key Valuation Ratios
Key Financial Data
Rising Income levels & increase in Motor vehicle ownership rates, especially in developing nations would need additional consumption of rubber.
Global demand for rubber processing chemicals forecasted to increase by 50% to 1.5 million MT in next 3-5 years
High performance tyres & extended life, Automotive & Industrial products will increase rubber processing chemical loadings
Share Holding Pattern
In the current year, the demand for Company’s products have not improved significantly,however, with demonetization of Indian economy and with the implementation of GST, theeconomy is expected to pick up during the second half of the year.
Company aims to achieve larger product portfolio, economies of scale, efficiency, optimizationof logistics and distribution network and other related economies of scale.
The primary segment that your Company operates in is Polymers, Compounds, and their
related products. During the year under review, the prevailing economic conditions in the
industry have not improved significantly. The rubber industry witnessed a general rise in
prices of synthetic rubber in line with dramatic movements in global prices which saw
increasing trend during the last two quarters. But since then prices have started falling back to
earlier levels. The current economic environment continues to be challenging for the industry.
However, prices are expected to gradually stabilize and demand in auto ancillary industry is
expected to pick up.
Till now, china used to meet the requirement of chemical due to low cost & favorablecurrency. Now, high regulatory compliance in china coupled with associated uncertainties &discomfort about overdependence on a single source country has lead MNC's to diversifyitself & add India as an additional source destination. Moreover, Government initiatives inthe form of port based chemical parks in SEZ, FDI relaxations, improvement ininfrastructure, Tax concessions etc. would further boost this sector.
Moreover, The outlook for FY 2017-18 for India, continues to be positive. Financial liquiditycoupled with relatively subdued crude prices augur well for the Indian economy. Indiacontinues to be and is expected to remain the fastest growing economy of the world.
For the quarter ended 30-06-2017, the company has reported a Standalone sales of ` 12.09 Cr., down 19.40%
from last quarter Sales of ` 14.99 Cr and up 23.79 % from last year same quarter Sales of ` 9.76 Crore .
Company has reported net profit after tax of ` 2.61 Cr in latest quarter as compared to ` 1.76cr, an increase of
48.30% on y-o-y basis.EBITDA stood at ` 3.44 crore in Q1FY18 against ` 2.09 crore in Q1FY17, an increase of 64.24%. Diluted EPS
for the quarter increased from ` 1.96 to ` 2.69 on a y-o-y basis.
FY17 RESULTS
Industry Analysis
Standalone Results% Change
(Q-O-Q)% ChangeQuarter Ended Year EndedParticulars
The world economy is expected to face challenging times in the coming year in view of major economic andother initiatives expected to be undertaken by certain western economies in the recent past. The trend
towards protectionist nationalism of moving away from globalization to isolation could be a new businessdimension in future which may arrest the growth of globalization. Despite this, the International MonetaryFund (IMF) estimates that world GDP will grow by 3.50%+ in 2017. Under this context, the Indian economicgrowth of 7%+ stands out as a bright spot in the world economic landscape. The coming year is expected towitness a growth of 7%+ for India. Continued economic reforms, increase in public investment ininfrastructure, development projects and lower credit costs (on account of surplus liquidity caused bydemonetization) will ensure that Indian economic growth is not hampered.
Results Snapshot
% Change
(Y-O-Y)
Standalone Results
Company’s Sales turnover stood at ` 46.70 crores in the year under review as compared to ` 38.36 crores in
the previous year. The Profit before tax (PBT) for the period under review has increased from ` 3.10 crore in
the previous year to ` 4.88 crores in current year. Company has reported net profit after tax of ` 3.49 Cr as
compared to ` 2.46 cr, an increase of 41.87% on y-o-y basis. EBITDA stood at ` 5.67 crore in against ` 3.88
crore in the previous year, an increase of 46.13%. Diluted EPS increased from ` 2 to ` 4.60 on a y-o-y basis.
During the year there was no significant change in Fixed Assets which stand at ` 8.79 crores at the end of the
financial year. Total inventories increased from ` 8.79 crores to `12.04 crores.
RUDRA SHARES &
STOCK BROKERS LTD.
Page 2 www.rudrashares.com
RUDRA SHARES &
STOCK BROKERS LTD.
Rubber industry
"Rubber is a sunrise sector in India and fits perfectly with the government's 'Make in India' and Skill Indiainitiatives, but also suffers from the shortage of skilled labor and abnormality in the duty structure which isunfair to domestic manufacturers. India is the 3rd largest producer and 2nd largest consumer of rubberin the world. The per capita consumption of rubber in India is estimated to be very low, in the range of 0.8 -1 kg, against a global average of 3.2 kg, and as high as 12 to 14 kg in Japan, Europe and the US. Even Chinahas per capita consumption of 8 kg. On the export front, India has a paltry share of 1.48% against China's11%. AIRIA maintains that India's share of export of rubber products can be easily enhanced to 5% in thenext 5-7 years to take the country to the top 5 exporters in this sector.
Economy & Markets
GDP growth expected to be between 6.75 and 7.50 per cent in 2017-18. Growth rate of industrial sectoris estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent last fiscal. During the year under review, the consumption of natural rubber decreased by 2.60 % only from10,20,910 tones to 9,94,415 tones, while the requirement of synthetic rubber increased by 3.21 % from5,36,130 tones to 5,53,370 tones. Among synthetic rubbers, usage of SBR, PBR, and other SR increasedby 15.25%, 0.62% and 11.51 % respectively. The global synthetic rubber market is projected to expand at a CAGR of 5.1 % during the periodbetween 2015 and 2023 according to a recent market research report which states that the risingdemand for synthetic rubber from the automotive industry is expected to drive the global syntheticrubber market. Rapidly expanding footwear market across the globe is also expected to augment thegrowth of synthetic rubber market. During the year under review, the prices of primary inputs viz.Butadiene and Styrene, inputs for synthetic rubber has been very volatile. 2016-17 has been marked bydramatic movements in global prices for these inputs which saw increasing trend from Sept 2016 to
Feb 2017, but thereafter prices have started falling driven by slump in China’s domestic market.
The Rubber industry can be broadly classified in tyre and non-tyre sectors. While tyre sector is dominated byfew large tyre companies, the non-tyre sector consists of number of medium and small units. This non tyre-
sector consists of about 6000 units compromising 30 large scale, 300 medium scale and 5600 small scale unitswhich manufacture about 35000 different rubber products. It plays a core sector role in the Indian nationaleconomy. Company is in the business of manufacturing of polymer blends to the medium and small scale sector whichaccounts for over 50% of production of rubber goods in non-tyre industrial products. The polymer blends areused in the manufacture of petrol hoses, LPG tubing, O-rings, seals & gaskets, printing & textile rollers, cablesheathing, automotive components, etc. Polymer compounding is an art of developing rubber mixtures withsuitable raw materials and their doses to achieve optimal processing and performance. It is a criticalintermediate product for the medium and small unit making various rubber products. Besides Polymer blends,the Company also sells other complimentary products sourced from abroad. Due to fragmented structure of theuser industry the market is highly price competitive.
Page 3 www.rudrashares.com
Till now, China used to meet the requirement of chemical due to low cost & favorable currency. Now,high regulatory compliance in china coupled with associated uncertainties & discomfort aboutoverdependence on a single source country has lead MNC's to diversify itself & add India as anadditional source destination, indirectly benefitting RISHIROOP.
Moreover, Government initiatives in the form of port based chemical parks in SEZ, FDI relaxations,improvement in infrastructure, Tax concessions etc. would further boost this sector. Due to the growing paceof tyres, the demand for rubber is also expected to grow which gives a good opportunity of the company togrow since a portion of the revenues of RISHIROOP come from rubber industry.
Formerly known as Puneet Resins Ltd., Rishiroop Ltd. is the merged entity of Puneet Resins Ltd. andRishiroop Rubber (International) Ltd. It has been a pioneer in introducing various grades of rubbercompounds in India. Currently its products are exported to various developed markets across the globe. Thecompany has been manufacturing rubber & PVC compounds which have specialized properties such as oilresistance, flame retardancy, ozone resistance, fuel and solvent resistance, etc. These compounds are used tomake products such as petrol hose, LPG tubes, footwear, auto parts, protective clothing, seals, conveyorbelts, etc.
RUDRA SHARES &
STOCK BROKERS LTD.
Company Overview
Valuation Conclusion
The global synthetic rubber market is projected to expand at a CAGR of 5.1 % during the period between2015 and 2023 according to a recent market research report which states that the rising demand forsynthetic rubber from the automotive industry is expected to drive the global synthetic rubber market.Rapidly expanding footwear market across the globe is also expected to augment the growth of syntheticrubber market. We suggest to accumulate the stock for 2-3 years.
Risks & Concerns
The price of Synthetic rubber and other raw materials have been quite volatile since last two quarters.Further uncertainty in cost of raw materials may impact demand for the company’s products andprofitability. Secondly, foreign currency fluctuations may also affect the prices of imported raw materialsand profitability.
SWOT Analysis
Opportunities & Threats
The Company is continuing to customize and promote its new grades of polymer blends to meet therequirements of domestic and international customers and to improve the quality.There is intense competition and prices of raw materials continue to be volatile in view of the globalsituation. Foreign exchange management during the current scenario is critical, as the company importssignificant portion of its raw material requirements.