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CRISIL IER Independent Equity Research
KSE Ltd
Q1FY18 results first cut: Earnings above expectations
Industry: Food Products August 14, 2017
KSE Ltd’s Q1FY18 earnings were above CRISIL Research’s expectations. Highlights are mentioned below. This will be followed by a detailed quarterly update.
● Revenue (net of excise duty) increased 14.4% y-o-y to ₹2,788 mn. The cattle feed division’s revenue (86.6% of sales) increased 11.3% y-o-y to ₹2,414 mn.
● EBITDA margin expanded 490 bps y-o-y to 5.6% owing to 472 bps y-o-y fall in raw material cost as a percentage of sales to 83.2%.
● Consequent to sturdy EBITDA growth, PAT jumped to ₹97 mn from ₹6 mn in Q1FY17.
CRISIL Research’s current IER coverage on KSE Ltd
In our report dated January 05, 2017, we had assigned a fundamental grade of 3/5 (good fundamentals) and fair value of ₹450 per share. We are reviewing the results in detail and will release an update report after discussions with management. The outstanding fundamental grade and fair value may undergo a revision in the update report.
KEY FORECAST
(₹ mn) FY14 FY15 FY16 FY17 FY18E
Operating income 8,069 9,002 9,254 10,478 10,817
EBITDA 299 610 167 285 252
Adj net income 153 338 74 150 115
Adj EPS (₹) 47.7 105.5 23.0 46.9 35.9
EPS growth (%) 236.0 121.1 (78.2) 104.1 (23.5)
Dividend yield (%) 1.5 3.7 1.5 2.2 3.9
RoCE (%) 38.4 70.8 14.4 24.1 31.4
RoE (%) 34.2 56.1 10.2 18.9 21.9
PE (x) 28.2 12.8 58.6 28.7 17.5
P/BV (x) 8.9 6.0 6.0 4.9 3.7
EV/EBITDA (x) 14.9 6.9 26.0 16.1 9.3
Source: Company, CRISIL Research estimates
The historical financials are restated as per CRISIL’s internal standards.
KEY STOCK STATISTICS
NIFTY/SENSEX 9794/31449
NSE/BSE ticker KSE
Face value (₹ per share) 10
Shares outstanding (mn) 3.2
Market cap (₹ bn)/(US$ bn) 4,307/67 Enterprise value (₹ bn)/(US$ bn) 4,605/72 52-week range (₹)/(H/L) 1,355/497
Beta 0.9
Free float (%) 73.7%
Avg daily volumes (30-days) 1,663 Avg daily value (30-days) (₹ mn) 2.1
FAIR VALUE MOVEMENT SINCE INITIATION
PERFORMANCE VIS-À-VIS MARKET Returns
1-m 3-m 6-m 12-m
KSE 8% 43% 77% 121%
NIFTY 500 -1% 3% 12% 16%
ANALYTICAL CONTACT
Arun Venkatesh [email protected] Sayan Das Sharma [email protected] Client servicing desk
+91 22 3342 3561 [email protected] Q1FY18 Results Summary
(₹ mn) Q1FY18 Q1FY17 y-o-y (%)
Net sales 2,788 2,437 14.4
Raw material cost 2,319 2,142 8.3
Raw material as % of sales 83.2% 87.9% -472bps
Employee cost 112 97 15.0
Other expenses 201 181 11.4
EBITDA 156 17 830.4
EBITDA margin 5.6% 0.7% 490bps
Depreciation 8 8 5.7
EBIT 147 9 1588.4
Interest and finance charges 3 3 2.5
Operating PBT 144 6 2433.7
Other income 5 2 138.4
PBT 149 8 1829.7
Tax 52 2 3352.5
PAT 97 6 1460.7
PAT margin 3.5% 0.3% 322bps
No of equity shares (mn) 3 3 -
EPS (₹) 30.3 1.9 1460.7
Source: Company, CRISIL Research
Note: The above quarterly numbers as reported by the company under IND-AS. However, projections are as per IGAAP. The company has not shared Q4FY17 numbers as per IND-AS
0 5 10 15 20 25
0 200 400 600 800 1,000 1,200 1,400 1,600
May-12 Oct-12 Feb-13 Jul-13 Nov-13 Apr-14 Aug-14 Dec-14 May-15 Sep-15 Feb-16 Jun-16 Nov-16 Mar-17 Aug-17
('000) (₹)
Total Traded Quantity (RHS) CRISIL Fair Value KSE
Argentina | China | Hong Kong | India | Poland | Singapore | UK | USA
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Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).
CRISIL
Fundamental Grade Assessment
CRISIL
Valuation Grade Assessment
5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)
4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)
3/5 Good fundamentals 3/5 Align (+-10% from CMP)
2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)
1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)
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Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company.
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