Marico
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- Words: 1,469
- Pages: 16
Date of report
Monday, April 07, 2008
Company
Marico Limited - Quick & Dirty Analysis
Analyst
Dhananjayan J
Contact
[email protected]
Table of Contents (Please enable the macro attached to this file)
Fact Sheet
>>
Quick & Dirty Analysis
>>
Segment
>>
Disclaimer
>>
FACT SHEET MARICO LIMITED NSE: MARICO, BSE: 531642, Exchange: BSE & NSE, MCap: 4,168.61 Crore Marico Limited is a fast moving consumer goods company. Marico has three business segments: Consumer Products, which includes consumer product business of Marico Limited and Marico Bangladesh Limited along with its wholly owned subsidiary, MBL Industries Limited; Skin Care, which includes Kaya Skin Care Limited and skin care business of Marico Limited in Dubai, and Global Ayurvedics (Sundari LLC.). Consumer products includes coconut oils, other edible oils, hair oils and other hair care products, fabric care products, soaps and baby care products. Other products include Skin Care and Global Ayurvedics. In October 2007, Shantih LLC became a wholly owned subsidiary of the Company. In October 2007, the Company acquired the consumer division of Enaleni Pharmaceuticals Ltd, through purchase of Enaleni Pharmaceuticals Consumer Division (Pty) Ltd. In March 2008, the Company announced the divestment of its processed foods business under the brand Sil to Good Food Group. Website
http://www.maricoindia.com
Special situation
Divestiture of processed foods business brand called "Sil".
Pro forma valuation Price ratio Price to earnings Price to free cash flow Price to tangible book value Enterprise value ratio EV / Sales EV / EBITDA EV / EBIT EV / (EBITDA-Capex) Debt and interest coverage Net Debt / EBITDA EBIT / Interest expense Yield Ratio Dividend yield Earnings yield FCF1 yield
25.3 na 21.7 2.3 16.5 18.9 -138.5 1.0 7.6 1.0% 4.0% na
Return on Assets Return on operating assets Return on capital invested
46.7% 94.3%
Operating margins EBITDA EBIT Net income
14.2% 12.4% 8.7%
Depreciation Vs. Capex
Capex
The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers published by the company. (Refer QAD sheet)
The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers published by the company. (Refer QAD sheet)
Conclusion Capex is more. The divestiture proceeds was not declared by the company. Moreover it is FMCG business that are direct conditions of the country. Not enough catalyst to drive the value of the business. Tough business with lot of competition. Hard overvalued. Our Verdict:
May be overvalued. Not enough catalyst to drive the value of the underlying business. Hence not inte
1
80
0.9 77.5 75 0.8 72.5 0.7 70 0.6 67.5 65 0.5 62.5 0.4 60 0.3 57.5 55 0.2 52.5 0.1 50 0
25 7 1 1 2 R R R R R R R R R R R R R R R R R R R R R R R R R R R R R / / / 02/ o o o o o o o o o oRow oo1 oo o oo o oo o oo o oo o oo 291 / / 2 ww w ww w ww w ww w ww w ww w ww w ww w ww w ww
business that are directly related to general economic h lot of competition. Hard to forecast the growth. May be
business. Hence not interesting.
QUICK & DIRTY ANALYSIS
INCOME STATEMENT
BALANCE SHEET
(Amt in crore)
CASH FLOW
RATIOS
9m 12/06 INCOME STATEMENT Revenue 1,159.96 Total growth - YTD Cost of materials 597.31 GROSS PROFIT 562.65 Margin 48.5% Manufacturing & other expenses 404.05 Miscellaneous income 1.46 EBITDA 160.06 Margin 13.8% Depreciation & Amortization 40.68 EBIT 119.38 Margin 10.3% Interest expenses 15.93 Interest income on loans & deposits EBT 103.45 Taxation @ 20% - assumption ** need to check 20.69 Net income before MI 82.76 Minority interest Net income 82.76 Margin 7.1% Outstanding shares as reported 60.90 EPS INR 1.36 Other income - non recurring income Income from current investments Profit on sale of units of mutual funds Dividend CASH FLOW Net profit before tax and MI as reported Tax paid Net income Adjustments Depreciation, amortization & impairment Profit on sale of assets Profit on sale of investments Dividend income on investments Provision for doubtful debts (A) Changes in working capital Inventories Sundry debtors Loans and advances Current liabilities & provisions (B) Cash from operation (A) + (B) Capital expenditure Purchase of fixed assets Sale of fixed assets
FY 3/07 1,556.92 818.43 738.49 47.4% 525.77 9.26 221.98 14.3% 52.06 169.92 10.9% 23.87 3.26 149.31 29.86 119.45 119.45 7.7% 60.90 INR 1.96
0.81 0.09 150.08 -23.46 126.62 52.19 -3.71 -0.81 -0.09 0.41 174.61 -89.18 -13.00 -12.65 108.01 -6.82 167.79 -301.66 1.69
9m 12/07 1,439.16 24.1% 751.15 688.01 47.8% 493.00 8.75 203.76 14.2% 22.84 180.92 12.6% 20.40 160.52 32.10 128.42 0.09 128.33 8.9% 60.90 INR 2.11
NOTES
LTM 12/07 Acq of Enaleni 1,836.12 972.27 863.85 47.0% 614.72 16.55 265.68 14.5% 34.22 231.46 12.6% 28.34 3.26 206.38 41.28 165.10 0.09 165.01 9.0% 60.90 INR 2.71
53.00
3.31 6.3% 0.80 2.52 4.8% 2.65 -0.13 -0.03 -0.11 -0.11 -0.2%
Net capital expenditure
-299.97
FCF1 before WC investments FCF2 after WC investments
-125.36 -132.18
Other investing activities Sale (purchase) of investments Amt rised/(repaid) to shareholders Equity share capital issued Share issue expense adj against sh premium Equity dividend paid Preference dividend paid Total Amount borrowed Foreign exchange effect
-299.97
19.27 151.39 -6.01 -45.57 -1.88 97.93 11.32 3.98
BALANCE SHEET Total assets Investments Deferred tax assets Cash and bank Adv recoverable in cash or in kind Operating assets Return on operating assets
561.73 0.01 115.15 42.73 39.64 364.20 46.7%
561.73
Fixed assets Current assets excl cash Current liabilities excl debt Capital invested Return on capital invested
161.61 299.91 281.32 180.20 94.3%
161.61 299.91 281.32 180.20 128.4%
42.74 250.97 192.37 192.37 INR 3.16 -128.46
42.74 250.97 192.37 192.37 INR 3.16 -100.74
INR 68.45 4,168.61 4,376.84
INR 68.45 4,168.61 4,376.84
2.8 19.7 25.8 -56.1
2.4 16.5 18.9 -127.6
34.9 na 21.7
25.3 na 21.7
Cash Debt Shareholders equity - book value Tangible book value (TBV) TBV / share Notional FCF1 before WC invst RATIOS Price Mcap EV EV/sales EV/EBITDA EV/EBIT EV/(EBITDA-Capex) PE P/FCF1 P/TBV
-1.00
364.20 63.6%
53.00
53.00
Net debt / EBITDA EBIT / Interest expenses Dividend per share Dividend yield Earnings yield FCF1 yield NOTES Note 1: Acquisition of Ethnic hair care and health care brands from Enaleni Date of transaction 31 oct 07 EV - Purchase consideration 53.00 Revenue 53.00 EBITDA 3.31
0.8 8.2 INR 0.66 1.0% 4.0% na
Pro forma 12/07 1,889.12
268.99 14.2% 35.02 233.98 12.4% 30.99 3.26 206.25 41.25 165.00 0.09 164.91 8.7% 60.90 INR 2.71
-300.97
42.74 303.97 192.37 192.37 INR 3.16 -101.05 INR 68.45 4,168.61 4,429.84 2.3 16.5 18.9 -138.5 25.3 na 21.7
1.0 7.6 INR 0.66 1.0% 4.0% na
SEGMENT FY 3/05
FY 3/06
FY 3/07
1,089.87 11.1% 95.3% 54.07 105.3% 4.7% 1,143.94 13.6%
1,473.84 35.2% 94.7% 83.08 53.7% 5.3% 1,556.92 36.1%
158.54 57.2% 14.5% -10.82 -1.0% -20.0% 147.72 64.3% 12.9%
223.94 41.3% 15.2% -1.18 -89.1% -1.4% 222.76 50.8% 14.3%
7.4%
128.04 43.2% 11.7% -24.99 73.7% -46.2% 103.05 37.4% 9.0%
181.48 41.7% 12.3% -10.78 -56.9% -13.0% 170.70 65.6% 11.0%
Depreciation Consumer products Others Corporate assets Total
11.45 3.46 14.91
30.50 14.17 44.67
42.46 9.60 52.06
Capital expenditure Consumer products Others Corporate assets Total
18.37 22.63 41.00
245.22 23.59 268.81
304.82 7.09 311.91
Assets Consumer products Others Corporate assets Total
307.14 66.90 29.08 403.12
572.10 79.04 28.85 679.99
505.17 70.32 150.30 725.79
REVENUE Consumer products Growth %age on sale Others Growth %age on sale Total Total growth EBITDA Consumer products Growth Margin Others Growth Margin Corporate overheads Total Total growth Margin EBIT Consumer products Growth Margin Others Growth Margin Corporate overheads Total Total growth Margin
980.70 97.4% 26.34 2.6% 1,007.04
100.86 10.3% -10.93 -41.5% 89.93 8.9% 89.41 9.1% -14.39 -54.6% 75.02
9M 12/06 9M 12/07 1,101.19 94.9% 58.77 5.1% 1,159.96
138.42 12.6% -5.02 -8.5% 133.40 11.5%
1,360.10 23.5% 94.5% 79.06 34.5% 5.5% 1,439.16 24.1%
183.92 32.9% 13.5% -3.09 -38.4% -3.9% 180.83 35.6% 12.6%
Liabilities Consumer products Others Corporate liabilities Total
159.30 5.79 21.11 186.20
382.37 8.34 27.80 418.51
452.27 66.40 14.74 533.41
Capital employed Consumer products Others Corporate liabilities Total
147.84 61.11 7.97 216.92
189.73 70.70 1.05 261.48
52.90 3.92 135.56 192.38
363.15 99.92 463.07
110.60 83.81 110.91 305.32
Disclaimer
Reports prepared by the Value Hunt Research & Analytics contain selected information and do not purport to be comp available information and data ("the Information") believed to be accurate and complete. Value Hunt Research & Analytics to be accurate and complete, nor guarantee its accuracy and completeness. Possible errors or incompleteness of the Inform liability, neither with regard to indirect nor to direct or consequential damages. All rights reserved.
o not purport to be complete. The reports based on publicly unt Research & Analytics neither do examine the Information ompleteness of the Information do not constitute grounds for .
Monday, April 07, 2008
Company
Marico Limited - Quick & Dirty Analysis
Analyst
Dhananjayan J
Contact
[email protected]
Table of Contents (Please enable the macro attached to this file)
Fact Sheet
>>
Quick & Dirty Analysis
>>
Segment
>>
Disclaimer
>>
FACT SHEET MARICO LIMITED NSE: MARICO, BSE: 531642, Exchange: BSE & NSE, MCap: 4,168.61 Crore Marico Limited is a fast moving consumer goods company. Marico has three business segments: Consumer Products, which includes consumer product business of Marico Limited and Marico Bangladesh Limited along with its wholly owned subsidiary, MBL Industries Limited; Skin Care, which includes Kaya Skin Care Limited and skin care business of Marico Limited in Dubai, and Global Ayurvedics (Sundari LLC.). Consumer products includes coconut oils, other edible oils, hair oils and other hair care products, fabric care products, soaps and baby care products. Other products include Skin Care and Global Ayurvedics. In October 2007, Shantih LLC became a wholly owned subsidiary of the Company. In October 2007, the Company acquired the consumer division of Enaleni Pharmaceuticals Ltd, through purchase of Enaleni Pharmaceuticals Consumer Division (Pty) Ltd. In March 2008, the Company announced the divestment of its processed foods business under the brand Sil to Good Food Group. Website
http://www.maricoindia.com
Special situation
Divestiture of processed foods business brand called "Sil".
Pro forma valuation Price ratio Price to earnings Price to free cash flow Price to tangible book value Enterprise value ratio EV / Sales EV / EBITDA EV / EBIT EV / (EBITDA-Capex) Debt and interest coverage Net Debt / EBITDA EBIT / Interest expense Yield Ratio Dividend yield Earnings yield FCF1 yield
25.3 na 21.7 2.3 16.5 18.9 -138.5 1.0 7.6 1.0% 4.0% na
Return on Assets Return on operating assets Return on capital invested
46.7% 94.3%
Operating margins EBITDA EBIT Net income
14.2% 12.4% 8.7%
Depreciation Vs. Capex
Capex
The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers published by the company. (Refer QAD sheet)
The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers published by the company. (Refer QAD sheet)
Conclusion Capex is more. The divestiture proceeds was not declared by the company. Moreover it is FMCG business that are direct conditions of the country. Not enough catalyst to drive the value of the business. Tough business with lot of competition. Hard overvalued. Our Verdict:
May be overvalued. Not enough catalyst to drive the value of the underlying business. Hence not inte
1
80
0.9 77.5 75 0.8 72.5 0.7 70 0.6 67.5 65 0.5 62.5 0.4 60 0.3 57.5 55 0.2 52.5 0.1 50 0
25 7 1 1 2 R R R R R R R R R R R R R R R R R R R R R R R R R R R R R / / / 02/ o o o o o o o o o oRow oo1 oo o oo o oo o oo o oo o oo 291 / / 2 ww w ww w ww w ww w ww w ww w ww w ww w ww w ww
business that are directly related to general economic h lot of competition. Hard to forecast the growth. May be
business. Hence not interesting.
QUICK & DIRTY ANALYSIS
INCOME STATEMENT
BALANCE SHEET
(Amt in crore)
CASH FLOW
RATIOS
9m 12/06 INCOME STATEMENT Revenue 1,159.96 Total growth - YTD Cost of materials 597.31 GROSS PROFIT 562.65 Margin 48.5% Manufacturing & other expenses 404.05 Miscellaneous income 1.46 EBITDA 160.06 Margin 13.8% Depreciation & Amortization 40.68 EBIT 119.38 Margin 10.3% Interest expenses 15.93 Interest income on loans & deposits EBT 103.45 Taxation @ 20% - assumption ** need to check 20.69 Net income before MI 82.76 Minority interest Net income 82.76 Margin 7.1% Outstanding shares as reported 60.90 EPS INR 1.36 Other income - non recurring income Income from current investments Profit on sale of units of mutual funds Dividend CASH FLOW Net profit before tax and MI as reported Tax paid Net income Adjustments Depreciation, amortization & impairment Profit on sale of assets Profit on sale of investments Dividend income on investments Provision for doubtful debts (A) Changes in working capital Inventories Sundry debtors Loans and advances Current liabilities & provisions (B) Cash from operation (A) + (B) Capital expenditure Purchase of fixed assets Sale of fixed assets
FY 3/07 1,556.92 818.43 738.49 47.4% 525.77 9.26 221.98 14.3% 52.06 169.92 10.9% 23.87 3.26 149.31 29.86 119.45 119.45 7.7% 60.90 INR 1.96
0.81 0.09 150.08 -23.46 126.62 52.19 -3.71 -0.81 -0.09 0.41 174.61 -89.18 -13.00 -12.65 108.01 -6.82 167.79 -301.66 1.69
9m 12/07 1,439.16 24.1% 751.15 688.01 47.8% 493.00 8.75 203.76 14.2% 22.84 180.92 12.6% 20.40 160.52 32.10 128.42 0.09 128.33 8.9% 60.90 INR 2.11
NOTES
LTM 12/07 Acq of Enaleni 1,836.12 972.27 863.85 47.0% 614.72 16.55 265.68 14.5% 34.22 231.46 12.6% 28.34 3.26 206.38 41.28 165.10 0.09 165.01 9.0% 60.90 INR 2.71
53.00
3.31 6.3% 0.80 2.52 4.8% 2.65 -0.13 -0.03 -0.11 -0.11 -0.2%
Net capital expenditure
-299.97
FCF1 before WC investments FCF2 after WC investments
-125.36 -132.18
Other investing activities Sale (purchase) of investments Amt rised/(repaid) to shareholders Equity share capital issued Share issue expense adj against sh premium Equity dividend paid Preference dividend paid Total Amount borrowed Foreign exchange effect
-299.97
19.27 151.39 -6.01 -45.57 -1.88 97.93 11.32 3.98
BALANCE SHEET Total assets Investments Deferred tax assets Cash and bank Adv recoverable in cash or in kind Operating assets Return on operating assets
561.73 0.01 115.15 42.73 39.64 364.20 46.7%
561.73
Fixed assets Current assets excl cash Current liabilities excl debt Capital invested Return on capital invested
161.61 299.91 281.32 180.20 94.3%
161.61 299.91 281.32 180.20 128.4%
42.74 250.97 192.37 192.37 INR 3.16 -128.46
42.74 250.97 192.37 192.37 INR 3.16 -100.74
INR 68.45 4,168.61 4,376.84
INR 68.45 4,168.61 4,376.84
2.8 19.7 25.8 -56.1
2.4 16.5 18.9 -127.6
34.9 na 21.7
25.3 na 21.7
Cash Debt Shareholders equity - book value Tangible book value (TBV) TBV / share Notional FCF1 before WC invst RATIOS Price Mcap EV EV/sales EV/EBITDA EV/EBIT EV/(EBITDA-Capex) PE P/FCF1 P/TBV
-1.00
364.20 63.6%
53.00
53.00
Net debt / EBITDA EBIT / Interest expenses Dividend per share Dividend yield Earnings yield FCF1 yield NOTES Note 1: Acquisition of Ethnic hair care and health care brands from Enaleni Date of transaction 31 oct 07 EV - Purchase consideration 53.00 Revenue 53.00 EBITDA 3.31
0.8 8.2 INR 0.66 1.0% 4.0% na
Pro forma 12/07 1,889.12
268.99 14.2% 35.02 233.98 12.4% 30.99 3.26 206.25 41.25 165.00 0.09 164.91 8.7% 60.90 INR 2.71
-300.97
42.74 303.97 192.37 192.37 INR 3.16 -101.05 INR 68.45 4,168.61 4,429.84 2.3 16.5 18.9 -138.5 25.3 na 21.7
1.0 7.6 INR 0.66 1.0% 4.0% na
SEGMENT FY 3/05
FY 3/06
FY 3/07
1,089.87 11.1% 95.3% 54.07 105.3% 4.7% 1,143.94 13.6%
1,473.84 35.2% 94.7% 83.08 53.7% 5.3% 1,556.92 36.1%
158.54 57.2% 14.5% -10.82 -1.0% -20.0% 147.72 64.3% 12.9%
223.94 41.3% 15.2% -1.18 -89.1% -1.4% 222.76 50.8% 14.3%
7.4%
128.04 43.2% 11.7% -24.99 73.7% -46.2% 103.05 37.4% 9.0%
181.48 41.7% 12.3% -10.78 -56.9% -13.0% 170.70 65.6% 11.0%
Depreciation Consumer products Others Corporate assets Total
11.45 3.46 14.91
30.50 14.17 44.67
42.46 9.60 52.06
Capital expenditure Consumer products Others Corporate assets Total
18.37 22.63 41.00
245.22 23.59 268.81
304.82 7.09 311.91
Assets Consumer products Others Corporate assets Total
307.14 66.90 29.08 403.12
572.10 79.04 28.85 679.99
505.17 70.32 150.30 725.79
REVENUE Consumer products Growth %age on sale Others Growth %age on sale Total Total growth EBITDA Consumer products Growth Margin Others Growth Margin Corporate overheads Total Total growth Margin EBIT Consumer products Growth Margin Others Growth Margin Corporate overheads Total Total growth Margin
980.70 97.4% 26.34 2.6% 1,007.04
100.86 10.3% -10.93 -41.5% 89.93 8.9% 89.41 9.1% -14.39 -54.6% 75.02
9M 12/06 9M 12/07 1,101.19 94.9% 58.77 5.1% 1,159.96
138.42 12.6% -5.02 -8.5% 133.40 11.5%
1,360.10 23.5% 94.5% 79.06 34.5% 5.5% 1,439.16 24.1%
183.92 32.9% 13.5% -3.09 -38.4% -3.9% 180.83 35.6% 12.6%
Liabilities Consumer products Others Corporate liabilities Total
159.30 5.79 21.11 186.20
382.37 8.34 27.80 418.51
452.27 66.40 14.74 533.41
Capital employed Consumer products Others Corporate liabilities Total
147.84 61.11 7.97 216.92
189.73 70.70 1.05 261.48
52.90 3.92 135.56 192.38
363.15 99.92 463.07
110.60 83.81 110.91 305.32
Disclaimer
Reports prepared by the Value Hunt Research & Analytics contain selected information and do not purport to be comp available information and data ("the Information") believed to be accurate and complete. Value Hunt Research & Analytics to be accurate and complete, nor guarantee its accuracy and completeness. Possible errors or incompleteness of the Inform liability, neither with regard to indirect nor to direct or consequential damages. All rights reserved.
o not purport to be complete. The reports based on publicly unt Research & Analytics neither do examine the Information ompleteness of the Information do not constitute grounds for .
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