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- Words: 945
- Pages: 11
Date of report
Tuesday, April 29, 2008
Company
SRF 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 SRF LIMITED SRF Ltd. is a leading Indian player in Technical Textiles, Refrigerant Gases and having operating interests in Packaging Films and Pharma Intermediates sectors. The company comprises a group of different businesses like Technical Textile Business, Chemical Business and Packaging Films Business. With seven production units in India and one overseas in Dubai under its fold, the company exports its products to over 60 countries.
Website
http://www.srf.com/
Special situation
Buyback
Pro forma valuation Price ratio Price to earnings Price to free cash flow Price to tangible book value
6.3 9.3 0.9
Enterprise value ratio EV / Sales EV / EBITDA EV / EBIT EV / (EBITDA-Capex)
0.8 3.9 5.7 6.9
Debt and interest coverage Net Debt / EBITDA EBIT / Interest expense
1.6 5.8
Yield Ratio Dividend yield Earnings yield FCF1 yield
3.9% 15.9% 10.7%
Return on Assets Return on operating assets Return on capital invested
14.0% 17.9%
Operating margins EBITDA EBIT Net income
20.2% 14.0% 7.5%
Depreciation Vs. Capex
Capex
The above valuation ratios are computed after assuming buyback announced in the LTM financial numbers published by the company. (Refer QAD sheet)
Conclusion Valuation ratios and operating margins are attractive. Though capex is more than depreciation, price to notional FCF1 is below diversified portfolio of business but still some synergies in operating it as a group. Moreover, the operating leverage as well covered. We believe that the stock can be interesting for long term investment with the latest announcement of buyback at maxi
Our Verdict:
Interesting - undervalued.
240 190 140 90 13 6 1 2 R R R R R R R R R R R R R R R R R 1/ / 0 / o o o o o o o o o o o o o o o o o / 12/ 2ww ww www ww ww ww www w
e to notional FCF1 is below 10x. Company is operating a operating leverage as well as the capital leverage is well cement of buyback at maximum price of Rs. 160.
QUICK & DIRTY ANALYSIS (Amt in lakhs) FY 3/08
Buyback
Pro forma 3/08 168,353.00 -10.8% 870.00 94,560.00 208.00 14,705.00 58,010.00 34.5% 1,879.00 2,100.00 8,696.00 15,088.00 34,005.00 20.2% 10,455.00 23,550.00 14.0% 4,083.02 7.3% 19,466.98 6,813.44 12,653.54 7.5% 623.86 INR 20.28
Sales Total growth Changes in inventories Consumption of raw materials Purchase of traded goods Power and fuel Gross profit Margin Other income Forex (gain)/loss Employee costs Other expenditure EBITDA Margin Depreciation EBIT Margin Interest expenses Rate of interest EBT Tax @ 35% Net income Margin Shares outstanding - as reported EPS
168,353.00 -10.8% 870.00 94,560.00 208.00 14,705.00 58,010.00 34.5% 1,879.00 2,100.00 8,696.00 15,088.00 34,005.00 20.2% 10,455.00 23,550.00 14.0% 3,572.00 7.3% 19,978.00 6,992.30 12,985.70 7.7% 678.85 INR 19.13
Total assets - FY 3/07 Investments Cash Goodwill Adv recoverable in cash or in kind Operating assets Return on operating assets
173,842.74 869.15 2,043.67 581.56 2,468.56 167,879.80 14.0%
173,842.74 869.15 2,043.67 581.56 2,468.56 167,879.80 14.0%
Fixed assets excluding Goodwill Current current excl cash Current liabilities excl debt Capital invested Return on capital invested
118,379.73 41,602.55 28,709.49 131,272.79 17.9%
118,379.73 41,602.55 28,709.49 131,272.79 17.9%
Cash Debt Shareholders equity - book value Tangible Book Value (TBV) TBV/share Gross capex - FY 3/07 Sale of Fixed Assets Net capex Notional FCF1 FCF1/share
2,043.67 48,929.87 93,072.27 90,022.15 INR 132.61 14,612.52 30.98 14,581.54 8,859.16 INR 13.05
511.02 7.3%
54.99
7,000.00
2,043.67 55,929.87 93,072.27 89,511.13 INR 143.48 14,612.52 30.98 14,581.54 8,527.00 INR 13.67
Price Mcap EV
INR 127.30 86,417.31 133,303.51
INR 127.30 79,417.31 133,303.51
EV/Sales EV/EBITDA EV/EBIT EV/(EBITDA-Net Capex)
0.8 3.9 5.7 6.9
0.8 3.9 5.7 6.9
PE P/FCF1 P/TBV
6.7 9.8 1.0
6.3 9.3 0.9
Net debt / EBITDA EBIT / Interest expenses
1.4 6.6
1.6 5.8
INR 5.00 3.9% 15.0% 10.3%
INR 5.00 3.9% 15.9% 10.7%
Dividend per share Dividend yield Earnings yield Notional FCF1 yield NOTE 1 - BUYBACK Amount allocated for buyback
7,000.00
Segment - unconsolidated (Amt in lakhs) REVENUE Technical textiles business Growth % on total sales Chemicals business Growth % on total sales Packing films buiness Growth % on total sales Intersegment Total revenue Total growth EBIT Technical textiles business Growth Margin Chemicals business Growth Margin Packing films buiness Growth Margin Overheads expenses Total Total growth Margin Capital employed Technical textiles business Chemicals business Packing films buiness Corporate assets/(liabilities) Total
FY 3/06
FY 3/07
FY 3/08
79,532.00
86,999.00 9.4% 48.3% 72,944.00 109.0% 40.5% 20,310.00 37.2% 11.3% -8.00 180,245.00 39.5%
90,880.00 4.5% 56.3% 47,894.00 -34.3% 29.7% 22,757.00 12.0% 14.1% -1.00 161,530.00 -10.4%
15.2%
4,668.00 -37.9% 5.4% 48,342.00 212.6% 66.3% -534.00 -72.4% -2.6% -4,614.00 47,862.00 144.1% 26.6%
1,991.00 -57.3% 2.2% 25,528.00 -47.2% 53.3% 2,136.00 -500.0% 9.4% -5,653.00 24,002.00 -49.9% 14.9%
75,509.00 24,503.00 18,050.00 6,993.00 125,055.00
90,902.00 24,600.00 19,130.00 7,940.00 142,572.00
91,037.00 29,052.00 18,154.00 17,813.00 156,056.00
61.5% 34,905.00 27.0% 14,801.00 11.5% -9.00 129,229.00
7,518.00 9.5% 15,466.00 44.3% -1,932.00 -13.1% -1,443.00 19,609.00
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 .
Tuesday, April 29, 2008
Company
SRF 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 SRF LIMITED SRF Ltd. is a leading Indian player in Technical Textiles, Refrigerant Gases and having operating interests in Packaging Films and Pharma Intermediates sectors. The company comprises a group of different businesses like Technical Textile Business, Chemical Business and Packaging Films Business. With seven production units in India and one overseas in Dubai under its fold, the company exports its products to over 60 countries.
Website
http://www.srf.com/
Special situation
Buyback
Pro forma valuation Price ratio Price to earnings Price to free cash flow Price to tangible book value
6.3 9.3 0.9
Enterprise value ratio EV / Sales EV / EBITDA EV / EBIT EV / (EBITDA-Capex)
0.8 3.9 5.7 6.9
Debt and interest coverage Net Debt / EBITDA EBIT / Interest expense
1.6 5.8
Yield Ratio Dividend yield Earnings yield FCF1 yield
3.9% 15.9% 10.7%
Return on Assets Return on operating assets Return on capital invested
14.0% 17.9%
Operating margins EBITDA EBIT Net income
20.2% 14.0% 7.5%
Depreciation Vs. Capex
Capex
The above valuation ratios are computed after assuming buyback announced in the LTM financial numbers published by the company. (Refer QAD sheet)
Conclusion Valuation ratios and operating margins are attractive. Though capex is more than depreciation, price to notional FCF1 is below diversified portfolio of business but still some synergies in operating it as a group. Moreover, the operating leverage as well covered. We believe that the stock can be interesting for long term investment with the latest announcement of buyback at maxi
Our Verdict:
Interesting - undervalued.
240 190 140 90 13 6 1 2 R R R R R R R R R R R R R R R R R 1/ / 0 / o o o o o o o o o o o o o o o o o / 12/ 2ww ww www ww ww ww www w
e to notional FCF1 is below 10x. Company is operating a operating leverage as well as the capital leverage is well cement of buyback at maximum price of Rs. 160.
QUICK & DIRTY ANALYSIS (Amt in lakhs) FY 3/08
Buyback
Pro forma 3/08 168,353.00 -10.8% 870.00 94,560.00 208.00 14,705.00 58,010.00 34.5% 1,879.00 2,100.00 8,696.00 15,088.00 34,005.00 20.2% 10,455.00 23,550.00 14.0% 4,083.02 7.3% 19,466.98 6,813.44 12,653.54 7.5% 623.86 INR 20.28
Sales Total growth Changes in inventories Consumption of raw materials Purchase of traded goods Power and fuel Gross profit Margin Other income Forex (gain)/loss Employee costs Other expenditure EBITDA Margin Depreciation EBIT Margin Interest expenses Rate of interest EBT Tax @ 35% Net income Margin Shares outstanding - as reported EPS
168,353.00 -10.8% 870.00 94,560.00 208.00 14,705.00 58,010.00 34.5% 1,879.00 2,100.00 8,696.00 15,088.00 34,005.00 20.2% 10,455.00 23,550.00 14.0% 3,572.00 7.3% 19,978.00 6,992.30 12,985.70 7.7% 678.85 INR 19.13
Total assets - FY 3/07 Investments Cash Goodwill Adv recoverable in cash or in kind Operating assets Return on operating assets
173,842.74 869.15 2,043.67 581.56 2,468.56 167,879.80 14.0%
173,842.74 869.15 2,043.67 581.56 2,468.56 167,879.80 14.0%
Fixed assets excluding Goodwill Current current excl cash Current liabilities excl debt Capital invested Return on capital invested
118,379.73 41,602.55 28,709.49 131,272.79 17.9%
118,379.73 41,602.55 28,709.49 131,272.79 17.9%
Cash Debt Shareholders equity - book value Tangible Book Value (TBV) TBV/share Gross capex - FY 3/07 Sale of Fixed Assets Net capex Notional FCF1 FCF1/share
2,043.67 48,929.87 93,072.27 90,022.15 INR 132.61 14,612.52 30.98 14,581.54 8,859.16 INR 13.05
511.02 7.3%
54.99
7,000.00
2,043.67 55,929.87 93,072.27 89,511.13 INR 143.48 14,612.52 30.98 14,581.54 8,527.00 INR 13.67
Price Mcap EV
INR 127.30 86,417.31 133,303.51
INR 127.30 79,417.31 133,303.51
EV/Sales EV/EBITDA EV/EBIT EV/(EBITDA-Net Capex)
0.8 3.9 5.7 6.9
0.8 3.9 5.7 6.9
PE P/FCF1 P/TBV
6.7 9.8 1.0
6.3 9.3 0.9
Net debt / EBITDA EBIT / Interest expenses
1.4 6.6
1.6 5.8
INR 5.00 3.9% 15.0% 10.3%
INR 5.00 3.9% 15.9% 10.7%
Dividend per share Dividend yield Earnings yield Notional FCF1 yield NOTE 1 - BUYBACK Amount allocated for buyback
7,000.00
Segment - unconsolidated (Amt in lakhs) REVENUE Technical textiles business Growth % on total sales Chemicals business Growth % on total sales Packing films buiness Growth % on total sales Intersegment Total revenue Total growth EBIT Technical textiles business Growth Margin Chemicals business Growth Margin Packing films buiness Growth Margin Overheads expenses Total Total growth Margin Capital employed Technical textiles business Chemicals business Packing films buiness Corporate assets/(liabilities) Total
FY 3/06
FY 3/07
FY 3/08
79,532.00
86,999.00 9.4% 48.3% 72,944.00 109.0% 40.5% 20,310.00 37.2% 11.3% -8.00 180,245.00 39.5%
90,880.00 4.5% 56.3% 47,894.00 -34.3% 29.7% 22,757.00 12.0% 14.1% -1.00 161,530.00 -10.4%
15.2%
4,668.00 -37.9% 5.4% 48,342.00 212.6% 66.3% -534.00 -72.4% -2.6% -4,614.00 47,862.00 144.1% 26.6%
1,991.00 -57.3% 2.2% 25,528.00 -47.2% 53.3% 2,136.00 -500.0% 9.4% -5,653.00 24,002.00 -49.9% 14.9%
75,509.00 24,503.00 18,050.00 6,993.00 125,055.00
90,902.00 24,600.00 19,130.00 7,940.00 142,572.00
91,037.00 29,052.00 18,154.00 17,813.00 156,056.00
61.5% 34,905.00 27.0% 14,801.00 11.5% -9.00 129,229.00
7,518.00 9.5% 15,466.00 44.3% -1,932.00 -13.1% -1,443.00 19,609.00
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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