For 4Q FY 2012, Finolex Cables (Finolex) reported
strong 21.1% quarter on quarter and 12.1% year on year growth in its top line to Rs. 605
cr. The company’s operating profit increased by whopping
45.9%year on year to Rs. 58 cr. OPM expanded by 2.23%
year on year and 1.36% quarter on quarter to 9.6%. PAT came in at Rs. 45
cr, up 139% year on year and 225% quarter on quarter.
Going ahead, the business outlook remains positive,
given the growth prospects in user industries and higher sales from the
high-tension (HT) cables plant.
We maintain our Buy rating on the stock.
Highest sales and PAT in the last eight quarters,
while margins expand: Finolex reported
12.1%year on year growth in its top line to Rs. 605
cr. The main electrical cables segment reported
strong growth of 39.5% year on year and 21.3 %
quarter on quarter to Rs. 506 cr.
However, the other 2 segments, communication cables
and copper rods, reported declines of 27.4 % & 36.7%, respectively. The
company’s EBITDA margin increased by 2.33% year on year to 9.6% on the back of lower raw material cost. Raw material cost as a percentage of sales
declined to 74.9%
in 4Q FY 2012 compared to 80.2 % in 4Q FY 2011. PAT
increased by 139% year on year to Rs. 45 cr
(Rs.
19 cr) on the back of margin
expansion, lower Forex loss, higher other income & tax
adjustments.
Other income increased by 130 % year on year to Rs. 9
cr, while Forex loss declined by
15.6% to Rs.10 cr. Consequently, PAT margin
increased by 3.91% year on year to 7.4 % (3.5 %).
Outlook and valuation:
We remain positive on the
company’s prospects going ahead,
given strong growth in user industries, which are
showing no signs of abating. Higher
sales from the HT cables plant and start of
production at the extra high voltage (EHV) plant
would further boost the company’s growth.
Overall, we expect the company’s sales to post a
13.6 % CAGR over FY 2012–14E, while PAT is expected to post a CAGR of 16.6 %
over the same period.
At the CMP, the stock is trading at 3.5x its FY2014E
EPS. We maintain
our Buy rating on the stock with a target price of Rs.61.
Investment Period 12 Months
Review By Angel Broking
Sharan Lillaney
+91 22 3935 7800 Ext: 6811
Sharanb.lillaney@angeltrade.com
Research Team Tel: 022 - 39357800 E-mail:
research@angelbroking.com Website: www.angelbroking.com
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