Documente Academic
Documente Profesional
Documente Cultură
Fundamental Grade
CRISILs Fundamental Grade represents an overall assessment of the fundamentals of the company graded in relation to other listed equity securities in India. The grade facilitates easy comparison of fundamentals between companies, irrespective of the size or the industry they operate in. The grading factors in the following: Business Prospects: Business prospects factors in Industry prospects and companys future financial performance Management Evaluation: Factors such as track record of the management, strategy are taken into consideration Corporate Governance: Assessment of adequacy of corporate governance structure and disclosure norms The grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) CRISIL Fundamental Grade 5/5 4/5 3/5 2/5 1/5 Assessment Excellent fundamentals Superior fundamentals Good fundamentals Moderate fundamentals Poor fundamentals
Valuation Grade
CRISILs Valuation Grade represents an assessment of the potential value in the company stock for an equity investor over a 12 month period. The 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 Valuation Grade 5/5 4/5 3/5 2/5 1/5 Analyst Disclosure
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.
Assessment Strong upside (>25% from CMP) Upside (10-25% from CMP) Align (+-10% from CMP) Downside (negative 10-25% from CMP) Strong downside (<-25% from CMP)
Disclaimer:
This Company-commissioned Report (Report) is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / Report are subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this Report. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assumes the entire risk of any use made of this data / Report. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information only of the authorized recipient in India only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose.
Kolkata-based Dhunseri Petrochem and Tea Ltd (Dhunseri) manufactures polyethylene terephthalate (PET) resin and cultivates tea. It is all set to increase its PET capacity fourfold and take advantage of the growing domestic and global demand for PET. We assign Dhunseri a fundamental grade of 3/5, indicating that its fundamentals are good relative to other listed securities. PET industry: Robust domestic and stable global demand to drive growth Strong growth in end-user industries and a preference for PET as packaging material has given PET demand a boost; it clocked an impressive five-year CAGR of 35% during FY0510. Despite a steep rise in consumption, Indias per capita PET consumption is very low at 0.3 kg compared to the global average of ~2 kg, which leaves tremendous room for further growth. Globally, improving demand from both developing and developed nations is expected to result in firm operating rates. We expect domestic and global PET markets to grow at a CAGR of 18-20% and 5%, respectively, over the medium term. Dhunseri to capitalise on stupendous domestic demand Owing to robust domestic demand coupled with import duty protection, Dhunseri has been enjoying higher realisations from domestic sales. To take advantage of this situation, Dhunseri d-bounded from its 100% export-oriented unit (EOU) status in FY10. Further, to realise the full potential of domestic and international demand, Dhunseri is expanding its domestic capacity by 210,000 MTPA by FY13 at a cost of Rs 3.7 bn. Post expansion, the companys capacity at the Haldia plant would reach 410,000 MTPA. Egypt plant to effectively service international customers Dhunseri is setting up a greenfield plant in Egypt with a capacity of 420,000 MTPA. Post commissioning of this project and the brownfield expansion, the companys capacity will increase from 200,000 MTPA in FY10 to 830,000 MTPA by FY14. Sales to Europe and America from Egypt, the key markets for Dhunseri, will happen at less than half the time resulting in effective client servicing and savings in freight costs. This unit will ensure proximity to end markets and raw material sources too. Project execution, volatility in raw material prices, forex fluctuations are key risks Dhunseri is in the process of doubling its domestic PET capacity and setting up a greenfield PET capacity of 420,000 MTPA in Egypt. The timely execution of these projects would be key for the companys future prospects. The companys EBITDA margins are sensitive to the movement in raw material prices especially during excess supply. The company keeps its imports and foreign loan transactions un-hedged. Any adverse movement in exchange rates could adversely impact the companys net profitability. Further, the company is highly dependent on a single supplier for its raw material supply. Revenues to grow at a two-year CAGR of 9%, EBITDA margins to improve We expect revenues to grow at a two-year CAGR of 9% to Rs 13.8 bn in FY12. Thereafter, revenues are expected to soar owing to an increase in capacity. EBITDA margins are expected to improve in FY11 backed by savings in power costs before declining in FY12 due to excess global supply. The companys capex plans are expected to increase its gearing between FY10 and FY12 and lower its RoE as compared to FY10. Valuations: Aligned at current levels We have valued Dhunseri based on the discounted cash flow (DCF) approach and arrived at a one-year fair value of Rs 236 per share. We initiate coverage on Dhunseri with a valuation grade of 3/5, indicating that the market price is aligned with the fair value. Key forecasts (Rs mn) Operating income EBITDA Adj Net income Adj EPS-Rs Adj EPS growth (%) PE (x) P/BV (x) EV/EBITDA (x) RoCE (%) RoE (%)
CFV matrix
Excellent Fundamentals 5
Fundamental Grade
4 3 2 1
Poor Fundamentals
Valuation Grade
Strong Downside Strong Upside
Fundamental grade of '3/5 indicates good fundamentals Valuation grade of '3/5' indicates CMP is aligned
-Indexed to 100 FY09 12,294 1,263 210 5.7 (11.6) 38.5 2.1 8.0 11.7 5.5 FY10 11,582 1,154 769 20.9 266.7 10.5 1.4 8.3 9.2 15.8 FY11E 13,786 1,781 985 26.8 28.1 8.2 1.2 5.6 13.6 15.7 FY12E 13,835 1,437 836 22.7 (15.1) 9.7 1.1 10.5 7.5 12.0
Analytical contact
Sudhir Nair (Head, Equities) Arun Vasu Suhel Kapur Email: clientservicing@crisil.com +91 22 3342 3526 +91 22 3342 3529 +91 22 3342 4149 +91 22 3342 3561
CRISIL Equities
Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
Dhunseri Nifty
CRISIL Equities
Grading Rationale
Dhunseri is the second largest domestic manufacturer of PET
Dhunseri is the second largest domestic PET resin manufacturer with a capacity to
Dhunseri has the capacity to produce 200,000 MTPA of PET resin as of FY10
produce 200,000 MTPA (metric tonnes per annum) as of FY10. Reliance Industries Limited (Reliance) and JBF Industries Ltd (JBF) are the other two producers of PET resin in India with a capacity of 290,000 MTPA and 110,000 MTPA, respectively. While Dhunseri and Reliance have capacities dedicated solely for PET production, JBF has been diverting capacities meant for producing polyester chips for producing PET resin since FY08.
What is PET?
PET (polyethylene terephthalate) is a clear, strong and lightweight engineering plastic belonging to the polyester family. PET has become the worlds packaging choice for many foods and beverages because of reactive, economical and freshness-retentive. its distinct characteristics - hygienic, lightweight, unbreakable, non-
Global demand-supply scenario set to improve over the next five years
PET is one of the fastest growing polyester applications, having logged a CAGR of 6% in the past five years. This holds out bright prospects for the PET resin industry
Global operating rates are set to firm post 2011
catalysed by population growth, widening applications and the replacement of container/glass bottles. The global PET resin industry has been experiencing surplus situation over the past few years and is expected to witness lower operating rates over the next two-three years before improving demand from developing and developed countries tightens it. The long-term prospects of the PET resin industry appear upbeat owing to product convenience and characteristics. Over the next five years, global operating rates are expected to improve from around an estimated 77% in 2010 to around 82% in 2015 though intermittent periods could see some excess supply.
CRISIL Equities
76.2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
Global Capacity
Operating Rate
Liquor, 20%
FY10E
FY05
FY06
FY07
FY08
FY09
Domestic demand
Growth (y-o-y)
Although the demand for PET resin in India has rallied in the past five years, India's per
Domestic demand is set to grow at 18-20% over the next five years
capita consumption of PET is only 0.3 kg compared to the global average of around 2 kg. Thus, there is tremendous scope for growth considering the growth in various packaging applications and end-user industries. Growing middleclass population, rising per capita income and an organised retail sector are expected to drive growth in the packaging segment. Over the next five years, we expect demand for PET to grow at a CAGR of 18-20% to reach 680,000 tonnes by FY15.
CRISIL Equities
Figure 6: Growth in domestic PET demand has pushed up PET sales in India
(000 MT) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 99 123 147 221 274 285 302 263 279 284
Figure 7: Reliance caters to more than 50% of the domestic market in FY10
(000 MT) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 39.3 70.1 88.7 138.2 143.3 59.9 52.8 58.7 78.1 100.5 5.0 30.4
FY06
FY07
FY08
FY09
FY10E
Exports
Domestic sales
JBF
Dhunseri
Reliance
Owing to robust demand from end-user industries and the import duty protection enjoyed by PET manufacturers in India, Dhunseri has been enjoying higher realisations from domestic sales.
Figure 8: The delta between domestic and export realisations has increased for Dhunseri
(Rs/MT) 63,000 62,000 61,000 60,000 59,000 58,000 57,000 56,000 55,000 FY06 55,300 FY07 Domestic realisation FY08 FY09 Export realisation FY10 56,064 57,317 56,680 56,134 60,880 62,013 62,400 60,585 59,489
In order to take advantage of the strong domestic demand, Dhunseri d-bounded from its 100% EOU status in FY10 to cater to the growing domestic demand with an option to export.
Dhunseri d-bounded from its EOU status to take advantage of the robust domestic demand
Further, to realise the full potential of domestic and international demand, Dhunseri is expanding its domestic capacity by 210,000 MTPA by FY13 at a cost of Rs 3.7 bn. Post
CRISIL Equities
FY10E
FY06
FY07
FY08
FY09
expansion, the companys capacity at the Haldia plant would reach 410,000 MTPA. The company is progressing well with its brownfield expansion plan and has appointed Oerlikon Barmag, Germany as its EPC contractor. Of the total debt requirement of about Rs 2.3 bn, the company has achieved financial closure for Rs 1.6 bn in Q1FY10 and the balance is expected to be achieved in November 2010.
Dhunseri has maintained its margins even with higher quantum of exports
Dhunseri operated as a 100% EOU till October 2009 with almost 60% of its production being exported. During this period too it was able to maintain healthy EBITDA margins despite lower realisations on export sales compared to domestic sales depicting its competitiveness vis--vis established international payers. We believe Dhunseri's change in focus towards the domestic market, given its growth prospects, holds it in good stead to better its profitability on the back of better domestic realisations.
Figure 9: Stable margins despite large exposure to export markets
10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% FY06 FY07 EBITDA in Petchem FY08 FY09 8.0% 8.3% 8.3% 9.8%
Until FY10, Dhunseri met its power requirements through furnace oil (FO)-based power plant. In June 2010, the company has commissioned an 8 MW coalbased captive power plant at its existing plant in Haldia. This power plant is sufficient for meeting the companys entire power requirement at its plant. The switch from FO to coal will result in substantial cost savings for the company. We estimate an annual savings of about Rs 75-100 mn in power costs considering current FO and coal. Consequently, EBITDA expansion of about 100 bps is expected from this initiative.
material source. The major raw materials for manufacturing of PET resins are PTA and MEG accounting for about 95% of the total raw material costs. While PTA is mostly
CRISIL Equities
sourced from MCC PTA India Corp. Private Ltds (a subsidiary of Tokyo-based Mitsubishi Chemical Corporation) Haldia plant, MEG is sourced from Mitsui, Singapore. In FY10, MCC PTA India doubled its PTA capacity from about 0.57 mn tonnes to about 1.27 mn tonnes.
underpenetrated North African and European markets. Dhunseri had floated a subsidiary under the Egyptian Indian Polyester Company, S.A.E. to enter into a joint venture with Egyptian Petrochemicals Holding Company (ECHEM) and Engineering for the Petroleum and Process Industries (ENPPI) (both government companies) to set up the plant in which Dhunseri would hold a 70% stake. However, due to regulatory issues the project got delayed. The company has finalised a new plot of land in Ain El Sokhna, a deep sea port on the Red Sea and has received all regulatory clearances as communicated by the management. Further, the company has also achieved financial closure for the project in October 2010 with International Finance Corporation as the leader with US$35 mn exposure. The balance loan has been tied up from local Egyptian banks. The approximate project cost is estimated at about US$160 mn and it is being financed at a debt-equity ratio of 2:1. The company has appointed Oerlikon Barmag, Germany as its EPC contractor for the Egypt plant as well. Barring any unforeseen events, we believe that the company would be able to commission its plant in Egypt by FY14.
shipments from India to Europe and America, respectively. Proximity to a high MEG-producing region in Saudi Arabia and the Middle East is expected to reduce procurement costs. Proximity to rapidly growing PET resin markets in Africa (Algeria, Morocco, Libya and Tunisia), Israel, the US and the European Union is expected to strengthen the units global footprint.
CRISIL Equities
10.4 7.2
9.9
10.5
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
Efficient operations and a favourable cycle have improved the profitability of tea business
Dhunseri mainly produces CTC tea and a small percentage of orthodox tea (about 10%). The company has 11 tea estates; all are in Assam where tea is superior in quality compared to other parts of the country. During FY10, Dhunseri sold about 32% of the total volume of tea through auctions,
Profitability of tea business has improved over the years
28% through packet sales and about 40% through private and consignment agents. The company has long-term association with reputed tea auction houses like J. Thomas & Co., Contemporary Tea Auctioneers and Caritt Moran & Co. Bulk tea is sold to them, and they in turn sell the tea to various traders and bulk buyers. Packet tea is mostly sold in Rajasthan to a fixed set of wholesale buyers, who, in turn, reach the same to the retail consumers under brand names like Lal Ghoda, Kala Ghoda and Chote Lal. In FY10, the companys aggregate area under cultivation was about 3,302 hectares with an average yield of around 2,265 kg per hectare in comparison with the industry benchmark of around 1,900 kg per hectare. An established position in the domestic tea industry along with emphasis on improving efficiency has improved profitability.
CRISIL Equities
FY10
Figure 12: Profitability has improved because of efficient operations and favourable cycle
30% 25% 20% 15% 10% 5% 0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 EBITDA margin PAT margin
589
551
501
592
573
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
Revenues
PAT
FY10
India, Kenya and Sri Lanka, which account for approximately 80% of the global tea production and more than 50% of global tea exports, faced adverse weather conditions (drought) in 2009. This lowered the global supply and consequently raised the prices in India and in the international market in 2009. Against this backdrop, CRISIL Research expects overall tea prices in India to increase by 5% in 2010 and 3% in 2011 to Rs 109 per kg and Rs 112 per kg, respectively, following a rise of 25% in 2009 and 24% in 2008. Tea prices in North Indian are expected to rise to Rs 121 per kg in 2010 and Rs 124 per kg in 2011 compared to Rs 115 per kg in 2009. At present, Dhunseri does not have plans to expand its tea business. However,
assuming current levels of production to be sustained and barring any unforeseen events, Dhunseris tea division is expected to grow at a two-year CAGR of 4% to Rs 1.4 bn in FY12E, driven by higher price realisation. As a proportion of total sales, the tea business contribution is expected to continue at about 10% until FY12 after which it is expected to fall owing to significant scale up in Dhunseris PET business.
CRISIL Equities
Key Risks
Timely execution of proposed expansions
Dhunseri is in the process of doubling its domestic PET capacity and setting up a greenfield PET capacity of 4,20,000 MTPA in Egypt. These expansions are expected to get commissioned in FY13 and FY14, respectively. The timely execution of these largesized expansions remains the key challenge for the company, especially in Egypt wherein the company has faced significant project delays so far.
MCC PTA India Corp Private Ltd, a subsidiary of Tokyo based Mitsubishi Chemical Corporation with a plant in Haldia) and MEG (sourced from Mitsui, Singapore). These two key raw materials account for ~80% of the total operating costs. Historically, PTA and MEG prices have remained volatile and are currently on an upward trend following a rise in crude oil prices (PTA and MEG are crude oil derivatives). PTA prices are directly linked to naphtha prices, while MEG prices are linked to ethylene prices, both of which are volatile in nature. Hence, the companys EBITDA margins are sensitive to the movement in raw material prices especially in a down cycle.
Forex fluctuations
The company follows a prudent hedging policy for its export sales. However, the company does not hedge for its MEG imports. Further, the company has foreign currency loan to the tune of Rs 1.3 bn in its book which is un-hedged. Consequently, the company accounts for huge foreign exchange fluctuations in its book at the end of the accounting year when it needs to adjust the debt value based on the year-end exchange rate. The major chunk of the foreign exchange fluctuation is a notional entry without any cash inflow/outflow. However, debt re-payment and interest payment within a year are impacted. The company has witnessed forex losses and gains to the tune of Rs 517.5 mn and Rs 212.3 mn in FY09 and FY10, respectively, which accounts for around 166% and 21% of its PBT in these two years, respectively. Hence, any wide fluctuations in forex rates would continue to adversely affect Dhunseris net margins, especially as its quantum of ECBs is set to increase with its capex plans.
CRISIL Equities
10
CRISIL Equities
11
Financial Outlook
Figure 13: Revenues to increase in FY11 due to optimum capacity utilisation
(Rs bn)
Figure 14: Cost savings in power to improve EBITDA in FY11, before being subdued by excess global supply
14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 10.4% 12.9%
16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 FY09 FY10 Petchem Tea FY11E FY12E
10.3%
10.0%
FY09
FY10
FY11E
FY12E
EBITDA margin
Figure 15: PAT estimated to remain stable over the forecast period
8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY09 FY10 PAT margin FY11E FY12E 1.7% Forex gains/(losses) cause huge variance in PAT margins 6.6% 7.1%
6.0%
CRISIL Equities
12
Management Evaluation
CRISIL Equities fundamental grading methodology includes a broad assessment of management quality apart from other key factors such as industry, business prospects and financial performance. Overall, we believe the management is relatively good.
The Dhanuka family has been engaged in the tea business for over five decades and in the petrochemicals business for around a decade. The top management has rich experience in both businesses and are well versed with the dynamics of these segments. Despite being a promoter-driven company, we believe that Dhunseris management has a professional approach towards managing the company.
CRISIL Equities
13
Corporate Governance
CRISILs fundamental grading methodology includes a broad assessment of corporate governance as well, apart from other key factors such as industry, business prospects, financial performance and management quality. In this context, CRISIL Equities analyses shareholding structure, board composition, typical board processes, disclosure standards and related-party transactions. Any qualifications by regulators or auditors also serve as useful inputs while assessing a companys corporate governance. Overall, corporate governance at Dhunseri presents good practices supported by a fairly experienced board. We feel that the company's corporate governance practices are adequate and meet the minimum required levels.
Board composition
The board comprises 12 members, of whom six are independent, which is in
Dhunseris corporate governance practices are adequate and meet the minimum required standards
accordance with the stipulated SEBI guidelines relating to the Clause 49 of the listing agreement. Given the background of the directors, we believe that the board is fairly diversified. We feel that the independent directors are aware of the business and are fairly engaged in all the major decisions.
Boards processes
The company has the audit and the shareholders grievance committees in place. The company's disclosures are sufficient to analyse its business aspects. Based on interactions with independent directors, CRISIL Equities assesses that the quality of agenda papers and the level of debate of discussions at the board meetings are good.
Other observations
Based on the level of information and details furnished in annual reports, the company website and other publicly available data, the companys quality of disclosure is good. Further, we assess that the audit committee is chaired by an independent director, and it meets at regular intervals.
CRISIL Equities
14
Valuation Grading
Grade: 3/5
We have used the discounted cash flow (DCF) method to value Dhunseri and arrived at a fair value of Rs 236 per share for the company. At the current market price of Rs 220 per share (Opening price on November 4, 2010), the stock trades at P/E multiples of 8.2x and 9.7x FY11E and FY12E EPS of Rs 26.8 and Rs 22.7, respectively. Our fair
We assign a fair value of Rs 236 per share and initiate coverage with a valuation grade of 3/5
value of Rs 236 per share gives implied P/E of 8.8x and 10.4x based on FY11 and FY12 earnings, respectively. We initiate coverage on the company with a valuation grade of 3/5, indicating that the current market price is aligned with our fair value.
The company has investments worth Rs 900 mn (at book value) invested in the market. The fair value of the company includes the value of these investments at around Rs 24 per share.
Table 2: Sensitivity analysis of terminal WACC and terminal growth rate
Terminal Growth Rate WACC 11.2% 12.2% 13.2% 14.2% 15.2% 1.0% 276 228 189 157 132 2.0% 312 255 210 174 145 3.0% 357 289 236 195 161 4.0% 414 331 267 218 180 5.0% 490 384 306 248 202
CRISIL Equities
15
Company Overview
Until 2008-09, the Dhunseri Group comprised two manufacturing companies: 1. 2. Dhunseri Tea & Industries Ltd engaged in tea cultivation and marketing South Asian Petrochem Ltd engaged in the manufacture of PET resin
In 2009-10, Dhunseri Tea & Industries and South Asian Petrochem merged together to form Dhunseri Petrochem and Tea Limited, the flagship company of the Rs 1,250-crore Kolkata-based Dhunseri Group. The main objective behind the merger was to seek stable returns by combining relatively predictable cash flows from PET resin with those from the cyclical tea business and the largely predictable commercial annuity business. Achieving higher scale of operations, enhancing the groups transparency and efficiency, and providing superior confidence to domestic and international lenders were other objectives which drove the merger. The erstwhile Dhunseri Tea & Industries was incorporated in May 1916 and the current promoter acquired this company in 1955. Dhunseri Tea & Industries is primarily engaged in the manufacturing and sale of loose tea and packet tea. The company has 11 tea estates in Assam and produced 10.4 mn kgs in FY10. The erstwhile South Asian Petrochem Limited was promoted by Dhunseri Tea & Industries in 1999 for manufacture of PET resins under technical and financial collaboration with Lurgi Zimmer AG of Germany. South Asian Petrochem became a subsidiary of Dhunseri Tea & Industries in FY09 by virtue of merger of an associate company with Dhunseri Tea & Industries and acquisition of further stake by Dhunseri Tea in South Asian Petrochem Limited. South Asian Petrochems PET resin plant is spread across 35 acres in Haldia, the port town of West Bengal. Plant capacity in FY10 was 200,000 MTPA. Prior to the merger of South Asian Petrochem in FY10, the Dhunseri Group held about 51% stake in South Asian Petrochem.
Table 3: Companys history and highlights
Year 1955 1961 1970 1980 1991 1992 1993 1994 1996 Milestones S L Dhanuka Group took over management of the company from James Finlay & Company Dhunseri Tea Company was incorporated Company was renamed Dhunseri Tea & Industries Company acquired the Namsang and Dilli Gardens in Assam The company took over Bahadur Tea Company and amalgamated with Dhunseri Tea The company came out with a public issue Santi Tea Estate was amalgamated with Dhunseri Tea The company acquired Santi tea estate, Khetojan tea estate and Khagorijan tea estate The company promoted South Asian Petrochem Ltd to manufacture PET Resins under technical and financial collaboration with Lurgi Zimmer AG of Germany 2009 Dhunseri Tea & Industries and South Asian Petrochem merged together to form Dhunseri Petrochem and Tea Ltd
Dhunseri Tea & Industries Ltd and South Asian Petrochem Ltd merged together to form Dhunseri Petrochem and Tea Limited in FY10
CRISIL Equities
16
Annexure: Financials
Income Statement (Rs mn) Net sales Operating Income EBITDA Depreciation Interest Other Income PBT Adj PAT No. of shares Adj Earnings per share (EPS -Rs) Balance Sheet (Rs mn) Equity capital (FV - Rs 10) Reserves and surplus Debt Current Liabilities and Provisions Deferred Tax Liability/(Asset) Capital Employed Net Fixed Assets Capital WIP Intangible assets Investments Loans and advances Inventory Receivables Cash & Bank Balance Applications of Funds Source: Company, CRISIL Equities estimate FY09 117 3,783 5,354 2,336 268 11,859 3,827 188 94 603 1,217 919 1,808 3,202 11,859 FY10 117 5,774 3,976 2,506 383 12,711 5,299 436 71 816 1,408 761 1,492 2,429 12,711 FY11E 350 6,403 5,476 2,886 577 15,646 5,152 1,740 57 716 1,676 906 1,775 3,625 15,646 FY12E 350 6,973 10,976 2,980 742 21,975 4,999 8,063 43 516 1,682 947 1,820 3,907 21,975 FY09 12,163 12,294 1,263 267 830 145 311 210 11.7 5.7 FY10 11,401 11,582 1,154 279 21 160 1,014 769 11.7 20.9 FY11E 13,649 13,786 1,781 289 204 182 1,471 985 35.0 26.8 FY12E 13,698 13,835 1,437 294 148 254 1,248 836 35.0 22.7
CRISIL Equities
17
Cash Flow (Rs mn) Pre-tax profit Total tax paid Depreciation Change in working capital Cash flow from operating activities Capital expenditure Investments and others Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries) Cash flow from financing activities Change in cash position Opening Cash Closing Cash Ratios FY09 Growth ratios Sales growth (%) EBITDA growth (%) Adj EPS growth (%) Profitability Ratios EBITDA Margin (%) PAT Margin (%) Return on Capital Employed (RoCE) (%) Return on equity (RoE) (%) Dividend and Earnings Dividend per share (Rs) Dividend payout ratio (%) Dividend yield (%) Adj Earnings Per Share (Rs) Efficiency ratios Asset Turnover (Sales/GFA) Asset Turnover (Sales/NFA) Sales/Working Capital Financial stability Debt-equity Interest Coverage Current Ratio Valuation Multiples Price-earnings Price-book EV/EBITDA Source: Company, CRISIL Equities estimate 38.5x 2.1x 8.0x 10.5x 1.4x 8.3x 8.2x 1.2x 5.6x 9.7x 1.1x 10.5x 1.4 1.2 3.1 0.7 42.2 2.4 0.8 7.3 2.8 1.5 7.7 2.8 2.3x 3.2x 9.5x 1.9x 2.5x 8.4x 1.9x 2.6x 10.5x 1.9x 2.7x 9.4x 3.9 21.5 1.8 5.7 13.9 21.2 6.3 20.9 6.5 20.2 3.0 26.8 6.5 27.2 3.0 22.7 10.3 1.7 11.7 5.5 10.0 6.6 9.2 15.8 12.9 7.1 13.6 15.7 10.4 6.0 7.5 12.0 1,221.2 938.7 (11.6) (5.8) (8.6) 266.7 19.0 54.3 28.1 0.4 (19.3) (15.1) FY10 FY11E FY12E FY09 311 (53) 267 (617) (93) (320) 318 (2) 47 1,293 (45) (100) 1,195 1,099 2,103 3,202 FY10 1,014 (176) 279 455 1,572 (1,975) (213) (2,188) 246 (1,379) (163) 1,139 (157) (772) 3,202 2,429 FY11E 1,471 (291) 289 (317) 1,151 (1,431) 100 (1,331) 233 1,500 (266) (90) 1,376 1,196 2,429 3,625 FY12E 1,248 (247) 294 3 1,299 (6,450) 200 (6,250) 5,500 (266) 5,234 282 3,625 3,907
CRISIL Equities
18
Quarterly results
Dhunseri (Rs mn) Net sales Raw materials cost Raw materials cost (% of net sales) Employees cost Other expenses EBITDA EBITDA margin Depreciation EBIT Interest and finance charges Operating PBT Other Income Extraordinary Income/(expense) PBT Tax PAT Adj PAT Adj PAT margin No of equity shares (Mn) Adj EPS (Rs) Source: Company, CRISIL Equities n.m.: not meaningful Note: Numbers have been re-classified as per CRISIL Equities standards. Interest and finance charges include losses/gains on account of foreign exchange fluctuation Q2FY11 3,689 2,492 67.6% 129 513 555 15.1% 85 470 13 457 40 143 639 103 537 394 10.7% 35.0 10.7 Q1FY11 3,568 2,572 72.1% 117 480 399 11.2% 65 334 83 250 45 295 60 236 236 6.6% 35.0 6.4 Q2FY10 2,472 1,706 69.0% 107 368 291 11.8% 65 226 68 158 50 208 18 189 189 7.7% 11.7 5.1 q-o-q(%) 3.4 (3.1) -5pps 10.0 6.9 39.1 386bps 30.4 40.8 (84.5) 82.5 (12.1) n.m. 116.4 72.0 127.6 67.1 407bps 67.1 y-o-y(%) 49.2 46.1 -1pps 20.3 39.4 90.8 328bps 30.9 108.1 (80.9) 189.3 (20.3) 208.0 455.7 183.7 108.3 303bps 108.3 H1FY11 7,257 5,063 69.8% 246 993 955 13.2% 151 804 96 707 85 143 935 162 772 630 8.7% 35.0 17.1 H1FY10 5,459 3,812 69.8% 210 812 625 11.5% 131 494 18 475 96 572 51 520 520 9.5% 11.7 14.2 y-o-y(%) 32.9 32.8 0pps 16.9 22.2 52.7 170bps 14.7 62.8 422.8 48.8 (12.3) n.m. 63.5 216.6 48.4 21.0 -86bps 21.0
CRISIL Equities
19
Focus Charts
Global operating rates to firm post 2011
(MMT) 25.0 20.0 15.0 10.0 5.0 0.0 73.5% 84.2% 84.3% 83.3% 82.5% 79.0% 86.4% 82.4% 77.9% 75.3% 81.6% 80.6% 78.1% 77.4% 76.6% 90% 85% 80% 75% 70% 65%
Dhunseri is the second largest player in the domestic PET market after Reliance
(000 MT) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 39.3 70.1 88.7 138.2 143.3 59.9 52.8 58.7 78.1 100.5 5.0 30.4
76.2%
2010E
2011E
2012E
2013E
2014E
2015E
Global Capacity
Operating Rate
JBF
Dhunseri
Reliance
Cost savings in power to improve EBITDA in FY11, before being subdued by excess global supply
14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% FY09 FY10 FY11E FY12E 10.4% 12.9%
10.3%
10.0%
EBITDA margin
Aug-09
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Aug-05
Aug-06
Aug-07
Aug-08
Share price
Fair Value
Source: NSE
CRISIL Equities
Aug-10
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
FY10E
FY06
FY07
FY08
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
FY09
20
Other Services by the Research group include ) ) ) CRISINFAC Industry research on over 60 industries and Economic Analysis Customised Research on Market sizing, Demand modelling and Entry strategies Customised research content for Information Memorandum and Offer documents
Mumbai
CRISIL House Central Avenue Hiranandani Business Park Powai, Mumbai - 400 076, India. Phone +91 (22) 3342 8026/29/35 Fax +91 (22) 3342 8088
New Delhi
The Mira G-1 (FF),1st Floor, Plot No. 1&2 Ishwar Nagar, Near Okhla Crossing New Delhi -110 065, India. Phone +91 (11) 4250 5100, 2693 0117-21 Fax +91 (11) 2684 2212/ 13
Bengaluru
W-101, Sunrise Chambers 22, Ulsoor Road Bengaluru - 560 042, India. Phone +91 (80) 4117 0622 Fax +91 (80) 2559 4801
Kolkata
Horizon, Block B, 4th floor 57 Chowringhee Road Kolkata - 700 071, India. Phone +91 (33) 2283 0595 Fax +91 (33) 2283 0597
Chennai
Mezzanine Floor, Thappar House 43 / 44, Montieth Road Egmore Chennai - 600 008, India. Phone +91 (44) 2854 6205/06, 2854 6093 Fax +91 (44) 2854 7531
Hyderabad
3rd Floor, Uma Chambers Plot No. 9&10, Nagarjuna Hills, (Near Punjagutta Cross Road) Hyderabad - 500 482 Phone : 91-40-2335 8103 - 05 Fax : 91-40-2335 7507 For further details or more information, please contact: Client Servicing CRISIL Research CRISIL House Central Avenue Hiranandani Business Park Powai, Mumbai - 400 076, India. Phone +91 (22) 3342 3561/ 62 Fax +91 (22) 3342 3501 E-mail: clientservicing@crisil.com E-mail: research@crisil.com www.ier.co.in