Monday, April 16, 2012

Indag Rubber - great Q4 March 2012 FY12 results.Maintain buy

Indag Rubber - great Q4 Mar 2012 & FY12 results.Maintain buy. 
Cmp / LTP  - 217 . All time high  /life time high.

It is already up +80% since my initiating buy recommendation in Oct`11 at price of 120. Had reiterated buy with target of 320 in recent posts after results. Previous posts here
Maintain the earlier target of 320 i.e ~50% upside from here. Though , a 2x upside i.e 450 target from here is also very much possible based on valuations and good results.But we`ll cross the bridge when we come to it.
  • Q4 Mar 2012 ending results ( vs YoY) - Sales +37% , EBITDA +72%,PAT +78%.
  • FY12 vs FY11 - Sales +44% , EBITDA +84%, PAT +84%
Details below

Earnings growth momentum continues
  • Q4 EBITDA Margin % at 16.4% vs 13.1% last year and preceding quarter 13.5%.
  • Sequential QoQ- Revenues down (-3%) but EBITDA growth of +19% and PAT growth of +22%
  • FY12 results are at lifetime highs.
  • Dividend per share up 50% to Rs 6 per share vs 4 per share.
  • FY12 ROE at 39% vs 21% in last year.
  • FY12 ROCE at ~51% vs 31% in last year.
  • Becomes debt free again. From being debt free in March 2009 ending F.Y 09, it had raised Rs. 7 crore debt for capex in FY10 and has repaid all of it in ~2 years.
Valuations
  • Compared with peers such as Apollo Tyres,MRF,Ceat,Balkrishna,Gujarat Reclaim Rubber - trading at 41% discount w.r.t to PE Ratio and discount of 24% on EV/EBITDA, inspite of having superior margins,debt free status and highest ROE and ROCE Ratios.
  • Promoter holding maintained at 77%.
  • At cmp of 217, market cap of 114 crores - PE of 5.5x, PSR of 0.5x and EV/ EBITDA of 3.7x.
  • Target of 320 will result in valuation ratios of PE of 8x, PSR of 0.7x and EV/ EBITDA of 5.5x. 

Disclosure - I hold Indag Rubber. Have been buying in phases.
Results summary and Peer Comparison given in below tables. (click to zoom)