mrf ltd q4 fy12 detail reportbreport.myiris.com/firstcall/mrf_20121130.pdf · 1 year comparative...
Post on 28-Jun-2018
258 Views
Preview:
TRANSCRIPT
CMP 10733.95
Target Price 12129.00
ISIN: INE883A01011
Nov 30th
, 2012
MRF LIMITED Result Update: Q4 FY 12
BUYBUYBUYBUY
Stock Data
Sector Tyres & Rubber
Products
BSE Code 500290
Face Value 10.00
52wk. High / Low (Rs.) 11570.00/6471.60
Volume (2wk. Avg ) 2620.00
Market Cap ( Rs in mn ) 45512.00
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY12A FY13E FY14E
Net Sales 118701.80 137694.09 151463.50
EBITDA 12930.00 14153.53 15428.94
Net Profit 5723.50 6167.89 6652.73
EPS 1349.88 1454.69 1569.04
P/E 7.95 7.38 6.84
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX MRF Ltd
Source: Company Data, Firstcall Research
SYNOPSIS
MRF Ltd is India’s largest tyre manufacturer
& it is the first tyre company in India to reach
a turnover of 5000 Crores.
The Company engaged in the manufacture,
distribution, and sale of tyres for various
kinds of vehicles in India & internationally.
MRF exports its products to over 65
countries.
The company is provides tubes, flaps, tread
rubber, conveyor belts, specialty coatings, &
sports goods.
MRF Ltd has demonstrated the results during
the quarter; its boisterous growth of Net Sales
is steers by 14.27% to Rs. 29936.20 million.
The company has recommended a Final
Dividend of Rs.19/- per share on the paid-up
capital as at September 30, 2012.
MRF Ltd has recommended a Final Dividend
of Rs.10/- per share along with the 2 Interim
Dividends of Rs.3/- each i.e. 250% for the year
ended September 30, 2012.
Profit before interest, depreciation and tax is
Rs.3696.90 millions as against Rs.1832.50
millions in the corresponding period of the
previous year.
Net Sales and Operating Profit of the company
are expected to grow at a CAGR of 16% and 8%
over 2011 to 2014E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
MRF Ltd 10733.95 45512.00 1349.88 7.95 1.59 250.00
Apollo Tyres Ltd 84.45 42539.70 5.26 16.05 2.08 50.00
JK Tyres Ltd 114.25 4691.00 28.19 4.05 0.70 24.99
Ceat Tyres Ltd 105.00 3578.40 21.13 4.95 0.55 10.00
Investment Highlights Standalone
Results updates- Q4 FY12,
MRF LTD is a leader in the category holds the No.1
position for the last 21 years. It is the first tyre
company in India to reach a turnover of 5000
Crores. The Company is engaged mainly in the
manufacture of Rubber Products such as Tyres,
Tubes, Flaps, Tread Rubber and Conveyor Belt,
reported its financial results for the quarter ended
30 Sep, 2012. The fourth quarter witnesses a healthy
increase in sales is slumped up on account of an
enhanced Dealers network and robust
infrastructural Support system.
Months Sep-12 Sep-11 % Change
Net Sales 29936.20 26197.90 14.27
PAT 1647.60 3954.40 (58.34)
EPS 388.58 932.64 (58.34)
EBITDA 3696.90 1832.50 101.74
The company’s net profit slump to Rs.1647.60 million against Rs.3954.40 million in the corresponding quarter
ending of previous year, an decrease of 58.34%. Revenue for the quarter rose by 14.27% to Rs.29936.20 million
from Rs.26197.90 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs.388.58 a share during the quarter, registering at 58.34% decrease over previous year
period. Profit before interest, depreciation and tax is Rs.3696.90 millions as against Rs.1832.50 millions in the
corresponding period of the previous year.
Expenditure :
During the quarter the total expenditure cost rose
by 9 per cent mainly on account of increase in stock
in trade along with consideration of depreciation in
the rupee impact and witnessed. Total expenditure
in Q4 FY12 was at Rs.27298.30 million as against
Rs.25062.70 million in Q4 FY11. Purchase of stock in
trade cost Rs.82.90 against Rs.50.80 millions in the
corresponding period of the previous year. Other
Expenditure was at Rs.4579.00 million and
Consumption of Raw Materials is Rs.21578.40
million in Q4 FY12 are the primarily attributable to
growth of expenditure.
Latest Updates
� MRF Ltd has recommended a Final Dividend of Rs.10/- per share along with the 2 Interim Dividends of Rs.3/-
each already paid works out to Rs. 25/- per equity share of Rs. 10/- (i.e. 250%) for the year ended September
30, 2012.
� The development of good highway, efforts are taken to improve durability and high speed characteristics in
all segments of tyres.
� The company has recommended a Final Dividend of Rs.19/- per share on the paid-up capital as at September
30, 2012.
Company Profile
Established as toy-balloon manufacturing company in 1946 by KM Mammen Mappillai, MRF quickly emerged as
the leading maker of tread rubber. Since then, the company hasn't looked back. A leader in the category MRF
holds the No.1 position for the last 21 years. The fact that it is the first tyre company in India to reach a turnover
of 5000 Crores is testament to its dominance of the industry. The Company is engaged mainly in the manufacture
of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt.
MRF uses cutting - edge technologies in predictive testing and design validation before it leaves the drawing
board. These advances have significantly brought down the time to market for new designs.
Advanced raw materials are tested and approved in our NABL accredited laboratories. MRF works closely with
global suppliers in using the latest developments in materials across the globe. Our laboratories which have the
very latest in testing equipment closely monitor the quality of the material going into our tyres at the time of
approval and regularly after that.
The prototypes for verification and validation testing are manufactured in one of MRF's 6 factories all of which
are TS 16949/ISO 9001 certified. The tyres then go through testing for confirming the architecture and a series
of indoor testing to ensure that they meet MRF's tight standards and also those required by the OEM or by any of
the national standards like BIS/JIS/ETRTO/T&RA.
Products
� Tyres
• Two Wheelers
• OTR
• Trucks / Buses
• Farm Services
• LCV
• Tubes & Flabs
• SCV
� Conveyor Belt
MRF manufactures its MUSCLEFLEX brand of Conveyor Belting at one of the most advanced, 'State of the Art',
Facilities in India. Incorporating the latest manufacturing techniques in processes beginning with Mixing,
Calendaring and the like, to manufacturing of the Finished Products, all of which is In-House, MUSCLEFLEX-
Conveyor Belting has gained rapid acceptance in markets worldwide. Conveyor Belting Division is ISO 9001
certified. Belting is manufactured under a detailed Quality Assurance Plan involving meticulous raw material
testing, in-process controls and stringent finished product testing.
� Pretreads
Pretreads has emerged as the Mileage leader in procured retreading and also has the specialized expertise
required for retreading Radial Tyres of Truck, Bus, LCV and Passenger vehicle.
� Paints & Coats
Services
� T & S
MRF T&S is a one stop shop for a unique tyre shopping experience. T&S stocks the entire range of MRF tyres
and is equipped to provide services of computerized wheel alignment, wheel balancing and tyre changing. It
is an answer to the increasing number of world-class cars which are cruising on Indian roads. The
technicians at MRF T&S are trained at the MRF Tyredrome. Currently, there are 200 T&S franchisees across
the country and many more springing up each day.
� TYRE DROME
MRF Tyre Drome is the tyre care the state of the art tyre care equipment improved facilities and a world class
ambience. The company would not miss the customer friendly and professional tyre care services.
� Tyre Maintenance
On the basis of the customer views and satisfaction the company gives the suggestions about the tyre usage,
life the tyre, retread, precautions prevent from wearing out prematurely, use of same kind of tyres, if usage of
different tyres for a single car what is the inflation pressure on tyres.
� MIDD
MRF Institute of Driver Development (MIDD), which imparts training to unemployed young men in light and
heavy commercial vehicle (LCV and HCV) driving.
Exports
Exports tyres and conveyor belts to over 65 countries in America, Europe, Middle East, Japan and the Pacific
region. These markets are service offices in Dubai, Vietnam and Australia.
Manufacturing units Locations
� Goa
� Medak
� Arkonam
� Tiruvottiyur
� Puducherry
� kottayam
MRF Sports
Motorsports in India has always been synonymous with MRF. The development and popularity of various forms
of the sport can be directly attributed to the pioneering efforts of the Company.
� Racing
� Rallying
� Motocross or Karting.
Sports Goods Division
� LIL GENIO
� KITS
� BATS
� GLOVES
� BAT CARE
� DEALER NETWORK
� GUARDS
Awards & Achievement
� MRF voted the "Most Trusted" Tyre company in India by TNS 2006 global CSR study.
� MRF won the award for exports.
� MRF won the award for customer satifaction not once but 6 times in the last 7 years.
Subsidiaries
• MRF Corp Ltd
• MRF International Ltd
• MRF Lanka (P) Ltd
Sales Network
� South
� Bangalore
� Belgaum
� Calicut
� Cuddapah
� Coimbatore
� Chennai
� Ernakulum
� Erode
� Gulbarga
� Gundy
� Hospet
� Hubli
� Hyderabad
� Hasthinapur
� Kurnool
� Karimnagar
� Khammam
� Madurai
� Mangalore
� Namakkal
� Mysore
� Nellore
� Neyvelli
� Palakkad
� Pondicherry
� Rajahmundry
� Salem
� Shimoga
� Tirunelveli
� Trichy
� Trivandrum
� Vijayawada
� Vishakhapatnam
� vellore
� East
� Asansol
� Barbil
� Berhampur
� Bhubaneshwar
� Begusarai
� Dhanbad
� Guwahati
� Jamshedpur
� Kolkata
� Muzaffarpur
� Midnapore
� Patna
� Ranchi
� Rourkela
� Silchar
� Siliguri
� Tripura road
� North
� Agra
� Allahabad
� Barmer
� Bareilly
� Bhilwara
� Bikaner
� Chandigarh
� Dehradun
� Faridabad
� Gorakhpur
� Gurgaon
� Haldwani
� Hissar
� Jalandhar
� Jammu & Kashmir
� Jodhpur
� Jaipur
� Jhansi
� Kanpur
� Lucknow
� Ludhiana
� Meerut
� Muzaffarnagar
� New Delhi
� Panipat
� Parwanoo
� Patiala
� Rohtak
� Udaipur
� Varanasi
� yamunanagar
� West
� Ahmedabad
� Aurangabad
� Baroda
� Bhavnagar
� Bhopal
� Bhimandi
� Goa
� Gahdhidham
� Gwalior
� Indore
� Jabalpur
� Jamnagar
� Kolhapur
� Latur
� Nagpur
� Nasik
� Pune
� Raipur
� Rajkot
� Ratlam
� Surat
� Sakinaka
� Nerul
� Woril
Financial Highlight Standalone
Annual Profit & Loss Statement for the period of 2011 to 2014E
Value(Rs.in.mn) FY11 FY12 FY13E FY14E
Description 12m 12m 12m 12m
Net Sales 97431.70 118701.80 137694.09 151463.50
Other Income 253.10 320.10 384.12 434.06
Total Income 97684.80 119021.90 138078.21 151897.55
Expenditure -85341.80 -106091.90 -123924.68 -136468.61
Operating Profit 12343.00 12930.00 14153.53 15428.94
Interest -930.20 -1587.80 -1889.48 -2154.01
Gross profit 11412.80 11342.20 12264.05 13274.93
Depreciation -2476.30 -3011.00 -3312.10 -3577.07
Profit Before Tax 8936.50 8331.20 8951.95 9697.86
Tax -2742.30 -2607.70 -2784.06 -3045.13
Net Profit 6194.20 5723.50 6167.89 6652.73
Equity capital 42.40 42.40 42.40 42.40
Reserves 22935.30 28535.60 34703.49 41356.23
Face value 10.00 10.00 10.00 10.00
EPS 1460.90 1349.88 1454.69 1569.04
Quarterly Profit & Loss Statement for the period of 31st
Mar, 2012 to 31st
Dec, 12E
Value(Rs.in.mn) 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12E
Description 3m 3m 3m 3m
Net sales 29928.00 30082.70 29936.20 32331.10
Other income 52.60 36.20 192.00 226.56
Total Income 29980.60 30118.90 30128.20 32557.66
Expenditure -26669.80 -26851.60 -26431.30 -29097.99
Operating profit 3310.80 3267.30 3696.90 3459.67
Interest -385.30 -393.30 -450.50 -522.58
Gross profit 2925.50 2874.00 3246.40 2937.09
Depreciation -720.10 -776.60 -867.00 -919.02
Profit Before Tax 2205.40 2097.40 2379.40 2018.07
Tax -704.10 -651.80 -731.80 -635.69
Net Profit 1501.30 1445.60 1647.60 1382.38
Equity capital 42.40 42.40 42.40 42.40
Face value 10.00 10.00 10.00 10.00
EPS 354.08 340.94 388.58 326.03
Ratio Analysis
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 1460.90 1349.88 1454.69 1569.04
EBITDA Margin (%) 12.67% 10.89% 10.28% 10.19%
PBT Margin (%) 9.17% 7.02% 6.50% 6.40%
PAT Margin (%) 6.36% 4.82% 4.48% 4.39%
P/E Ratio (x) 7.35 7.95 7.38 6.84
ROE (%) 26.96% 20.03% 17.75% 16.07%
ROCE (%) 38.85% 34.64% 32.92% 31.35%
Debt Equity Ratio 0.66 0.61 0.53 0.46
Book Value (Rs.) 5419.27 6740.09 8194.79 9763.83
P/BV 1.98 1.59 1.31 1.10
Charts
Outlook and Conclusion
� At the current market price of Rs.10733.95, the stock P/E ratio is at 7.38 x FY13E and 6.84 x FY14E
respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.1454.69 and
Rs.1569.04 respectively.
� Net Sales and Operating Profit of the company are expected to grow at a CAGR of 16% and 8% over 2011
to 2014E respectively.
� Price to Book Value of the stock is expected to be at 1.31 x and 1.10 x respectively for FY13E and FY14E.
The fourth quarter witnesses a healthy increase in overall sales and profit slumped down on account of powerful
combination of exciting products, an enhanced store network and robust infrastructural Support system. We
expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story
in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.12129.00 for
Medium to Long term investment.
Industry Overview
With the diminishing sources of petroleum and increasing concern for the environment, natural rubber becomes
more acceptable and preferred raw material because of its unique qualities, when compared to other elastomers,
including in synthetic rubber and it thus touches our life everyday in many ways and in good demand. Rubber
caters to a spectrum of diverse industries like automobile, aeronautics, electrical and electronics, materials
handling, health care, power transmission and has a host of other applications. Asia is the largest source of
natural rubber, accounting for around 94 per cent of the total world output. The three largest rubber producing
countries are Indonesia, Malaysia and Thailand, which together account for around 72 per cent of all natural
rubber production. Globally Rubber Industry witnessed a steady growth in the year 2011. The world NR
production increased by 5.5% to 10.97 million tones in 2011, compared to 7.3 % during the corresponding year
2010. Which is reflected in the increased consumption figures of all types of Rubber Products?
World-wide, the NR and SR rubber consumption increased to 10.92 million tones and 14.93 million tones during
2011 and recorded a growth of 1.4 % in NR and 6.0% SR consumption respectively and main NR Consuming
Countries are USA with 11.1% increase in the consumption. Japan stand next to USA with the growth rate of 2.0%
and India with 2.0% respectively during 2011. NR consumption in China showed a negative growth of 1.2 %
during 2011. The year 2011-12 was a much futuristic and competitive year for the Rubber Industry where there
was steep increase in the consumption of NR and SR Consumption ratio during 2011 was 45.58 and it was 43.57
during 2010.
Rubber Industry in India
The Rubber Industry is a key sector in the Indian economy and developing as a global manufacturing hub of
rubber products. India is the fourth largest producer and Second largest consumption of natural rubber in the
world and also the fifth largest consumer of natural rubber and synthetic rubber put together. The total
consumption in the country exceeds production, India manages to export natural rubber as and when there is a
price gap between international market and the domestic market. Since the global consumer needs are complex,
production of specialized products for specific applications is essential for entry and sustenance in global market.
The plantation sector is customized for production and supply. Indian rubber plantation industry
Commercialisation started in 1902, and predominantly spread over the states of Kerala, Tamil Nadu, Karnataka
and the North East. Indian farmers are equipped to process world class rubber The industry structure was
initially characterised by dominance of large estates, which later broke into a number of small holdings.
Currently, 75 per cent of rubber estates are nearly 200 hectares in area and 35 per cent are nearly 40 hectares
In-house quality control systems with advanced analytical and monitoring equipment are installed in all the
rubber processing companies in India to meet stringent national and international standards like ASTM, ISO and
BIS. RSS grades produced in India conforms to International Green Book Standards. Rubber manufacturers in
India need to maintain their competitiveness, Rubber Board of India acts as the binding force for the successful
development of the rubber sector in production and consumption. Board also provides a transparent platform to
promote export by ensuring the quality of rubber and ensures efficient market deliverables so that overseas
buyers can feel relaxed in trading of rubber with India. .
Rubber Cultivation in India
India is the fourth largest producer of natural rubber accounting for 6.5 per cent of the total world production.
Commercial cultivation of rubber in India was started in 1902, ideally rubber grows in the region between 10o
north and south of the equator where the rain fall, humidity and temperature are high and the elevation is below
450 meters. Many plant species produce natural rubber. Considerations of quality and economics, however, limit
the source of natural rubber to one species, namely Hevea brasiliensis The rubber tree may live for a hundred
years or even more. But its economic life period in plantations, on general considerations is, only around 32
years – 7 years of immature phase and 25 years of productive phase. It is a native of the Amazon basin and
introduced from there to countries in the tropical belts of Asia and Africa during late 19th century. It can be
termed as the most far reaching and successful of introductions in plant history resulting in plantations over 9.3
million hectares, 95 per cent of it across the globe in Asia
Conclusion
Despite not having the best of geographical regions favorable for growing natural rubber, India continued to hold
first position with a yield of 1867 kg per ha per annum in 2008-09. Export of natural rubber is perceived as a tool
to adjust the demand-supply balance in the domestic market so that the Indian farmer is not deprived of the
price fetched by his counterparts elsewhere. The domestic rubber prices were ruling above the international
prices from the end of March 2009 till early October ’11. Currently, natural rubber can be freely imported into
the country subject to payment of import duty. The current applied rate of duty for dry forms of natural rubber is
20% and that of latex is 70%. India is the pioneer in reclaim rubber. Reclaim rubber produced in India is unique
as it is mostly from truck and bus tyres, which have almost 70% natural rubber in it.
The Rubber Board has been implementing several schemes for the development of the rubber industry in the
country under different five-year/annual plans. The functions of the Board broadly divided by the Government of
India to undertaking & assisting scientific technological and economic research; imparting training to
students/growers on improved methods of cultivation; manuring and spraying; rendering technical advice to
rubber growers; marketing; collecting statistics from owners with a vision that manufacturing is not only aimed
at making money, but also to generate wealth that should be used for the overall economic and social growth of
the society and the country.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – info@firstcallindia.com
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods
A.Nagaraju Cement, Reality & Infra, Oil & Gas
Ashish.Kushwaha IT, Consumer Durable & Banking
K. Jagadhishwari Devi Diversified
Abdul Khabeer Diversified
Anil Kumar Diversified
A.Ravi Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: info@firstcallindiaequity.com
www.firstcallindiaequity.com
top related