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Hyderabad Industries - Hem Securities
Posted On : 2012-08-03 10:45:39( TIMEZONE : IST )
Hyderabad Industries (HIL) is a flagship company of the C K Birla group of companies. HIL has led the cement industry for well over five decades. Today HIL is a multi product, multi location organization with a formidable network of branches, depots, stockists and personnel spread all over India.
The company has posted sharp numbers for the quarter ending June 2012. The quarter revenue stood at Rs. 332.53 crore for the Q1FY13 indicating a growth of about 33.51% as compared to Rs. 249.07 crore during the year-ago period. Sales grew by sharp 33% on a q-o-q basis supported by strong demand, peak season and better realization. Operating profit surged to Rs.54.78 crore from the corresponding previous quarter of Rs.41.69 crore. The company has posted a 30.96% increase in its net profits to Rs.32.53 crore for the quarter ended June 2012 compared to Rs. 24.84 crore in the corresponding quarter in the previous year. EPS stood at Rs.43.43. Operating profit margin was at 16.47% vs 16.74% in Q1FY12 and 12.95% in Q4FY12. Net profit margin stood at 9.78% vs 9.97% in Q1FY12 and 7.19% in Q4FY12.
Revenues from building products; major revenue contributor; rose by 35.14% y-o-y and 33.21% q-o-q at Rs.324.52 crore. Thermal insulation products segment revenue witnessed a fall of 16.52% y-o-y while a growth of 14.01% q-o-q to stay at Rs.6.72 crore. Wind power segment has posted a sharp growth of 41.18% y-o-y and 90.91% q-o-q at Rs.1.68 crore.
Valuation
With augmentation of capacity at existing locations, setting up new plants in strategic locations, strong market share, wide distribution channel, strong growth across all business verticals, recognized brand name and increasing thrust on green products; Hyderabad Industries Ltd. revenue visibility looks visible. We believe HIL is trading at an attractive valuation at 5.05x and 4.54x of FY13EPS of Rs.88.44 and FY14EPS of Rs.98.43. We initiate a 'BUY' on the stock with a target price of Rs.560 (appreciation of about 25%) with the long term investment horizon.
