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Research
Finolex Cables - 1QFY2013 Result Update - Angel Broking
Posted On : 2012-08-17 23:28:11( TIMEZONE : IST )
For 1QFY2013, Finolex Cables (Finolex) reported a 12.4% yoy growth in its top-line to Rs.518cr. The company's operating profit increased by a whopping 41.6% yoy to Rs.49cr. The OPM expanded by 194bp yoy to 9.4%. The PAT came in at Rs.25cr, up 24% yoy. 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.
Margins and PAT improve yoy: Finolex announced a good set of numbers for its 1QFY2013 results. Net sales grew by 12.4% yoy to Rs.518cr on back of strong sales in the electrical segment. The electrical cables segment registered a 21.4% yoy growth in revenue to Rs.456cr. The company's other two segments - communication cables and copper rods continued with their poor run witnessing only 8.3% yoy growth and 32.9% yoy decline in revenue. The EBITDA increased by 41.6% yoy to Rs.49cr on the back of higher revenue and margin expansion. The EBITDA margin expanded by 194bp yoy to 9.5% on the back of lower raw material costs. The raw material cost as a percentage of sales declined to 73.0% in 1QFY2013 compared to 79.3% in 1QFY2012. PAT increased by only 24.1% yoy to Rs.25cr due to higher forex loss and lower other income. Other income declined by 72.6% yoy to Rs.2cr while forex loss increased by 237% to Rs.6cr. The PAT margin also increased by 45bp yoy to 4.8%.
Outlook and valuation: We remain positive on the company's prospects going ahead, given the 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 FY2012-14E, while the PAT is expected to post a CAGR of 16.6% over the same period. At the current market price, the stock is trading at 3.8x its FY2014E EPS. We maintain our Buy rating on the stock with a target price of Rs.61.
