IFB Agro - Q4FY13 Result Review - Angel Broking

IFB Agro reported better than expected results for 4QFY2013. Revenue came in at Rs. 86cr as compared to our estimate of Rs. 82cr, while on a yoy basis, revenue decline dby 9.3% primarily due to fall in revenue in the alcohol division due to closure of the molasses distillery. However, EBITDA margin expanded by 298bp yoy to 6.8% in 4QFY2013 from 3.8% in 4QFY2012, due to a sharp decline in other expenses during the quarter. This coupled with lower depreciation and higher other income led to a net profit Rs. 4cr during the quarter as compared to a net profit of Rs. 0.3cr in 4QFY2012.

For FY2013, overall revenue growth stood at 4.5% yoy to Rs. 462cr from Rs. 442cr in FY2012. Decline in revenue growth is attributable to lower contribution from the alcohol division. EBITDA margin contracted by 71bp to 10.3% on account of increase in net raw material cost. This was offset by lower depreciation and higher other income which led to 2.5% yoy growth in net profit to Rs. 26cr for FY2013.

Going forward we expect the revenue to post a 19.2% CAGR to Rs. 657cr over FY2013-15 at the back of new distillery capacity, which is expected to be operational by FY2015E. We expect the net profit to post a CAGR of 32.4% on the back of margin expansion arising from high margin distillery business. At the current market price, the stock is trading at P/B of 0.6x for FY2015E, which we feel is attractive. Hence, we maintain our buy recommendation on the stock with a target price of Rs. 224 based on a target P/B of 0.8x for FY2015E.

Source : Equity Bulls

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