Please refer to important disclosures at the end of this report
1
(` cr)
3QFY20
3QFY19
% yoy
2QFY20
% qoq
Revenue
193
175
10.6
193
0.4
EBITDA
58.8
(12.0)
OPM (%)
16.3
11.3
494bp 18.6
(229bp)
Reported PAT
80.5
(16.6)
Source: Company, Angel Research
For 3QFY2020, Hawkins Cookers Ltd (HCL) posted strong set of numbers, exceeding
our expectations on top-line and bottom-line fronts
. Revenue grew by ~11% yoy.
The company’s operating margins improved by 494bps yoy. On the bottom-
line
front, HCL reported growth of ~80% yoy to `
22cr on the back of healthy revenue
growth and operating performance.
Top-line grew ~11% yoy: HCL’s top-line grew by ~11% yoy to `
193cr on the back
of healthy growth in cooker and cookware segment. HCL reported healthy g
rowth
compared
to its leader in market, which signified the market share gain during the
quarter. During the quarter, the company launched two products viz.
two dish and
three dish set pressure cookers.
Strong operating performance aided profitability: On
the operating front, the
company reported better margins, up 494bps yoy on the
back of lower raw material
price and other expenditure. On the bottom-
line front, HCL reported growth of
~80% yoy to `22cr on the back of strong operating performance and healthy top
-
line growth.
Outlook and Valuation: We forecast HCL to report healthy top-
line CAGR of ~13%
to `954cr over FY2019-
22E on the back of government initiatives, new product
launches, strong brand name and wide distribution network. On the bottom-
line
front (reported PAT), we estimate ~24% CAGR to `
102cr due to strong revenue and
operating margin improvement (on the back of correction in raw material prices).
Thus, we maintain BUY on the stock with a revised Target Price of `5,232.
Key Financials
Y/E March (` cr)
FY2019 FY2020E FY2021E
FY2022E
Net sales 653 734 837 954
% chg 18.1 12.5 14.0 14.0
Adj. Net profit 54 78 89 102
% chg 11.4 43.9 14.5 14.7
EBITDA margin (%) 13.2 15.0 15.1 15.1
EPS (`) 102.5 147.4 168.9 193.8
P/E (x) 43.8 30.4 26.6 23.2
P/BV (x) 20.0 15.4 12.4 9.9
RoE (%) 45.7 50.6 46.8 42.7
RoCE (%) 55.0 57.0 54.5 50.6
EV/Sales (x) 3.6 3.2 2.8 2.5
EV/EBITDA (x) 27.5 21.5 18.6 16.2
Source: Company, Angel Research
BUY
CMP `4,489
Target Price `5,232
Investment Period 12 months
Stock Info
Sector Houseware
Market Cap (` cr) 2,373
Net Debt (` cr)
(7)
Beta 0.5
52 Week High / Low 4,650/2,606
Avg. Daily Volume 2,944
Face Value (`) 10
BSE Sensex 39,872
Nifty 11,707
Reuters Code HWKN.BO
Bloomberg Code HAWK.IN
Shareholding Pattern (%)
Promoters
56.0
MF / Banks / Indian
15.3
FII / NRIs / OCBs
1.5
Indian Public/Others
27.2
Abs.(%) 3m 1yr 3yr
Sensex
(1.1)
9.0 41.2
HCL 16.2 46.2 49.3
Historical share price chart
Source: Company, Angel Research
Amarjeet S Maurya
022-40003600 Ext: 6831
amarjeet[email protected]lbroking.com
Hawkins Cookers Ltd
Performance Update
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
3QFY2020 Result Update | Houseware
February 4, 2020
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
2
3QFY2020 Performance
Y/E March (` cr)
3QFY20
3QFY19
% yoy
2QFY20 % qoq
9MF20
9MF19
% chg
Net Sales
193
175
10.6
193
0.4
528
468
12.8
Consumption of RM
2.7
88 (10.3)
232
206
12.6
(% of Sales)
41.1
44.2
45.9
44.0
44.1
Staff Costs
25
23
5.7
25
(1.3)
71
67
5.6
(% of Sales)
12.7
13.3
12.9
13.5
14.4
Other Expenses
58
54
6.4
43
33.2
135
130
3.7
(% of Sales)
29.9
31.1
22.6
25.6
27.8
Total Expenditure
162
155
4.5
157
3.2
439
404
8.6
Operating Profit
31
20
58.8
36
(12.0)
89
64
39.2
OPM
16.3
11.3
18.6
16.9
13.7
Interest
1
1
(1.1)
1
(22.4)
3
3
6.0
Depreciation
1
1
16.7
1
6.2
3
3
14.5
Other Income
1
1
(7.0)
1
27.4
2
3
(30.7)
PBT (excl. Ext Items)
30
19
60.5
34
(11.4)
85
62
37.9
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
30
19
60.5
34
(11.4)
85
62
37.9
(% of Sales)
15.7
10.8
17.8
16.2
13.2
Provision for Taxation
8
6
21.6
7
7.9
22
21
5.2
(% of PBT)
25.8
34.0
21.2
26.1
34.2
Reported PAT
22
12
80.5
27
(16.6)
63
41
54.9
PATM
11.6
7.1
14.0
12.0
8.7
Source: Company, Angel Research
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
3
Outlook and Valuation
We forecast HCL to report healthy top-line CAGR of ~13% to `954cr over FY2019-
22E on the back of government initiatives, new product launches, strong brand
name and wide distribution network. On the bottom-line front (reported PAT), we
estimate ~24% CAGR to `102cr due to strong revenue and operating margin
improvement (on the back of correction in raw material prices). Thus, we maintain
BUY on the stock with a revised Target Price of `5,232.
Downside risks to our estimates
Volatile aluminium prices: Aluminium accounts for ~20% of net sales of HCL.
Volatility in aluminium prices will have a negative impact on the company’s
performance.
Economic slowdown: Economic slowdown will affect the performance of the
company.
Competition: Losing market share due to stiff competition could impact the
profitability of company.
Company Background
Hawkins Cookers Ltd (HCL) was incorporated in 1959 by Mr. HD Vasudeva. HCL
operates in two segments i.e. Pressure Cookers and Cookware. The pressure
cookers are marketed under the flagship brand Hawkins and also under Futura and
Miss Mary; cookware is sold under the Futura brand name. The company has
approximately 75 models of pressure cookers in eleven different varieties. Currently,
the domestic market contributes around 94% of the overall sales and rest comes
from
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
4
Profit & Loss Statement
Y/E March (` cr) FY2018
FY2019
FY2020E
FY2021E
FY2022E
Net Sales 553
653
734
837
954
% chg 7.9
18.1
12.5
14.0
14.0
Total Expenditure 482
567
624
711
810
Raw Material 261
293
323
368
420
Personnel 76
103
118
136
Others Expenses 145
182
198
224
255
EBITDA 71
110
126
144
% chg (5.0)
22.2
27.8
14.8
14.0
(% of Net Sales) 12.8
13.2
15.0
15.1
15.1
Depreciation& Amortisation 4
4
5
6
7
EBIT 67
105
121
137
% chg (5.5)
22.9
28.4
14.4
13.8
(% of Net Sales) 12.1
12.6
14.4
14.4
14.4
Interest & other Charges 4
4
4
4
4
Other Income 11
4
3
3
4
(% of PBT) 15.0 5.0
2.9
2.5 2.9
Recurring PBT 74
104
119
137
% chg 4.0
11.6
26.6
14.5
14.7
Tax 25
26
34
(% of PBT) 34.0
34.2
25.2
25.2
25.2
PAT (reported) 49
78
102
Extraordinary Items -
-
-
-
-
ADJ. PAT 49
78
102
% chg 2.7
11.4
43.9
14.5
14.7
(% of Net Sales) 8.8 8.3
10.6
10.7
10.7
Basic EPS (`) 92.0
102.5
147.4
168.9
193.8
Fully Diluted EPS (`) 92.0
102.5
147.4
168.9
193.8
% chg 2.7
11.4
43.9
14.5
14.7
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
5
Balance Sheet
Y/E March (` cr) FY2018
FY2019
FY2020E
FY2021E
FY2022E
SOURCES OF FUNDS
Equity Share Capital 5
5
5
5 5
Reserves& Surplus
105
113
149
185
235
Shareholders Funds
110
119
154
191
240
Total Loans 25
31
Deferred Tax Liability 3
2
2
2 2
Total Liabilities
138
152
188
224
274
APPLICATION OF FUNDS
Gross Block 30
57
Less: Acc. Depreciation 7
21
Net Block 23
36
Capital Work-in-Progress
1
2
2
2 2
Investments
-
-
-
-
-
Current Assets
220
237
279
328
394
Inventories 67
100
117
135
157
Sundry Debtors 47
108
126
Cash 87
48
Loans & Advances 14
29
Other Assets 4
5
6
8
Current liabilities
111
118
129
146
166
Net Current Assets
109
119
150
182
229
Deferred Tax Asset 4
4
4
4 4
Mis. Exp. not written off
-
-
-
-
-
Total Assets
138
152
188
224
274
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
6
Cash flow Statement
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
FY2022E
Profit before tax
82
104
119
137
Depreciation
4
4
5
6
7
Change in Working Capital
(62)
(24)
(26)
(31)
Interest / Dividend (Net)
(2)
0
4
4
4
Direct taxes paid
(22)
(28)
(26)
(30)
(34)
Others
(5)
(2)
0
0
0
Cash Flow from Operations
(6)
74
(Inc.)/ Dec. in Fixed Assets
(1)
(8)
(10)
(10)
(10)
(Inc.)/ Dec. in Investments
(12)
50
0
0
0
Cash Flow from Investing
(13)
42
(10)
(10)
(10)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
7
6
0
0
0
Dividend Paid (Incl. Tax)
(44)
(45)
(42)
(53)
(53)
Interest / Dividend (Net)
3
(49)
(4)
(4)
(4)
Cash Flow from Financing
(35)
(87)
(47)
(57)
(57)
Inc./(Dec.) in Cash
(52)
7
6
Opening Cash balances
87
42
Closing Cash balances
35
48
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
7
Key Ratios
Y/E March
FY2018
FY2019 FY2020E
FY2021E
FY2022E
Valuation Ratio (x)
P/E (on FDEPS)
48.8
43.8 30.4
26.6
23.2
P/CEPS
45.4
40.8 28.7
25.0
21.7
P/BV
21.6
20.0 15.4
12.4
9.9
Dividend yield (%) 1.6 1.6 1.8
2.2
2.2
EV/Sales 4.2 3.6 3.2
2.8
2.5
EV/EBITDA
32.8
27.5 21.5
18.6
16.2
EV / Total Assets
16.8
15.6 12.6
10.5
8.6
Per Share Data (Rs)
EPS (Basic)
92.0
102.5
147.4
168.9
193.8
EPS (fully diluted)
92.0
102.5
147.4
168.9
193.8
Cash EPS
98.9
110.1
156.3
179.8
206.8
DPS
70.0
70.0 80.0
100.0
100.0
Book Value
207.6
224.2
291.7
360.5
454.3
Returns (%)
ROCE
49.6
55.0 57.0
54.5
50.6
Angel ROIC (Pre-tax)
139.9
72.0 73.7
69.7
66.3
ROE
44.3
45.7 50.6
46.8
42.7
Turnover ratios (x)
Asset Turnover (Gross Block)
18.3
17.5 15.6
14.6
14.2
Inventory / Sales (days)
58
Receivables (days)
46
Payables (days)
30
Working capital cycle (ex-cash) (days)
74
Hawkins Cooker | 3QFY2020 Result Update
February 4, 2020
8
Research Team Tel: 022
-
39357800 E
-
mail:
resea[email protected]king.com Website: www.angelbroking.com
DISCLAIMER
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Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
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Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (
-
5 to 5%)
Reduce (-5% to -15%) Sell (< -15%)
Disclosure of Interest Statement
Hawkins Cookers
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No