4QFY2018 Result Update | Textiles
May 30, 2018
Siyaram Silk Mills
BUY
CMP
`650
Performance Update
Target Price
`851
Y/E March (` cr)
4QFY18
4QFY17
% yoy
3QFY18
% qoq
Investment Period
12 months
Net sales
595.9
529.3
12.6
393.6
51.4
EBITDA
98.0
72.6
34.9
50.4
94.5
Stock Info
Sector
Textiles
EBITDA margin (%)
16.4
13.7
272.3
12.8
364.3
Market Cap (Rs cr)
3,051
Adjusted PAT
52.0
43.7
18.9
22.4
131.7
Net Debt
549
Beta
0.6
Source: Company, Angel Research
52 Week High / Low
799/359
Avg. Daily Volume
2,781
For 4QFY2018, Siyaram Silk Mills (SSM) posted good set of results, exceeding our
Face Value (Rs)
2
expectations on both, top-line as well as bottom-line fronts. Revenues grew by
BSE Sensex
34,906
Nifty
10,614
~12% yoy. On the operating front, the company reported operating margin
Reuters Code
SIYR.BO
improvement. On the bottom-line front, SSM reported growth of ~19% yoy to
Bloomberg Code
SIYA IN
`52cr on the back of strong top-line growth and strong operating margin
improvement.
Shareholding Pattern (%)
Promoters
67.1
Top-line driven by strong volume growth: The Company’s top-line grew by ~13%
MF / Banks / Indian Fls
9.4
yoy to `596cr on the back of strong growth in volume and price hike.
FII / NRIs / OCBs
1.7
Indian Public / Others
21.8
Strong revenue growth and operating performance boost overall profitability: On
the operating front, the company’s margin has improved by 272bps yoy at
Abs. (%)
3m 1yr 3yr
16.4%. The company reported ~19% yoy rise in its net profit to `52cr on the back
Sensex
7.4
27.1
22.9
SSM
11.1
130.5
232.0
of strong revenue growth and operating margin improvement.
Outlook and Valuation: Going forward, we expect SSML to report a net sales
CAGR of ~14% to ~`2,272cr and adj.net profit CAGR of ~14% to `150cr over
FY2018-20E on back of market leadership in blended fabrics, strong brand
building, wide distribution channel, strong presence in tier II and tier III cities and
emphasis on latest designs and affordable pricing points. At the current market
price, SSML trades at an inexpensive valuation. We have a buy recommendation
Historical share price chart
on the stock and target price of `851.
900
800
Key Financials
700
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
600
500
Net sales
1,574
1,733
1,976
2,272
400
% chg
(2.8)
10.1
14.0
15.0
300
Adj. Net profit
91
111
128
150
200
100
% chg
91.0
115.0
128.1
149.7
-
EBITDA margin (%)
12.5
14.2
13.5
13.3
EPS (`)
19.4
24.5
27.3
32.0
P/E (x)
33.5
26.5
23.8
20.3
Source: Company, Angel Research
P/BV (x)
5.1
5.7
4.7
3.9
RoE (%)
15.3
22.9
19.7
19.1
Amarjeet S Maurya
RoCE (%)
15.8
17.0
17.0
17.8
022-40003600 Ext: 6831
EV/Sales (x)
2.1
2.1
1.8
1.6
EV/EBITDA (x)
16.9
14.5
13.3
11.7
Source: Company, Angel Research Note: CMP as of May 29, 2018
Please refer to important disclosures at the end of this report
1
Siyaram Silk Mills| 4QFY2018 Result Update
Exhibit 1: 4QFY2018 Performance
Y/E March (` cr)
4QFY18
4QFY17
% chg. (yoy)
3QFY18
% chg. (qoq)
FY18
FY17
% chg
Net Sales
596
529
12.6
394
51.4
1,733
1,574
10.1
Net raw material
299.5
266
12.4
163.24
83.5
773.8
738.61
4.8
(% of Sales)
50.3
50.3
(8)
41.5
879
44.7
46.9
Employee Cost
52
44
16.3
47
9.5
190
169
12.6
(% of Sales)
8.7
8.4
28
12.0
(332)
11.0
10.7
Other Expenses
147
146
0.6
133
10.5
524
470
11.4
(% of Sales)
24.6
27.5
(292)
33.7
(911)
30.2
29.9
Total Expenditure
498
457
9.0
343
45.1
1,487
1,377
8.0
Operating Profit
98
73
34.9
50
94.5
246
197
25
OPM (%)
16.4
13.7
272
12.8
364
14.18
12.50
168
Interest
12
5
152.8
9
33.0
34
32
7.9
Depreciation
16
12
32.4
15
4.7
61
55
11.0
Other Income
9
7
26.3
8
11.8
26
26
3.3
PBT before exceptional
79
63
25.4
34
131.0
177
136
30.4
(% of Sales)
13.3
11.9
8.7
10.2
8.6
Exceptional Items
6.0
-
-
6.0
-
PBT
73.0
63.0
15.9
34.2
113.4
171.3
136.0
Tax
25
19
29.3
12
111.5
60
45
32.7
(% of PBT)
31.5
30.6
34.4
33.7
33.1
Reported PAT
48
44
10.0
22
114.4
112
91
22.6
PATM
8.1
8.3
5.7
6.4
5.8
Extra-ordinary Items
(4)
-
-
(4)
-
Adj PAT
52
44
18.9
22
131.7
115
91
26.8
Source: Company
May 30, 2018
2
Siyaram Silk Mills| 4QFY2018 Result Update
Outlook and Valuation
Going forward, we expect SSML to report a net sales CAGR of ~14% to
~`2,272cr and adj.net profit CAGR of ~14% to `150cr over FY2018-20E on back
of market leadership in blended fabrics, strong brand building, wide distribution
channel, strong presence in tier II and tier III cities and emphasis on latest designs
and affordable pricing points. At the current market price, SSML trades at an
inexpensive valuation. We have a buy recommendation on the stock and target
price of `851.
Downside risks to our estimates include
Decline in rural spending: Unseasonal rains or deficient rainfall in the rural areas
may result in lower agriculture output. This, in turn, could result in lower
discretionary spending among rural consumers, which could impact the company’s
overall sales.
Competition from the unorganized sector: SSML, being in a sector that’s highly
fragmented, faces intense competition from unorganized players as they usually
sell their products at a much cheaper rate compared to it. However, due to strong
branding efforts, huge distribution network and affordable price points, the
company is easily able to differentiate its products from those of competitors.
Fluctuation in raw material prices: SSML operates in a highly price-sensitive
market. Any fluctuation in raw-material prices can lead to margin compression, as
the company may not be able to pass on the entire increase to the end-user.
Company Background
SSML is the largest manufacturer of blended fabrics in India. The company enjoys
a strong brand presence across the country, with brands such as Siyaram’s,
Mistair, MSD, J. Hampstead and Oxemberg in its kitty. The company has also
launched three premium brands - Royal Linen (linen fabrics for men and women),
Moretti (cotton shirting) and Zenesis (cotton suitings). SSML has built a strong
brand presence in the country through continuous advertisement and brand
building efforts over the past 30 years. The company has created a niche for itself
in a highly competitive industry. It has a wide distribution network comprising
1,600 dealers and 500 agents supplying to more than 40,000 outlets across India
and has ~160 franchise stores. The company operates four plants - one at
Tarapur near Mumbai for weaving and yarn dyeing, two at Daman for garments
and one at Silvassa for weaving.
May 30, 2018
5
Siyaram Silk Mills| 4QFY2018 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Total operating income
1,574
1,733
1,976
2,272
% chg
(2.8)
10.1
14.0
15.0
Total Expenditure
1,377
1,488
1,709
1,970
Cost of Materials
739
774
879
1,011
Personnel
169
190
217
254
Others Expenses
470
524
612
704
EBITDA
197
245
267
302
% chg
4.8
24.8
8.7
13.3
(% of Net Sales)
12.5
14.2
13.5
13.3
Depreciation& Amortisation
55
61
63
65
EBIT
142
185
204
237
% chg
(2.7)
30.0
10.2
16.5
(% of Net Sales)
9.0
10.7
10.3
10.4
Interest & other Charges
32
34
41
44
Other Income
26
26
28
30
(% of PBT)
18.8
14.9
14.6
13.4
Share in profit of Associates
-
-
-
-
Recurring PBT
136
177
191
223
% chg
2.4
30.2
8.0
16.9
Prior Period & Extraordinary Expense/(Inc.)
-
(6)
-
-
PBT (reported)
136
183
191
223
Tax
45
60
63
74
(% of PBT)
33.1
32.8
33.0
33.0
PAT (reported)
91
123
128
150
Add: Share of earnings of associate
-
-
-
-
ADJ. PAT
91
117
128
150
% chg
3.9
26.4
11.4
16.9
(% of Net Sales)
5.8
6.8
6.5
6.6
Basic EPS (Rs)
19.4
24.5
27.3
32.0
Fully Diluted EPS (`)
19.4
24.5
27.3
32.0
% chg
3.9
26.4
11.4
16.9
May 30, 2018
6
Siyaram Silk Mills| 4QFY2018 Result Update
Balance Sheet
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
SOURCES OF FUNDS
Equity Share Capital
9
9
9
9
Reserves& Surplus
587
528
641
773
Shareholders Funds
597
538
651
782
Minority Interest
-
-
-
-
Total Loans
305
549
549
549
Deferred Tax Liability
20
20
20
20
Total Liabilities
921
1,429
1,548
1,692
APPLICATION OF FUNDS
Gross Block
481
659
679
699
Less: Acc. Depreciation
86
146
209
274
Net Block
395
513
470
425
Capital Work-in-Progress
36
36
36
36
Investments
14
14
14
14
Current Assets
714
1,056
1,243
1,463
Inventories
316
430
493
566
Sundry Debtors
305
422
487
573
Cash
5
24
36
52
Loans & Advances
55
128
158
182
Other Assets
34
52
69
91
Current liabilities
238
190
216
247
Net Current Assets
476
866
1,028
1,217
Deferred Tax Asset
-
-
-
-
Mis. Exp. not written off
-
-
-
-
Total Assets
921
1,429
1,548
1,692
May 30, 2018
7
Siyaram Silk Mills| 4QFY2018 Result Update
Consolidated Cashflow Statement
Y/E March (`cr)
FY2017
FY2018
FY2019E
FY2020E
Profit before tax
136
177
191
223
Depreciation
55
61
63
65
Change in Working Capital
47
(370)
(149)
(174)
Interest / Dividend (Net)
18
34
41
44
Direct taxes paid
-
(60)
(63)
(74)
Others
(52)
-
-
-
Cash Flow from Operations
203
(159)
82
85
(Inc.)/ Dec. in Fixed Assets
(68)
(20)
(20)
(20)
(Inc.)/ Dec. in Investments
1
-
-
-
Cash Flow from Investing
(69)
(20)
(20)
(20)
Issue of Equity
-
-
-
-
Inc./(Dec.) in loans
-
246
3
4
Dividend Paid (Incl. Tax)
(0)
14
15
18
Interest / Dividend (Net)
(134)
(62)
(68)
(71)
Cash Flow from Financing
(135)
198
(50)
(49)
Inc./(Dec.) in Cash
(1)
20
13
15
Opening Cash balances
5
4
24
36
Closing Cash balances
4
24
36
52
May 30, 2018
8
Siyaram Silk Mills| 4QFY2018 Result Update
Key ratios
Y/E March
FY2017
FY2018
FY2019E
FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
33.5
26.5
23.8
20.3
P/CEPS
19.2
24.2
27.0
31.5
P/BV
5.1
5.7
4.7
3.9
Dividend yield (%)
1.7
2.1
2.4
2.8
EV/Sales
2.1
2.1
1.8
1.6
EV/EBITDA
16.9
14.5
13.3
11.7
EV / Total Assets
2.9
2.2
2.0
1.8
Per Share Data (`)
EPS (Basic)
19.4
24.5
27.3
32.0
EPS (fully diluted)
19.4
24.5
27.3
32.0
Cash EPS
33.9
26.8
24.1
20.6
DPS
10.9
13.8
15.4
18.0
Book Value
127.3
114.8
138.9
167.0
Returns (%)
ROCE
15.8
17.0
17.0
17.8
Angel ROIC (Pre-tax)
16.1
17.6
17.7
18.8
ROE
15.3
22.9
19.7
19.1
Turnover ratios (x)
Asset Turnover (Gross Block)
3.3
2.6
2.9
3.2
Inventory / Sales (days)
73
91
91
91
Receivables (days)
71
89
90
92
Payables (days)
34
31
31
31
Working capital cycle (ex-cash) (days)
110
148
150
152
Source: Company, Angel Research
May 30, 2018
9
Siyaram Silk Mills| 4QFY2018 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
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latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may
have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
Siyaram Silk Mills
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
May 30, 2018
10
