Savera Industries Ltd - National Stock Exchange of India … · Analysis of Fundamentals (addressed...
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© CRISIL Limited. All Rights Reserved. Savera Industries Ltd Enhancing investment decisions Q4FY11 Result Update
Transcript of Savera Industries Ltd - National Stock Exchange of India … · Analysis of Fundamentals (addressed...
© CRISIL Limited. All Rights Reserved.
Savera Industries Ltd
Enhancing investment decisions
Q4FY11 Result Update
© CRISIL Limited. All Rights Reserved.
Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process –
Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental
grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The
valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to
grade 1 (strong downside from the CMP).
CRISIL Fundamental Grade
Assessment CRISIL Valuation Grade
Assessment
5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)
4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)
3/5 Good fundamentals 3/5 Align (+-10% from CMP)
2/5 Moderate fundamentals 2/5 Downside (- 10-25% from CMP)
1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)
Analyst Disclosure Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest
that can bias the grading recommendation of the company. Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer: This Exchange-commissioned Report (Report) is based on data publicly available or from sources considered reliable by CRISIL
(Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for
any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are subject to change without
any prior notice. Opinions expressed herein are our current opinions as on the date of this Report. Nothing in this Report constitutes
investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold
any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this
Report. This Report is for the personal information only of the authorized recipient in India only. This Report should not be
reproduced or redistributed or communicated directly or indirectly in any form to any other person – especially outside India or
published or copied in whole or in part, for any purpose.
© CRISIL Limited. All Rights Reserved. CRISIL EQUITIES | 1
Savera Industries Ltd Steady growth
Fundamental Grade 2/5 (Moderate fundamentals)
Valuation Grade 5/5 (CMP has strong upside) Industry Hotels, Restaurant & Leisure
Fair Value Rs 73 CMP Rs 39
June 07, 2011
Savera Industries Ltd’s (Savera’s) Q4FY11 revenues and earnings were in line with CRISIL Equities’ expectations. Revenue growth was healthy on the back of higher food & beverage (F&B) and health club income. However, EBITDA margin declined 6% y-o-y (we had already factored this in our estimates) due to higher renovation costs incurred on the Bengaluru property. Consequently, PAT margins dropped 67 bps. We maintain the fundamental grade of 2/5. Q4FY11 result analysis
• Savera’s Q4 revenues grew by 31% y-o-y to Rs 131 mn on the back of
higher room rent and strong F&B income. Room rent income grew by 25%
y-o-y to Rs 58 mn. The increase in room rent is attributed to increase on
occupancy rate (OR). OR increased to 75% in Q4FY11 from 64% in
Q4FY10. For FY11, revenues grew by 36.6% to Rs 480.3 mn.
• EBITDA margin declined by 592 bps y-o-y to Rs 26.7% due to higher
expenditure on the Bengaluru property. However, FY11 EBITDA margin
expanded by 334 bps y-o-y to 29.1% primarily due to the high-margin F&B
business.
• PAT grew by 21.8% y-o-y to Rs 11 mn due to sales growth. FY11 PAT grew
by 57% to Rs 57 mn.
Key development
Despite an additional 5% service tax levied on hotel rooms, during the budget in February, we believe the impact on Savera will be limited as it operates in the four-star category. Valuations: Current market price has strong upside
We continue to value Savera on the EV/adjusted room basis. We have assigned a multiple of Rs 4.5 mn on EV/adjusted room, which translates into a fair value of Rs 73 per share. Based on the current market price, our valuation grade is 5/5.
KEY FORECAST
(Rs mn) FY09 FY10 FY11# FY12E FY13E
Operating income 397 352 480 506 538
EBITDA 117 95 140 148 160
Adj Net income 5 25 53 70 83
EPS-Rs 0.4 2.1 4.5 5.9 6.9
EPS growth (%) (91.7) 435.4 109.3 31.7 18.1
Dividend yield 2.7 1.2 2.9 3.2 3.8
PE (x) 102.8 19.2 8.3 7.0 5.9
P/BV (x) 2.1 2.0 1.7 1.5 1.2
RoCE (%) 17.4 16.4 25.4 26.7 29.1
RoE (%) 2.1 10.7 22.2 22.6 22.6
EV/EBITDA (x) 4.1 8.0 4.8 4.0 3.2
NM: Not meaningful; CMP: Current Market Price
#FY11 numbers based on the abridged financials
Source: Company, CRISIL Equ it ies est imate
CFV MATRIX
KEY STOCK STATISTICS NIFTY 5517
NSE ticker SAVERA
Face value (Rs per share) 10
Shares outstanding (mn) 11.9
Market cap (Rs mn)/(US$ mn) 488 / 11
Enterprise value (Rs mn) /(US$ mn) 665 / 15
52-week range (Rs) (H/L) 119 / 29
Beta 1.1
Free float (%) 47.8%
Avg daily volumes (30-days) 5,515.6
Avg daily value (30-days) (Rs mn) 0.2
SHAREHOLDING PATTERN
PERFORMANCE VIS-À-VIS MARKET
Returns
1-m 3-m 6-m 12-m
SAVERA -9% 12% -32% n.a
NIFTY -6% 4% -9% 10%
ANALYTICAL CONTACT Sudhir Nair (Head) [email protected]
Sandeep Panchal [email protected]
Bhaskar Bukrediwala [email protected]
Client servicing desk
+91 22 3342 3561 [email protected]
1 2 3 4 5
1
2
3
4
5
Valuation Grade
Fu
nd
am
en
tal G
rad
e
Poor Fundamentals
ExcellentFundamentals
Str
on
gD
ow
nsid
e
Str
on
gU
psi
de
50.3% 50.3% 52.3% 52.3%
1.0%
48.8% 49.8% 47.8% 47.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun-10 Sep-10 Dec-10 Mar-11
Promoter FII Others
© CRISIL Limited. All Rights Reserved. CRISIL EQUITIES | 2
Savera Industries Ltd
Q4FY11 Result Summary (Rs mn) Q4FY11 Q3FY11 Q4FY10 q-o-q (%) y-o-y (%) FY11 FY10 y-o-y (%)
Net sales 131 119 100 10.4 31.6 480 352 36.6
Raw materials cost 16 15 14 9.9 18.9 105 91 14.4
Raw materials cost (% of net sales) 12.5% 12.6% 13.9% -6bps -133bps 21.8% 26.0% -423bps
Employees cost 24 23 21 5.4 17.7 91 74 23.4
Other expenses 55 48 33 16.1 69.4 144 96 51.3
EBITDA 35 33 33 6.0 7.7 140 91 54.3
EBITDA margin 26.7% 27.8% 32.6% -112bps -592bps 29.1% 25.8% 334bps
Depreciation 6 6 5 5.9 38.4 23 21 7.5
EBIT 29 27 28 6.0 2.5 117 73 68.8
Interest and finance charges 6 6 6 1.8 2.4 24 25 -7.2
Operating PBT 23 21 22 7.1 2.6 93 44 113.0
Other Income - - - - n.m. - 1 -100.0
Extraordinary Income/(expense) - - (4) - - (4) - 0.0
PBT 23 21 18 7.1 23.9 89 45 100.5
Tax 12 3 9 275.3 26.0 32 19 66.7
PAT 11 18 9 (39.3) 21.8 57 25 126.0
Adj PAT 11 18 9 (39.3) 21.8 53 25 126.0
Adj PAT margin 8.3% 15.2% 9.0% -684bps -67bps 11.2% 7.2% 474bps
No of equity shares (mn) 12 12 6 2.1 96.0 12 6 92.0
Adj EPS (Rs) 0.9 1.5 1.4 (40.6) (37.9) 4.5 4.1 17.7
Source: Company, CRISIL Equ it ies
Stable growth in revenues EBIDTA and EBITDA margins
Source: Company, CRISIL Equ it ies Source: Company, CRISIL Equ it ies
Increase in OR.... ....Keeps ARR under pressure
Source: Company, CRISIL Equ it ies Source: Company, CRISIL Equ it ies
7587 90 100 106 122 119 131
-12%
15%
3%
11%
6%
15%
-2%
10%
-15%
-10%
-5%
0%
5%
10%
15%
20%
0
20
40
60
80
100
120
140
Jun-
09
Sep-
09
Dec-
09
Mar
-10
Jun-
10
Sep-
10
Dec-
10
Mar
-11
(Rs mn)
Net Sales Sales Growth (RHS)
13 27 22 29 32 38 33 35
17%
31%
24%
29%30% 31%
28%27%
0%
5%
10%
15%
20%
25%
30%
35%
0
5
10
15
20
25
30
35
40
Jun-
09
Sep-
09
Dec-
09
Mar
-10
Jun-
10
Sep-
10
Dec-
10
Mar
-11
(Rs mn)
EBITDA EBITDA Margin(RHS)
44% 46%
32%
46% 46%
64% 66%
73%
64%
75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q3F
Y09
Q4F
Y09
Q1F
Y10
Q2F
Y10
Q3F
Y10
Q4F
Y10
Q1F
Y11
Q2F
Y11
Q3F
Y11
Q4F
Y11
OR
4,2
54
3,9
73
3,6
76
3,3
88
3,3
47
3,2
91
3,1
98
3,1
82
3,4
64
3,5
60
500
1,500
2,500
3,500
4,500
Q3FY
09
Q4FY
09
Q1FY
10
Q2FY
10
Q3FY
10
Q4FY
10
Q1FY
11
Q2FY
11
Q3FY
11
Q4FY
11
(Rs/Day)
ARR
© CRISIL Limited. All Rights Reserved. CRISIL EQUITIES | 3
Savera Industries Ltd
Share price movement Fair value movement since initiation
-indexed to 100
Source: NSE, CRISIL Equ ities Source: NSE, CRISIL Equ ities
0
50
100
150
200
250
Jun-
10
Jul-
10
Aug-1
0
Sep
-10
Oct
-10
Nov-1
0
Dec-
10
Jan-1
1
Mar
-11
Apr-
11
May-1
1
Savera NIFTY
0
20,000
40,000
60,000
80,000
100,000
120,000
0
10
20
30
40
50
60
70
80
Nov-
10
Dec-
10
Jan-
11
Feb-
11
Mar-
11
Apr-
11
May-
11
(Rs)
Total Traded Quantity (RHS) CRISIL Fair Value Savera
© CRISIL Limited. All Rights Reserved. CRISIL EQUITIES | 4
Savera Industries Ltd
VALUATION
We continue to value Savera based on an EV/adjusted room basis. We have
assigned a multiple of Rs 4.5 mn on EV/adjusted room. Given the inherent value
of the property and the strong outlook for the hospitality sector we maintain our
fair value of Rs 73. Based on current market price, our valuation grade is 5/5.
One-year forward P/E band One-year forward EV/EBITDA band
Source: NSE, CRISIL Equ ities Source: NSE, CRISIL Equ ities
P/E – premium/discount to NIFTY P/E movement
Source: NSE, CRISIL Equ ities Source: NSE, CRISIL Equ ities
CRISIL IER reports released on Savera Industries Ltd
Date Nature of report
Fundamental
grade Fair value
Valuation
grade
CMP
(on the date of report)
11-Nov-10 Initiating coverage* 2/5 Rs 73 5/5 Rs 55
16-Feb-11 Q3FY11 result update 2/5 Rs 73 5/5 Rs 38
07-June-11 Q4FY11 result update 2/5 Rs 73 5/5 Rs 38
* For detailed initiating coverage report please visit: www.ier.co.in
CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.
0
10
20
30
40
50
60
70
Jun-1
0
Jul-
10
Jul-
10
Aug
-10
Aug
-10
Sep-1
0
Sep-1
0
Oct
-10
Oct
-10
Nov
-10
Nov
-10
Dec
-10
Dec
-10
Dec
-10
Jan-1
1
Jan-1
1
Feb
-11
Feb
-11
Mar-
11
Mar-
11
Apr
-11
Apr
-11
May
-11
May
-11
(Rs)
Savera 5x 8x 11x
0
200
400
600
800
1,000
1,200
Jun-1
0
Jul-
10Ju
l-10
Aug
-10
Aug
-10
Sep-1
0
Sep-1
0
Oct
-10
Oct
-10
Nov
-10
Nov
-10
Dec
-10
Dec
-10
Dec
-10
Jan-1
1Ja
n-1
1
Feb
-11
Feb
-11
Mar-
11
Mar-
11
Apr
-11
Apr
-11
May
-11
May
-11
(Rs mn)
EV 3x 5x 7x
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Jun-
10
Jul-
10
Jul-
10
Aug
-10
Aug
-10
Sep-
10
Sep-
10O
ct-1
0
Oct
-10
Nov
-10
Nov
-10
Dec-
10
Dec-
10D
ec-
10
Jan-1
1
Jan-1
1Fe
b-1
1
Feb-1
1
Mar
-11
Mar
-11
Apr-
11
Apr-
11M
ay-1
1
May-1
1
Premium/Discount to NIFTY Median
0
2
4
6
8
10
12
Jun-1
0
Jul-
10
Jul-
10
Aug
-10
Aug
-10
Sep-1
0
Sep-1
0
Oct
-10
Oct
-10
Nov
-10
Nov
-10
Dec
-10
Dec
-10
Dec
-10
Jan-1
1
Jan-1
1
Feb
-11
Feb
-11
Mar-
11
Mar-
11
Apr
-11
Apr
-11
May
-11
May
-11
(Times)
1yr Fwd PE (x) Median PE
-1 std dev
+1 std dev
© CRISIL Limited. All Rights Reserved. CRISIL EQUITIES | 5
Savera Industries Ltd
FINANCIALS
#FY11 numbers based on the abridged financials
Source: Company, CRISIL Equ it ies est imate
Income statement Balance Sheet
(Rs mn) FY09 FY10 FY11# FY12E FY13E (Rs mn) FY09 FY10 FY11# FY12E FY13E
Operating income 397 352 480 506 538 Liabilities
EBITDA 117 95 140 148 160 Equity share capital 60 60 119 119 119
EBITDA margin 29.5% 26.9% 29.1% 29.2% 29.7% Reserves 173 185 166 217 277
Depreciation 30 21 23 22 23 Minorities - - - - -
EBIT 88 73 117 126 137 Net worth 232 245 285 336 397
Interest 51 25 24 19 13 Convertible debt - - - - -
Operating PBT 37 48 93 106 124 Other debt 231 186 186 132 78
Other income (8) (3) - 2 2 Total debt 231 186 186 132 78
Exceptional inc/(exp) - - (4) - - Deferred tax liability (net) 4 4 4 4 4
PBT 29 45 89 108 127 Total liabilities 468 435 475 472 479
Tax provision 24 19 32 38 44 Assets
Minority interest - - - - - Net fixed assets 440 431 434 422 409
PAT (Reported) 5 25 57 70 83 Capital WIP - - - - -
Less: Exceptionals - - (4) - - Total fixed assets 440 431 434 422 409
Adjusted PAT 5 25 53 70 83 Investments 0 4 2 2 2
Current assets
Ratios Inventory 8 9 12 13 14
FY09 FY10 FY11# FY12E FY13E Sundry debtors 17 13 17 18 19
Growth Loans and advances 36 27 36 39 39
Operating income (%) (13.3) (11.3) 36.5 5.4 6.3 Cash & bank balance 7 9 25 31 52
EBITDA (%) (25.1) (19.0) 47.6 5.8 8.1 Marketable securities - - - - -
Adj PAT (%) (91.6) 435.4 126.0 31.6 18.1 Total current assets 69 58 90 101 124
Adj EPS (%) (91.6) 435.4 109.3 31.7 18.1 Total current liabilities 52 65 51 53 56
Net current assets 17 (7) 39 48 67
Profitability Intangibles/Misc. expenditure 11 7 - - -
EBITDA margin (%) 29.5 26.9 29.1 29.2 29.7 Total assets 468 435 475 472 479
Adj PAT Margin (%) 1.2 7.2 11.2 13.8 15.4
RoE (%) 2.1 10.7 22.2 22.6 22.6 Cash flow
RoCE (%) 17.4 16.4 25.4 26.7 29.1 (Rs mn) FY09 FY10 FY11# FY12E FY13E
RoIC (%) 9.6 10.9 19.0 20.7 22.9 Pre-tax profit 29 45 93 108 127
Total tax paid (24) (19) (34) (38) (44)
Valuations Depreciation 30 21 22 22 23
Price-earnings (x) 102.8 19.2 8.3 7.0 5.9 Working capital changes (13) 26 (31) (3) 1
Price-book (x) 2.1 2.0 1.7 1.5 1.2 Net cash from operations 22 73 50 90 107
EV/EBITDA (x) 6.1 7.0 4.8 4.0 3.2 Cash from investments
EV/Sales (x) 1.9 2.0 1.5 1.2 1.0 Capital expenditure 60 (9) (18) (10) (10)
Dividend payout ratio (%) 146.9 28.1 23.9 22.3 22.1 Investments and others - (4) 2 - -
Dividend yield (%) 1.4 1.5 2.9 3.2 3.8 Net cash from investments 60 (13) (16) (10) (10)
Cash from financing
B/S ratios Equity raised/(repaid) - - 60 - -
Inventory days 12 14 14 14 14.5 Debt raised/(repaid) (84) (45) (0) (54) (54)
Creditors days 36 64 26 25 25.3 Dividend (incl. tax) (7) (7) (16) (18) (21)
Debtor days 18 15 15 15 14.8 Others (incl extraordinaries) 10 (6) (62) (1) (1)
Working capital days 3 (4) (1) 11 11.1 Net cash from financing (81) (58) (18) (73) (76)
Gross asset turnover (x) 0.6 0.5 0.7 0.7 0.8 Change in cash position 1 1 16 6 20
Net asset turnover (x) 0.8 0.8 1.1 1.2 1.3 C losing cash 7 9 25 31 52
Sales/operating assets (x) 0.8 0.8 1.1 1.2 1.3
Current ratio (x) 1.3 0.9 1.8 1.9 2.2 Quarterly financials
Debt-equity (x) 1.0 0.8 0.7 0.4 0.2 (Rs mn) Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11
Net debt/equity (x) 1.0 0.7 0.6 0.3 0.1 Net Sales 100 106 122 119 131
Interest coverage 1.7 2.9 5.1 6.5 10.7 Change (q-o-q) -6% 6% 15% -2% 10%
EBITDA 33 32 38 33 35
Per share Change (q-o-q) 1% -1% 19% -13% 6%
FY09 FY10 FY11# FY12E FY13E EBITDA margin 32.6% 30.2% 31.3% 27.8% 26.7%
Adj EPS (Rs) 0.4 2.1 4.5 5.9 6.9 PAT 9 13 18 18 11
CEPS 2.9 3.9 6.8 7.8 8.8 Adj PAT 9 9 18 18 11
Book value 19.5 20.5 23.9 28.2 33.3 Change (q-o-q) 2% -2% 109% -2% -39%
Dividend (Rs) 0.6 0.6 1.2 1.3 1.5 Adj PAT margin 9.0% 8.3% 15.2% 15.2% 8.3%
Actual o/s shares (mn) 11.9 11.9 11.9 11.9 11.9 Adj EPS 1.4 0.7 1.7 1.5 0.9
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