LISTING | NSE |
|---|---|
| CMP | Rs367 |
| 52 WEEK HIGH/LOW | Rs 422.00/ Rs 180.00 |
| FACE VALUE | Rs10 |
| PE RATIO | 23 |
| AVERAGE VOLUME | 33000 |
| MARKETCAP | Rs647 crore |
| P/BV | 3.8 |
COMPANY OVERVIEW:
The Company "Solar Explosives Limited" was incorporated in the year 1995 by Mr.Satyanarayan Nuwal, Nandlal Nuwal and Kailashchandra Nuwal.
Solar Industries Ltd (SIL) is India`s largest explosive manufacturer with over 20% market share. Its current capacity stands at 80000 tons of cartridge explosives, 94450 tons of bulk explosives and 140 million detonators. The company has also set up 12 plants at strategic location across India.
SIL has invested in two coal mines. It has picked up 74% stake in Navbharat Coalfields which has coal reserve of 36 million tons and 24% stake in a Joint Venture with Chhattisgarh Mineral Development Corporation (CMDC), which has 80 million tons of coal reserve.
SUBSIDIARIES:
Economic Explosives Ltd: Company is located on 165 acre industrial plot 40 km from Nagpur.
Solar Capital Ltd: This wholly owned subsidiary manufactures bulk explosives to provide dedicated on-site service to its client. Currently it has three manufacturing facilities at Waidhan, Korba and Chandrapur.
Solar Component Pvt Ltd.: It was set up in 1998 for manufacturing of Aluminium tubes, Copper tubes and Brass Fuse Heads.
Navbharat Coalfields
Solar Mines and Minerals
Solar Mining Resources
Somu Steel And Power
PRODUCT MIX:
Product | Sales(In Crore) | % of Total Sales |
| Slurry Emulsion Explosives | Rs156.3 crore | 82% |
| Ammonium Nitrate | Rs32.09 crore | 16.83% |
| Job Work | Rs2.15 crore | 1.12% |
| By Product & Scrap | Rs0.05 crore | 0.02% |
INVESTMENT RATIONAL:
SIL has three year contract with Coal India for the supply of explosives. The contract is with price variation clause which is beneficial for SIL.
SIL will cater to 18% of the requirement of explosives of Cola India.
Setting up bulk explosive plant in Nigeria.
With huge thrust on Power Generation in Eleventh Five year Plan, coal requirement will drastically increase and hence SIL will benefit by supplying more and more explosives.
The valuation of coal mines comes at around Rs250 crore.
The IPO of Coal India will see the SIL stock flying.
Shortage of coal in India will see increase in the valuation of coal mine asset of the company.
The company`s Microdat and Solarpride products have been approved and accepted by the government opening up a huge business opportunity for the company.
SHAREHOLDING PATTERN:
|
|
| NO.OF SHARES | % OF TOTAL | ||
| PROMOTERS | 12923816 |
| 74.60% |
| |
| INSTITUTION | 3251205 |
| 18.76% |
| |
| GENERAL PUBLIC | 1148795 |
| 6.64% |
| |
| GRAND TOTAL | 17323816 |
| 100% |
| |
FINANCIAL:
|
|
| 31/03/06 | 31/03/07 | 31/03/08 | 31/03/09 |
| TOTAL INCOME | 104.56 | 145.86 | 201.43 | 484.97 | |
| EXPENDITURE | -89.2 | -124.48 | -162.68 | -419.67 | |
| PBDITA |
| 15.36 | 21.38 | 38.75 | 65.3 |
| DEPRECIATION | -1.87 | -2.16 | -2.84 | -4.89 | |
| PBIT |
| 13.49 | 19.22 | 35.91 | 60.41 |
| INTEREST |
| -2.47 | -5.32 | -8.04 | -23.03 |
| PBT |
| 11.02 | 13.9 | 27.87 | 37.38 |
| TAX |
| -2.18 | -3.55 | -9.85 | -12.17 |
| PAT |
| 8.84 | 10.35 | 18.02 | 25.21 |
Key Highlights:
CAGR in Total Income is 67.1%.
CAGR in PBDITA is 62%.
CAGR in Net Profit is 41.8%.
RATIOS:
|
|
| 31/03/06 | 31/03/07 | 31/03/08 | 31/03/09 |
| EPS |
| 5.109827 | 5.982659 | 10.41618 | 14.57225 |
| PBDITA MARGIN | 14.69013 | 14.65789 | 19.23745 | 13.46475 | |
| NPM |
| 8.454476 | 7.095845 | 8.946036 | 5.19826 |
| INTEREST COVER | 5.461538 | 3.612782 | 4.466418 | 2.6231 | |
Key Highlights:
EPS has grown at CAGR OF 41.8%.
PBDITA margin remained almost flat at 13.46% over the period of 4 years.
NPM declined from 8.4% in FY2006 to 5.2% in FY09, mainly because of increase in Interest outgo.
Interest cover declined from 5.4 to 2.6.
COMPARISION OF Q1FY2010 WITH Q1FY2009:
|
|
| Q1FY09 | % CHANGE | Q1FY10 | |
| TOTAL INCOME | 65.42 | 107.30% |
| 138.62 | |
| EXPENDITURE | -51.25 |
|
| -118.53 | |
| PBDITA |
| 14.17 | 41.80% |
| 20.09 |
| DEPRECIATION | -0.71 |
|
| -1.35 | |
| PBIT |
| 13.46 |
|
| 18.74 |
| INTEREST |
| -3.91 |
|
| -5 |
| PBT |
| 9.55 |
|
| 13.74 |
| TAX |
| -3.42 |
|
| -5.16 |
| PAT |
| 6.13 | 39.96% |
| 8.58 |
Key Highlights:
Total Income surged by 107.3%.
PBDITA moved up by 41.8%.
Net Profit increased by 40%.
VALUATION:
We expect the EPS to grow at 40% for next three years due to the increase in demand for explosives and increase in price of coal. At CMP of Rs370 it is trading at 23X to trailing 12 months EPS. The PEG ratio comes at around 0.57. Ideal PEG ratio is 1 we on conservative basis take it at 0.9 then also the stock is trading at significant discount. We feel stock should be valued at 36X. The fair value we arrive at is Rs522.
CONCLUSION:
The stock will see re-rating after the Coal India IPO. We feel investors with 6-8 month time horizon can reap good profit from the counter.
No comments:
Post a Comment