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Riddhi Siddhi Gluco Biols (RIDSID) ICICI Direct Review |
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Thursday, 06 September 2007 |
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Revenues subdued, expected to recover from Q3
Riddhi Siddhi Gluco Biols, India’s largest cornstarch producer, is well-positioned to capitalise on the current consumption-led boom in the economy,
which should see a spurt in demand for cornstarch and its derivatives. We re-iterate our outperformer rating.
- Q1 FY08 results subdued due to fire at plant
The company reported a modest growth in quarter ended June 30, 2007 (Q1FY08), following a major fire at its plant in in Gokak (Karnataka) in May 2007, which forced it to suspend starch production. Revenues grew 3.95% y-o-y to Rs 68.28 crore, while net profit increased 11.9% to Rs 4.7 crore. EBIDTA margin improved by 82 bps to 17%, due to a greater thrust on high-value product mix and improving operational efficiency.
- Normality to return by September, Uttaranchal unit to be operational
The management expects normal production to start by the end of September at the Gokak plant, which is currently running at around 50% capacity. By the third quarter, the company's total capacity will increase up to 1,500 tonnes per day (tpd), as commercial production at the Uttaranchal plant would have commenced. Trial production of starch and derivatives is currently being undertaken at the new plant.
Valuations At the current price of Rs 270, the stock trades at a P/E of 8.28x its FY08E EPS of Rs 32.61. On an EV/ EBIDTA basis, the stock is available at a multiple of 6.19x FY08E earnings. The company will be on the growth path once the production starts at the Uttaranchal plant, and normalcy returns in the Gokak plant. We remain positive on the company’s fundamentals and continue to value the stock at a P/E multiple of 11x its FY08E earnings with a price target of Rs 358. We reiterate our outperformer rating on the stock.
Source:ICICIdirect
Key Financials(Rs Crore)
| Year ending March 31 | Q1FY08 | Q1FY07 | % change | FY07 | FY08E | | Net Sales | 68.28 | 65.68 | 3.95 | 332.43 | 423.14 | | Expenditure | 56.65 | 55.04 | 2.93 | 278.09 | 352.09 | | EBIDTA | 11.63 | 10.64 | 9.24 | 54.33 | 71.05 | | Depreciation | 2.75 | 2.31 | 19.05 | 10.87 | 11.87 | | Interest | 3.63 | 3.55 | 2.50 | 10.91 | 14.94 | | PBT | 5.24 | 4.79 | 9.50 | 32.55 | 44.24 | | Provision for Tax | 0.54 | 0.55 | -1.82 | 5.52 | 7.92 | | Prior Period Adjustment | | | | 0.26 | | | Net Profit | 4.70 | 42.45 | 10.97 | 26.77 | 36.32 | | Equity capital | 10.55 | 10.55 | | 10.55 | 11.14 | | EPS (in Rs) (not annualised) | 4.45 | 4.02 | | 25.36 | 32.16 |
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