Srikalahasthi Pipes Ltd (Formerly: Lanco Industries Ltd) Earnings - - PowerPoint PPT Presentation

Srikalahasthi Pipes Ltd (Formerly: Lanco Industries Ltd)

Earnings Presentation Q2/H1-FY17

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• Srikalahasthi Pipes Ltd. (SPL) (formerly: Lanco Industries Ltd) was incorporated in 1991, the company entered into a

strategic alliance with Electrosteel Group in 2002, India’s leading DI Pipe manufacturer.

• The company has adopted its name from the area of its manufacturing facility, which is located in Rachagunneri,

Srikalahasti Mandal, Tirupati

• The company got Listed on BSE in 1994 and in NSE in 2007 and has a current market capitalization of approximately

INR 11.3 Bn Overview

• DI Pipes : Capacity – 225,000 TPA

Pig Iron : Capacity - 275,000 TPA Coke : Capacity - 225,000 TPA

• Cement : 90,000 TPA

Power : 2 Captive Power Plants with a total capacity of 14.5 MW (2.5MW+ 12MW) Business Mix

• SPL supplies DI pipes to various Water Boards, Municipal Corporations and Turnkey Contractors across the country for

their Water Infrastructure Projects which is the thrust area of the Govt. of India.

• Some of the Marquee clients include: Larsen & Toubro, Nagarjuna Construction Corporation, Indian Hume Pipes Ltd, VA

Tech Wabag Ltd, Sriram EPC Ltd etc. Clients

• Total Income at INR 11,629 mn*
• EBITDA at INR 2,838 mn ; EBITDA Margin of 24.4 %
• Net Profit at INR 1,588 mn

FY16 Financials Highlights

* Including Other Income

3  Srikalahasthi Pipes Limited “SPL” (Formerly known as Lanco Industries Ltd.) was established in 1991 by Lanco Group of Companies to manufacture Pig Iron.  SPL’s plant is located at Rachagunneri, Srikalahasthi, Chittoor District, Andhra Pradesh near Tirupati and its key products include DI Pipes, Pig Iron, Cement.  SPL is categorized as Public Utility Services Company by Govt. of Andhra Pradesh  The company has a fully backward integrated manufacturing facility which includes a sinter plant, coke oven plant, power plant and a Sewage Treatment facilities in the same complex spread over 300 acres, giving them a significant competitive advantage.  In March 2002, India’s leading DI Pipes manufacturer, Electrosteel Castings Ltd (ECL), entered into a strategic alliance with SPL.  ECL is India’s largest and one of the few manufacturers in the world to make Ductile Iron (DI) Pipes, DI Fittings and CI Pipes, having its facilities in Khardah & Haldia in West Bengal and Elavur in Tamil Nadu.  SPL is one of the top players in the DI pipe industry in India, and commands around 15% market share across India and around 75% in South and Western Zone which it primarily caters to.  Together the Electrosteel group commands around 40% market share of the Indian DI Pipes Market.

Electrosteel Castings Ltd. Srikalahasthi Pipes Ltd.(49%)

Revenue Distribution FY16 Electrosteel Group Structure

DI Pipes 85% Cement 2% Pig Iron 3% Others 10%

4  Q2-FY17 Financial Performance:

• Total Income (including other income): INR 1,913 mn
• EBITDA: INR 518 mn
• EBITDA Margin: 27.10 %, an increase of 339 bps Y-o-Y
• PAT: INR 260 mn, a growth of 24.35 % Y-o-Y
• PAT Margin: 13.58 %, an increase of 210 bps Y-o-Y
• EPS: INR 6.53/ equity share

 H1-FY17 Financial Performance:

• Total Income (including other income): INR 4,760 mn
• EBITDA: INR 1,327 mn
• EBITDA Margin: 27.87 %, an increase of 347 bps Y-o-Y
• PAT: INR 689 mn, a growth of 0.1 % Y-o-Y
• PAT Margin: 14.49 %, an increase of 213 bps Y-o-Y
• EPS: INR 17.34/ equity share

Q2/H1-FY17 Highlights :



The on-going expansion programme of Rs 100 crores comprising up-gradation and modification of Blast Furnace and augmentation of Ductile Iron Pipes capacity has been completed and will be stabilised in Q3-FY17



The Company also has taken a shut down of the Mini Blast Furnace (MBF) from 4th August, 2016 for a period of about 30 days for the entire relining of the furnace along with the modernization to reduce the cost of production of the liquid metal.



The sales for the quarter is lower due to reduced production of Ductile Iron Pipes, consequent to the planned shut down of Mini Blast Furnace.



Company is working to mitigate increase in coking coal price by using the existing coal stock and hedging coking coal price risk. 5

*Total Income includes other Income Particulars(INR. mn) Q2-FY17 wQ1-FY17 QoQ % Q2-FY16 YoY % Total Income 1,913 2,847 (32.8)% 2,986 (35.9)% Expenditure 1,394 2,039 (31.6)% 2,278 (38.8)% EBITDA 519 808 (35.8)% 708 (26.7)% EBITDA margin 27.13% 28.39% (126)bps 23.71% 342 bps Depreciation 91 100 (9.5)% 86 5.3% Finance Cost 75 120 (37.5)% 133 (43.5)% PBT 353 588 (40.0)% 489 (27.9)% Tax 93 158 (41.4)% 146 (36.5)% PAT 260 430 (39.5)% 343 (24.3)% PAT margin 13.58% 15.09% (151) bps 11.48% 210 bps Other Comprehensive Income (net of Tax) (1) (1) 0.0% 1048.0% Total Comprehensive income 259 429 (39.6)% 343 (24.4)% EPS 6.53 10.81 (39.6)% 8.63 (24.3)% 6

*Total Income includes other Income Particulars(INR. mn) H1-FY17 H1-FY16 YoY % Total Income 4,760 5,571 (14.6)% Expenditure 3,433 4,212 (18.5)% EBITDA 1,327 1,359 (2.4)% EBITDA margin 27.87% 24.40% 347 bps Depreciation 191 173 10.5% Finance Cost 195 229 (15.0)% PBT 941 957 (1.7)% Tax 252 269 (6.4)% PAT 689 689 0.1% PAT margin 14.49% 12.36% 213 bps Other Comprehensive Income (net of Tax) (1) (0.11) 943.6% Total Comprehensive income 688 688 0.0% EPS 17.34 17.32 0.1% 7

*Total Income includes other Income Particulars(INR. mn) FY11 FY12 FY13 FY14 FY15 FY16 H1-FY17 Total Income 7,361 7,954 8,739 9,966 10,922 11,629 4,760 Expenditure 6,389 7,217 8,126 8,724 8,979 8,791 3,433 EBITDA 972 737 613 1,243 1,943 2,838 1,327 EBITDA margin 13.2% 9.3% 7.0% 12.5% 17.8% 24.4% 27.87% Depreciation 187 200 222 279 312 271 191 Finance Cost 227 579 604 549 437 420 195 PBT 558 (42) (213) 414 1,194 2,147 941 Tax 138 (2) (82) 27 372 559 252 PAT 420 (40) (131) 387 822 1,588 689 PAT margin 5.7% (0.5)% (1.5)% 3.9% 7.5% 13.7% 14.49% EPS 10.57 (0.99) (3.29) 9.73 20.66 39.94 17.34 8

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Equity and Liabilities (INR. mn) FY13 FY14 FY15 FY16 H1FY17 Shareholders Fund Share Capital 398 398 398 398 398 Reserves and Surplus 1,540 1,857 2,535 3,884 4,497 Net worth 1,938 2,255 2,933 4,282 4,895 Non Current Liabilities Long Term borrowings 1,507 1,746 1,799 1,090 779 Deferred tax liabilities 277 304 655 691 449 Long Term provisions 15 29 39 51 62 Other non-current liabilities 740 495 125 125 50 Total non current liabilities 2,539 2,574 2,618 1,957 1,340 Current Liabilities Short Term Borrowings 2,767 2,355 1,987 2,925 3,233 Trades payables 1,048 1,957 1,024 515 521 Other Current Liabilities 737 945 963 933 783 Short Term Provisions 27 95 187 301 81 Total current liabilities 4,579 5,352 4,161 4,674 4,618 Grand Total 9,056 10,181 9,712 10,913 10,853 Assets (INR Mn.) FY13 FY14 FY15 FY16 H1FY17 Non Current Fixed Assets Fixed Assets 4,414 4,355 4,873 4,888 4,935 Capital work in progress 170 200 89 194 992 Total Fixed Assets 4,584 4,555 4,962 5,082 5,927 Non Current Investments Long Term Loan and Advances 652 559 56 91

• Other Non Current

Investments

• Current Assets

Current Investments

• 1,460

971 Inventories 2,083 2,368 1,346 1,189 1,792 Trade Receivables 1,194 1,480 1,860 2,076 1,551 Cash and cash equivalents 102 574 593 215 103 Short Term loan and advances 139 265 392 296 350 Other current Assets 303 382 503 504 159 Total 3,820 5,068 4,694 5,740 4,926 Grand Total 9,056 10,181 9,712 10,913 10,853

10 Total Revenue EBIDTA & EBIDTA Margins Efficiency Ratios

7,361 7,954 8,739 9,966 10,922 11,629

• 3,000

6,000 9,000 12,000 15,000 FY11 FY12 FY13 FY14 FY15 FY16 972 737 613 1,243 1,943 2,838 13.20% 9.30% 7.00% 12.50% 17.80% 24.40%

• 500

1,000 1,500 2,000 2,500 3,000 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% FY11 FY12 FY13 FY14 FY15 FY16

Working Capital Days

197 201 135 117 105 130

• 50

100 150 200 250 FY11 FY12 FY13 FY14 FY15 FY16 1.4 2.1 2.2 1.6 1.1 0.9

• 0.5

1.0 1.5 2.0 2.5 FY11 FY12 FY13 FY14 FY15 FY16

Net D/E (x)

420 (40) (131) 387 822 1,588

• 500
• 500

1,000 1,500 2,000 FY11 FY12 FY13 FY14 FY15 FY16

Net Profits

19.9%

• 1.9% -6.8%

17.2% 28.3% 37.40% 13.0% 6.9% 4.7% 14.0% 23.0% 29.00%

• 10.0%

0.0% 10.0% 20.0% 30.0% 40.0% FY11 FY12 FY13 FY14 FY15 FY16 RoE (%) RoCE (%)

11 Price Data (As of 30th September, 2016) INR Face Value 10 Market Price 285 52 Week H/L 356/184 Market Cap (INR Mn) 11,331.6 Equity Shares Outstanding (Mn) 39.76 1 Year Avg. Trading Volume ('000) 213.2

Shareholding Pattern

• 40%
• 30%
• 20%
• 10%

0% 10% 20% Srikalahasthi Sensex

promoters 51% FII 3% DII 1% Others 45%

Valorem Advisors Disclaimer: Valorem Advisors is an Independent Investor Relations Management Service company. This Presentation has been prepared by Valorem Advisors based on information and data which the Company considers reliable, but Valorem Advisors and the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. Valorem Advisors also hereby certifies that the directors or employees of Valorem Advisors do not own any stock in personal or company capacity of the Company under review For further information please contact our Investor Relations Representative:

• Mr. Anuj Sonpal

Valorem Advisors Tel: +91-22-30067521-24 Email: info@valoremadvisors.com

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