3QFY2019 Result Update | Textiles
January 30, 2019
Siyaram Silk Mills
BUY
CMP
`330
Performance Update
Target Price
`549
Investment Period
12 months
Y/E March (` cr)
3QFY19
3QFY18
% chg (yoy)
2QFY19
% chg (qoq)
Stock Info
Net sales
Sector
Textiles
446
394
13.4
459
(2.7)
Market Cap (` cr)
1,546
EBITDA
53
50
4.7
62
(14.7)
Net Debt (` cr)
549
EBITDA margin (%)
11.8
12.8
(98)
13.5
(166)
Beta
0.6
Adjusted PAT
20
22
(10.5)
27
(26.6)
52 Week High / Low
763/303
Source: Company, Angel Research
Avg. Daily Volume
2,333
For 3QFY2019, Siyaram Silk Mills (SSML) posted subdued results, which were
Face Value (`)
2
below our expectations on bottom-line fronts. Revenue grew ~13% yoy. On the
BSE Sensex
35,610
margin front, the company reported operating margin contraction by 98bps yoy.
Nifty
10,657
Reuters Code
SIYR.BO
On the bottom-line front, SSML reported de-growth of ~11% yoy to ~`20cr due
Bloomberg Code
SIYA.IN
to subdued top-line growth.
PAT declined by 10% yoy: On the operating front, the company’s margin
Shareholding Pattern (%)
contracted by 98bps yoy at 11.8%. PAT de-grew by 11% yoy due to poor
Promoters
67.1
operating performance, higher interest cost and higher taxes.
MF / Banks / Indian
8.2
FII / NRIs / OCBs
1.5
Outlook and Valuation: Going forward, we expect SSML to report net sales CAGR
Indian Public/Others
23.2
of ~13% to ~`2,207cr and adj. net profit CAGR of ~13% to `146cr over
Abs.(%)
3m
1yr
3yr
FY2018-20E on the back of market leadership in blended fabrics, strong brand
Sensex
4.5
(1.9)
43.1
building, wide distribution channel and strong presence in tier 2 and tier 3 cities
SSM
(4.6)
(55.2)
92.9
coupled with emphasis on latest designs and affordable pricing points. At the
current market prices, SSML trades at inexpensive valuations. We maintain our
Buy recommendation on the stock with a Target Price of `549.
Key Financials
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Historical share price chart
Net sales
1,574
1,733
1,919
2,207
900
% chg
(2.8)
10.1
10.7
15.0
800
Adj. Net profit
91
111
115
146
700
600
% chg
91.0
115.0
115.4
146.2
500
EBITDA margin (%)
12.5
14.2
13.5
14.0
400
300
EPS (`)
19.4
24.5
24.6
31.2
200
P/E (x)
18.3
14.5
14.4
11.4
100
0
P/BV (x)
2.8
2.5
2.1
1.8
RoE (%)
15.3
18.1
14.8
16.1
RoCE (%)
15.8
14.8
14.4
16.3
Source: Company, Angel Research
EV/Sales (x)
1.2
1.3
1.1
1.0
EV/EBITDA (x)
9.9
8.9
8.4
7.1
Amarjeet S Maurya
Source: Company, Angel Research Note: CMP as of January 30, 2019
022-40003600 Ext: 6831
Please refer to important disclosures at the end of this report
1
Siyaram Silk Mills| 3QFY2019 Result Update
Exhibit 1: 3QFY2019 Performance
Y/E March (` cr)
3QFY19
3QFY18
% chg. (yoy)
2QFY19
% chg. (qoq)
9MFY19
9MFY18
% chg
Net Sales
446
394
13
459
(2.7)
1,227
1,137
7.9
Net raw material
196.9
163
20.6
196.8
0.0
521
474
9.9
(% of Sales)
44.1
41.5
264
42.9
121
42.5
41.7
Employee Cost
50
47
6.2
51
(2.5)
148
138
7.2
(% of Sales)
11.2
12.0
(76)
11.2
2
12.1
12.1
Other Expenses
147
133
10.4
149
(1.4)
409
377
8.6
(% of Sales)
32.8
33.7
(90)
32.4
44
33.3
33.1
Total Expenditure
394
343
14.7
397
(0.8)
1,079
989
9.0
Operating Profit
53
50
4.7
62
(14.7)
149
148
1
OPM (%)
11.8
12.8
(98)
13.5
(166)
12.1
13.0
(89)
Interest
14
9
49.5
12
14.4
37
22
66.7
Depreciation
15
15
1.3
16
(7.3)
47
45
3.7
Other Income
7
8
(4.6)
6
21.1
21.3
17.6
21.0
PBT before exceptional
32
34
(7.9)
40
(20.9)
86
98
(12.0)
(% of Sales)
7.1
8.7
8.7
7.0
8.6
Exceptional Items
-
-
PBT
32
34
(7.9)
40
(20.9)
86.5
98.3
(12.0)
Tax
11
12
(3.0)
15
(25.8)
32
35
(7.9)
(% of PBT)
36.3
34.4
38.7
37.1
35.4
Reported PAT
20
22
(10.5)
24
(17.8)
54
64
(14.3)
PATM
4.5
5.7
5.3
4.4
5.6
Extra-ordinary Items
-
(3)
-3
0
Adj PAT
20
22
(10.5)
27
(26.6)
57
64
(9.7)
Source: Company
January 30, 2019
2
Siyaram Silk Mills| 3QFY2019 Result Update
Outlook and Valuation
Going forward, we expect SSML to report net sales CAGR of ~13% to ~`2,207cr
and adj. net profit CAGR of ~13% to ssss146cr over FY2018-20E on the back of
market leadership in blended fabrics, strong brand building, wide distribution
channel and strong presence in tier 2 and tier 3 cities coupled with emphasis on
latest designs and affordable pricing points. At the current market prices, SSML
trades at inexpensive valuations. We maintain our Buy recommendation on the
stock with a Target Price of `549.
Downside risks to our estimates include
Decline in rural spending: Unseasonal rain 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, impacting the company’s overall
sales.
Competition from the unorganized sector: SSML, being in a sector that is 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 users.
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.
January 30, 2019
3
Siyaram Silk Mills| 3QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Total operating income
1,574
1,733
1,919
2,207
% chg
(2.8)
10.1
10.7
15.0
Total Expenditure
1,377
1,488
1,660
1,898
Cost of Materials
739
774
825
940
Personnel
169
190
221
260
Others Expenses
470
524
614
697
EBITDA
197
245
259
309
% chg
4.8
24.8
5.5
19.3
(% of Net Sales)
12.5
14.2
13.5
14.0
Depreciation& Amortisation
55
61
65
67
EBIT
142
185
194
242
% chg
(2.7)
30.0
4.9
24.6
(% of Net Sales)
9.0
10.7
10.1
11.0
Interest & other Charges
32
34
52
53
Other Income
26
26
30
30
(% of PBT)
18.8
14.9
17.4
13.7
Share in profit of Associates
-
-
-
-
Recurring PBT
136
177
172
218
% chg
2.4
30.2
(2.7)
26.7
Prior Period & Extraordinary Expense/(Inc.)
-
(6)
-
-
PBT (reported)
136
183
172
218
Tax
45
60
57
72
(% of PBT)
33.1
32.8
33.0
33.0
PAT (reported)
91
123
115
146
Add: Share of earnings of associate
-
-
-
-
ADJ. PAT
91
117
115
146
% chg
3.9
26.4
0.4
26.7
(% of Net Sales)
5.8
6.8
6.0
6.6
Basic EPS (`)
19.4
24.5
24.6
31.2
Fully Diluted EPS (`)
19.4
24.5
24.6
31.2
% chg
3.9
26.4
0.4
26.7
January 30, 2019
4
Siyaram Silk Mills| 3QFY2019 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
669
771
900
Shareholders Funds
597
679
780
909
Minority Interest
-
-
-
-
Total Loans
305
573
570
570
Deferred Tax Liability
20
15
15
15
Total Liabilities
921
1,267
1,393
1,557
APPLICATION OF FUNDS
Gross Block
481
582
602
622
Less: Acc. Depreciation
86
143
208
275
Net Block
395
439
394
346
Capital Work-in-Progress
36
93
93
93
Investments
14
33
33
33
Current Assets
714
989
1,163
1,403
Inventories
316
430
505
592
Sundry Debtors
305
422
489
574
Cash
5
23
15
16
Loans & Advances
55
81
96
132
Other Assets
34
33
58
88
Current liabilities
238
286
288
318
Net Current Assets
476
703
874
1,085
Deferred Tax Asset
-
-
-
-
Mis. Exp. not written off
-
-
-
-
Total Assets
921
1,267
1,393
1,557
January 30, 2019
5
Siyaram Silk Mills| 3QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (`cr)
FY2017
FY2018
FY2019E
FY2020E
Profit before tax
136
177
172
218
Depreciation
55
61
65
67
Change in Working Capital
47
(281)
(178)
(210)
Interest / Dividend (Net)
18
19
52
53
Direct taxes paid
-
-
(57)
(72)
Others
(52)
(4)
-
-
Cash Flow from Operations
203
(28)
54
56
(Inc.)/ Dec. in Fixed Assets
(68)
(176)
(20)
(20)
(Inc.)/ Dec. in Investments
1
(19)
-
-
Cash Flow from Investing
(69)
(158)
(20)
(20)
Issue of Equity
-
-
-
-
Inc./(Dec.) in loans
-
-
(3)
-
Dividend Paid (Incl. Tax)
(0)
1
14
18
Interest / Dividend (Net)
(134)
204
(52)
(53)
Cash Flow from Financing
(135)
205
(41)
(36)
Inc./(Dec.) in Cash
(1)
19
(7)
1
Opening Cash balances
5
4
23
15
Closing Cash balances
4
23
15
16
January 30, 2019
6
Siyaram Silk Mills| 3QFY2019 Result Update
Key ratios
Y/E March
FY2017
FY2018
FY2019E
FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
17.0
13.4
13.4
10.6
P/CEPS
17.1
21.6
21.7
27.5
P/BV
2.6
2.3
2.0
1.7
Dividend yield (%)
3.3
4.2
4.2
5.3
EV/Sales
1.2
1.2
1.1
0.9
EV/EBITDA
9.3
8.4
8.0
6.7
EV / Total Assets
1.6
1.3
1.2
1.1
Per Share Data (`)
EPS (Basic)
19.4
24.5
24.6
31.2
EPS (fully diluted)
19.4
24.5
24.6
31.2
Cash EPS
19.3
15.3
15.2
12.0
DPS
10.9
13.8
13.9
17.5
Book Value
127.3
144.8
166.5
194.0
Returns (%)
ROCE
15.8
14.8
14.4
16.3
Angel ROIC (Pre-tax)
16.1
15.5
14.9
16.9
ROE
15.3
18.1
14.8
16.1
Turnover ratios (x)
Asset Turnover (Gross Block)
3.3
3.0
3.2
3.5
Inventory / Sales (days)
73
91
96
98
Receivables (days)
71
89
93
95
Payables (days)
33
38
35
33
Working capital cycle (ex-cash) (days)
111
141
154
160
Source: Company, Angel Research
January 30, 2019
7
Siyaram Silk Mills| 3QFY2019 Result Update
Research Team Tel: 022 - 39357800
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been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
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by Analyst during the past twelve months.
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Disclosure of Interest Statement
Siyaram Silk Mills
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
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%)
January 30, 2019
8
