CRISIL assigns valuation grade of 3/5 to Responsive Ind

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CRISIL assigns valuation grade of 3/5 to Responsive Ind

CRISIL Research has come out with its report on Responsive Industries. The research firm has maintained the fundamental grade of 4/5 to the company in its November 28, 2011 report.

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Responsive Ind BSE | NSE 31/05/12 Are Mutual Funds betting on Responsive Ind?

CRISIL Research has come out with its report on Responsive Industries . The research firm has maintained the fundamental grade of 4/5 to the company in its November 28, 2011 report.

Responsive Industries Ltd's (Responsive's) Q2FY12 standalone revenues (PVC flooring and other PVC products) were in line with CRISIL Research's expectations. EBITDA and PAT were slightly lower than expected on account of higher costs in the initial stabilisation phase of the newly expanded capacity. Consolidated numbers were in line with estimates due to better-than-expected profitability in the shipping ropes division. Responsive completed its capacity expansion from 44,000 MTPA to 90,000 MTPA and commercial operations started in September 2011. We maintain our fundamental grade of 4/5.

Q2FY12 standalone result analysis
• Revenues increased by 5.9% q-o-q (up 61.4% y-o-y due to new capacities coming on stream) to Rs 2,249 mn.

• EBITDA margin declined by 290 bps q-o-q to 13.9% due to higher other expenditure. Other expenditure as a percentage of sales increased by 310 bps q-o-q to 11.2% due to higher costs in the initial stabilisation phase of the new capacity.

• The company reported PAT of Rs 114 mn against Rs 140 mn in Q1FY12. Accordingly, EPS was Rs 0.44 vis-à-vis Rs 0.53 in Q1FY12. While absolute PAT remained flat y-o-y, PAT margin declined by 300 bps due to higher depreciation cost from increased capacity and higher taxes.

Q2FY12 consolidated result analysis
• The company started reporting its consolidated numbers from Q1FY12 and has not disclosed historically comparable numbers. Consolidated revenues increased by 6.1% q-o-q to Rs 3,733 mn - in line with our estimates.

• EBITDA margin declined by 83 bps to 16.5%. Better-than-expected performance by the shipping ropes subsidiary - Axiom Cordages Ltd - offset high other expenditure in the standalone business.

• The company reported PAT of Rs 280 mn against Rs 271 mn in Q1FY12. Accordingly, EPS was Rs 1.07 vis-à-vis Rs 1.05 in Q1FY12.

Valuations: Current market price is aligned
We value Responsive based on the discounted cash flow method with a fair value of Rs 107. At the current market price of Rs 100, the stock merits a valuation grade of 3/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The 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. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. 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 of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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