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Jun 12, 2012, 06.10 PM IST
CRISIL Research has come out with its report on Alok Industries. The research firm has maintained the fundamental grade of 3/5 to the company in its June 08, 2012 report.
CRISIL Research has come out with its report on Alok Industries . The research firm has maintained the fundamental grade of 3/5 to the company in its June 08, 2012 report.
Alok Industries Ltd’s (Alok’s) Q4FY12 standalone revenues and operating profitability were marginally above CRISIL Research’s expectations. Both domestic and export businesses boosted revenue growth, with the fabric segment contributing the most. Although we expect a slowdown in export demand, we believe that Alok will be able to withstand this slowdown given its scale of operation and backward integration; thus we maintain our fundamental grade of 3/5. However, its high debt level (~Rs 120 bn FY12) and timely exit from the real estate business remain key monitorables.
Q4FY12 result analysis (standalone)
• EBITDA margin expanded by 266 bps y-o-y to 28% on account of higher contribution from high margin apparel fabric business. The expansion in EBITDA margin was also supported by the benefits that Alok derived in the export market due to rupee depreciation.
• Despite higher revenue and healthy operating profitability, adj. PBT declined by 10% y-o-y (up 24% q-o-q) to Rs 2,293 mn due to higher interest outflow. Interest doubled to Rs 3,346 mn against Rs 1,667 mn in Q4FY11 mainly due to higher interest rate, capitalisation of assets and increase in working capital requirement.
• The company reported extraordinary income of Rs 2,276 mn on account of restatement of foreign currency asset/liabilities and derivative contract.
• Income tax charge for the quarter included Rs 491 mn on account of a permanent disallowance which resulted in higher tax outflow of Rs 1,733 mn (38% tax rate).
• PAT margins expanded to 8.8% due to healthy operating profitability. EPS stood at Rs 3.4 against Rs (0.5) in Q3FY12 and Rs 2.0 per share in Q4FY11. The company has recommended a dividend of Rs 0.3 per share. The company is yet to announce consolidated results.
Valuation: Current market price has strong upside
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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