CRISIL Research has come out with its report on HSIL. According to the research firm, the company commissioned the 0.3 mn units faucet capacity in Bahadurgarh, Haryana in October 2012 which will add to revenues in Q4FY13.
CRISIL Research has come out with its report on HSIL . According to the research firm, the company commissioned the 0.3 mn units faucet capacity in Bahadurgarh, Haryana in October 2012 which will add to revenues in Q4FY13.
HSIL`s Q3FY13 standalone results were below CRISIL Research's expectations. Revenues grew by 15% y-o-y to Rs 3.9 bn and were in line with estimates. However, EBITDA margin contracted 452 bps y-o-y to 14.2% due to a sharp decline in the container glass segment's margin. As a result, PAT declined by 53% y-o-y to Rs 123 mn. Capacity expansion in the building products segment is on track. We expect this division to continue to witness momentum and stable profitability. However, the profitability of the container glass segment is expected to remain under pressure due to increase in competition and higher soda ash prices; the state of competition, raw material price movement and demand are key monitorables for the container glass segment. Driven by HSIL's leading position in both its business segments, we maintain the fundamental grade of 4/5.
Container glass margin declined due to high raw material prices, competition
A price hike does not seem likely in the near term due to the over-capacity. Hence, we expect margins in this division to remain under pressure. Further, HSIL's volume growth could also get subdued due to intense competition and is a monitorable.
Building products strong sales, marginal drop in profitability
Earnings estimates revised downwards, fair value maintained at Rs 185
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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