CARE assigns fundamental grade of 4 for Responsive Inds

CARE Equity Research has assigned a fundamental grade of 4 [Four] for the equity shares of Responsive Industries, indicating â€˜Very Good Fundamentals‘.

April 10, 2015 / 16:54 IST

26 Aug, 2025 12:21

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CARE Equity Research's report on Responsive Industries

During Q3FY15 (refers to the period October 01 to December 31), Responsive reported consolidated revenue of Rs.531 crore (down 23.4% y-o-y) which was significantly lower than CARE Equity Research estimates. The decline in revenue was mainly on account of decline in crude prices and thus lower realization as the company passes on the lower raw material cost benefit to customers (the company follows a cost plus model). On a standalone basis, the revenue declined from Rs.522 crore in Q3FY14 to Rs.400 crore in Q3FY15. During the quarter, Axiom Cordages reported revenue decline of 23% to Rs.131 crore.

EBITDA on a consolidated basis was reported at Rs.57.9 crore in Q3FY15 as against Rs.77.9 crore in Q3FY14, a decline of 25.7% y-o-y. Consolidated EBITDA margin decreased by 35bps to 10.9% in Q3FY15 as compared to 11.2% in Q3FY14. During the quarter, employee cost increased from Rs 2.5 crore in Q3FY14 to Rs 3.8 crore in Q3FY15. On a standalone basis, EBITDA decreased by 30.3% y-o-y to Rs.40.7 crore in Q3FY15.

Consolidated other income increased from Rs.4.4 crore in Q3FY14 to Rs.9.1 crore in Q3FY15. Interest cost for the quarter declined by 18.0% y-o-y to Rs 6.3 crore. Responsive reported a consolidated net profit of Rs.9.5 crore in Q3FY15, down significantly by 55.7% y-o-y.

ValuationBased on the recent financial results and industry dynamics, we have revised our estimates for FY15E and FY16E. We have valued the equity shares of Responsive at Rs.110 per share. The valuation has been arrived at by using the EV/ EBITDA valuation methodology. The CIV of Rs.110 per share is around 14.7% below the Current Market Price (CMP) of Rs.129 per share; hence we assign the valuation grade of 2/5 to the equity shares of Responsive, indicating that equity shares have ‘Moderate Downside Potential’.