CARE Equity Research's report on Asahi Songwon Colors
ASCL exhibited a revenue increase of 21.3 percent y-o-y, from Rs.59.8 crore in Q2FY13 to Rs.72.5 crore in Q2FY14. This increase in revenue was on account of growth in both volumes & realizations.
The company has also exhibited a significant improvement in both EBITDA & EBITDA margin. EBITDA increased by 89.0 percent y-o-y to Rs.10.5 crore, while EBITDA margins expanded by 519bps y-o-y and 294bps q-o-q to 14.5 percent, in Q2FY14. Lower raw material and other expenses supported the growth in EBITDA margin. Raw materials and other expenses, exhibited a decrease. Also, there was no environment related expenses during Q2FY14.
While, interest cost for the company exhibited an increase by 51.3 percent y-o-y during the quarter to Rs.1.6 crore, net profit exhibited an expansion of 120.8 percent y-o-y to Rs.4.8 crore on back of better operating performance. Net margins expanded by 295bps y-o-y to 6.6 percent during Q2FY14.
CARE Equity Research retains 4/5 on fundamental grade to Asahi Songwon Colors Limited (ASCL).
Valuation: CARE Equity Research revises the CIV assigned to the equity shares of ASCL from Rs.86 per share to Rs.92 per share. CIV has been arrived at using the discounted cash flow valuation methodology. The CIV of Rs.92 per share is around 30.7 percent above the current market price (CMP) of Rs.70 per share resulting in a valuation grade of 5/5, indicating that equity shares of ASCL have 'Considerable Upside Potential'.
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