Visaka Industries LTD PDF

Visaka Industries Ltd
Buy
Target Price ₹ 986 CMP ₹ 770
Index Details Visaka Industries Ltd (Visaka) has a diversified product portfolio
Sensex 35,511 offering of building products and textile product (synthetic blended
Nifty 10,894 yarn). The company has recently completed its capex in the textile
Industry Building Products segment by increasing the production capacity in FY17. Further, the
company has also undertaken capacity expansion of its V-Next
product by investing in a greenfield facility of 50,000 TPA in Haryana.
Scrip Details While the building segment has experienced secular growth, the
MktCap (` cr) 1,222.1 textiles segment was impacted by the inverted tax structure under
BVPS (`) 244.2 GST. However, with this being addressed, growth is likely to continue.
O/s Shares (Cr) 1.59
On the back of the above, we expect overall revenues to grow at a
AvVol 1,54,800
CAGR of 8.3% to Rs. 1,228.6 crore by FY20. EBITDA is expected to
52 Week H/L 839/200
Div Yield (%) 0.7
grow to Rs. 178.1 crore (CAGR of 15.8%) over the same period. While
the margins of the textile segment are expected to remain resilient,
FVPS (`) 10.0 the building segment margins are expected to improve by 642bps to
STOCK POINTER
Shareholding Pattern 15.5% with the improved capacity utilization and an increase in the
Shareholders % share of V-Next products. The ROE and ROCE are also expected to
Promoters 41.3 improve by 461 bps to 15.7% and 672bps to 20%, respectively, by
Public 58.7 FY20.
Total 100.0 We initiate coverage on Visaka as a BUY with a price objective of Rs
Visaka vs. Sensex
986, representing a potential upside of 28% over a period of 18
months. We have arrived at the price target by applying SOTP
valuation. Our optimism stems from the following-
• Government initiatives like “Housing for All by 2022”, “Smart City
40000 900
Mission” and “Pradhan Mantri Awas Yojana” are expected to give
35000 800
700 momentum to the building material industry.
30000
25000
600 • Visaka is undertaking capacity expansion in the boards and
500
20000 panels segment. The current capacity of 129750 MT will be
400
15000 expanded to 179750 MT by end of FY18 which will lead to strong
300
10000 200 revenue growth of 27.6% CAGR over FY17-FY20.
5000 100 • The implementation of GST has improved the competitiveness of
0 0
08-Jan-15 08-Jan-16 08-Jan-17 08-Jan-18
its Building products. The tax incidence on the competing
products has remained the same whereas the tax incidence on
SENSEX Close (Unit Curr)
Visaka’s products has been reduced from 28% to 18%.
Key Financials (Rs cr)
Y/E Mar Net Adj. EPS EPS Growth RONW ROCE P/E EV / EBITDA
EBITDA Adj. PAT
Revenue (Rs) (%) (%) (%) (x) (x)
2017 966.7 114.8 40.8 25.7 1.67 11.1 13.3 30.0 12.2
2018E 1027.2 132.8 54.1 34.1 32.7 13.1 16.1 22.6 10.6
2019E 1121.9 157.2 71.3 44.9 31.7 15.2 18.6 17.1 8.4
2020E 1228.6 178.2 85.6 53.9 20.0 15.7 20.0 14.3 6.9
-1- Saturday,20th January, 2018
This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.
❖ Company Background
Established in 1985, Visaka Industries Limited (Visaka) has two main business
verticals – Building products which includes cement asbestos products & fibre
cement flat products and Synthetic Yarn for the textile industry.
Business Verticals of Visaka Industries Ltd
Source:, Ventura Research
Strong product portfolio
Source: Company, Ventura Research
-2- Saturday, 20th January, 2018
Plant locations across India
❖ Key investment highlights:
➢ Building Product Division – Growth Driver
Visaka commenced its building product division in 1985 through the

manufacturing of cement asbestos sheets and later in 2008 diversified into fibre
cement boards (V-Next products). The building product division caters to the
industrial, logistics and the rural/suburban housing segment. The company
possessed 802,000 TPA of installed capacity of the cement asbestos products
and 129750 TPA installed capacity of V-Next products. Visaka derives ~82% of
its revenues from this segment.
The cement asbestos segment constitutes ~82% of the Building Product division
revenues, whereas the fibre cement boards segment constitutes the remaining
~18%. With the roofing industry growing at a slower pace, the company has
renewed its focus towards the high growth and high margin fibre cement boards
segment. We expect the Building Product division revenues to grow at a CAGR
of 8.7% over FY17-20E to Rs. 1005.6 crore. Further, the EBITDA is expected to
grow at a CAGR of 15.7% over the same period to Rs. 155.8 crore and the
EBITDA margin to improve by 264bps to 15.5% by FY20. We are optimistic
given that:
Revenues to grow at a CAGR of 8.7% EBITDA and EBITDA margins to improve
(Rs. in crore) 180 (in %) 18

1,200
160 16
1,000 140 14
120 12
800
100 10
600 80 8
400 60 6
40 4
200
20 2
- - 0
FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY14 FY15 FY16 FY17 FY18E FY19E FY20E
EBITDA EBITDA margin (%)
• Governments thrust on housing will lead to growth in the housing demand
The government has undertaken various initiatives like “Housing for All by
2022”, “Smart City Mission” and the “Pradhan Mantri Awas Yojana” which are
expected to give momentum to the building materials industry.
The government under the Pradhan Mantri Awas Yojana (PMAY) envisages
building affordable houses with water facilities, sanitation and electricity supply.
The government under the scheme aims to build 10 million houses in the rural
areas by March 31, 2019, with a target of completing 5.1 million houses by
March 31, 2018.
Cumulative house completion targets under PMAY
120 (in lacs)

100
100
80
60 51
40
25
20 10
0
Nov '17 Jan'18 Mar'18 Mar'19
Source: Ministry of Rural Development, Ventura Research
• GST implementation improves competitiveness
The implementation of the GST augurs well for the company, as the total
indirect tax incidence on its competing products have remained the same
whereas the tax incidence on its products - cement asbestos sheets and V- Next
products - have come down to 18% from 28% pre-GST.
This reduction in the tax incidence will reduce the price difference between the
competing products and make the company’s products more competitive
thereby enabling it to drive volumes.
GST Rate of Visaka Products Vs Competing Products

Visaka's Product Pre GST Post GST Competing Pre GST Post GST
(%) (%) Product (%) (%)
Aluminium Sheets 18.1 18.0
Cement Asbestos Sheets 28.8 18.0 C C Sheets 18.1 18.0
GI Steel Sheets 18.1 18.0
Gypsum 28.8 18.0
V- Board 28.8 18.0
Plywood 28.8 18.0
• Cement Asbestos products – Rural demand augurs well
Visaka is the second largest manufacturer of cement asbestos sheets in India

with a market share of 18% having manufacturing facilities spread across the
country (four in South India, one in North India, two in East India and one in
Western India) making it possible to address different regional needs. The
products are distributed through 6000+ retailers in the rural and the semi-urban
markets.
Cement asbestos sheets are used as a part of construction material in the form
of roofing material in the rural and semi-rural housing. As per the latest census,
60% of Indian houses were classified pucca, 28% semi-pucca and 12% as
kutcha. Among the pucca houses also, less than half use RCC slabs and the
rest used ready house roofing products such as fibre cement roofing, thereby
giving a huge opportunity for the roofing industry.
Further, with better monsoons, a decline in rural inflation and declining

competition from the colour-coated steel sheets, following an increase in steel
prices, the demand for cement asbestos sheets is expected to increase.
Cement Asbestos has the following advantages:-

• Fire – resistant, thermal insulation, sound insulation
• Product life of more than 50 years
• Resistance to wear and tear over plastic and steel
Based on the above, we expect the revenues of cement asbestos products to

grow at 4% CAGR over FY 17-20E to Rs. 714.1 crore in FY20.
Volume growth on the back of improved utilisation Steady growth in revenue
760000 (in TPA) (in %) 100 750 (in crs) (in %) 80
740000 70
720
720000 80
60
700000 690
50
60
680000
660 40
660000
40 30
640000 630
620000 20
20
600
600000 10
580000 0 570 0
Revenue % of total revenue

Quantity sold (Cement Asbestos) Capacity utilisation
Source: Company, Ventura Research Source: Company, Ventura Research
• Fibre Cement Boards & Panels (V-Next) – Next growth driver
In 2008, Visaka diversified its product range in the building product segment by
entering the niche segment of fibre cement boards. The company ventured into
this alternative building product material due to the rising preference for this
material among architects, aesthetics and faster construction.
The company currently has an installed capacity of 129,750 TPA and is adding
a capacity of 50,000 TPA at a capex of ~75 crore in a greenfield project in North
India (Haryana) to cater to the North Indian market. The capacity is expected to
become operational in FY19, thereby making it one of the largest manufacturers
in India. V-Next products are also exported to countries like Saudi Arabia, UAE,
Qatar, Iraq, Iran, Bharain and Sri-Lanka.
V-Next products are expected to make significant inroad in the existing ~Rs.
20,000 crore plywood market being a perfect substitute for plywood and gypsum
boards. V-Next products constitute a perfect substitute of plywood as they have
various advantages, which are as follows:-
Advantages of V-Next over plywood

Parameter V-Next Plywood
Cheaper by Costlier
Cost
nearly 40%
Durability 15-20 years 5-10 years
Resistance to
Yes No
weathering
Environment friendly Yes No
Time - saving in Yes No
installation
Requires other material No Yes
Based on the above, we expect the revenue share of the fibre cement boards
and panels (V-Next) to increase from 18% of the Building Product division to
29% by FY20 and the revenues to grow at 27.6% CAGR over FY 17-20E to Rs.
292 crore in FY20.
Volume growth on the back of improved utilisation Steady growth in revenue
160000 (in TPA) 90 350 (in %)

25
(in %) (in crore)
140000 80 300
70 20
120000
250
60
100000 15
50 200
80000
40 150
60000 10
30
100
40000 20 5
20000 10 50
0 0 - 0
Quantity sold (Boards & Panels) Capacity utilisation Revenue % of total revenue
• Launch of an innovative product – ATUM
Visaka launched a new hybrid roofing product which has an integrated solar
roofing system that serves all the functions of the traditional roof and generates
energy. Being an integrated solar panel with a cement base, it reduces thermal
conductivity better than the traditional roof.
With the launch of ATUM, Visaka is the first company to introduce such a
product in India. The company has initiated undertaking pilot projects and
expects to commercialize it soon.
Innovative product - ATUM
➢ Textile Product Division – Steady business
Visaka commenced the manufacturing of synthetic yarns in 1992. The company

manufactures various forms of synthetic yarns like mélange yarns, high-twist
yarns and specialty yarns by using state-of-the-art, Twin Air Jet Spinning
technology. The company has 41 MTS machines which is equivalent to 82560
ring spindles having capacity of 12,500 TPA. The company derives ~18% of its
revenues from this segment.
We expect the Textile Product division revenues to grow at a CAGR of 8.5%

over FY17-20E to Rs. 223 crore. Further, the EBITDA is expected to grow at a
CAGR of 7.5% over the same period to Rs. 22.3 crore. We are optimistic given
that:
Revenues to grow at a CAGR of 8.5% EBITDA and EBITDA margins to improve
250 (Rs. in crore) 30 (Rs. in crore) (in %) 18

16
200 25
14
20 12
150
10
15
8
100
10 6
50 4
5
2
- - 0
EBITDA EBITDA margin (%)
• Capacity expansion to support growth
The company in FY17 expanded its spinning capacity by 26% to 2,752 spinning
positions at a capex of Rs. 70 crore. Now with the capex being incurred the
company expects to generate superior performance on the back of increased
capacity.
Installed capacity with improving utilisation
13000 (in TPA) (in %) 100

90
12500 80
12000 70
60
11500 50
40
11000 30
10500 20
10
10000 0
FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Installed Capacity Capacity Utilisation
• Domestic volumes to pick up post resolution of tax rate anomaly
Although the implementation of GST was a boon for the Building Product
segment it was a bane for the Textile segment as the tax rate on yarn was set at
18% against 5% on the fabric, creating a huge inverted duty problem and
thereby leading to de-stocking post the implementation of the new tax regime.
However, the GST council in Oct ’17, reduced the GST rate on yarn to 12% from
18%. This reduction in tax is likely to be help improve sales going forward.
Installed capacity with improving utilisation
Particulars Earlier Present
Yarn Cost (INR) 100 100
GST Rate 18% 12%
Input Tax (INR) 18 12
Fabric Selling Price (INR) 150 150

GST Rate 5% 5%
Output Tax (INR) 7.5 7.5
Impact on Working Capital (INR) -10.5 -4.5

Note: The above example shows the impact on work ing capital
of fabric manufacturer
• Marquee client includes prominent brands
The company’s marquee clients comprises of prominent brands such as
Siyaram Silk, S. Kumar Nationwide, Grasim Industries and DC Textiles. Further,
the company also exports to countries like Germany, Egypt, Italy, Taiwan, USA,
Syria, South Africa and UK.
- 10 - Saturday, 20th January, 2018
❖ Financial Performance
In Q2FY18, Visaka reported a 7.1% decline in its topline to Rs 201.1 crore from
Rs 216.4 crore (reported in the same quarter of the previous year). The decline
in the revenue was mainly on account of a temporary drag in the textile segment
on the back of GST implementation. The EBIDTA margin increased by 375 bps
to 16.6% from 12.8% and the EBITDA grew by 20.1% YoY to Rs. 33.3 crore,
driven by robust performance in its building product segment. The PAT stood at
14.1 crore, increasing by 43.8% YoY on account of strong operating
performance.
During FY17, Visaka’s net sales stood at Rs.966.7 crore registering a decline of
3.8% YoY. However, the EBIDTA margin increased 240 bps YoY to 11.9% and
the EBITDA increased by 20.5% YoY to Rs. 114.7 crore. Further, the PAT
increased by 67% YoY to Rs. 40.8 crore on the back of improved operating
performance and a decline in finance costs.
Financial Performance (Rs in crore)
DESCRIPTION Q2FY18 Q2FY17 Mar-17 Mar-16

Net Sales 201.1 216.4 966.7 1004.9
Other operating income 0.0 0.0 0.0 0.0
Net Sales & Other Operating Income 201.1 216.4 966.7 1004.9
Growth (%) -7.1% -3.8%
Total Expenditure 167.8 188.7 852.0 909.6
EBITDA 33.3 27.7 114.8 95.2
EBITDA Margin 16.6% 12.8% 11.9% 9.5%
Depreciation 8.6 8.1 34.1 36.3
EBIT (Excl. OI) 24.7 19.6 80.7 58.9
Other Income 1.0 1.1 3.8 2.7
EBIT 25.7 20.7 84.4 61.7
Interest 4.0 3.8 18.1 21.3
Exceptional Items 0.0 0.0 0.0 0.0
PBT 21.7 16.9 66.4 40.4
PBT Margin 10.8% 7.8% 6.9% 4.0%
Tax 7.6 7.1 25.6 15.9
Profit After Tax 14.1 9.8 40.8 24.4
Profit Margin 7.0% 4.5% 4.2% 2.4%
❖ Financial Outlook
The revenue growth trajectory is expected to continue, going forward, on the

back of increased capacity additions along with the launch of new products,
such as Atum. We expect overall revenues to grow at a CAGR of 8.3% over
FY17-20E to Rs 1,228.6 crore from Rs 966.7 crore reported in FY17. Further,
the EBIDTA and PAT are expected to grow at a faster CAGR of 15.8% (to Rs.
178.1 crore) and 28% (to Rs. 85.6 crore) over the same period.
Expected topline growth of 8.3% CAGR EBITDA to grow at 15.8% CAGR
1,400 (Rs. in crore) 200 (Rs. in crore) (in %) 16%

180 14%
1,200
160
12%
1,000 140
120 10%
800
100 8%
600 80 6%
400 60
4%
40
200 2%
20
- - 0%
Building Products Textile Products EBITDA EBITDA margin (%)
PAT to grow at 28% CAGR
90 (Rs. in crore) (in %) 8%

80 7%
70 6%
60
5%
50
4%
40
3%
30
20 2%
10 1%
0 0%
PAT PAT margin (%)
Further, return ratios ROCE and ROE are also expected to improve by 672 bps
and 461 bps to 20% and 15.7% from 13.3% and 11.1% respectively by FY20.
Strong financials to boost ROCE and ROE
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
ROE ROCE
Improving solvency ratios Healthy working capital ratios
5.0 100 (no. of days)

4.5 90
4.0 80
3.5 70
3.0 60
2.5 50
2.0 40
1.5 30
1.0 20
0.5 10
- -
Inventory Days Receivable Days Trade Payable Days
Debt to EBITDA Debt to Equity
❖ Key Risk
• The company derives more than 60% of its revenues from the cement asbestos
sheets that are largely consumed in the rural areas for residential roofs. The
rural demand largely depends on the monsoon and the agricultural produce.
• The company’s cement asbestos sheets face competition from alternate
products such as colour-coated steel sheets. However, with the rising prices of
steel the competitive advantage is in the company’s favour. Further, with
growing concerns regarding the functionality of steel sheets, the demand for
cement asbestos is expected to increase.
• Slower than expected off-take, triggered by factors such as poor monsoon,

lower industrial capex and slower economic growth could lead to lower volumes,
thereby impacting growth and profitability.
❖ Valuation
We initiate coverage on Visaka as a BUY, with a SOTP based price objective of

Rs. 986, representing an upside of 28% over a period of 18 months from the
CMP of Rs. 770.
SOTP valuation
Particulars Basis Multiple EV ( Rs in cr)
Building Products FY20E EBITDA - Rs 155.8 cr 9.0 X 1402.2
Textile Product FY20E EBITDA - Rs 22.3 cr 8.0 X 178.4
Total EV 1,580.6
Less: FY20 Debt (178.7)
Add: FY20 Cash 163.8
Market Capitalisation 1,565.7
No of shares outstanding 1.6
Total value per share 986
CMP 770
Potential upside 28.0%
Source: Ventura Research
Peer Comparison
Y/E March Sales EBITDA PAT EBITDA PAT ROE(%) ROCE(%) P/E P/BV EV/
Margin Margin EBITDA
(%) (%)
Visaka Industries (CMP : Rs. 770)
2016 1004.9 95.2 24.4 9.5 2.4 7.2 9.5 50.0 3.5 15.4
2017 966.7 114.8 40.8 11.9 4.2 11.1 13.3 30.0 3.2 12.2
2018E 1027.2 132.8 54.1 12.9 5.3 13.1 16.1 22.6 2.8 10.6
2019E 1121.9 157.2 71.3 14.0 6.4 15.2 18.6 17.1 2.4 8.4
2020E 1228.6 178.2 85.6 14.5 7.0 15.7 20.0 14.3 2.1 6.9
HIL (CMP : Rs. 1654)
2016 1096.3 97.3 39.7 8.9 3.6 9.0 11.9 9.5 0.8 4.7
2017 1053.6 102.2 54.6 9.7 5.2 11.4 13.3 10.7 0.9 5.9
2018E 1189.5 126.1 58.0 10.6 4.8 11.5 17.0 16.6 1.6 8.5
2019E 1363.0 157.5 82.0 11.5 6.0 15.0 18.0 11.7 1.4 6.5
2020E 1497.0 182.0 100.0 12.2 6.7 17.0 24.0 9.5 1.5 5.1
NCL Industries (CMP : Rs. 282)
2016 660.8 121.0 54.6 18.3 8.3 30.7 26.9 6.5 1.8 4.2
2017 765.5 114.3 54.7 14.9 7.1 22.8 17.2 16.8 3.8 10.2
2018E 970.7 171.2 71.4 17.6 7.4 22.9 19.8 12.9 2.9 6.7
2019E 1178.7 200.1 94.8 17.0 8.0 23.3 20.6 9.7 2.3 5.3
2020E 1398.8 248.3 138.1 17.8 9.9 25.3 23.2 6.6 1.7 4.0
Everest Industries (CMP : Rs. 584)
2016 1313.4 86.0 34.4 6.6 2.6 10.3 12.0 10.6 1.1 5.6
2017 1177.0 40.0 4.0 3.4 0.3 1.2 5.1 83.6 1.7 13.2
2018E 1293.0 106.0 60.0 8.2 4.6 15.4 18.8 13.7 1.7 8.7
2019E 1453.0 128.0 73.0 8.8 5.0 15.8 21.6 11.2 1.5 6.8
2020E 1604.0 144.0 85.0 9.0 5.3 15.8 22.0 9.5 1.4 5.5
Source: Bloomberg, Ventura Research
Peers snapshot
Everest Industries Visaka Industries HIL
Segments Roofing: Fibre cement Roofing: Cement Asbestos Roofing: Fibre cement Sheets and
Sheets and coloured steel Sheets coloured steel sheets
sheets
Boards & panels: Fibre Fibre cement boards: V Building solutions: AAC, FOB & C-
Cement Sheets Boards & V Panels Boards, Dry Mix and Pipes and
Fittings
Steel Buildings & Metal Synthetic yarn Thermal insulation solution

Roofing
Brand name Roofing : Everest Roofing : Visaka Roofing: Charminar
Boards & panels : Everest Fibre boards: V-Next Building solutions: Birla Aerocon
Installed Roofing Sheets: 7,15,000 Cement asbestos: 8,02,000 Fibre cement sheets: 11,50,000 MTA
Capacity MTA MTA Coloured steel sheets: 26,700 MTA
Boards & panels: 1,50,000 Fibre cement sheets: Solid Wall panels: 78000 MTA
MTA 1,29,750 MTA FOB & C-boards: 54,000 MT
Steel Buildings: 72,000 Spinning Machines: 11,000 Insulation for energy intensive
MTA tonnes of yarn p.a. industries: 4,800MT
No. of plants 6 Building Product plants; 11 manufacturing facilities 20 manufacturing facilities
3 Steel Building plants
Revenue Roofing: 575cr Roofing: 642cr Roofing: 746cr
Breakup Boards & Panels: 180cr Boards & Panels: 140cr Building solutions: 209cr
Steel Building: 423cr Textile (Yarn): 175cr Others: 72cr
Source: Ventura Research
Visaka PE trend
900
800
700
600
500
400
300
200
100
0
CMP 1.9x 4.9x 7.8x 10.8x 13.7x
Source: Visaka, Ventura Research
Visaka PB trend Visaka EV/EBITDA trend

900 600
800
500
700
600 400
500
300
400
300 200
200
100
100
0 0
CMP 0.33x 0.56x 0.80x 1.04x 1.27x CMP 1.2x 2.7x 4.0x 5.5x 6.9x
Source: Visaka, Ventura Research Source: Visaka, Ventura Research
Financials and Projections
Y/E March, Fig in ` Cr FY16 FY17 FY18E FY19E FY20E Y/E March, Fig in ` Cr FY16 FY17 FY18E FY19E FY20E
Profit & Loss Statement Per Share Data (Rs)
Net Sales 1004.9 966.7 1027.2 1121.9 1228.6 Adj. EPS 15.4 25.7 34.1 44.9 53.9
% Chg. -2% -4% 6% 9% 10% Cash EPS 38.2 47.2 56.9 67.9 77.2
Total Expenditure 909.6 852.0 894.3 964.3 1049.9 Book Value 218.5 244.2 275.4 317.4 368.3
% Chg. -2% -6% 5% 8% 9%
EBITDA 95.2 114.8 132.8 157.2 178.2 Capital, Liquidity, Returns Ratio
EBDITA Margin % 9% 12% 13% 14% 15% Debt / Equity (x) 0.9 0.6 0.5 0.4 0.3
Other Income 2.7 3.8 4.0 4.4 4.8 Current Ratio (x) 1.2 1.5 1.5 1.8 2.1
EBITDA (incl. OI) 98.0 118.5 136.8 161.5 183.0 ROE (%) 7.2 11.1 13.1 15.2 15.7
Depreciation 36.3 34.1 36.3 36.5 37.0 ROCE (%) 9.5 13.3 16.1 18.6 20.0
Interest 21.3 18.0 17.2 15.3 14.3 Dividend Yield (%) 10% 20% 20% 20%
Exceptional items 0.0 0.0 0.0 0.0 0.0 Valuation Ratio (x)
PBT 40.4 66.4 83.3 109.7 131.6 P/E 50.0 30.0 22.6 17.1 14.3
Tax Provisions 15.9 25.6 29.2 38.4 46.1 P/BV 3.5 3.2 2.8 2.4 2.1
Reported PAT 24.4 40.8 54.1 71.3 85.6 EV/Sales 1.5 1.4 1.4 1.2 1.0
Minority Interest 0.0 0.0 0.0 0.0 0.0 EV/EBIDTA 15.4 12.2 10.6 8.4 6.9
Share in JV 0.0 0.0 0.0 0.0 0.0
PAT 24.4 40.8 54.1 71.3 85.6 Efficiency Ratio (x)
PAT Margin (%) 2% 4% 5% 6% 7% Debtors (days) 53 59 56 54 52
Total Expenditure/ Sales (%) 91% 88% 87% 86% 85% Creditors (days) 23 29 28 26 25
Balance Sheet Cash Flow Statement

Share Capital 15.9 15.9 15.9 15.9 15.9 Profit Before Tax 40.4 66.4 83.3 109.7 131.6
Reserves & Surplus 331.1 371.9 421.4 488.1 569.0 Depreciation 36.3 34.1 36.3 36.5 37.0
Minority Interest 0.0 0.0 0.0 0.0 0.0 Working Capital Changes & Other Adj.34.9 76.1 (0.9) (8.0) (7.5)
Long Term Borrowings 53.7 78.6 76.4 60.0 51.4 Tax Paid (22.3) (24.8) (29.2) (38.4) (46.1)
Long Term Provision 0.0 0.0 0.0 0.0 0.0 Operating Cash Flow 89.2 151.7 89.5 99.8 115.0
Other Non Current Liabilities 22.2 21.3 20.3 19.3 18.3 Capital Expenditure (28.7) (64.1) (73.8) (3.9) (9.1)
Total Liabilities 423.0 487.8 534.0 583.3 654.7 Other Investment Activities 0.3 0.2 - - -
Gross Block 584.3 650.7 725.7 730.7 740.7 Cash Flow from Investing (28.4) (63.9) (73.8) (3.9) (9.1)
Less: Acc. Depreciation 290.2 323.9 360.2 396.7 433.8 Changes in Share Capital - - - - -
Net Block 294.1 326.8 365.6 334.0 307.0 Changes in Borrowings 22.0 (102.9) (3.3) (17.4) (10.6)
Capital WIP 4.1 11.7 10.5 9.5 8.5 Dividend, Interest & Others (35.9) (21.7) (21.9) (19.9) (18.9)
Non Current Investments 10.1 0.0 0.0 0.0 0.0 Cash Flow from Financing (13.9) (124.6) (25.2) (37.3) (29.6)
Long Term Loans & Advances & OA 28.6 17.8 17.2 17.4 17.6 Net Change in Cash 46.9 (36.7) (9.5) 58.6 76.4
Net Current Assets 86.1 131.4 140.7 222.4 321.5 Opening Cash Balance 28.1 75.0 38.3 28.8 87.4
Total Assets 423.0 487.8 534.0 583.3 654.7 Closing Cash Balance 75.0 38.3 28.8 87.4 163.8
Disclosures and Disclaimer
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Visaka Industries Ltd

-1- Saturday,20th January, 2018

Business Verticals of Visaka Industries Ltd

Source:, Ventura Research

Strong product portfolio

Source: Company, Ventura Research

-2- Saturday, 20th January, 2018

Source: Company, Ventura Research

❖ Key investment highlights:

➢ Building Product Division – Growth Driver

Visaka commenced its building product division in 1985 through the

-3- Saturday, 20th January, 2018

Revenues to grow at a CAGR of 8.7% EBITDA and EBITDA margins to improve

(Rs. in crore) 180 (in %) 18

• Governments thrust on housing will lead to growth in the housing demand

-4- Saturday, 20th January, 2018

120 (in lacs)

Source: Ministry of Rural Development, Ventura Research

• GST implementation improves competitiveness

GST Rate of Visaka Products Vs Competing Products

• Cement Asbestos products – Rural demand augurs well

Visaka is the second largest manufacturer of cement asbestos sheets in India

-5- Saturday, 20th January, 2018

Further, with better monsoons, a decline in rural inflation and declining

Cement Asbestos has the following advantages:-

Based on the above, we expect the revenues of cement asbestos products to

Volume growth on the back of improved utilisation Steady growth in revenue

760000 (in TPA) (in %) 100 750 (in crs) (in %) 80

Revenue % of total revenue

Source: Company, Ventura Research Source: Company, Ventura Research

• Fibre Cement Boards & Panels (V-Next) – Next growth driver

-6- Saturday, 20th January, 2018

Advantages of V-Next over plywood

-7- Saturday, 20th January, 2018

160000 (in TPA) 90 350 (in %)

Source: Company, Ventura Research Source: Company, Ventura Research

• Launch of an innovative product – ATUM

Innovative product - ATUM

Source: Company, Ventura Research

-8- Saturday, 20th January, 2018

Visaka commenced the manufacturing of synthetic yarns in 1992. The company

We expect the Textile Product division revenues to grow at a CAGR of 8.5%

Revenues to grow at a CAGR of 8.5% EBITDA and EBITDA margins to improve

250 (Rs. in crore) 30 (Rs. in crore) (in %) 18

EBITDA EBITDA margin (%)

Source: Company, Ventura Research Source: Company, Ventura Research

• Capacity expansion to support growth

-9- Saturday, 20th January, 2018

13000 (in TPA) (in %) 100

Installed Capacity Capacity Utilisation

Source: Company, Ventura Research

• Domestic volumes to pick up post resolution of tax rate anomaly

Fabric Selling Price (INR) 150 150

Impact on Working Capital (INR) -10.5 -4.5

- 10 - Saturday, 20th January, 2018

Financial Performance (Rs in crore)

DESCRIPTION Q2FY18 Q2FY17 Mar-17 Mar-16

Source: Company, Ventura Research

- 11 - Saturday, 20th January, 2018

The revenue growth trajectory is expected to continue, going forward, on the

Expected topline growth of 8.3% CAGR EBITDA to grow at 15.8% CAGR

1,400 (Rs. in crore) 200 (Rs. in crore) (in %) 16%

Building Products Textile Products EBITDA EBITDA margin (%)