OUTLOOK AND CONCLUSION
- At the current market price of Rs. 205.20, the stock P/E ratio is at 15.21 x FY16E and 13.46 x FY17E respectively.
- Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 13.49 and Rs. 15.25 respectively.
- Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 13% over 2014 to 2017E respectively.
- On the basis of EV/EBITDA, the stock trades at 9.43 x for FY16E and 8.26 x for FY17E.
- Price to Book Value of the stock is expected to be at 3.43 x and 2.93 x respectively for FY16E and FY17E.
- We recommend ‘BUY’ in this particular scrip with a target price of Rs.232.00 for Medium to Long term investment.
- Indag Rubber Limited (IRL) was incorporated in July 1978 as a joint venture between Khemka group and M/S Bandag Incorporated, USA, one of the biggest players in the US retreading industry.
- For the 2 nd quarter of FY16, Revenue rose by 21.75% to Rs. 710.35 million from Rs. 583.43 million, when compared with the prior year period.
- The company’s Net profit stood at Rs. 86.39 million against Rs. 87.58 million in the corresponding quarter ending of previous year.
- In Q2 FY16, Profit before interest, depreciation and tax rose by 10.83% of Rs. 136.00 million compared to Rs. 122.71 million in Q2 FY15.
- Profit before Tax (PBT) stood at Rs. 128.56 million, an increase of 10.30% y-o-y in Q2 FY16 Compared to Rs. 116.55 million in Q2 FY15.
- The company has declared an Interim Dividend @ 45% i.e., Rs. 0.90/- per share on face value of Rs. 2.00/- each for the Financial Year 2015-2016.
- Net Sales for the half year ended of FY16 stood at Rs. 1351.58 million, rose by 15.17% as compared to Rs. 1173.56 million for the half year ended of FY15.
- In H1 FY16, the company’s Operating profit grew by 21.22% of Rs. 265.18 million as compared to Rs. 218.76 million in H1 FY15.
- Net sales and PAT of the company are expected to grow at a CAGR of 6% and 13% over 2014 to 2017E respectively.
OVERVIEW OF THE GLOBAL RETREADING INDUSTRY
- The global market for industrial rubber products is projected to increase 5.8 percent per year to $140 billion in 2016. Demand gains will be fueled by growth in key original equipment manufacturing (OEM) markets, particularly motor vehicles. In addition, the worldwide motor vehicle park will grow at a faster pace based on the emerging strength of developing markets, supporting aftermarket demand. The motor vehicle mark et is forecast to post the fastest gains through 2016, reflecting an acceleration in light vehicle production, which will bolster OEM sales of industrial rubber products. Mechanical rubber goods, which include such products as body seals,vibration control devices and wiper blades, are expected to remain by far the largest product segment through 2016. The Asia/Pacific region, which represented 44 percent of the global market for industrial rubber products in 2011, is forecast to post the fastest growth of any region through 2016.
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