"Hyderabad Industries (HIL), a C K Birla Group was incorporated as Hyderabad Asbestos Cement in June 1946 and was renamed to the present one in 1985. HIL is into the business of producing building products, engineering goods and industrial products. Its first public issue was in 1946. HIL is the market leader in its segments. HIL markets its product AC and fibre cement sheets under the well-known brand "Charminar". HIL is also the largest manufacturer of calcium silicate, insulation blocks, pipe sections and jointing for gasketing, thereby meeting the critical needs of the fertilizer, engineering and chemical industries. It also makes aerocon prefab panels, autoclaved aerated concrete (AAC) blocks which find applications in the construction of residential quarters, malls, shopping complexes and office partitioning etc."
"During FY11, sales advanced by 2.8% to `726.2 crore but net profit fell by 43.6% to `50.6 crore. OP and NP margin stood at 13.4% and 7.0% against 22.3% and 12.7% respectively in the corresponding period last year. HIL was forced to briefly shut down its Dharuhera plant because of certain labour and regulatory issues, which resulted in decline in revenue from this segment. FY10 was an exceptional year in view of the decreased cost of production. EPS for FY11 stood at `67.4.The DER as at FY11 stood at 0.29:1 whereas the value of the gross block at `444.5 crore. During Q3FY12, sales rose 14.8% to `194.3 crore and net profit by 59.5% to `10.2 crore. (YoY). OPM and NPM stood at 10.5% and 5.2% compared to 8.5% and 3.8% respectively in Q3FY11. EPS for Q3FY12 stands at `13.6."
"From a mere roof manufacturing company, HIL has evolved into a multi product, green building products organization. It has gradually diversified from a one-product into other areas such as autoclaved aerated concrete (AAC) blocks, thermal insulation products and other products like prefabricated building panels, Hysil powder, spares and accessories etc. Over 50% of the Indian population still lives under thatched roofs (Kuccha roofing) and clay tiles. Thatched roof is not waterproof, and poses a fire hazard besides needing regular replacement. Tiled roof needs recurring maintenance and is also not safe. Hence security concern coupled with rising income level, the desire to shift from kuccha house to pucca house is increasing. Implementations of Government of India's infrastructure development projects have started gaining momentum. This together with other Government sponsored initiatives in providing homes and schools for the masses in general and the poor in particular is expected to increase demand for construction materials."
"A reasonably good monsoon expected in ensuing season and Government's continued thrust to provide adequate shelter to the rural poor by introducing programs like Indira Awas Yojna, Golden Jubilee Rural Housing Finance Scheme, Pradhan Mantri Adarsh Gram Yojna, Productive Housing in Rural Area and Rural Housing Fund will boost the demand for building products and increase the market potential for fibre cement sheets. At the CMP of `328, the share is trading at a P/E of 4.6x on FY12E. We recommend BUY with a target price of `430 at which the share will trade at a P/E of 6.0," says Sunidhi Securities research report.
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