Surya Roshni ISIN: INE335A01012
indexed
BSE: 500336 NSE: SURYAROSNI ISIN: INE335A01012
Face Value : Rs 10.00 - CMP : Rs. 83.40 - Market Cap : Rs. 216.7 Cr -
Book Value : Rs. 75.93
EPS (TTM) 8.8 - P/E 8.12 Industry P/E 12.96
Surya Roshni Ltd has emerged today as a vast conglomerate with the
largest ERW pipe manufacturing plant in India, a large cold rolling
strip mill at Bahadurgarh (Haryana) and two lighting units one each at
Kashipur (UP) and Malanpur (MP) producing fluorescent tube lights, GLS
lamps, CFL lamps, HPSV Lamps, HPMV Lamps and Metal Halide Lamps. It is
the second largest seller of GLS and FTL in India. The company has
manufacturing units at Bahadurgarh in Haryana, Kashipur in Uttar
Pradesh and Malanpur in Madhya Pradesh. SRL has two subsidiaries
abroad, i.e. Surya Roshni, USA and Surya Roshni (HK), Hong Kong. The
company also markets a wide range of Luminaires and Accessories, High
Mast Lighting Systems, Lighting Poles, Decorative Poles and MCBs.
Surya is the only lighting company of India with 100% backward
integration. It is the single largest manufacturing company of Lamps
in the country.The company is a pioneer in this industry to have
implemented the concept of total quality management. Both the plants
have deservedly won the ISO 9001:2000, ISO 14001:1996 and
OHSAS18001:1999 certifications. Surya GLS also conforms to prestigious
European safety standards - "CE" & TUV Bauart. Surya exports its
products to 40 countries. IOCL, OIL, Essar Projects, GAIL, EIL,
Reliance Petro, ONGC and L&T are some of the major customers of the
company for steel pipes.
It`s turnover ending March 2009 is around Rs.1700 crores (more than
USD 360 Million)Surya possesses two state-of-the-art plants at
Malanpur and Kashipur for lighting products set up in 1984 and 1992
respectively. The company has a wide marketing network with its
branches and dealer and retailer outlets spread across the length and
breadth of the country. Over the years, Surya has built up a strong
sales network of 30 branch offices, over 1,500 dealers and more than
40,000 retailers.
Surya Roshni is a company which is broadly into two business segment,
Steel and lighting. Sales for first 9-month are close to Rs 1435
crore, profit after tax is Rs 16.25 crore and cash profit is Rs 37
crore. Equity capital of the company is just about Rs 26 crore which
gives it a market cap of about Rs 217 crore. This company has got a 20-
year track record of uninterrupted dividend payment. Company is very
rich in assets and has a huge land bank in Bahadurgarh which it is
planning to develop as a real estate.The company does sales of Rs 1700
crore in last year and this year (FY10) it is going to be close to Rs
2000 crore. Market cap of the company is just about Rs 190 crore and
sales to equity is just about 60 times which means even a 1% increase
in net profit margin would increase its EPS by close to Rs 6-7.Company
has started a new plant in Gujarat which makes spiral welded pipes and
this is again going to add to the topline and bottomline of the
company in FY11.
Surya Roshni has raised its steel pipe capacity from 3 lakh tonne to 4
lakh tonne. The company is putting up a steel plant in Bhuj at a total
outlay of Rs 600 crore for the year. JP Agarwal, CMD, Surya Roshni,
says all required funds have been tied up. “We have raised
preferential shares, including internal accruals, to fund this plan.”
Going forward, Agarwal expects the lighting business to clock 50%
growth. He also expects the steel business to grow by 20%. “This
fiscal we will touch Rs 2,100 crore revenue versus Rs 1,700 crore last
year.”He says 2011 will be much better year post steel pipe units
coming on-stream. “Revenues will be substantially higher than Rs 2,600
crore in FY11
Surya Roshni expects more than double growth in its turnover at Rs
5,000 crore in financial year 2011-12 from the projected turnover of
Rs 2,000 crore in current fiscal. He said Surya has already invested
Rs 550 crore to set up two steel pipe manufacturing plants in Gujarat
and Madhya Pradesh.
Subsidiary Investments
Surya Roshini, a Gujarat based company and a lighting and steel pipe
solutions provider is diversifying into Steel & cement production.The
Group plans to set up a five million tonnes steel plant with an
investment of Rs 20,000 crore in Karnataka. The initial proposal is on
for selection of area and term of funding.
It is in advance terms for setting up a 20 lakh tpa cement plant with
an investment of Rs.1100 crore and it is likely to go operational by
2012. According to sources, proximity to ports, availability of raw
materials and fast track clearances made the company to foray into
this sector. The company has formed a subsidiary Surya Global Cement
Ltd to implement the project.
As against such big plans for the company to achieve a turnover of Rs
2600 cr for 2010-11 and Rs 5000 cr in 2011-12 as against projected
turnover of Rs 2000cr for 2009-10. The projected PBDT is likely to be
Rs 60 crore for 2009-10, Rs 104 cr for 2010-11 and Rs 247cr for
2011-12.
At the current market capitalisation of Rs 217 crore the P/E for
various years are as follows
Year NProfit PE at Rs 84
2009-10 23.4 9.34 (shares outstanding 2.6 crore shares)
2010-11 57.2 5.73 (expects capital expanded to 3.9 crore shares)
2011-12 178.8 2.45 (expects capital expanded to 5.2 crore shares)
so it looks to be a safe investment given the fundamentals, the cash
earnings and the cash flows.
Peer PE is around 13x . expecting an improvement in OPM & NPM due to
availability of raw materials at cheaper price from (steel venture)
and overal improvement in performance
Based on PE of around 13x one can expect upside of 120-130 % in
2010-11 and 320-330% in 2011-12 from current price of 83.4 with
extremely restricted downside risk.