December 7, 2017

Everest Industries Limited

Initiating Coverage Report

Research Analyst:
Pratim Roy (Midcap)
pratim.roy@smifs.co.in

1
 Table of Contents
Sections Page No.

Brief Overview & Investment Rationale 3-4

Company Overview & Risk 5-6

Board of Directors—Management Team & Shareholding Pattern 7

Industry Structure 8

Quarterly Financial Snapshot 9

Business Prospects 10-11

Con-call Highlights Q2 12

Financial Details 13-16

Valuation 17

Disclaimer & Disclosures 18-19

2
 Everest Industries Limited
Sector: Cement and Cements Product
7 December 2017

Everest Industries Limited – About to Deliver

CMP (INR): 522.8
We initiate coverage on Everest Industries Limited with a Strong Buy
Target (INR): 632
rating. Mounting rural demand, spending on affordable housing and
Upside(%): 21% industrial infrastructure offers immense scope for growth that is related to
Recommendation: STRONG BUY Indian economy.

Investment Rationale
BSE Code 508906 Diversified portfolio across categories and locations:
NSE Code EVERESTIND They have 6 Building Products plants and 3 Steel Building Plants, 40 Sales
Depot, over 6,000 Dealer Outlets, serving over 600 cities & 100,000 villages,
Bloomberg Ticker EVI IN export to over 35 countries (Green solutions – Fibre cement boards).
Reuters Ticker EVRI.BO
Key pillars: Speed, Strength and Safety
Their large customer base includes inspiring companies who believe that
Stock Scan complexity is a way of life and fast execution of projects is the key to their
Market Cap (INR Cr.) 805.68 success and high growth. They provides building products and building
solutions for commercial, industrial and residential sectors.
Outstanding Shares (Cr.) 1.54
Face Value (INR) 10.00 They have the best alternative construction method which is 3 times faster
than the conventional construction. Everest smart steel buildings are 100%
Dividend Yield(%) 0.21 customized, aesthetic, durable and green buildings with inbuilt stability.
P/E (x) 283.21
GST impact on the company:
Industry P/E (x) 35.78 Their product have been kept at 18% bracket, GST council to reduce the tax
impact from 27% to the 18% slab under the GST regime and bring it on par
Debt/Equity 0.57
with metal roofing.
Beta vs. Sensex 0.24
Normal monsoon in the country:
52 Week High/ Low (INR) 580/180.3 The monsoon so far across the country has been normal and since there is a
Avg. Daily Volume (NSE)/1 year 101662 high degree of correlation between monsoon and rural incomes, leading to
better farm output and more disposable income in the hands of rural
customers and sale of roofing sheets.
Shareholding Pattern (%) (Rationale continued…)
Sept-2017 June-2017 Mar-2017
Financial Performance at a glance (consolidated)
Promoters 48.66 48.76 48.76
Institution’s 6.88 8.78 8.51 Particulars (INR in Lakhs) FY15 FY16 FY17 FY18 (E) FY19 (E)
Public & Others 44.46 42.46 42.73
Net Sales 124172.28 132630.20 117703.62 134566.83 145381.08

Growth (%) 18.53% 6.81% -11.25% 14.33% 8.04%

Stock Vs. Nifty (Relative Return)
325.00
EBITDA 9241.84 9521.46 4536.29 8395.26 8646.49

EBITDA Margins (%) 10.42% 4.98% 7.44% 6.30% 6.04%

275.00

Net Profit 3422.97 3444.13 123.70 2660.94 3118.74

225.00

EPS 22.54 22.38 0.80 17.29 20.27

175.00

BVPS 208.95 225.20 225.73 226.26 237.77

125.00

P/E 14.27 10.60 283.21 29.8 25.5

75.00

P/BV 1.53 1.05 1.01 2.28 2.17

EVI Nifty 50
EV/EBITDA 7.80 5.63 11.69 8.44 9.70
Source: Company Data, SMIFS Research
ROE (%) 10.71% 9.94% 0.36% 7.63% 8.50%
Research Analyst:
Pratim Roy Source: Company Data, ACE Equity & Smifs Research
pratim.roy@smifs.co.in

3
 Everest Industries Limited

Investment Rationale Continued

New product line:
The steady efforts on Research & Development they are planning to introduce newer products and application in FY18 and
roll out Everest Super color Anti fungal roofing sheets. They have received excellent response for “Everest Super” – which
create positive impact on their revenue.
Government initiatives towards Indian infrastructure growth:
Government initiatives like “Swatch Bharat Abhiyan”, “Housing for all by 2022” & “Smart City Mission” would drive
additional demand for Building Products. Strong time bound push and increase in government focus on rapid development
of Smart Cities across the country will put pressure on smarter, safer and speedier construction methods, which will help in
increase in demand for Boards & Panels in urban and semi urban areas. Government focus to connect Tier II and Tier III
towns via air routes will help the company to promote its modern Smart Steel Building Technologies.
Implementation of “Parivartan Project” to cut cost:
The number one Project Parivartan was a onetime exercise in which they had engaged a consultant, BCG, helping them with
improving their roofing business and their procurement processes. This is a onetime expense, they do not expect any major
payouts to happen in this regards in future. Having said that the basic objective of Project Parivartan was actually to work on
various levels to improve their sales in terms of volumes, improve our realizations, reduce procurement cost, reduce logistics
cost, they expect the benefits of these two to accrue over long-term.
Strong R&D:
Everest’s Research and Development division based in Lakhmapur works has received recognition from Department of
Science and Industrial Research (DSIR) and Ministry of Science and Technology (MoST). The R&D department is actively
involved in process and product development with a clear focus on cost and value optimization. Key R&D activities during
the year included development of special quality solutions and colour application for fibre cement products and new designs
for fiber cement boards. In the steel building division, the R&D department initiated projects for faster manufacturing
throughout, scrap reduction and better material flow for faster erection planning.
Reducing the debt significantly:
Their debt equity ratio has been decreased from 0.34 to 0.26 YoY basis, They have paid DBS bank’s outstanding debt in April
2017 which will create positive impact on the bottom line of the company.

4
 Everest Industries Limited

Company Overview
Everest was established in 1934 and has over 8 decades of experience
Revenue Break Up in building products. It is the pioneer of fiber cement products in
India. The company offers a complete range of roofing, ceiling, wall
flooring & cladding products and pre-engineered steel buildings for
Business Mix industrial, commercial and residential applications. The Company has
introduced modern products & solutions to meet the contemporary
requirements of the construction industry. The Company’s building
37% Steel Product products and solutions are available in more than 1,00,000 villages
and 600 cities in India and also in many countries globally. The
63% Company has designed anderected more than 2,000 Pre-Engineered
Building Product
steel buildings across 275 cities in India.

THEY ARE MAINLY DEALING WITH THREE PRODUCT LINE LIKE

Steel Building:
They offers a wide range of products for residential, commercial and
industrial roofing. Its products are installed over more than 1 billion
Manufacturing Capacity sqm of industrial and residential roofs in India. With 6 state-of-the art
Roofing sheet manufacturing plants spread across the country and
Business Division Manufacturing Total distribution reach of more than 1 lakh villages and 600 towns, Everest
Division Units Capacity today is a brand synonymous to roofing in India.
Roorkee (Uttarakhand) They launched Pre Engineered Steel Buildings in 2008 and over the last
Kolkata (West Bengal) few years it has emerged as one of the most prominent players in
Building Kymore Madhya Pradesh) 865000 India. On average, Everest manufactures and supplies one
Products Nashik (Maharashtra) MTPA Pre-Engineered Steel Building every working day. The company
Podanur (Tamil Nadu) provides end to end PEB solutions from design to installation and has
executed more than 2000 projects till date. They offers Everest Smart
Somnathpur (Odisha)
Steel Buildings as PEB solution for low rise, low span buildings. With
Roorkee (Uttarakhand)
Everest Smart Steel Buildings, construction of a building can be
Steel Dahej (Gujarat) 72,000 72000 completed at a three times faster rate than conventional methods of
Buildings MTPA MTPA construction even in seismic, hilly, coastal and high-wind areas.
Ranchi (Jharkhand)
Boards & Panels:
They offers a range of Fiber Cement based new-age building
products and solutions which enable strong, light and rapid
Geographic Revenue Break Up construction of residential, commercial and industrial
infrastructure. Everest has two manufacturing facilities for
Gepgraphical Mix Boards & Panels. Boards business offers ample opportunities for
3% value addition by way of different designs, colours, finishes and
inherent properties of the product.
Manufacturing Facilities:
Export
They have 6 operational manufacturing plants serving the Building
Domestic
Products division (7 roofing lines – including 1 dual use line, 3 Boards
line and 2 Panel lines) located across India with total capacity of
97% 8,65,000 MTPA and three facilities catering to the Steel Building
division (2 steel building plants, 1 metal roofing plant) with total
capacity of 72,000 MTPA. This includes the recently commissioned
Source: Company Data, ACE Equity & Smifs Research
Dahej plant with capacity of 30,000 MTPA which will cater to projects
in Western, Central and Southern region. Proximity to markets is
important in ACS due to bulk and breakage risk.
5
 Everest Industries Limited

Risk and Concern:

Sustaining growth momentum:
Adequate investments have ensured that the company’s growth trajectory will accelerate over the next few years. However,
economic environment, competitive activities, monsoon and such other external factors brings the risk to sustenance of the
growth momentum.
Increasing competition:
The company’s products face competition in the form of roofing tiles and metal roofing, gypsum boards, plywood, wood
substitutes, and brick & mortar construction.

Volatile raw material price:

The main raw materials for fiber cement products are cement, pulp, fly ash and imported fibers. Steel is the major raw
material of PEB segment, hence volatility in global steel prices will also affect margins accordingly. There is limited pricing
power due to large number of players operating in both its segment and hence pass through of increased costs is not
possible. Any increase in the raw material prices or the inability of the company to pass on the price rise to the customers
can affect the company’s profitability. There are concerns that exposure to Chrysotile fiber leads to health risks and its usage
is banned in certain countries.
Maintaining product consistency:
The company’s manufacturing facilities have been producing quality products that meet the required technical aspects and
aesthetics. Any change in the quality offered can affect the brand and hence the sales.
Dependence on single segment:
The Company has traditionally been dependent on its Roofing products which has been highly concentrated within the Rural
consumer segment. Any slowdown in the Rural economy of the country would impact the revenues of the Company.

6
 Everest Industries Limited

Board of Directors & Share Holding Pattern

Mr A.V.Somani (Promoter & Chairman): Mr. Somani has pursued MBA from University of Pittsburg, USA & PGDBM from SP
Jain. He has varied experience in areas of Textile, Construction, Real Estate and Information management.

Mr Y.S.Rao (Executive Director, Operations): Mr. Rao is with the company since 1997 with hands‐on experience of handling
manufacturing, project management, technology transfer and R&D initiatives. He has an experience of around three decades
in multi‐cultural and international environment.

Mr Manish Sanghi (M.D): Mr Sanghi is with the organization since 2001 and looks after day‐to‐day operations of the
organisation. He is an IIM Ahmedabad alumnus and has an experience of 25 years with leading organizations like Castrol,
BHEL, Eicher Motors etc.

Mr Rakesh Gupta (CFO): Mr Gupta is with EIL since 2007 and looks after finance function of the organization. He is a quali‐
fied CA and CWA with three decades of domestic and international experience.

Top Five Fund house holdings (%) Share Holding Pattern (%)
60.00%
Key Share‐Holders % holding

49.52% 49.49% 49.18% 48.87% 48.76%

50.00%
3.7 2.2
4
41.60% 41.94% 42.73%

40.00% 36.63% 35.38%

FALAK INVESTMENT PVT LTD Promoters

30.00%
48.1 HDFC AMC
Public
SBI FUNDS MANAGEMENT
Institutions
RELIANCE CAPITAL AMC 20.00%
15.75%
EVEREST STAFF WELFARE TRST
14.19%
48.1
8.88% 8.57% 8.51%
10.00%

0.00%
2013 2014 2015 2016 2017

Source: BSE Source: BSE

7

The roofing industry is valued at
INR42bn and is expected to grow
between 6‐8% depending on the GDP
growth and monsoons.
The industry is estimated to grow at
8-10% in the coming years driven by
sustainable growth in the domestic
economy.
Everest Industries Limited
Industry Structure
The fiber cement roofing industry in India has a capacity of 5‐5.5m MTPA
consisting of 30 major players and is an oligopoly market with top five players
collectively controlling 60% of the market. Prominent players in the industry
include Hyderabad Industries (HIL), Visaka Industries, Everest Industries, Ramco
Industries and Utkal Industries. The roofing industry is valued at INR42bn and is
expected to grow between 6‐8% depending on the GDP growth and monsoons.
According to the 2011 census, almost 39% of Indian population is still living
without a Pucca roof. This presents a significant opportunity for growth in the
future. The cost of a pucca roof using Fibre Cement Roofing is one‐third the
cost of an RCC ceiling slab.
The key raw materials used are cement, fly ash, wood pulp and dry waste the
cost depends on the demand with suppliers and the parity between USD and
INR.
With increased urbanization in India there is a growing demand for affordable
houses. The Urban population in India is estimated to reach a staggering 600
million by 2031. The total urban housing shortfall is estimated at 18.78 million
units as per the 12th five year plan. The major chunk of the shortfall is amongst
the Economically Weaker Section and Low Income Group contributing 96% to
the shortfall.
Fiber Cement Roofing Sheets are majorly used in the rural housing segment
along with applications in warehousing and logistics. The industry is estimated
to grow at 8-10% in the coming years driven by sustainable growth in the
domestic economy.
8
 Everest Industries Limited

Quarterly Financial Snapshot (Consolidated)

Particulars (in Lakh) Q3FY17 Q4FY18 Q1FY18 Q2FY18 Q3FY18(F)

The Company closed the quarter under review on a
positive note showing significant improvement over the
Total Revenue 25375.24 32694.71 37930 26151 30924.54 quarter. Consolidated sales rose by 17% to INR261.51
QoQ Growth(%) 10.73% 28.84% 16.78% -31.47% 18.19% crores in Q2-18 from INR224.12 crores in Q2-17. As the
business returned to normalcy and consumer demand
Total Expenses 26701.00 30504.00 35155.00 25566.00 28168.89
rebounded in rural markets, EBITDA Margin expanded by
QOQ Expense(%) 11.54% 14.24% 15.25% -27.28% 10.18% 800 bps to INR13.83 crores, during the quarter. Half yearly
sales rose by 6% to INR639.53 crore in H1-18 from
EBITDA -1325.76 2190.71 3420.45 1383.00 3401.10
INR603.79 crore in H1-17.PAT Margin expanded by 572
EBITDA Margin(%) -5.28% 6.77% 9.05% 5.34% 11.11% bps YoY basis.
PAT -1404 1409 2127 505 1468.36
In Q2FY18 the BP division’s revenue was up 8% YoY.
PAT Margin(%) -5.53% 4.31% 5.61% 1.93% 4.75% EBITDA margin expanded 1100 bps point basis with a view
Paid Up Capital 1539 1539 1539 1539 1539
to improve the performance of the division, management
is taking various measures such as a focus on launches,
EPS(INR) -9.12 9.16 13.82 3.28 9.54 widening reach (distribution channel, architects) and
ROE(%) -4.21% 4.22% 6.38% 1.51% 4.40% improving working-capital management. Better volumes in
Boards and Panels as compared to Q2-FY17 in Domestic
Markets.
QoQ Revenue & Revenue Growth (lakhs) In Q2FY18 the Steel building segment's EBITDA margin
40000 37930 40.00% expanded by 602 bps to INR2.31 crores and turns into
32694.71
30924.54
positive number as per management expectation. They
30000 25375.24 28.84% 26151 20.00% have dispatched 14,299 MT material in Q2-FY18, 40%
higher than Q2-FY17.
20000 10.73% 16.78% 0.00%
18.19%
They have stable order book, stands at 26518 MT as on
30th September 2017. We are expecting a better
10000 -20.00%
performance in the coming quarters.
-31.47%
0 -40.00%
Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18(F)

Total Revenue QoQ Growth(%)

QoQ EBITDA & EBITDA Growth (%) QoQ PAT VS PAT Margin (%)
4000.00 15.00% 3000 10.00%
3420.45 3401.10
2127
3000.00
10.00% 2000 1468.36
2190.71 1409 5.00%
1383.00 11.11% 5.61%
2000.00 9.05% 505
5.00% 1000 4.31% 4.75%
1000.00 6.77% 5.34% 0.00%
1.93%
0.00% 0
0.00 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18(F)
Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18(F) -5.00%
-5.00% -1000
-1000.00 -5.28% -5.53%
-1325.76 -1404
-2000.00 -10.00% -2000 -10.00%

EBITDA EBITDA Margin(%) PAT PAT Margin(%)

Source: Company Data, ACE Equity & Smifs Research

9
 Everest Industries Limited

Business Prospects
Product Wise Sales in lakhs (YoY) The business is expected to perk up from FY18
100000
89099 Secrete Behind the Growth: This is one stop solution for building
82548 83342
80000
76863 78659 products. There is a huge opportunity in the rural market. Their
product is used in villages, towns, and metropolitan cities. It
60000 51712 54134
48151 46197
49893 touches the lives of all classes in the society. However, they have
40000 done a mistake 2-3 years ago by diversifying in a Gulf country
20000
which did not do well and impacted the balance sheet
negatively. They have now closed down and shifted the plant to
0
Mar-15 Mar-16 Mar-17 Mar-18 E Mar-19 E
India.
Building Product Steel Building Agriculture Growth: There is still more than 60% of the
population dependent on agriculture. The monsoon plays a very
important role in the progress of rural economy and a good
monsoon will help rural economy grow and thereby generating
good demand for their product.
Revenue VS Revenue Growth (%)
Migration from ‘Kuccha’ To ‘Pucca’ Roofs: As per the population
160000.00 145381.08 30.00%
132630.20 134566.83 census 2011, 54% of the Indian population still lives in the
124172.28
120000.00
117703.62 20.00% houses made from kuchha roofs. As farm incomes improve, so
18.53% 10.00%
do aspirations of the people to improve the quality of their
80000.00 14.33% 8.04% living. Roofing caters to the basic human requirement of
0.00%
6.81% providing shelter in the form of Pucca roof. The ‘Infrastructure’
40000.00
-10.00% status being accorded to the affordable housing sector in Budget
-11.25% 2018 should be a big boost to the entire low cost housing
0.00 -20.00%
Mar-15 Mar-16 Mar-17 Mar-18 E Mar-19 E segment.
Total Revenue Revenue Growth
Modernization in housing development: Now days Indian
people are coming out from their conservative mind and start
getting involved into the new age products, replacing the
traditional products in applications like walls, flooring, façade
cladding, ceiling and paneling. Fiber Cement boards have some
Product Line Diagram
inherent advantages over other dry construction products. They
are water resistant, termite resistant and have fantastic acoustic
insulation properties, good thermal insulation and above all, can
be used both indoors and outdoors. Fiber Cement Boards are
slowly but surely changing the construction industry in India.
Steel Building Segment: The building and construction scenario
in India is evolving at a steady pace. Pre-Engineered steel
buildings are today used not only for factories and warehouses
but also for hospitals, hotels, educational institutes, IT centers,
malls and airports. Clients opt for PEBs as it allows them to
install productive capacity much faster without compromising on
any of the functional requirements. The growth of PEB is directly
Source: Company Data, ACE Equity & Smifs Research linked to the growth of India. India is the fastest growing large
economy and that also makes the Indian PEB market the most
interesting in the world.
10
 Everest Industries Limited

The company continues to remain committed towards smarter, safer, and speedier construction technology which
is fast catching momentum in India. The government focus to connect tier 2 and tier 3 cities with roads, rails and air
should help them promote the modern building methods across the country. They had through their subsidiaries in
Mauritius and Middle East planned a project for making fiber cement boards in the Middle East. They are very
bullish about a program called Pehchaan which is intended to cover a very large number of contractors for their
boards and panel product range across the country. Going forward with the GST rollout, they anticipate a spurt in
building products segment. They anticipate occasional logistic cost to come down due to the multiple effect of
smoothing the flow of material and optimization of the requirement, it is going to take some time before these
effects start showing up.
Everest Solar: Sun is the power house of the Earth, so their new product Everest solar believes in technology
innovation and state of art manufacturing. There main USP is no risk, no investment and predictable supply.
They are already operating in roofing segment and they have enough market penetration in this domain so this
solar power roof will provide clean, efficient and affordable power supply to the end user.
They are following EPC business model for this particular segment. As per the analysis 1 KW system can help save
up to INR8250 per year compare to grid electricity, which is providing huge cost advantage for the heavy electricity
consumption industry. So, considering cost cutting and Go Green concept we can expect a very good future
prospect for this segment.
Solar rooftops will be new growth driver the government has announced a target of 40000 MW solar rooftops.
India offer a big opportunity for solar power given its 750 GW potential on account of enjoying 300 sunny days a
year with an average solar radiation range of 4-7 KWH. According to news report EVI is in talk with Engie, the
French behemoth, to set up a partnership to manufacture solar ready rooftops.

11
 Everest Industries Limited

Key Takeaways and Con-call highlights for Q2FY18

 Their Q2 earning has faced a GST pressure which may not impact their coming earrings.
 Building product’s production is 14100 MT up by 6% YoY basis and revenue from this segment up by 2%.
 They are presently focusing on system selling rather than product selling. Value added product has much more
penetration rather than basic product.
 Their present order book stands at 4600 MT which is INR250 Cr also they have strong pipeline for their PEB
segment stand at 2600 MT.
 Good roofing business is expected in the coming year due to government projects.
 They are trying to improve their EBITDA margin by several dynamic steps towards it.
 They are expecting 19% growth in cement product business.
 Their capital expenditure will be allocated towards the improvement of the product and their modernization.
 They are using the FY16 number as their FY18 benchmark.
 Adding more products in their bucket as “Everest Jali”, “Water proof board” for Mumbai region and many more.
Their existing product “Everest Super” is running in the market successfully.
 “Housing for All” is fundamentally good for them, ‘Pakka’ house can be constructed by sloping roof and that
make them qualified for this government project.
 They have diversified product range to compete with their domestic competitors however they need to put
more effort to make them suitable in international market.
 Other expenses declined INR15 Cr which drive their bottom line significantly.
 They are positive on partition wall which may generate four time revenue compare with present numbers in the
coming future.
 In BP business their capacity utilization is nearly 65% and they are expecting good outlook in the coming 3-5
years.
 In PEB segment their capacity utilization is almost full and this business is not cyclical in nature like cement, so
they are expecting a good out come from this segment.
 They will try to catch international market with new developments and products in future.

12
 Everest Industries Limited

Financial Details

Income Statement (Consolidated)

Particulars (INR in Lakhs) FY15 FY16 FY17 FY18 (E) FY19 (E)
Income from Operation 130138.15 139762.97 124856.27 133234.49 143232.59

Excise Duty 7011.72 8425.63 8060.68 0.00 0.00

Other Income 1045.85 1292.86 908.03 1332.34 2148.49

Total Revenue 124172.28 132630.20 117703.62 134566.83 145381.08

Revenue Growth 18.53% 6.81% -11.25% 14.33% 8.04%

Raw materials consumed 70566.32 70044.04 62478.26 67915.88 73373.83

Purchases of stock-in-trade (traded goods) 1542.54 1234.53 1539.62 2018.50 2180.72

Changes in inventories of finished goods, WIP and SIP -1428.43 1948.69 985.67 992.57 998.53

Employee benefits expense 10909.58 12724.36 12875.77 14356.48 16007.48

Depreciation and amortization expense 2542.36 2562.70 2513.60 2581.80 2662.88

Other expenses 33340.43 37157.12 35288.01 40888.13 44174.04

Total Expenses 117472.80 125671.44 115680.93 128753.36 139397.47

EBITDA 9241.84 9521.46 4536.29 8395.26 8646.49

EBITDA Margin(%) 7.44% 7.18% 3.63% 6.30% 6.04%

Gross Profit Margin(%) 20.16% 23.30% 21.70% 18.34% 17.93%

Finance Cost 1869.47 2284.49 1889.53 2437.97 1907.53

PBT 4830.01 5048.48 133.61 3375.49 4076.08

TAX 1407.04 1604.35 9.91 714.56 957.34

PAT 3422.97 3444.13 123.70 2660.94 3118.74

PAT Margin 2.76% 2.60% 0.11% 1.98% 2.15%

Paid Up Capital 1518.73 1538.89 1538.89 1538.89 1538.89

No. of O/S Share 151.87 153.89 153.89 153.89 153.89

EPS(INR) 22.54 22.38 0.80 17.29 20.27

ROE(%) 10.71% 9.94% 0.36% 7.63% 8.50%

DPS(INR) 7.65 7.72 0 5.76 6.75

Source: Company Data, ACE Equity & Smifs Research

13
 Everest Industries Limited

Balance Sheet (Consolidated)

Particulars (INR in Lakhs) FY15 FY16 FY17 FY18 (E) FY19 (E)
Equity and liabilities
Share capital 1529.11 1538.89 1542.29 1542.29 1542.29
Reserves and surplus 30421.53 33117.48 33271.59 33354.06 35128.11
Net Worth 31950.64 34656.37 34813.88 34896.35 36670.40
Minority interest 0.00 92.06 18.84 10.39 6.40
Non-current liabilities
Long-term borrowings 9478.58 11823.94 9169.27 7992.35 6084.82
Deferred tax liabilities (Net) 2951.13 3226.35 3124.21 3364.17 3634.53
Long-term provisions 598.83 452.89 0.00 0.00 0.00
Current liabilities
Short-term borrowings 18570.17 11249.76 8835.25 10765.35 13084.30
Trade payables 13218.91 17310.93 17455.56 20185.02 21807.16
Other current liabilities 13520.26 11612.41 11650.85 13456.68 14828.87
Short-term provisions 4695.31 3023.56 551.68 551.68 551.68
Total Current liabilities
Total Liabilities 94983.83 93448.27 85619.54 91221.99 96668.16
Assets
Property, plant and equipment 31380.35 34778.60 33648.47 35048.92 35932.80
Intangible assets 706.16 249.24 78.97 71.27 64.32
Capital work in progress 3216.56 942.66 2628.88 2812.90 3023.87
Total Asset 35303.07 35970.50 36356.32 37933.09 39020.99
Long-term loans and advances 8739.80 6205.22 4780.57 478.06 47.81
Other non-current assets 336.34 324.07 14.53 14.53 14.53
Total Fixed Asset 44379.21 42499.79 41151.42 38425.68 39083.33
Current Assets
Inventories 27184.70 25252.69 23708.02 26913.37 29076.22
Trade receivables 10431.41 11311.05 10785.72 11438.18 12357.39
Cash and cash equivalents 6788.29 6333.71 1841.78 6353.59 9264.26
Short-term loans and advances 6097.56 7964.42 7781.34 8091.18 6886.97
Other current assets 102.66 86.61 351.26 0.00 0.00
Total Current Assets 50604.62 50948.48 44468.12 52796.31 57584.83
Total Asset 94983.83 93448.27 85619.54 91221.99 96668.16
Source: Company Data, ACE Equity & Smifs Research

14
 Everest Industries Limited

Cash Flow (Consolidated)

Particular Mar-15 Mar-16 Mar-17 Mar-18 E Mar-19 E

A. Cash flow from operating activities

Net profit before tax 4830.01 5048.48 133.61 3375.49 4076.08
Depreciation and amortization expense 2542.36 2562.70 2513.60 2581.80 2662.88
Finance cost 1869.47 2284.49 1889.53 2437.97 1907.53
Interest income -325.73 -927.99 -242.41 -241.70 -241.70
Liabilities / provisions no longer required written back -599.93 -234.34 -520.47 -540.00 -540.00
Provision for doubtful receivables 188.72 326.18 791.13 791.13 791.32
Net unrealized (gain)/loss on exchange rate fluctuation -13.79 408.92 -288.16 -176.45 -255.22
Operating profit before working capital changes 8489.55 9437.33 4276.81 8228.24 8400.89
Adjustment for (increase)/decrease in operating assets: -2652.64 694.63 3070.56 4234.10 2075.11
Cash generated from operations 5836.91 10131.96 7347.37 12462.34 10476.00
Net income tax paid -1520.54 -856.05 -691.22 -714.56 -957.34
Net cash flow from operating activities (A) 4316.37 9275.91 6656.15 11747.78 9518.66
B. Cash flow from investing activities
Capital expenditure on fixed assets, including capital advances -3927.84 -2896.94 -2911.84 1345.67 726.91
Placed (deposits and unclaimed dividend accounts) 0.00 0.00 0.00 -175.22 -175.22
Proceeds from sale of fixed assets 28.90 59.67 0.02 0.00 0.00
Bank balances not considered as Cash and cash equivalents 2.91 -87.68 -175.22 -175.22 -175.22
Interest received 270.32 943.21 247.26 247.26 247.26
Net Cash from/(used in) investing activities (B) -3625.71 -1981.74 -2839.78 1242.49 623.73
C. Cash flow from financing activities
Proceeds from issue of equity shares 9.64 9.78 1.38 1.38 1.38
Repayment of long-term borrowings -2623.00 -2060.13 -4750.60 -2053.85 -1684.48
Proceeds/(repayment) from short-term borrowings 2014.69 -7320.41 -2414.51 -2414.51 -2414.51
Finance costs -1917.11 -2306.63 -1936.55 -2437.97 -1907.53
Dividends paid -381.32 -763.52 -766.11 -886.89 -1039.48
Tax on dividend -64.76 -156.10 -156.64 -159.64 -187.11
Net Cash flow from/(used) in financing activities (C) 3553.65 -7840.50 -8483.52 -7951.48 -7231.72
Net increase/(decrease) in cash and cash equivalents 4244.31 -546.33 -4667.15 5038.79 2910.67
Cash as on Previous year 2279.90 6524.21 5981.95 1314.80 6353.59
Cash and cash equivalents 6524.21 5981.95 1314.80 6353.59 9264.26
Source: Company Data, ACE Equity & Smifs Research

15
 Everest Industries Limited

Ratio Analysis (Consolidated)

Particulars (INR in Lakhs) FY15 FY16 FY17 FY18 (E) FY19 (E)
Profitability Ratios(%)
Return on Assets (ROA) 3.60% 3.69% 0.14% 2.92% 3.23%
Return on Capital Employed (ROCE) 16.17% 15.78% 4.60% 13.55% 14.00%
Return on Equity (ROE) 10.71% 9.94% 0.36% 7.63% 8.50%
Per Share
Earning Per Share 22.54 22.38 0.80 17.29 20.27
Dividend Per share 7.65 7.72 0.00 5.76 6.75
Cash Earning Per Share 28.42 60.28 43.25 76.34 61.85
BVPS 210.38 225.20 226.23 226.76 238.29
Valuation Parameters
Adj. P/E ratio 14.27 10.60 283.21 29.8 25.5
Normalized P/BVPS 1.53 1.05 1.01 2.28 2.17
EV/EBITDA 7.81 5.63 11.69 8.44 9.70
Liquidity Ratios
Current Ratio 1.01 1.18 1.16 1.17 1.15
Acid Test Ratio
Debt-Equity Ratio 0.30 0.34 0.26 0.23 0.17
Efficiency Ratios(%)
Asset turnover Ratio 1.31 1.42 1.37 1.48 1.50
Inventory Turnover Ratio
Margin Ratios(%)
EBITDA Margin 7.44% 7.18% 3.63% 6.30% 6.04%
EBIT Margin
PBT Margin 3.89% 3.81% 0.11% 2.51% 2.80%
Net Profit Margin 2.76% 2.60% 0.11% 1.98% 2.15%
PBT Margin 3.89% 3.81% 0.11% 3.51% 2.77%
Net Profit Margin 2.76% 2.60% 0.11% 2.45% 1.94%
Source: Company Data, ACE Equity & Smifs Research

16
 Everest Industries Limited

Valuation

Peer's Comparison

Historical 5 yr Average Ratio P/E P/BV EV/EBITDA EV/SALES

HIL 13.13 0.88 4.60 0.47

VISAKA Industry 6.62 0.57 4.59 0.46

Ramco Industries 4.41 0.71 10.88 1.37

Sahyadri Industries 2.84 0.55 5.91 0.61

Everest Industry 14.57 1.17 7.77 0.49

Source: Company Data, ACE Equity & Smifs Research

As per DCF method:

There is steady cash flow in their balance sheet, as per DCF valuation method values of the company is coming around
INR632.
 We have used WACC 9.18%, perpetual growth 2%, cost of equity 13.1% and beta of the stock 0.24.
 Expecting 8% Boards and Panel segment growth, 8% PEB and steel building segment growth and 5% BP segment
growth in the coming year with EBITDA margin 6.3%.

Conclusion:
For Everest Industries Ltd. we have used DCF (FCFE) valuation method the assumption of which include, cost of equity at
13.1% and perpetual growth rate at 2% came out with a target price of INR632 with a holding period of one year.

Sensitivity Analysis
Cost of Equity

12.10% 12.60% 13.10% 13.60% 14.10%

Perpetual Growth

1% 649 621 596 572 551

1.50% 670 640 613 588 565
2% 694 662 632 605 581
2.50% 720 685 653 624 598
3% 749 711 676 645 616
Source: Smifs Research

17

Mr. Monal Desai
Sr. VP—Institutional Sales
monal.desai@smifs.co.in
+91 2242005555
Mobile: +91 9821137303
Mr. Ajay Srivastava
Associate VP—Research
ajay.srivastava@smifs.co.in
+91 33 30515400
Mr. Pratim Roy
Research Analyst
Oil & Gas/Textiles
pratim.roy@smifs.co.in
+91 33 30515468
Mr. Sarthak Mukherjee
Research Analyst
Logistics and Media - Broadcasting
sarthak.mukherjee@smifs.co.in
+91 33 30515468
Mr. Mohammad Khalid Ansari
Office No. 5G, New Marine Lines, Court
Chamber, Mumbai - 400 020,
Maharashtra, India
khalid.ansari@smifs.co.in
Phone: +91 9769589720
Ms. Debjani Sen
Officer – Investor Relations
debjani.sen@smifs.com
+91 33 30515401
MUMBAI
Mr. Vaibhav Wadke
Office No. 5G, New Marine Lines, Court
Chamber, Mumbai - 400 020,
Maharashtra, India
Phone: +91-9967642795
BHUBANESHWAR
Mr. Jeetendra Nath Sahoo
Plot No. 15-B, Bapuji Nagar,
Unit-I, Ashok Nagar,
Bhubaneswar - 751009, Odissa, India.
Phone: +91 9668257514
LYONS RANGE
Mr. Deepak Gupta
7, Lyons Range, CSEA Building, 3rd Floor,
Kolkata - 700001, India.
Phone: +91 9674793553
Research & Development Strategies
Mr. Ashiwini Kumar Tripathi Mr. Ajay Jaiswal
Director President: Strategies and Head Research
aswin.tripathi@smifs.com Mr. Shivaji Roy ajaiswal@smifs.com Mr. Vishal Prabhakar
+91 33 30515415 / 40115415 Sr. VP – Retail Sales +91 33 30515408 / 40115408 Sr. VP – PMS & PCG
Mobile: +91 9831155058 shivaji.roy@smifs.co.in Mobile: +91 9836966900 vishal.prabhakar@smifs.com
+91 33 30515400/40115400 +91 33 30515400 / 40115400
Mobile: +91 9830173200 Mobile: +91 9831554477
Research Team
Mr. Saurabh Ginodia Mr. Dipanjan Basuthakur Ms. Sutapa Biswas Mr. Aditya Jaiswal
Associate VP -- Research & Strategies Research Analyst Research Analyst Research Analyst
saurabh.ginodia@smifs.com dipanjan.basuthakur@smifs.com Economy Aviation and Hospitality
+91 33 30515407 +91 33 30515486 sutapa.biswas@smifs.com aditya.jaiswal@smifs.com
+91 9836020612 +91 33 30515433 / 30515468
Ms. Mononita Mitra Mr. Harshit Mantri Mr. Kapil Joshi Mr. Abhishek Roy
Research Analyst Research Analyst Research Analyst Research Analyst
Agro & Agro Chemicals BFSI Infrastructure/Power FMCG/Retail
m.mitra@smifs.com harshit.mantri@smifs.com kapil.joshi@smifs.com abhishek.roy@smifs.com
+91 33 30515468 +91 33 30515433 / 30515468 +91 33 30515468 +91 33 30515468
Mr. Anupam Goswami Mr. Anmol Das Mr. Debjit Maji Mr. Jaydeb Dey
Research Analyst Research Analyst Research Analyst Technical Analyst Equities
Building Products/Capital Goods/ Metals and Mining IT-Telecom/Pharmaceuticals / jaydeb.dey@smifs.com
Construction Equipment anmol.das@smifs.co.in Auto & Auto Ancillary +91 33 30515433
anupam.goswami@smifs.co.in +91 33 30515468 debjit.maji@smifs.co.in
+91 33 30515433 +91 33 30515468
Sales Leadership Team
Mr. Taj Mohammad Mr. Jaydeep Pattanayak Mr. Saurasanta Biswas
6th Floor, 654, Aggarwal Metro Heights, Plot No. 15-B, Bapuji Nagar, Unit-I, Vaibhav, 4 Lee Road,
Netaji Subhash Place, Pitampura, Ashok Nagar, Bhubaneswar - 751009, Kolkata - 700020, India.
New Delhi – 110034, India. Odissa, India. saurasanta.biswas@smifs.co.in
taj.mohammad@smifs.com jaydeep.pattanayak@smifs.co.in Phone: +91 9883604672
Phone: +91 9818754786 Phone: +91 9583099025
Stock Recommendation Expected absolute returns (%) over 12 months
Strong Buy >20%
Buy between 10% and 20%
Hold between 0% and 10%
Sell 0 to <-10%
Neutral No Rating
Investor Relations and Data Support
Mr. Deepankar Saha
Research Assistant
deepankar.saha@smifs.co.in
+91 33 30515468
Bloomberg Ticker for Stewart & Mackertich Research: SMIF<Enter>
Contact Details
REGISTERED OFFICE
Mr. Sandipan Chatterjee
Vaibhav, 4 Lee Road,
Kolkata 700020, India.
Phone: +91 33 30515400 / 40115400
Fax No: +91 9748899161
NEW DELHI BANGALORE CHENNAI LUCKNOW
Mr. Rajesh Kumar Jha Mr. S. Srikanth Mr. K.K.Raja Gopalan Mr. Ashish Verma
6th Floor, 654, Aggarwal Metro Heights, No.153, 2nd Floor, Sheela Arcade, 7th Block New No.4/2, Bajaj Apartments, 6 Park Road, UGF 4, Hazratganj,
Netaji Subhash Place, Pitampura, Koramangala, (Opp.—Sai Baba Mandir) Seethamal Colony, 1st Cross Corner, Alwarpet, Lucknow - 226001, Uttar Pradesh, India.
New Delhi – 110034, India. Bangalore - 560095, India. Chennai – 600018, India. Phone: +91 9870398545
Phone: +91 9999243622 Phone: +91 9845020017 Phone: +91 9383931590
PATNA KANPUR DHANBAD BALASORE
Mr. Ram Singh Mr. Amit Kumar Gupta Mr. Vinay Kumar Singh Mr. Jyoti Bhusan Das
606/A, Ashiana Plaza, Budha Marg, Office No.212 - 213, 2nd Floor, KAN Chamber, Room No. 308, 3rd Floor, Shriram Plaza Bank Plot No. 891/1632, Bhaskarganj – A, Station
Patna – 800001, Bihar, India. Adjacent to UP Stock Exchange, 14/113, Civil More, Dhanbad - 826001, Jharkhand, India. Chhak, Municipality Holding No. 648 (32),
Phone: +91 9570507409 Lines, Kanpur - 208001, Uttar Pradesh, India. Phone: +91 9835351951 Balasore – 756001, Odissa. India.
Phone: +91 9151104767 Phone: +91 9776265566
NOIDA PATHANKOT MANALI PORT BLAIR
Mr. Prakash Srivastava Ms. Anuradha Marwaha Mr. Sachin Jolly Mr. Gulam Hassan
1st, Floor, Wave Silver Tower, Sector-18, SCO G - 69, Netaji Market, Village & Post Office - Bahang, Tehsil Manali, 24, S.J.Lane, 8/3, Sahajeevan Housing,
Noida - 201301, Uttar Pradesh, India. Opp. Hindu Co.op. Bank, Dalhousie Road, Rohtang Pass Road, District - Kullu, Co-operative, P.O. Haddo,
Phone: +91 9910497783 Pathankot - 145001, Punjab, India. Pin - 175103, Himachal Pradesh, India Port Blair 744102, India.
Phone: 0186 - 2222201/ 2222205 Phone: +91 9816036136 Phone: 233-175 Mobile No.
9932081381/9933236406
Members: NSE | BSE | MCX | NCDEX | NSDL | CDSL | Repository
(For Disclosures and Disclaimers please follow the page below)
Website: www.smifs.com | Email: investors@smifs.com
18
 Disclaimer
Any document, including this report, which is prepared by the research team of Stewart & Mackertich Wealth
Management Ltd. (SMIFS) is circulated for the purpose of information only to the intended recipient and should not be
replicated or quoted or circulated to any person/corporate or legal entities in any form. This document/ documents/
reports/ opinion should not be interpreted as an Investment/ taxation/ legal advice. While the information contained in
the report has been procured in good faith, from sources considered/ believed to be reliable, all/ part of the statement/
statements/ opinion/ opinions/ view/ views in the report may not be considered to be complete or accurate. Therefore, it
should only be relied upon at the recipients own risk.

Research Analysts/ Economists/ Advisors/ Investment Strategists or any other spokes persons of the company
(SMIFS) are often sought after for expressing their views on print/ electronic/ web media. The views expressed
are purely based on their assumption/ understanding on fundamental approach/ technical and historic facts on
the subject. The views expressed should not be construed as an offer to buy/ sell or hold equity/ commodity/
currencies or their derivatives. The views/ opinions expressed is for information purpose only, and may change
due to underlying factors, related or unrelated or other market conditions and may or may not be updated.

Stewart & Mackertich Wealth Management Ltd, its subsidiaries, or any of its directors, employees, agents, and
representatives shall not be liable for any damages whether direct or indirect, incidental, special or consequential
including lost revenue or lost profits that may arise from or in connection with the use of the information/ research
reports/ opinions expressed.

Disclosure: Clients/ associates of SMIFS Group may be holding positions in equities or their derivatives on which the
research report is made or opinion is formed or views are expressed in print or electronic media. We ensure all
compliance is adhered to with this report/ reports/ opinion or views expressed.

Analyst ownership of the stock – NIL

Analyst’s dependent relatives’ ownership in the stock – NIL

Analyst Certification: The matter related to the report has been taken from sources believed reliable and the views
expressed about the subject or issues in this report accurately reflect the personal views of the analyst/ analysts. Stewart
& Mackertich Wealth Management Ltd. does not compensate partly or in full, directly or indirectly, related to specific
recommendations or views expressed by the research analysts/ market strategists/ Portfolio Managers.

REGISTRATION as required under SEBI (Research Analyst) Regulation 2014 has been granted by Securities & Exchange
Board of India (SEBI), registration number being INH300001474.

Stewart & Mackertich Wealth Management Ltd.

Vaibhav, 4 Lee Road, Kolkata 700020, West Bengal, India.
Tel.: +91 33 3051 5408 /, Fax: 91 33 22893401

Website: www.smifs.com

For queries related to compliance of the report, please contact:-

Sudipto Datta, Compliance Officer
Contact No.: +91 33 30515414 / 4011 5414
Email Id.: compliance@smifs.com / sudipta@smifs.com

19