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Company Report | Q4FY11 Result Update


11 June 2011 Building Products 169 180 7% 184 / 82 11,294 0.15 mn 11


Industry CMP (INR) Target (INR) Upside / Downside (%) 52 week High/Low (INR) Market Cap (INR mn) 3M Avg. Daily Volumes P/E (FY12 E) Shareholding Pattern (%)

Q4FY11 Result Highlights

HSIL Ltd. (HSIL) reported revenue of INR 3,270.6 mn for this quarter. This was below Unicon estimates. On a YoY and a QoQ basis, total income from operations has increased 26.7% and 18.1% respectively. This growth was driven by 22% growth in the Building Products segment and ~28% in the Container Glass segment.

EBITDA for this quarter stood at INR 656.4 mn. While EBITDA was up a whopping 28.4% on a YoY basis, it was marginally up by 5.2% on a QoQ basis. EBITDA was above Unicon estimates. EBITDA margin shrank to 22.2%, a 240 bps fall on a sequential basis. On an annual basis, EBITDA margin has improved by 46 bps. The improvement is on the back of improved product mix and better pricing power.

Stock Performance Net Income clocked a growth of 4.6% on a YoY basis and 17.2% on a QoQ basis at INR 323.1 mn. PAT is in line with Unicon estimates. Higher other income and lower interest aided the growth in bottom-line for HSIL.

HSIL is planning to increase its capacity in the sanitaryware segment by investing around INR 6.5 bn over the next two three years. It is planning to set up a new facility to produce 1.2 mn pieces while Performance (%) 1 Month 4.2 -1.4 3 Months 28.4 0.7 1 Year 89.7 7.2
(INR in mn)

expanding its existing facilities capacity by 1 mn.

Outlook & Valuation

HSIL is well placed to benefit from timely expansion to capture growth opportunities in both its segments. Margins are expected to expand on improving realisations, savings on fuel cost front and higher capacity utilization levels. At CMP, the stock is trading at a PE multiple of ~11x its FY12E earnings. Given the strong brand recall & wide distribution network, capex lined up, diversified revenue base, we recommend a HOLD on this stock with a price target of INR 180.


Particulars Total Income EBIDTA Reported PAT

Actual 3,270.6 656.4 323.1

Estimates 3427.7 614.9 313.4

* Source: Bloomberg, Unicon Research

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Financials Summary
(INR in mn)

Q4 FY11 Net Revenue Other Operating income Total Income Operating Exp. EBITDA EBITDA (%) Depreciation Other income EBIT EBIT (%) Financial charges Exceptional Items PBT Tax Provision Tax Rate (%) PAT PAT Margins (%) EPS
Source: Company, Unicon Research

Q4 FY10 2,580.9 63.6 2,644.5 2,133.3 511.2 19.3 127.8 2.8 386.2 14.6 97.6 0.0 288.6 -20.4 -7.1 309.0 11.7 5.6

Y-o-Y 26.7 -27.4 25.4 24.7 28.4 46 bps 4.5 814.3 42.0 193 bps -16.7 61.9 NA 3791 bps 4.6 -201 bps -12.9

Q3 FY11 2,768.8 43.6 2,812.4 2,188.2 624.2 22.2 138.8 4.6 490.0 17.4 82.6 0.0 407.4 131.6 32.3 275.8 9.8 4.2

Q-o-Q 18.1 -162.7 17.9 21.6 5.2 -240 bps -3.8 456.5 11.9 -89 bps -1.6 14.7 -146 bps 17.2 -12 bps 17.2

FY11 10,353.3 168.9 10,522.2 8,392.3 2,129.9 20.2 535.0 36.0 1,630.9 15.5 356.3 0.0 1,274.6 401.1 31.5 873.5 8.3 13.2

FY10 7,887.4 123.2 8,010.6 6,478.4 1,532.2 19.1 490.4 15.9 1,057.7 13.2 400.9 0.0 656.8 132.5 20.2 524.3 6.5 9.5

Y-o-Y 31.3 37.1 31.4 29.5 39.0 111 bps 9.1 126.4 54.2 230 bps -11.1 94.1 202.7 1130 bps 66.6 174 bps 38.9

3,270.6 46.2 3,316.8 2,660.4 656.4 19.8 133.5 25.6 548.5 16.5 81.3 0.0 467.2 144.1 30.8 323.1 9.7 4.9

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email:

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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