Siyaram Silk Mills: Textiles & Apparel

Textiles & Apparel
November 13, 2014
Siyaram Silk Mills
India Research Stock Broking
RESULT REVIEW
Bloomberg Code: SIYA IN
HOLD
Recommendation (Rs)
Optimal Product-Mix & Demand to drive Growth

Siyaram Silk Mills (SSML) sales, EBITDA and net income grew 18%, 23% and 19%
YoY respectively during Q2FY15. EBITDA margin increased by 58bps YoY on
account of stable raw material prices and new product launches. Going forward,
management is optimistic on maintaining its margins on stabilizing raw-material
costs, optimized product mix & higher turnover on capex.
Revenue growth fuelled by Capex: SSML carried out capacity expansion at
capital expenditure of Rs 2200 mn, by adding 200 looms and 110 machines for
ready-made garments over the last three years. This boosted its weaving and
garment capacities by 20 MMPA and 0.6 mn pieces per annum, respectively. The
companys top-line grew 18% YoY to Rs. 3,980 mn during Q2FY15 due to
enhanced product (linen) mix & improvement in realizations by ~4%. However,
due to challenging consumer sentiments, we expect price hike by ~5% over the
next 4-5 quarters.
EBITDA margins improving on stabilized raw material costs: SSMLs Operating
margin was under pressure for 4-5 quarters on subdued consumer demand and
inability to pass on rise in input costs. However, during Q2FY15, margins
improved despite no price hike. Going forward, we expect the margins to grow
by a similar trend owing to stable raw material prices.
Strong growth in Garments to continue: SSMLs garment segment grew by 37%
YoY due to higher exports. We expect the segment to register a growth of 23%
CAGR during FY14-17E, led by strong brand positioning. Capacity expansion is
expected to drive top-line growth in the fabric segment in the coming quarters.
Valuation and Outlook
CMP
860
Target Price
964
Previous Target Price
745
Upside (%)
12
Stock Information
Mkt Cap (Rs.mn/US$ mn)
8122/132
52-wk H/L (Rs)
877/224.9
3M ADV (mn)
0.02
Beta (x)
1.28
28047/8390
Sensex/Nifty
9.37
O/S Shares (mn)
Shareholding Pattern (%)

Promoter
67.1
Public
26.2
Banks/MF & Others
6.6
FII
0.2
Stock Performance (%)

1M
3M
6M
12M
Absolute
19.8 64.2
273
211.6
Relative to Sensex
12.5 52.8 85.3
170.9
Performance
500
Jun/14
Apr/14
Aug/14
Sensex
Feb/14
Dec/13
Oct/13
0
Aug/13
SSMLs revenue and net income are expected to grow at a CAGR of 23% and 33%,
respectively over FY14-17E. At CMP, the stock is valued at 7.0x and 5.4x FY16E
and FY17E earnings respectively.We remain positive on SSML and recommend
HOLD on strong financials, superior return ratios and inviting valuations with
a target price of 961 based on 6x FY17E earnings, representing an upside potential
of 12%.
Siyaram
Source: Bloomberg
Exhibit 1: Valuation Summary (Rs.
Mn)
YE Mar (Rs Million)
FY13
FY14
FY15E
FY16E
FY17E
Net Sales
10413
13034
15876
19455
23949
EBIDTA
1102
1401
1738
2169
2694
EBIDTA %
10.6
10.7
11.0
11.2
11.3
Adj Net Profit
550
636
850
1151
1506
EPS (Rs.)
59
68
91
123
161
RoE (%)
18.9
18.6
20.9
23.2
24.3
P/E (x)
14.7
12.7
9.5
7.0
5.4
Analyst Contact
Varun Chakri
040- 4485 7891
varun.chakri@karvy.com
Source: Company, Karvy Research
For private circulation only. For important information about Karvys rating system and other disclosures refer to the end of this
material. Karvy Stock Broking is also available on Bloomberg, KRVY<GO>, Thomson Publishers & Reuters
Oct 00, 2014

Company Name
Exhibit 2: Q2 FY15 Financials

YE Mar (Rs. Millions)
Q2 FY15
Q1 FY15
QoQ %
Q2 FY14
YoY %
Turnover
3980
3021
31.7
3385
17.6
Expenditure
3490
2699
29.3
2988
16.8
EBIDTA
490
322
52.4
397
23.4
Depreciation
102
108
(5.6)
74
38.0
Interest
78
79
(2.1)
73
6.9
Other Income
37
37
0.8
37
(0.8)
PBT
347
171
103.6
288
20.6
Tax
127
55
131.8
103
23.5
PAT
220
116
90.2
185
19.0
Minority Interest
Adjusted PAT
220
116
90.2
185
19.0
EBIDTA (%)
12.3
10.6
167
12 Bps
58 Bps
Net profit (%)
5.5
3.8
170
6 Bps
7 Bps
Exhibit 3: Quarterly Segmental Revenue Break-up

Q2FY14 (Sep-13)
Bed Linen
2%
Yarn
3%
Q2FY15 (Sep-14)
Others
2%
SKD
1%
Bed Linen SKD

3%
1%
Yarn
3% Garments
20%
Garments
17%
Fabric
72%
Fabric
75%
Others
1%
November 13, 2014

Siyaram Silk Mills
Exhibit 4: Segmental Financials

Segment-wise revenues (Rs. Millions)
Q2FY15
Q1FY15
QoQ %
Q2FY14
YoY %
Fabric
4978
2172
129.2
4433
12.3
Readymade Garments
1367
539
153.6
1001
36.6
Yarn
216
99
118.2
188
14.9
Bed Linen
101
35
188.6
96
5.2
SKD (Salwar Kameez)
231
138
67.4
80
188.8
Others
66
32
106.3
89
(25.8)
Fabric (Mtr)
361
164
119.7
362
(0.3)
Readymade Garments (Nos.)
19
106.2
17
9.4
Yarn (Kg)
119.8
11.0
Bed Linen (Mtr)
167.7
(7.2)
Volume (mn)
SKD (Salwar Kameez) (Nos.)
74.9
155.2
Others
12
122.2
16
(21.9)
Fabric
138.1
132.3
4.3
122.5
12.7
Readymade Garments
739.0
600.9
23.0
591.7
24.9
Yarn
235.0
235.1
(0.1)
226.7
3.6
Bed Linen
244.3
224.1
9.0
215.0
13.6
SKD (Salwar Kameez)
466.8
488.8
(4.5)
413.0
13.0
NA
NA
Realizations(Rs. /unit)
Others
Exhibit 5: Financials
Adjusted Financials (Rs. Mn)
Adj. Mar'14
Mar 15E
Mar 16E
Mar 17E
Net Sales
13034
15876
19455
23949
EBIDTA
1401
1738
2169
2694
EBIDTA margin (%)
10.7
11.0
11.2
11.3
Adj. Net profit
636
850
1151
1506
EPS(Rs.)
68
91
123
161
15.6
33.7
35.4
30.8
YoY growth (%)

November 13, 2014

Siyaram Silk Mills
Quarterly Performance
SSMLs top-line grew 31.7% YoY to Rs. 3,980 mn during Q2FY15 on back
of added capacities in fabric & garmenting divisions and enhanced
product mix. Fabric, Readymade garments, Yarn, Bed Linen & SKD
grew by 12%, 37%, 15%, 5% & 189% YoY on account of higher volume &
value realizations. EBITDA margin for the quarter increased by 58bps to
12.3% owing to stable input costs & new launches. Consequentially,
EBITDA grew 23% YoY to Rs. 490 mn. Net income grew 19% YoY to Rs.
220 mn.
Exhibit 6: Quarterly Performance

(Rs Mn)
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
QoQ (%)
YoY (%)
2,788
2,476
312
11.2
33
79
56
210
72
34.3
138
2,896
2,599
298
10.3
28
51
61
213
84
39.2
130
2,511
2,252
258
10.3
37
66
68
162
54
33.6
107
3,385
2,988
397
11.7
37
73
74
288
103
35.7
185
3,080
2,766
314
10.2
44
70
74
214
73
34.0
141
4,058
3,627
431
10.6
40
79
76
317
115
36.2
202
3,021
2,699
322
10.6
37
79
108
171
55
32.1
116
3,980
3,490
490
12.3
37
78
102
347
127
36.6
220
31.7
29.3
52.4
167
0.8
(2.1)
(5.6)
103.6
131.8
445
90.2
17.6
16.8
23.4
58
(0.8)
6.9
38.0
20.6
23.5
86
19.0
Revenue
Operating Costs
EBIDTA
EBIDTA Margin (%)
Other Income
Interest
Depreciation
Profit Before Tax
Tax
Tax Rate (%)
Rep. PAT
We expect better operating environment with moderate recovery in

EBITDA margins over FY15E-FY17E period with stabilizing raw
material prices and expansion benefits kicking in. According to the
management, there would be a minimal capex of Rs. 100mn for the
year. It plans to spend Rs.200mn-Rs.300mn of capex for the next year.
Moreover, its retail expansion would help to connect better with
consumers on higher brand visibility. SSML is looking to expand its
retail stores under franchisee model with ~100 stores additions YoY;
aiming ~500 stores in the next 4-5 years from the existing network of
180 stores.
Exhibit 7: Quarterly revenue break-up (Rs. Mn)
Exhibit 8: Segmental margin trend (Rs. Mn)
10000
500
8000
400
6000
11.2%
10.3%
10.3%
300
4000
200
2000
100
Fabric
Garments
Yarn
Bed Linen
SKD
Others
EBITDA
10.2%
11.7%
10.6%
10.6%
12.5%
12.3% 10.5%
8.5%
6.5%
4.5%
2.5%
0.5%
-1.5%
EBITDA margin (%)
November 13, 2014

Siyaram Silk Mills
Financials
Exhibit 09: Income Statement
YE Mar (Rs. Million)
FY13
FY14
FY15E
FY16E
FY17E
Revenues
10413
13034
15876
19455
23949
Growth (%)
13.7
25.2
21.8
22.5
23.1
Operating Expenses
9311
11633
14137
17286
21255
EBIDTA
1102
1401
1738
2169
2694
Growth (%)
(5.4)
27.1
24.1
24.8
24.2
Depreciation & Amortization
218
292
322
335
351
Other Income
185
158
120
120
120
EBIT
884
1110
1417
1835
2343
Interest Expenses
252
287
268
237
216
PBT
818
980
1269
1718
2248
Tax
268
345
419
567
742
Adjusted PAT
550
636
850
1151
1506
Growth (%)
(3.0)
15.6
33.7
35.4
30.8
FY13
FY14
FY15E
FY16E
FY17E
33
56
40
107
Sundry Debtors
2004
2601
2937
3599
4431
Inventory
2220
2253
2699
3405
4311
Loans & Advances
822
393
1159
1420
1748
Investments
Gross Block
4989
5760
5940
6230
6530
Net Block
3049
3529
3387
3337
3279
CWIP
163
20
30
30
Total Assets
5973
6673
7016
7865
9068
Current Liabilities & Provisions
2400
2291
3356
4061
4967
Debt
2641
2753
2353
2153
1953
Other Liabilities
192
223
223
223
223
Total Liabilities
5233
5268
5932
6438
7144
Shareholders' Equity
94
94
94
94
94
Reserves & Surplus
3047
3603
4346
5394
6797
Total Networth
3141
3696
4440
5488
6891
5973
6673
7016
7865
9068
Exhibit 10: Balance Sheet

Cash & Inventories
Miscellaneous
Minority Interest
Total Networth & Liabilities
November 13, 2014

Siyaram Silk Mills
Exhibit 11: Cash Flow Statement

FY13
EBIT
(Inc.)/Dec in working capital
Other income
FY14
FY15E
FY16E
FY17E
884
1110
1417
1835
2343
(132)
(311)
(1386)
(1128)
(1416)
185
158
120
120
120
Depreciation
218
292
322
335
351
Interest paid
(252)
(287)
(268)
(237)
(216)
Tax paid
(268)
(345)
(419)
(567)
(742)
32
32
Dividends paid
(82)
(88)
(99)
(99)
(99)
Cash flow from operations
588
560
(313)
260
343
(973)
(608)
(200)
(300)
(300)
(Inc.)/Dec. in investments
28
Others
(945)
(608)
(200)
(300)
(300)
Others
Inc/dec in capital expenditure
Cash flow from investing activities

Issuance of equity
(In)/dec in borrowings
259
113
(400)
(200)
(200)
Others
111
(41)
(8)
Cash flow from financing activities
287
113
(400)
(200)
(200)
Net change in cash
13
23
(921)
(240)
(157)
Exhibit 12: Key Ratios

YE Mar (%)
FY13
FY14
FY15E
FY16E
FY17E
EBIDTA Margin (%)
12.7
10.6
10.7
11.0
11.2
EBIT Margin (%)
10.3
8.5
8.5
8.9
9.4
Net Profit Margin (%)
6.2
5.3
4.9
5.4
5.9
Dividend Payout ratio
0.1
0.1
0.1
0.1
0.1
Net Debt/Equity
0.8
0.7
0.7
0.6
0.5
RoE (%)
23.3
18.9
18.6
20.9
23.2
RoCE (%)
20.2
19.1
20.0
22.5
26.3
YE Mar
FY13
FY14
FY15E
FY16E
FY17E
EPS (Rs.)
58.7
67.8
90.7
122.8
160.7
DPS (Rs.)
7.5
8.0
9.0
9.0
9.0
BV (Rs.)
335.1
394.4
473.7
586.0
736.2
PE (x)
14.7
12.7
9.5
7.0
5.4
P/BV (x)
2.6
2.2
1.8
1.5
1.2
EV/EBIDTA (x)
9.7
7.7
6.5
5.2
4.2
EV/Sales (x)
1.0
0.8
0.7
0.6
0.5
Exhibit 13: Valuation Parameters
November 13, 2014

Siyaram Silk Mills
Stock Ratings
Buy
Hold
Sell
:
:
:
Absolute Returns
> 15%
15%
< 5%
Connect & discuss more at
For further enquiries please contact:
research@karvy.com
Toll Free: 1800 425 8283
Disclosures Appendix
Analyst certification
The following analyst(s), who is (are) primarily responsible for this report, certify (ies) that the views expressed herein accurately reflect his (their) personal
view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the
specific recommendation(s) or views contained in this research report.
Disclaimer
The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained herein is based on our
analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal
information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable
for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such
independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that
neither Karvy nor Karvy Stock Broking nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this
information and views mentioned in this document.
The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to
time. Every employee of Karvy and its associate companies are required to disclose their individual stock holdings and details of trades, if any, that they
undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till
such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders
only through Karvy Stock Broking Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the
information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures nor
other derivatives related to such securities.
Karvy Stock Broking Limited

Karvy Centre, Avenue-4, 2nd Floor, Road No: 10, Banjara Hills, Hyderabad 500 034. India.
Tel: 91-40-23312454; Fax: 91-40-23311968
For More updates & Stock Research, visit www.karvyonline.com

Siyaram Silk Mills: Textiles & Apparel

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Siyaram Silk Mills: Textiles & Apparel

Uploaded by

Copyright:

Available Formats

Textiles & Apparel

November 13, 2014