Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leadership

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Critical Financial & Valuation Ratios of JIL as Consolidated
Entity (post merger) as at FY11

Consolidated Equity Capital

11.84 cr.
Consolidated Book Value per share

` 77
Consolidated Enterprise Value

375.28 cr.
Consolidated
Debt-to-Equity (D/E)

1.9


Consolidated Revenues
834.7 cr.
Current Marketcap
238 cr.
Marketcap-to-Sales
0.28
EV/Sales
0.44
Price-to-Book
2.6

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Small fertiliser firms: Outlook is strong, but valuations still low


30 Dec, 2011, 04.32AM IST



The new Nutrient-Based Subsidy (NBS) policy of April 2010 has significantly improved the prospects of single-super phosphate (SSP) industry. Companies' valuations, however, remain low in the current depressed market conditions.

As the NBS recognised sulphur as an important farm nutrient for subsidy, the SSP became competitive against the heavily subsidised di-ammonium phosphate (DAP). This boosted the SSP consumption in the country 29.2% to 3.6 million tonne. As a result, the industry's overall capacity utilisation jumped by 7 percentage points to 49.5%.

Apart from the higher volumes, even the margins improved substantially for the industry, with players such as Rama Phosphate, Basant Agro and Liberty Phosphate recording a double-digit margin for the first time.

Khaitan Chemicals, country's largest SSP producer, witnessed over 10-percentage-point margin expansion at 15.1% Almost all companies posted their highest-ever net profit in FY11. The combined net profit of the six listed SSP players -Basant Agro Tech, Khaitan Chemicals and Fertilizers, Liberty Phosphate, Rama Phosphate, Shiva Global Agro and Teesta Agro - more than tripled to .`117 crore.

These companies continued their dream run in the first half of FY12 as well, with Basant Agro, Liberty Phosphate and Teesta Agro posting a profit growth between 16% and 50%.

The performance of Rama Phosphate was down due to slack in its soya business while Khaitan Chemicals' was down due to forex losses. Existing players are making fresh investments to take advantage of the improved policy framework for SSP.

In FY11, the overall capacity inched up 1.7% to 7.9 mt. Leading player Rama Phosphate has also disclosed plans to expand capacities at its Udaipur, Indore and Pune plants.



Similarly, Basant Agro plans to expand the capacity of its SSP plant to produce 1.25 lakh tonne per annum.

Although the industry's improved prospects were cheered by the stock market in FY11, in the current depressed market conditions, the industry's valuations have fallen below its earlier levels.

The combined price-toearnings ratio for the six players has fallen from 3.1 in FY11 to 2.9 at present, which is below what it was in FY09 and FY10.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Link to pdf of my Q3FY12 as well as 9'Month'FY12 estimate for Jubilant Industries Ltd.


http://www.scribd.com/doc/76999128/


I have provided the figures for each of the division viz., Industrial Products (IP), Agri and Consumer Products (ACP) & Retail separately as post merger the break-up will be like this. I have assumed that management will choose to publish consolidated results by giving effect to Retail business merger, although, legally management is not required to do so since merger will receive court approval only on 5th Jan. 2012.

Rgds.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

( fig. In ` cr. )
Q3FY12

9'Month'FY12




Revenue


IP

ACP

Retail
51 53

90 96

105 - 115
143 146

289 295

305 315

Total
246 - 264
737 - 756



EBITDA


IP

ACP

Retail
5.5 6

7.8 8.5

(5.5) (8.5)
15 15.5

23 24

(19) (22)

Total
6 - 7.8
17.5 - 19

Link to pdf of my Q3FY12 as well as 9'Month'FY12 estimate for Jubilant Industries Ltd.


http://www.scribd.com/doc/76999128/


I have provided the figures for each of the division viz., Industrial Products (IP), Agri and Consumer Products (ACP) & Retail separately as post merger the break-up will be like this. I have assumed that management will choose to publish consolidated results by giving effect to Retail business merger, although, legally management is not required to do so since merger will receive court approval only on 5th Jan. 2012.

Rgds.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Board will meet on 14th January 2012 to consider Q3FY12 numbers......Retail segment numbers will I think not be reported by the company as the matter is still subjudice with final approval from court getting further delayed beyond 16th Jan.2012...



Based on pre-merger segmentation, revised Q3FY12 estimate for Jubilant Industries is given below :



Total Revenue - 141-149 cr.

of which :

Agri Input segment (Ramban brand) - 54-58 cr.

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 87-91 cr.





Total EBITDA - 13.3 - 14.5 cr.

of which :

Agri Input segment (Ramban brand) - 3.8 - 4.5 cr.

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 9.5 - 10 cr.





---------------------------------------

Based on pre-merger segmentation, revised Nine'Month'FY12 estimate for Jubilant Industries is given below :



Total Revenue - 444 - 452 cr.

of which :

Agri Input segment (Ramban brand) - 188 - 192 cr.

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 256 - 260 cr.





Total EBITDA - 44.2 - 45.5 cr.

of which :

Agri Input segment (Ramban brand) - 14 - 14.7 cr.

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 30.2 - 30.8 cr.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Prima facie Jubilant Industries Q3FY12 results look exceptionally strong and have exceeded the estimates by quite a margin....





Q3FY12 Total Revenue - 178.06 cr. (v/s our estimate of 141-149 cr.)

of which :

Agri Input segment (Ramban brand) - 90.49 cr. (v/s our estimate of 54-58 cr.)

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 87.08 cr. (v/s our estimate of 87-91 cr.)






Q3FY12 Total EBITDA - 23.8 cr. (v/s our estimate of 13.3 - 14.5 cr.)

of which :

Agri Input segment (Ramban brand) - 12.13 cr. (v/s our estimate of 3.8 - 4.5 cr.)

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 12.14 cr. (v/s our estimate of 9.5 - 10 cr.)



------

For 9'Month'FY12 --

9'Month'FY12 Total Revenue - 482.8 cr. (v/s our estimate of 444 - 452 cr.)

of which :

Agri Input segment (Ramban brand) - 224.4 cr. (v/s our estimate of 188 - 192 cr.)

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 256.07 cr. (v/s our estimate of 256 - 260 cr.)





9'Month'FY12 Total EBITDA - 52.3 cr. (v/s our estimate of 44.2 - 45.5 cr.)

of which :

Agri Input segment (Ramban brand) - 22.36 cr. (v/s our estimate of 14 - 14.7 cr.)

Performance Polymers segment (Jivanjor Brand, Food Polymer & Latex) - 32.9 cr. (v/s our estimate of 30.2 - 30.8 cr.)





-------------------------

Management Team is made strong to enable quick and smooth scale-up by induction of Mr. Videh Jaipuriar, ex. Vice-president Food Business Bunge India (the MNC which acquired Dalda and recently Amrit brands).....

Mr. Shamit Bhartia is now on board which is the brain-child behind Jubilant Bhartia group's retail business....



will come out with a detailed update on Q3FY12 numbers soon..

Rgds.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Court approves Jubilant Industries scheme of arrangement (source - 16th Jan. 2012 Court Order)...... Retail division set to merge before 31st Jan. 2012....

Will update with details soon...

Rgds.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Shoppers Stop yesterday announced its Q3FY12 financials..... Key highlight of the result was -- contrary to market perceptions, Shoppers Stop's hypermarket division Hypercity recorded a strong YoY growth of 30 % in revenues with 70 basis points expansion in gross operational margins. On a 9'Month'FY12 basis, Hypercity recoded revenue growth of 28 %.



The widespread belief that slowdown in economy and therefore fall in discretionary spending will severly hurt retailers financials, although true to an extent, but is defied by the first result announced by major Indian retailer, especially in value retail format. This is because, value retail is extremely beneficial to ultimate consumers irrespective of class as affluent adopt it for the wide choices available under a single roof while middle class adopts it because of value-for-money products. Its a volume game and for winning this game retailers offer hefty discounts which is otherwise not available in unorganised retail space. Recent 50-70 % discount across all major categories (to dry-up the old inventory) offered by all organised retailors (including Big Bazaar, Star Bazaar, Spar, Total, RelianceMart) is the best example of the same. Consumers across all classes, especially middle-income-group get immensely benefited by such discounts and therefore get attracted to shop from organised retailors. When the incomes are shrinking such discounts are the most preferred choice to shop as consumers seldom avoid all-together use of the products.



So far, Indian retailors have played the game extremely well and the segment is bound to grow 25 % + p.a. for next many years as still only the surface has been scratched with organised retail penetration just 6 % of the overall market and unorganised retailers as well as middlemen enjoying 40 % + margins.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

Jubilant Industries Ltd has informed BSE that The Hon'ble High Court of Judicature at Allahabad vide its order dated January 16, 2012 has sanctioned a Scheme of Arrangement amongst Enpro Oil Private Limited, Jubilant Industries Limited and Jubilant Agri and Consumer Products Limited.

The above said order has been filed in Form No. 21 with the office of Registrar of Companies, Uttar Pradesh (ROC) by Jubilant Industries Limited.

Therefore, the Scheme has become effective w.e.f. February 01, 2012.

 

[maheshi]

Re: Jubilant Industries -FY12e 850 cr. Revenues -US$ 3 bn. Group Backing-World-Leader

My reply to an important query on Jubilant Industries :

--------------------------------------
So can Jubilant Ind be the multibagger for years to come ? The cash guzzling retail business remains a threat.The promoters are damn good but the cash generating SSP business remains a low PE cyclical business.Lib Phosphate the no 1 player in segment pe is between 1-2.so why will it rerate sooner is the big question?

------------------------------------------
Hi ,
You are counting only one part out of many parts and thats not the right way to value a whole co.. SSp is just one part of the five parts of Jubilant Industries and even if you value it at an EBITDA multiple currently commanded by Liberty then also only SSP part carries the value of ~Rs. 50. Like this way if you value each part based on the valuation commanded by its peer in the respective part then the valuation comes to Rs. 325 as explained by me in the initial report on the company (dated 26th Sep 2011).



Now, on your query asto "can Jubilant be the multibagger for years to come?"... Yes... It surely can as it has all the right ingredients to be one.However, in the initial stages of a so-called multibagger stock no one can figure out whether it will surely be multibagger or not as otherwise it will not open from the upper circuit untill the right valuation is reached. Concerns as well as different views are the right opportunity with a prudent investor to make entry into a promising stock. For ex. when I first made detailed research report on PI Industries at the its price of Rs. 530-540 odd (FV 10) in the month of March 2011 I remember there was least participation from all members in not only this but all forums and groups where I post.... I continued to update rgdg. the co. for many months without desired participation...... Then when the events played out well and management delivered, suddenly there was interest from every corner of the market which rerated the stock significantly and currently even after a significant correction its trading at Rs. 450-460 (FV 5) which is well 60 %+ above the price of March 2011.



Let me explain you in slight detail asto why I say Jubilant Industries needs to be rerated sooner rather than later :

(1) First and foremost thing is there is least downside from the current rate so evenif the market has to significantly correct then too after a 10-20 odd % correction sellers will not find the rate attractive to sell.... This is the first trigger point for any rerating to start.

(2) Positive triggers are in place that just needs market recognition... Markets have not taken into consideration the fact there has been significant management changes in the company in the span of last few months which are explained in detail in my Q3FY12 update which I will be posting after this write-up. Markets have also not taken into consideration the strong brands as well as potential upside each of the operational segment offers whereas negatives are all almost discounted at current rate.... This is the second trigger point for any rerating to start.

(3) There has not been any news or any sort of positive moves announcements from the company side as also nil IR initiatives are undertaken to market the company in the financial community.... This is the third trigger point for any rerating to start as on small change in this step could create a lot of buying in the counter.

(4) Company has to fund its business plans and for that it needs to raise equity....Without funding it can't remain for too long and based on the track-record of promoters as also close links of promoters with financial fraternity members because of its other two listed cos. Jubilant Life & Jubilant Foodworks, its just a matter of time before which actual equity-raising exercising could start..... raising of equity at current mcap is not lucrative for promoters themselves and so the valuations can surely head only up from now on.... This is the fourth trigger point for any rerating to start.



Hence, I think the rerating process for Jubilant Industries has to start very soon.

Rgds.