EQUITY

RESEARCH
ANALYSIS
DEBOJYOTI MUKHERJEE
NIDHI SHARMA
PRAVEEN KUMAR
RISHAV DHANDANIA
SHASHANK UNERCAT









INTRODUCTION
FUTURE EXPANSION AND RISK
ASSOCIATED
SWOT ANALYSIS
INDUSTRY ANALYSIS
TRENDS
PROFIT AND LOSS
BALANCE SHEET
WACC AND DUPONT ANALYSIS
RECOMENDATION

Bhadresh K. US .Vega Industries Ltd (100% holdings) – Marketing in UK .Rajendra S. Shah Managing Director:. China etc  Niche Manufacturer of high chrome casting with rated capacity of 200000 metric tons per annum.  Metallurgy Process Technology followed. Shah Subsidiary Companies :.     . India Chairman :.Welcast Steel Ltd (72% holdings) – Manufacturer in Bangalore .DCPL Foundries Pvt Ltd (70% Holdings)Manufacturer in Tamil Nadu .Established in 1979 at Ahmedabad.

       Global Leader Mining to be the main focus. . Capacity of 300000 metric tons planned by 2015 Greenfield and Brownfield Expansion Utilization of 90% to be achieved Foreign Currency Fluctuations is risky Mining Sector in India has a negative growth.

 STRENGTHS: o o DIVERSIFIED CLIENT BASE OLIGOPOLISTIC INDUSTRY STRUCTURE  WEAKNESS o REVENUE EXPOSED TO FOREX LOSSES  OPPORTUNITIES STRONG PROMOTER HOLDING  THREATS DECLINE IN CEMENT SECTOR .

PORTER FIVE FORCES: THREATS OF NEW ENTRY THREATS OF SUBSTITUTES COMPETITIVE RIVALARY BARGAINING POWER OF SUPPLIERS BARGAINING POWER OF CUSTOMERS  Industry PE is 16x.5. 2. 4. .  1. 3.

77 5 1000 0 0 2009 AIA CL 2010 2011 2012 NIFTY CL AIA VS NIFTY PE RATIO 2013 .22 4000 3000 P/E 10 2000 6.23 15 14.92 5000 19.25 7000 22.15 20 6000 17.

5 2008 2009 2010 2013 GROSS SALES PAT 2.38 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 Dividend ROE 4 4 2.59 134.62 174.59 171.87 1217.79 2011 15.15 183.21 1837 986.43 2010 18.5 2012 3 3 2011 2012 2013 DIVIDEND HISTORY 20.84 15.2 1085.1 1478.8 771.81 181.Gross Sales PAT Linear (PAT) Linear (Gross Sales) 211.95 2012 2013 ROE .

00% 60.912 108.37% 128.171699693 3.00% sales 0 36000 total sales 160000 204725 realisations/mt 110000 121000 total sales 17600000000 24771725000 total sales (cr) 1760 2477.57444 INVENTORY AND DEBTOR ESTIMATION .149825757 70.920062 4.37% 4.511089 4.1725 Excise 4.67 Debtor turnover 4.447761194 67 5.345882961 83.37% Excise 76.37% 4.8761844 2368.8 3704.60%.42 1416.00% 80%.8 4.00% 80.3404 141.00% 178650 158800 158800 60000 240000 70.199693181 4.2012-13 2013-14 existing capacity 200000 198500 ex capacity utilisation 80.80%.31 5.705158 58.77378 1751.37% 4.2524383 2014-15 2015-16 2016-17 198500 198500 198500 90.60% 42000 136000 178000 220650 294800 336800 133100 110000 110000 2.800145303 4.71036 161.802631579 76 2808.00% 85.40% 90%.87388123 76.852 3242.94E+10 32428000000 37048000000 2936.080252 95.98753562 5.811064 Debtor days 81.03936485 77.447761194 67 6.452852836 3.96992208 115.802631579 76 Inventory Turnover Inventory days 4.00% sales 160000 168725 new capacity 0 60000 new capacity utilisation 0.00% 80.89976 SALES ESTIMATION INVENTORY AND DEBTOR Sales 949.7 1136.

. Increase in net worth leading to increase in EPS.       Sales Averaged out on geographical segments and its capacity External debt of 1 bn in 2014 and 3 bn in 2015 Expenditures in the same trend as previous Better Product mix and cost reduction strategy Straight Line method of Depreciation Dividend Payout ratio to be the same .

78 0.71 0 237.63 -45.098 0 39.63 52.97 37.35 31.15 357.8 -0.15 949.51 62.852 128.66 43.69 1751.87 461.33 75.702 -51.93 991.24 263.88 89.913 130.18 174.273 423.01 149.95 230.603 313.93 273.36 595.810 17.69 66.79407307 .01 3.399 280.41 43.55 52.1 -0.000 0.37 150 19.626 346.06 449.340 2808.941 176.55 461.1 236.53 181.539 526.46 23.74 71.130 685.51 0 246.000 291.998 79.36 64.038 1174.57 410.77 150 19.31 -13.35 248.539 476.77 41.39 112.33 126.27 290.91 171.81 125 18.29 986.800 -0.968 -0.58 20.252 2368.6 277.35 8.100 291.67 1837 85.59 62.36 30.32 0.171 87.95 24.81 11.87 62.45 556.908 21.89 215.1 -70.1 57.800 1037.76 1907.26 173.000 49.66 85.36 774.01 0 237.173 108.74 0 252.13 Estimated Estimated Mar-14 Mar-15 12 12 2477.009 78.57 410.935 1437.81 909.646 141.000 0.74 718.01 68.26 4.06 145.000 0.Profit And Loss Consolidated Description No of Months INCOME Gross Sales Less: Excise Net Sales EXPENDITURE Increase/Decrease in Stock Raw Materials Consumed Power & Fuel Cost Employee Cost Other Manufacturing Expenses General and Administration Expenses Selling and Distribution Expenses Miscellaneous Expenses total expenditure Operating Profit (Excl OI) Other Income Operating Profit Interest PBDT Depreciation Profit Before Taxation & Exceptional Items Exceptional Income / Expenses Profit Before Tax Provision for Tax PAT Minority Interest Appropriations Dividend(%) EPS Mar-09 12 Mar-10 Mar-11 12 12 Mar-12 12 Mar-13 12 1085.46 7.920 2936.87 346.59 -0.74 119.33 0 249.42 1478.914 290.349 543.88 4.18 0 252.3 269.53 24.15 -0.98 418.030 211.94 32.93 59.83 125 18.998 0 0.58 580.25 249.33 39.62 42.13 251.571 2264.77 32.44 -37.07 13.2 1416.95 111.29 259.7 1136.000 334.66768451 36.35 271.736 128.19 740.93 183.65 1139.35 2.539 476.511 -31.62 298.3 1023.89 108.16 29.89 74.17 282.59 29.91 0 246.2 -0.75 874.258 108.01 65.000 200 200 200 22.810 326.908 8.69 444.849 80.349 543.267 80.8 1194.72 276.570 46.

 Assets like current investments . intangible assets .  Plant shutdown and addition in 2014.Capex increased to 2.  Accumulated depreciation increased in proportion with the assets. Long term investment and other current assets are kept constant.   .2x Debtors days to be constant at 76 days and 67 days calculated accordingly with the sales.  Total Reserves increased with increase in profit.

92% 2.21% 5.96% 0.54% 4.57% 12.08% 17.97% 22.20% 2.35% 27.06% 9.45% Mar-11 42.54% 16.35% 2.79% 16.59% 16.61% 0.58% 19.69% 0.50% 18.84% 5.13% Operating Profit (Excl OI) Operating Profit Interest PBDT Depreciation 24.00% 24.56% 20.50% 0.41% 4.12% 4.00% 16.38% 23.08% 2.17% Profit Before Taxation & Exceptional Items Exceptional Income / Expenses Profit Before Tax Provision for Tax Profit After Tax 24.13% 24.62% 1.58% 15.67% 2.31% 0.52% 3.61% 4.02% 21.43% 0.76% .30% 27.69% 5.98% 4.75% 4.43% 0.56% 13.35% 9.96% 6.60% 15.94% 18.00% 17.90% 19.97% 20.05% 12.05% 4.90% 4.25% Mar-12 38.79% 6.93% 2.62% 3.62% 4.94% 10.28% 2.65% 4.69% 0.57% 15.91% 0.29% 10.45% 2.87% 4.28% 3.52% 14.08% 16.65% 0.00% 21.28% 5.36% 38.39% 22.12% 0.16% 2.00% 20.76% 9.Common Size Statement DESCRIPTION Raw Material Consumed Power & Fuel Cost Employee Cost Other Manufacturing Expenses General and Administration Expenses Selling and Distribution Expenses Miscellaneous Expenses Mar-10 37.24% 19.21% Mar-13 Average 37.45% 22.

43% 13.13% 22.Ratios for projections Depreciation/Net block Depreciation/gross block pure working capital .07% 27.08% 16.42% 6.01% 19.46% 6.12% 27.56% 6.53% 11.85% 25.42% .44% 7.29% 23.46% 2.24% 6.68% 19.83% 31.96% 13.41% 20.53% Mar-12 8.30% Mar-13 9.Inventories debtors creditors Creditors/RMC & power effectivee tax rate Mar-10 10.94% 21.66% 5.52% 28.25% 26.81% Mar-11 9.35% 5.

35% 10.15% -7.17% 24.03% 21.29% 17.66% Raw Material Consumed Power & Fuel Cost Employee Cost Other Manufacturing Expenses General and Administration Expenses Selling and Distribution Expenses Miscellaneous Expenses Total Expenditure Operating Profit (Excl OI) -29.19% Mar-11 19.60% 0.42% 26.05% 31.YOY DESCRIPTION Net Sales Mar-10 -7.45% 9.39% -1.66% 34.66% 23.88% 20.20% 40.71% 24.62% -18.16% 13.24% 5.21% -3.67% 4.53% -13.91% 32.30% 11.61% 26.00% Mar-12 Mar-13 24.15% -7.15% -10.91% -91.69% 57.78% 25.75% 19.75% 35.90% 24.66% 31.61% 37.67% 2022.17% .38% 25.

Short term provisions are with slight increase as it just includes the employee benefits. Total Debts is calculated upon the incremental assets.      External Debts are added to the secured loans. . Short term liability is also increased in the proportion of the expenditure. The tax is taken out proportionately on the basis of the previous year trends Net Worth drives the book value to increase and the contingent liability is kept to be constant.

9792 1838.802 1716.635 16.059 0.0841 116.9011 5.3216 53.8062 198.089 130.46 153.5585 141.0398 181.5873 53.0359 180.396 4.9366 13.4896 1765.287 2588.9011 5.8641 1216.2546 371.8062 198.7655 .4356 22.678 225.3423 187.4356 140.875 1295.7338 398.8641 18.1289 1398.31 186.001 0 0 242.567 1.8363 186.39 3.599 0 11.7859 351.6292 1685.133 236.747 358.2305 67.888 36.292 1094.4592 3.53 140.979 111.0841 106.3585 779.7256 149.0887 371.6692 0 0 7.1171 2044.0359 152.2079 0 0 4.345 54.in Crores) EQUITY AND LIABILITIES Share Capital Total Reserves (Incl Revaluation) Revaluation reserve Shareholder's Funds Minority Interest Long-Term Borrowings Secured Loans Unsecured Loans Deferred Tax Assets / Liabilities Other Long Term Liabilities Long Term Trade Payables Long Term Provisions Total Non-Current Liabilities Current Liabilities Trade Payables Other Current Liabilities Short Term Borrowings Short Term Provisions Total Current Liabilities Total Liabilities ASSETS Non-Current Assets Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment A/c Capital Work in Progress Intangible assets Pre-operative Expenses pending Assets in transit Long Term Investment Long Term Loans & Advances Other Non Current Assets Total Non-Current Assets Current Assets Loans & Advances Currents Investments Inventories Trade Receivables Cash and Bank Other Current Assets Short Term Loans and Advances Total Current Assets Total Assets Contingent Liabilities Total Debt Book Value Adjusted Book Value Mar-10 Mar-11 18.3263 625.654 225.9366 13.908 4.6417 3.493 495.564 0.684 109.02 1052.2079 8.14 902.3266 102.6292 1091.4356 135.137 1295.3256 112.291 132.001 0 0 297.649 0.8641 883.31 150.62 150.98 130.3 153.7035 402.7872 2.8489 0 360.9668 345.2305 52.241 293.1171 1235.3796 7.9814 340.5744 16.2 13.3622 125.467 8.3963 16.203 320.5844 38.4278 0 339.938 0.7035 186.179 927.0359 367.684 223.686 15.058 181.5007 1267.963 334.881 497.9827 6.913 1490.428 2063.6692 0 0 7.7338 861.22 18.39 3.0398 218.961 0 0 0.6358 53.8429 493.1962 125.9011 19.322 150.202 21.259 0.3355 1844.9489 226.4592 3.367 0 15.744 0.2489 275.12 2617.8062 198.0717 279.8489 0 431.621 225.657 343.98 1408.8641 18.237 Mar-12 Mar-13 Mar-14 Mar-15 18.2816 0 0 0.279 209.1 0 150 16.3266 252.1171 1697.1908 548.4333 75.889 1295.532 0.678 15.1522 1490.262 2310.7338 657.3963 16.6427 35.4333 75.944 0 0 396.001 17.(Indian Rupee .0841 121.62 95.945 1053.401 181.0849 16.9366 13.2583 301.9489 0 585.575 275.115 15.8641 18.5995 50.3963 16.01 4.973 103.152 0.152 6.4934 0 31.0259 515.374 0 217.7698 8.164 13.4333 75.021 98.0213 2202.3014 5.191 1592.9921 95.513 1417.39 3.328 1844.4896 1551.4896 2396.53 111.6292 0.5349 584.077 396.24 154.251 127.3275 436.93 16.3 0 150 16.2079 8.3266 252.2143 155.244 11.0841 6.2305 62.4592 3.125 3.7865 0 18.1356 0.123 6.969 376.305 0.6692 0 0 7.884 0 268.66 0.8641 1033.705 1592.389 27.185 213.7035 434.881 83.

67% 9.CAPM MODEL Market Beta (Calculated) Government bond Rate (Observed) 0.797 34.8984% .236343933 8.74% Market Return Rate ( Calculated) wacc Cost of Debt K(d) 9.1187 WACC 13.90% Total Debt 13% Market Cap 1551.10% 65.6262% Weight of Debt Weight of equity 2997.3217 Total 4549.

725794835 0.9513677 15.919044283 1.84 31/03/2012 Net Profit Margin Asset Turnover Ratio Equity Multiplier 12.08352605 1.79055814 0.95 31/03/2013 19.25687687 0.870466678 15.870696091 15.84170327 .49524589 0.347646353 0.95 31/03/2013 3 Stage Dupont Analysis Net Profit Margin Asset Turnover Ratio Equity Multiplier 5 Stage Dupont Analysis ebit/sale sale/asset asset/avg equity pat/ebt ebt/ebit ROE 3 Stage Dupont Analysis 12.0.050295512 1.3463 Tax rate ROE 15.25687687 3 Stage Dupont Analysis ROE ROE 15.050295512 1.919044283 1.347646353 3 Stage Dupont Analysis ROE 15.12111505 1.84170327 5 Stage Dupont Analysis ebit/sale sale/asset asset/avg equity pat/ebt ebt/ebit ROE DUPONT ANALYSIS 31/03/2012 20.716942312 0.

Expected Return Date Expected Return Rate (Calculated) 3/31/2013 13.58% .33% 3/31/2010 13.28% 3/31/2011 13.09% 3/31/2009 14.47% 13.73% 3/31/2012 13.

WACC is 9.  The company expected return is more than WACC which indicates that investor shall put their money into the stock and vice versa. which represents the minimum rate of return at which company produces value for its investors.  Quite efficient  Financial Leverage Risk has decreased  Tax burden has increased  Interest rate burden is almost same  Operating Profit Margin has decreased  .  Net profit margin has decreased.62%.

   CURRENT MARKET PRICE (AS ON 1ST FEB 2014): RS.50 TARGET PRICE: RS 588 RECOMMENDATION: BUY . 511.

    ECONOMIC TIMES BUSINESS STANDARD ANNUAL REPORT OF THE COMPANY MONEY CONTROL .

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