Aksh Optifibre- A Technical and Fundamental Analysis

(Akash Padhiyar) #288

(Akash Padhiyar) #289

Good result posted…Though revenue is little less than expected

(PE_Ratio) #290

Excellent results posted by Aksh Optifibre. I like how Aksh is becoming consistent in the last few quarters. The capacity expansion is helping better the numbers quarter after quarter.

QoQ comparison:
Revenue up by 9.95%
PAT up by 37.7%
EBITDA margin improved - From 12.95% (Q3) to 15.2% (Q4)

a. Manufacturing
Revenue up by 4.7%
EBIT margin improved - From 10.8% (Q3) to 12.3%(Q4)

b. Trading
Revenue down by 13%, but profit up.
EPIT margin improved - From 19.1% (Q3) to 33.1% (Q4)

c. Services
Revenue up by a massive 186.8%
But it’s still loss making. A very good point to note here is that the amount of loss remains the same despite the huge increase in revenue. This indicates this segement is getting better.

EPS for this quarter is 0.55rs. But there was an exceptional expense of 74 lakhs. Usually in the past quarters, there would be exceptional income of around 27 lakhs. So, that’s a difference of 1 cr lost in this quarter.
If we add that back, then EPS for this quarter would have been 0.6 rs.

Another good thing is company has started paying dividend. Rs 0.3/- per share. 0.82% dividend yield is not bad.

At 0.55 EPS in Q4, assuming minimum 15% EPS growth in the next 3 quarters, then forward EPS for an year will be 2.75 at the end of 2018.
Aksh is trading at 13x multiple in forward EPS. 15% EPS growth is conservative, considering the Silvassa and Mauritius OFC capacities coming online in June 2018. That’s additional 1.7mn FKM.
And additional 0.4mn FKM FRP capacity coming online in September 2018. And Ophthalmic lens production just started. So, we can expect more EPS growth in the upcoming quarters.

If we exclude Services segment, then EPS is standing at a whopping 0.7 rs for Q4. And trading at 9.5x multiple at forward EPS (assuming 20% growth).
If we compare this with peer Sterlite Technologies, then Aksh is dirt cheap.

From the presentation:
“We also expect to see the incremental benefits of our capacity expansion initiatives in the financial year 2019 and beyond, going forward this will also pave the way for sustainable growth for the company.”

All looking good w.r.t revenue growth and profit growth.

Negative points:

  1. Finance cost increased - From 4.31cr to 6.01cr.
  2. Receivables went up from 184cr (Q3) to 245.6cr (Q4)

(Mehnazfatima) #291

When a huge part of the turnover is supplied to Govt departments/ BSNL…then the receivables are bound to go up. First the goods are supplied and payment is received with a time lag. I won’t consider it as a big negative

(Akash Padhiyar) #292

Receivables continuously increasing trend which is a real concern, can any one post receivable cycle in comparison to Sterlite tech?
One need to clarify it with management. Is there any concol gonna happen?

(S_Banerjee) #293

Any details on show cause issued by SEBI on GDR issue case by company? Effect on share price and company growth, any analysis done by anyone pls share.

(Akash Padhiyar) #294

GDR is an old issue and company can handle it well so its not a major issue as far as I understand…
On previous discussion on receivables increase, I have noticed that when there are client like govt companies such as bsnl or other big corporate, receivable increase with revenue is normal phenomenon…but should be tracked on quarterly basis
Other than that everything looks rosy as of now as dubai facility revenue and opthalmic lens revenue will contribution from q1

(Mehnazfatima) #295

My assessment of Aksh is that in FY19 it can do an eps of 3-3.5 rupees and if Dubai facility starts making profits, then the eps can jump to 5 rupees…as of now Opthalmic blanks and services are not contributing to the eps…