4th quarter results have been flat Y-on-Y. the growth in FY 19 is expected to come from better capacity utilization of the enhanced capacities. In Fy 18, revenue volume growth has been 10% and value growth has been 10%, hence the topline has been able to grow at 20-21%. Major part of the value growth must have come from price rise passed on to the customers and minor portion must have come from increase of proportion of value added items in the overall topline. The reduction in margins at EBITDA level must be because of two reasons mainly -
1). Appreciation of Rupee in FY 18.
2). Company unable to pass on all the raw material price rise to its customers - which they had mentioned in FY 17 AR and the same situation has repeated in FY 18.
Looking at the 10% volume growth only in Fy 18, what is the expected topline for FY 19?
What can be drawn from the numbers is that the new capacity might be operating at 42% only. The estimated revenue from the capacity enhancement can be estimated to be close to 420 cr (without value growth) whereas company has already booked 180 odd crore of turnover in FY 17 and FY 18 (from the new capacity).
So, almost 1400 odd crores including the value growth impact!!
Now, the cotton price have stabilized and rupee has depreciated and is back at 67 levels - which hints probability of improvement is EBITDA margins.
Valuation - Available at rock bottom price - Price to Book of nearly 1.15 times!! And available at sufficient discount to the QIP price.
Please correct me if I am wrong. We have to wait for the timeline for the completion of the new project of 650 odd cr.
Disc - Invested.