ITL Industries - adding cutting edge to my portfolio

Stock Opportunities Untested - but worth a good look
45

Good result by ITL

Rev 22.97 Cr vs 20.30 (13%)
PAT 1.78 Cr vs 1.36 Cr (30%)
EPS 5.58 vs 4.24 (31%)
Part Margin 7.7% vs 6.6%

Excellent margin expansion. The new capacity just started production, so full effect is yet to be seen. So Q4 should be much higher.

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Rev 101 Cr vs 83 cr (21%)
PAT 6.7 Cr vs 5.13 Cr (30%)
EPS 20.96 vs 16.03 (30%)

maintains consistent 30% growth, one of the cheapest stock.

And Dividend Re 1/-.

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q4 fy 19 numbers show higher revenues but lower profits, indicating some margin pressure. q4 fy 19 revenues at 32 crores vs 27 crores for q4 fy 18. Operating profit at 2.92 crores vs 3.05 in comparative quarters.

Whether this is a one off or a permanent feature in future results would decide whether this stock remains cheap or would merit re rating.

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48

Q4 was the first quarter after company started commercial production from expanded capacity.

Clearly no sign of operational leverage in Q4 may be because of higher RM pressure.We will come to know about this in upcoming quarters.

Company has been able to showcase some growth in last 2-3 years.Largely driven by the increase in contribution of trading business and export income.If they can maintain 15-20% top line growth going forward it will be great.Given the slowdown in domestic economy and capital goods in specific is in bad shape it is going to be a tough job.

I feel downside is limited as the valuation,debt and recivables etc are in comfort levels.

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49

A good brief view of business, manufacturing plant and corporate office etc.

ITL Industries Ltd. Corporate Film Clipping Nov-2019

50

Promoters are increasing stake;-

Not sure its first time in many years or first time ever?

51

Assigned ‘CRISIL BBB/Stable/CRISIL A3+’ ratings.

Key Rating Drivers & Detailed Description:-

Strengths:

  • Extensive industry experience of the promoters:
    The company is promoted by Mr. Manohar Singh Jain, who has an industry experience of over 5 decades. He is assisted by his two sons, Mr. Rajendra Singh Jain and Mr. Mahendra Singh Jain (Joint MD’S), who look after the day to day business of the company. The promoters, along with the board of directors and the senior management have rich experience in the engineering industry, and has been instrumental in shaping the business risk profile. Supported by the long standing experience in the industry, the company has established strong relationships with the customers and suppliers.
  • Stable Market Position:
    The company has a long standing presence of close to 30 years in the industry. Over the years, the company has established strong relations with customers across various industries such as general engineering, auto components, forging, power, metals etc. Concentration risk is minimal as its customers are located across India, and top 20 customers contribute to less than 20% of overall revenue. Supported by the quality of products, the company has been receiving repeat orders from its customers. Its strong market position is underlined by revenue CAGR of 14.52% over the past 3 years.
    The company has its own R&D center, which is engaged in development of new products and improvement of existing ones.
  • Comfortable Financial Risk Profile:
    Financial risk profile is supported by healthy capital structure, as reflected in gearing of 0.39 time and adequate networth of Rs. 31.83 crores as on March 31, 2018. Debt protection metrics are comfortable supported by interest coverage ratio of 6.5 times and net cash accruals to adjusted debt ratio of 0.48 for fiscal 2018.

Weakness:

  • Susceptibility of the operating margin to volatility in commodity prices:
    Operating margins are exposed to volatility in raw material prices. Raw material costs accounts for 65% of the operating revenue/total manufacturing cost. Any sharp deviation in raw material prices is likely to impact the operating margins of the company.
  • Intensive nature of working capital operations:
    Gross current assets (GCA) was at 220 days as on March 31, 2018. The GCA is mainly driven by high inventory and receivables. The company is required to maintain higher inventory in order to ensure smooth execution of orders during the subsequent 3-4 months.
    **

Liquidity:

**
ITPL has adequate liquidity driven by expected cash accruals of more than Rs.6 crores per annum in FY19 and FY20and cash and cash equivalents of Rs.1.85 crores as on March 31, 2018. ITPL also has access to fund based limits of Rs.14 crores, utilized to the tune of 57% on an average over the 12 months ended February 2019. The company has long term repayment obligations around Rs.1 crore each in FY19 and FY20 and no major capex plans. CRISIL expects internal accruals, cash & cash equivalents and unutilized bank lines to be sufficient to meet its repayment
obligations as well as incremental working capital requirements.

  • Outlook:Stable

CRISIL believe ITLIL will continue to benefit from the extensive experience of its promoter, and established relationships with clients. The outlook may be revised to ‘Positive’ if ramp-up in scale of operations and stable profitability strengthen financial risk profile. The outlook may be revised to ‘Negative’ if decline in profitability or stretch in working capital cycle or large debt-funded capital expenditure weakens capital structure.

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52

Rev 23.53 Cr vs 20.80 (13%)
PAT 1.74 Cr vs 0.78 Cr (123%)
EPS 5.43 vs 2.46 (120%)
Part Margin 7.4 % vs 3.75%

Excellent result by ITL, within pandemic.

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Income 23.77 crs 18 crs 32.06% Up
Profit 2 crs 1.28 crs 56.25% Up
EPS 6.26 4.01 56.11% Up
55

The ITL seems to be seeing some active accumulation these last few days. Attaching a link of their corporate video to enable better understanding of the business. The rebound in Q2 & Q3 numbers look sustainable after the Covid impacted Q1.

Disc: Invested

2 Likes
56

Yes, accumulation goin on.
Sharad Kanayalal Shah bought 27,455 of ITL Industries ( Bulk Deal on BSE, 21 May 2021 )

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(Q1 FY 2021-22) Results - YoY

The company has reported EPS of Rs.3.52 for the period ended June 30, 2021 as compared to Rs.(- 0.85) for the period ended June 30, 2020.

Q1 FY2021-22 Q1 FY2020-21 %
Total Income 19.73 crs 8.11 crs Up 143.28%
Net Profit 1.12 crs (0.2792) crs Up 501.15%
EPS 3.52 (0.85) Up 514.12%
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