Dalal Street Investment Journal - July 09, 2019

DSIJ.in JULY 8 - 21, 2019 I DALAL STREET INVESTMENT JOURNAL (^19)
impact of forex conversion.
Consequently, EPS sank 44.97 per cent
YoY to 1.04 in Q4FY19 from1.89 in
Q4FY18.
Despite the poor performance in the
fourth quarter of FY19, the company
showcased a positive set of numbers for
the full year ended March 31, 2019. Total
income from operations rose 7.93 per
cent YoY to 8,576.94 crore in FY from7,946.76 crore in FY18. EBITDA
declined 12.30 per cent YoY to 925. crore in FY19 from1,055.43 crore in
FY18. EBITDA margin stood at 14.6 per
cent for FY19. Net profit exhibited
growth of 15.08 per cent YoY to
250.48 crore in FY19 as compared to 217.66 crore in FY18. EPS rose 9.18 per
cent YoY to 4.64 in FY19 from4.25 in
FY18.
Operating Performance
The overseas business showcased higher
growth than the domestic business. The
tightening of liquidity in rural markets,
draught in certain regions of India and
slowdown on account of the uncertainty
Meanwhile, in FY19, its finance costs
increased 7.3 per cent to 513.7 crore. However, depreciation dropped 9.3 per cent to312.9 crore in FY19.
The muted growth in Q4FY19 is
attributable to purchase deferrals by
end-users, as well as delays in the project
business of plastic products. Nonetheless,
the company exhibited good
improvement at the inventory level.
Furthermore, the net working capital in
the food business improved by 18 days
YoY.
Challenges
JISL’s balance sheet is burdened with a
massive amount of debt. The company
reported debt of 4,954 crore in March 2019 as against3,891 crore in March
2018, a growth of 27.31 per cent. This led
to rating downgrades by the credit rating
agencies such as India Ratings and Fitch
Ratings. India Ratings and Research
downgraded the company’s long-term
issuer rating to ‘IND BBB’ from ‘IND
A-‘, while also placing it on ‘Rating
Watch Negative’. Apart from the
growing debt levels, the company’s
working capital and interest payments
are exerting pressure on the operating
cash flows. This does not leave the
company with much in hand to make
debt repayments. The mounting debt is
attributable to delays in receiving
payments from the government to fund
the company’s micro-irrigation business.
Owing to the nature of JISL’s business, a
major chunk of its debt is in working
capital. Furthermore, the company’s
consistent acquisition of assets also
contributed to the rising debt.
revolving around elections in April 2019
impaired the sales and collections
during the fourth quarter of FY19.
Nevertheless, both finance costs and
depreciation declined 14.9 per cent
and 17.3 per cent, respectively to
112.9 crore and72 crore, respectively,
in Q4FY19.
The JISL board of directors has decided to pare down
the debt of the company and its subsidiaries by at least
200 crore over the course of the upcoming 12 to 24 months. It intends to do so by means of demergers, divestments and equity infusion in the food and plastic business in India as well as in the overseas irrigation business. It will enlist the help of bankers to assist with this process by September 2019. Jain Irrigation Systems Ltd. BSE Code: 500219 CMP:25.
Particulars Amonut (Crore) Net Sales 8607. % Change 8.66% Operating Profit 1197. % Change 7.57% Net Profit 250. % Change 15.08% Equity 103. EPS () 4.
FV () 2 CMP () 25.
P/E (x) 28.
Dividend Yield (%) 0.
Book Value () 88. (Trailing Four Quarter Data) CMP as on 2nd July, 2019 Peer Analysis Company Name Market Cap ( in Cr.)
EPS (`) ROA (%) ROE (%) ROCE (%) D/E (x) Adjusted PE (x) EV/
EBITDA(x)
Finolex Industries 6506.94 24.06 9.32 11.81 17.09 0.04 27.07 16.
Jain Irrigation Systems 39.84 5.45 3.65 6.33 9.68 0.26 19.55 8.
Jindal Poly Films 1113.27 3.32 0.41 0.80 3.19 0.54 94.13 6.
Supreme Industries 14227.01 36.29 15.78 24.75 34.35 0.08 30.70 17.
Uflex 243.05 13.98 2.37 4.85 7.48 0.67 24.31 7.
Source : ACE Equity Data as on 02nd July, 2019