Multi Bagger: Alps Industries
Recommended Price Rs 83.10
S.P.Tulsian, Investment Advisor Report Dated: Jan 08, 2008
Alps Industries is a leading eco-friendly textile products manufacturers and a principal infrastructure player of interior products. The product portfolio of the company includes an eclectic range of home furnishings, sophisticated fashion accessories and high quality yarn.
Alps Industries has a total of 9 manufacturing facilities on a total built-up area of 15 lakh sq. feet, with units located at Ghaziabad (4 units), Uttarakhand (4 units) and one unit at Pondicherry.
The company has completed expansion of its spinning yarn, which is catering to premium segment of yarn market, by installing 66,000 spindles at Haridwar, which has commenced production from December 07, ahead of schedule by about 6 months. This project had a cost of Rs
330 crores. Another project of Rs 63 crores for weaving & processing is being put up. The unit is for weaving of upholstery and decorative furnishing fabrics of 84 lakh square machining fabric processing, which would be operational from July 2008.
Financials
For FY 07, the company posted a total income of Rs 432.56 crores, with EBITDA of Rs 68.12 crores, resulting in a margin of 15.75% with PBT of Rs 35.48 crores and PAT of Rs 30.35 crores, resulting in an EPS of Rs 9.34 on an equity capital of Rs 32.51 crores.
For H1 FY 08 the total income was at Rs 272 crores with EBITDA of Rs 40.61 crores, resulting in a margin of 14.93% with PBT of Rs 20.08 crores and PAT of Rs 18.56 crores, resulting in an EPS of Rs 5.38 on equity of Rs 34.51 crores.
The rise in equity is due to preferential issue of equity shares of Rs 65 per share, to the promoters of the company. 40 lakh warrants having issued to the promoters would take equity to rise to Rs 38.51 crores. These warrants would be convertible at Rs 65 per share. The present equity of Rs 34.51 crores is held by promoters of about 31.76%, FIIs 17.59%, Banks and MF 11.09% and Public at 36.71% as at 30-09-07.
The company has 1,640 retail counters for interior décor products and 1,248 retailers for home furnishings. The company has formed a wholly owned subsidiary Alps Energy Ltd. to undertake Hydro Electric Projects in the states of Uttarakhand and Himachal Pradesh by setting up new power projects as also acquiring existing ones.
The break up of present sales is about 78% from domestic market while 22% from exports. Of this 22%, export to US is half, at 11% of total income, on which margins are partially affected by currency fluctuations and rupee strengthening.
The company hopes to post a total income of Rs 600 crores for FY 08 with PAT of Rs 38 crores, resulting in an EPS of Rs 11. For FY 09, topline is expected to touch Rs 1,000 crores with an EPS of Rs 16.
The present book-value per share is close to Rs 90, while the share is presently ruling at Rs 83.10. The present market capitalization is just close to Rs 300 crores, while the value of realty and plant is in excess of Rs 600 crores.
The share price is now ruling at Rs 83.10, which has potential to touch Rs 150 in the next 9 – 12 months. It would be wrong to perceive the company as a pure textile play, while it has premium range of textiles and interiors, catering mainly to domestic market.
A safe bet is at Rs 83.10.
