Hold Indian Hume Pipe Ltd For Target Rs.257 - Sushil Finance
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HIGHLIGHTS FROM THE QUARTER (Q4FY21):
* The Indian Hume Pipe Company Ltd (IHP) reported a total Revenue from Operations of Rs. 458.7 cr in Q4FY21 as against Rs. 396.9 cr in Q4FY20.
* In the quarter the Company has reported an EBIDTA of Rs. 49.2 cr as against Rs. 56.3 cr in Q4FY20.
* The Company's net profit for the current quarter of Rs. 38.5 cr and EPS was Rs. 8.67.
* During the year, the nationwide lockdown imposed to control COVID-19 pandemic resulted in disruption in supply chain and availability of manpower, leading to stoppage of factories and project execution, in major part of this quarter which resulted in lower volumes and margins for the company.
* In FY21, the company reported a revenue of Rs. 1,241.4 cr compared to Rs. 1,623.6 cr in FY 20 showing a de-growth of ~24% on a YoY basis. EBITDA of the company was Rs. 117.4 cr showing a de-growth of ~38% on a YoY basis. PAT and EPS for FY21 stands at Rs. 42 cr & Rs. 8.67 respectively showing a de-growth of ~43% on a YoY basis
* As a part of the company’s constant effort of reducing debtors and debt, it issued bills for collection in the year for Rs. 1,480 cr on a topline of Rs. 1,241 cr, collected old outstanding of VAT and GST to the tune of Rs. 11.91 cr and 17.71 cr and received a 10% interest free mobilization advance. As a result of these inflows the company’s total borrowings and creditors were reduced by Rs. 110 cr and Rs. 30 cr and additionally it lowered the interest burden in Q4FY21.
* The estimated balance value of work as at 31st May 2021 is Rs. 4,519.44 cr as against Rs. 5,007.79 cr in June 2020. The company is also L1 in two projects of the value of Rs. 419.83 cr as at 31st May 2021.
OUTLOOK AND VALUATION
As a result of the strong order book as on May 2021 and strong performance by the company in Q4FY21, we estimate the company’s revenue will grow by 12% to Rs. 1,390.4 cr with an EBITDA, PAT and EPS of Rs. 178 cr, Rs. 76.8 cr and Rs. 15.86 respectively in FY22. Hence, by assigning an EV/EBITDA multiple of ~9.85X we have arrived at a target price of Rs. 257 (~+11%) within an investment horizon of 8-12 months which makes the recommendation a “HOLD”.
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