[stock_ticker symbols=”VISAKAIND” show=”name” static=”0″ nolink=”” duplicate=”1″ class=””]
Visaka industries is the manufacturer of building products and textile yarn. In the building product division, it manufactures cement asbestos products and fiber cement flat products, such as V-boards and V-panels. Visaka is the second largest cement sheet manufacturer in India. It has installed 11 factories spread across the country, producing about 802,000 tons of corrugated cement asbestos sheets and 1,29,750 tons of fiber cement flat board products  per year. The spinning plant produces about 9,000 tons of yarn per year.  As of financial year ending March, 2015, revenue from building products segment constituted to 82% and that from yarn segment were at 18%. It has also commissioned a 2.5 megawatt captive solar power plant.
In 201-15, the company generates 7.8% of its revenue from export, which has been 2095 metric tons against 1609 metric tons in 2013-14, a growth of 30%. The company enjoys marketing presence in more than 30 countries.
The company has only 1.59 crore of equity shares. As on 31-Mar-2016, the promoter group holds 37.54% share.
Visaka Industries‘ net profit has grown from 11.97 crore in 2013-14 to 21.24 crore in 2014-15, a growth of 77%. Though the net profit remains flat in the last nine months ending Dec-2015 (around 15 crore), we believe that 2016-17 will be good for Visaka Industries, as after two years weak rural growth, good growth is expected in 2016-17. Also, Visaka may be one of the main beneficiaries from the government’s emphasis on “house for everyone”.
In the nine months ending Dec-2015, the EBIDTA margin is 9.3%, which is more or less at the same level for the similar period in the last financial year. Asbestos material is the main raw material and constitutes 60% of the build products raw material. It is 100% imported. We don’t expect any substantial change of its price and hence expect that the margin to be around at the same level.
Visaka Industries’ total debt is 286 crore, which means that it has a healthy debt to equity ratio of 1 ( as of last financial year).
Visaka Industries is a consistent dividend payer. For the year ending March 2015, it declared a dividend of 50% amounting to Rs 5 per share.
Visaka Industries is currently trading at 8.69 PE (trailing), which is quite cheap in comparison of its peer like Everest and HIL. Based on the improved business environment and cheap valuation, we believe that stock has substantial headroom. On a conservative valuation, we believe that stock can achieve Rs 150 in the next 6 to 8 months.
Risk : a) In case of inadequate monsoon, the rural growth may be subdued. This will impact the revenue of Visaka Industries.
- b) Asbestos fiber is considered as carcinogenic. Any government initiative to ban or restrict its usage will adversely impact Visaka Industries.
NSE Code : VISAKAIND
BSE Code : 509055
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