GHCL LTD - Quantamental Equity Research

Quantamental Equity Research on GHCL LTD | Release: 10 Dec 2018 13:26:20 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:GHCL and BSE CODE:500171
Last Close:  INR 218.3
Fair Value:  INR 382.6
Est. Price by Mar 19:  INR 209.35
Market Capitalization (INR Crs):  2139.96
Industry:  Commodity Chemicals
Rating:  STRONG BUY
Upside:  75%
Company Profile
GHCL is engaged in primarily two segments consisting of Inorganic Chemicals (mainly manufacture and sale of Soda Ash) and Home Textile division (comprising of yarn manufacturing, weaving, processing and cutting and sewing of home textiles products).
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 6% 32% 28%  
EBIT % -15% 28% 80%  
Earnings % -6% 99% 217%  
Book Value %  20% 111% 52%  
Stock Total Return %  5% 280% 691%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 18.87  
(B) FII/FPI 16.39  
(C) DII/Insurance Companies 14.91  
(D) Public holding < 2 lakhs of cap. 15.20  
(E) Others 34.63  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 48 42 36 35 37 74 126 266 280 209 254 299 345 377  
Return on Equity 12% 11% 12% 11% 14% 24% 25% 29% 22% 15% 15% 16% 16% 15%  
Price to Earning  3.4 3.6 3.1 3.1 3.2 4.0 4.9 6.8 7.5 7.5 7.5 7.5 7.5 7.5  
EVTI 1.4 1.2 0.8 0.7 0.8 0.9 1.0 1.5 1.4 0.9 0.9 0.8 0.8 0.7  
EVTIFM 3.4 3.6 3.1 3.1 3.2 4.0 4.9 6.8 7.5 7.5 7.5 7.5 7.5 7.5  
Price to Book Value 0.4 0.4 0.4 0.3 0.4 1.0 1.2 2.0 1.7 1.1 1.2 1.2 1.2 1.1  
Debt to Equity  1.1 1.4 1.3 1.1 1.5 1.7 1.3 1.1 0.8 0.5 0.3 0.1 0.0 0.0  
Dividend Yield 4% 5% 6% 6% 5% 3% 3% 2% 2% 2% 2% 2% 2% 2%  
Cash Flow to Firm 15% 20% 31% 20% 27% 26% 12% 6% 10% 22% 22% 23% 24% 26%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales       2,905.65       3,165.24       3,416.90       3,654.95       3,873.65       4,067.33  
EBITDA          649.17          658.96          711.35          760.91          806.44          846.76  
EBIT          539.64          539.64          597.58          652.43          703.01          748.14  
PBT          415.48          415.48          504.16          594.11          684.33          748.14  
NPAT          364.51          274.26          332.80          392.17          451.73          493.85  
Price to Earning               7.48              7.48              7.48              7.48              7.48              7.48  
Price to Book Value              1.68              1.10              1.16              1.18              1.17              1.12  
Debt to Equity               0.81              0.53              0.29              0.08                 -                   -    
Return on Equity              0.22              0.15              0.15              0.16              0.16              0.15  
Enterprise Value to Total Income (EVTI)              1.37              0.95              0.90              0.84              0.79              0.71  
Enterprise Value to Total Income to Firm Margin(EVTIFM)              9.20              9.45              8.72              8.05              7.42              6.55  
Price or Est. Share Prices          279.92          209.35          254.05          299.40          344.90          377.10  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT          415.48          504.16          594.11          684.33          748.14  
Interest          124.16            93.42            58.33            18.68                 -    
Depreciation          119.32          113.77          108.47          103.43            98.62  
Cash Flow Before Tax          658.96          711.35          760.91          806.44          846.76  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax          434.98          469.56          502.27          532.33          558.94  
Terminal Cash Flow                                                                                    -         3,589.43  
Total Cash Flow          434.98          469.56          502.27          532.33       4,148.37  
Present Value of Cash Flow       3,750.52  
Debt                 -    
Value of Equity       3,750.52  
Fair Value Per Share          382.60  
Equity            2,140
Debt            1,314
Beta Take from Reuters 1.05
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid               124
Tax Benefit                 15
Interest Net of Tax               109
Debt            1,314
Cost of Debt 8%
Cost of Equity 15%
Debt Weight 38%
Equity Weight 62%
WACC 12%
Cash Flow of Mar-23 E          558.94
Growth -2.0%
Present Value of Terminal Cashflow       3,589.43
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Tata Chemicals           673.95          17,170          444.96            13.74            11.38              1.28            16.28              1.51              7.15              0.55              3.27            10.58              8.47          12,485            30.63               107              7.88            10.05            56.20            -1.77          982.35
   2  Pidilite Inds.        1,140.10          57,911            70.36            31.96            37.64              7.93            67.03            16.20            60.69              0.03              0.53            21.84            31.43            7,140            69.74               284            -4.18            14.88            -2.95            -8.05          172.24
   3  Guj Fluorochem           893.00            9,814          483.80            56.54              7.94              1.83              4.83              1.85            13.65              0.42              0.39            47.96            36.07            6,076            68.34                 23              8.80            69.00          269.23          584.88          854.58
   4  Castrol India           144.75          14,318            10.80            67.70          105.28              3.58            25.19            13.40            20.66                 -                4.84            -0.06            -0.06            3,782            51.00               109            -8.88              7.60            -8.40            -5.76            41.27
   5  Godrej Inds.           543.20          18,272          124.72            17.65              9.33              1.78        -621.03              4.36            41.59              1.76              0.32            15.19            18.13          11,528            74.72             -149          -13.43            14.76            72.24            72.13          192.97
   6  GHCL           218.30            2,140          175.35            24.41            18.88              1.02              8.66              1.24              7.30              0.81              2.28            21.15            18.27            3,356            18.87                 29            10.71            16.95            27.31            47.06          344.21

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