ESCORTS LTD - Quantamental Equity Research

Quantamental Equity Research on ESCORTS LTD | Release: 19 Feb 2019 16:35:23 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:ESCORTS and BSE CODE:500495
Last Close:  INR 638.3
Fair Value:  INR 660.55
Est. Price by Mar 19:  INR 830.45
Market Capitalization (INR Crs):  7824.28
Industry:  Commercial Vehicles
Rating:  STRONG BUY
Upside:  30%
Company Profile
Escorts is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, construction, earth moving and material handling equipment, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork & Mcpherson struts, brake block, internal combustion engines and all types of brake used by railways.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 22% 26% 24%  
EBIT % 101% 329% 191%  
Earnings % 115% 361% 395%  
Book Value %  28% 46% 64%  
Stock Total Return %  72% 615% 1293%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 40.08  
(B) FII/FPI 21.65  
(C) DII/Insurance Companies 4.88  
(D) Public holding < 2 lakhs of cap. 15.60  
(E) Others 17.79  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Sep-09 Sep-10 Sep-11 Sep-12 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 113 222 77 67 126 131 160 544 934 830 1056 1231 1364 1432  
Return on Equity 7% 8% 7% 4% 14% 4% 5% 8% 13% 16% 17% 17% 16% 15%  
Price to Earning  11.4 17.0 6.8 11.5 6.3 20.9 23.4 41.6 33.2 20.6 20.6 20.6 20.6 20.6  
EVTI 0.5 0.8 0.2 0.2 0.3 0.4 0.6 1.5 2.1 1.4 1.5 1.5 1.4 1.3  
EVTIFM 11.4 17.0 6.8 11.5 6.3 20.9 23.4 41.6 33.2 20.6 20.6 20.6 20.6 20.6  
Price to Book Value 0.8 1.4 0.5 0.5 0.9 0.9 1.1 3.3 4.4 3.4 3.6 3.5 3.3 3.0  
Debt to Equity  0.2 0.2 0.2 0.4 0.2 0.3 0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0  
Dividend Yield 1% 1% 2% 2% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0%  
Cash Flow to Firm -42% 2% -1% 23% 18% 6% 12% 6% 5% 4% 4% 5% 7% 9%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales       4,995.12       6,406.62       7,844.46       9,148.90     10,138.29     10,645.21  
EBITDA          609.87          869.00       1,064.03       1,240.96       1,375.16       1,443.92  
EBIT          537.39          776.04          950.05       1,107.85       1,227.43       1,288.56  
PBT          508.82          747.47          950.05       1,107.85       1,227.43       1,288.56  
NPAT          344.72          493.40          627.13          731.29          810.23          850.58  
Price to Earning             33.21            20.63            20.63            20.63            20.63            20.63  
Price to Book Value              4.45              3.36              3.59              3.53              3.34              3.03  
Debt to Equity               0.02                 -                   -                   -                   -                   -    
Return on Equity              0.13              0.16              0.17              0.17              0.16              0.15  
Enterprise Value to Total Income (EVTI)              2.10              1.43              1.49              1.47              1.42              1.35  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            34.81            21.76            22.65            22.32            21.68            20.52  
Price or Est. Share Prices          934.01          830.45       1,055.55       1,230.90       1,363.80       1,431.75  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT          747.47          950.05       1,107.85       1,227.43       1,288.56  
Interest            28.57                 -                   -                   -                   -    
Depreciation            92.96          113.98          133.12          147.73          155.36  
Cash Flow Before Tax          869.00       1,064.03       1,240.96       1,375.16       1,443.92  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax          573.63          702.36          819.16          907.75          953.13  
Terminal Cash Flow                                                                                    -       12,157.50  
Total Cash Flow          573.63          702.36          819.16          907.75     13,110.64  
Present Value of Cash Flow       8,096.98  
Debt                 -    
Value of Equity       8,096.98  
Fair Value Per Share          660.55  
Equity            7,824
Debt                 50
Beta Take from Reuters 1.25
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid                 29
Tax Benefit                   9
Interest Net of Tax                 19
Debt                 50
Cost of Debt 39%
Cost of Equity 16%
Debt Weight 1%
Equity Weight 99%
WACC 17%
Cash Flow of Mar-23 E          953.13
Growth 8.3%
Present Value of Terminal Cashflow     12,157.50
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  Maruti Suzuki        6,930.05        209,343       1,382.33            17.39            23.98              2.11            70.85              5.01            27.59                 -                1.15            11.95          242.37          82,342            56.21               366          -12.33              2.00          -33.53          -17.22       2,794.94
   2  Bajaj Auto        2,825.95          81,774          704.48            29.99            30.96              1.94            22.73              4.01            17.42              0.01              2.12            17.65        -151.45          31,996            49.30               130            -7.52            16.00            -2.85            20.49       1,603.43
   3  M & M           627.55          78,017          295.81                 -              13.64                 -                   -                2.12            13.62              1.52              1.20                 -                   -                   -              19.87                 -                   -                   -                   -                   -            634.09
   4  Eicher Motors      20,234.10          55,188       2,867.26            37.61            49.40              4.80            32.50              7.06            26.04              0.02              0.54            31.85        -426.96          10,119            49.35               160            -2.79              3.18            -2.88              2.39       7,081.86
   5  Hero Motocorp        2,696.45          53,855          635.14            31.66            46.10              1.43            19.35              4.25            14.87                 -                3.52            15.42            93.93          32,210            34.63                 93          -13.49              7.53          -21.22            -4.51       1,609.89
   6  Escorts           638.30            7,824          224.37            27.78            21.78              0.99            15.16              2.84            16.69              0.02              0.31            25.81            41.81            6,762            40.08                 75            18.36            37.35            36.37            44.55          448.47

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