VST Tillers Tractors Ltd - Ventura Securities Ltd

VST Tillers Tractors Ltd BUY CMP `1961

Index Details Sensex Nifty

27,126 8323 AutomobilesTractors

Industry

Scrip Details Mkt Cap(` cr) 1,688.9 BVPS (`) 505.8 O/s Shares (Cr) 0.9 Av Vol (Lacs) 0.1 52 Week H/L 2005/1265 Div Yield (%) 0.7 FVPS (`) 10.0 Shareholding Pattern Shareholders Promoters Public Total

% 53.9 46.1 100.0

FY19E PE 19X

After facing a strenuous period over FY14-16 the tractor industry is all set to emerge on the growth track, given the favorable monsoon outlook and the steadfast government initiatives to ramp up the agricultural economy. While bucking the recent bearish trend in industry sales, VST Tillers Tractors Ltd (VST) has not only grow over the said period but enhanced market share both in the tiller and tractors segment. We are optimistic about the company’s performance over the next three years and expect overall revenue to grow at a CAGR of 16.3% to `1017 crore by FY19 while the EBITDA is expected to increase at a CAGR of 17.0% from `113 crore to `181 crore. The PAT, in turn, is expected to increase at a CAGR of 18.3% from `74.1 crore to `122.7 crore. We initiate coverage on VST with a Buy, with a price objective of `2451 (19X FY19) representing an upside potential of 24.9% from the CMP of `1962 over a period of 27 – 30 months. Currently the stock is trading at 15X its estimated earnings for FY19. While our valuation target is demanding, we believe that

VST Tillers Tractors Ltd vs. Sensex

00000000000 a) the dominance in the tillers segment and b) strong growth of the compact tractor segment puts VST in a sweet spot for strong visibility of earnings over the forecast period, while c) robust margins and d) superior return ratios warrant a premium.

400

350 300 250 200 150 100 50

VST Tillers Tractors Ltd

08-Jul-16

08-Mar-16

08-Jul-15

08-Nov-15

08-Mar-15

08-Jul-14

08-Nov-14

08-Mar-14

08-Jul-13

08-Nov-13

08-Mar-13

08-Jul-12

08-Nov-12

08-Mar-12

08-Jul-11

08-Nov-11

08-Mar-11

08-Jul-10

08-Nov-10

0

Our optimism stems from the following: Favorable monsoon and government initiatives augur well for the agricultural sector

Sensex

0000000000000000000;/’;;. I. Key Financials (` in Cr) II.

With the meteorology department forecasting a favorable monsoon and several initiatives taken by the government viz I. Water conservation and irrigation

Net Sales

PAT

EPS

RONW (%)

ROCE (%)

EV/EBITDA

EBITDA

EPS Growth (%)

P/E

Y/E Mar

(x)

(x)

2016 2017E 2018E 2019E

646.7 768.2 887.3 1017.5

112.9 134.8 157.1 180.6

134.8 89.3 105.1 122.7

86.2 103.8 122.2 142.7

7.1 20.4 17.7 16.8

17.6 18.5 18.8 18.9

26.8 28.1 28.4 28.5

22.8 18.9 16.1 13.7

13.6 11.2 9.3 7.9

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Monday 11 July, 2016 This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

STOCK POINTER

Target Price `2451

II. III. IV.

V.

VI. VII. VIII.

IX. X. XI. XII.

- 2 of 22-

Water conservation and irrigation Crop insurance scheme to provide income security to farmers Soil Cards to examine soil health and optimize farm productivity with regards to judicious choice of crop plantation and fertilizer inputs Market integration towards better price discovery Should help improve farmers’ prosperity and thereby provide impetus for better farming practices and hence, tractor demand.

Monopoly in tillers and significant latent demand potential augur well for VST Despite the previous two years of poor rainfall and negative growth of the tractor industry, VST has grown its tiller sales by 19%. Going forward, we expect tiller sales to grow at 12-13%, leading to a 13.5% CAGR growth in revenues to `519 crore by FY19. Compact tractor segment to see robust growth in the near to medium term As per the management, the compact tractors segment (sub 35 hp) is expected to grow to 2,00,000 units in 4-5 years. VST operates within this segment entirely and is expected to be one of the biggest beneficiaries. Further, it has launched a new model VST Shakti 270 MT (27 hp), which should help propel tractor sales growth. Going forward, we expect tractor sales to grow at 15%, leading to a 21.3% CAGR growth in revenues to `347 crore by FY19.

th


 Company Background : VST Tillers & Tractors (VST) was founded in 1967 as a joint venture technical collaboration between VST Motors and Mitsubishi Heavy Industries (Japan). Thereafter, over the course of time, VST acquired majority ownership in the company (current holding stands at 51%). The company is a major player in the domestic farm equipment industry, manufacturing power tillers & tractors.VST is also present in the segment of rice translators& power reapers. The company imports the same from China and Japan and sells them in the domestic market, earning a trading margin on the same. VST also exports a few power tillers & tractors to Africa, Russia, Myanmar, etc. VST’s Ltd manufacturing locations

Bengaluru manufactures power tillers of 9HP, 13HP and 15HP Tamil Nadu manufactures tractors with 18.5HP and 22HP

Source: VST Tillers Tractors Ltd, Ventura Research

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 Key Investment Highlights  Strong operational performance on the cards Historically VST’s revenues have grown at a CAGR of 6.8% from FY12 - FY16 to `647 crore, mainly propelled by market share gains in the tillers segment and a foray into tractors. Given the favorable thrust of the government on increasing rural incomes and patronizing agri growth, we expect VST Tillers to be one of the biggest beneficiaries. Going forth we expect overall revenue to grow at a CAGR of 16.3% to `1017 crore by FY19, driven by faster growth of the tiller segment (13.5% CAGR to `519 crore by FY19) and the introduction of a new tractor model in the 27 hp segment (which should drive tractor revenues by 21.3% CAGR to `347 crore by FY19). Strong revenue growth on the cards

1200

` In Crore

1000

151

129

800 112 600

400 200

97

76 254 80.4 40 194 28 167 67 180 176 111 149

347 299

25 20 87 459 519 53 325 267 346 296 356 402 289 201 232

Tillers

Tractors

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY10

FY09

0

Others

Source: VST Tillers Tractors Ltd, Ventura Research,TMA

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Tractor revenue share set to increase

8

26

26

31

14

13

14

15

15

14

15

31

30

32

30

33

34

34

55

57

54

55

52

52

51

FY18E

7

FY17E

7

FY16

7 20

FY15

80

FY14

100

In %

FY13

120

67

67

61

FY12

73

FY11

40

FY10

60

20

Tillers

Tractors

FY19E

FY09

0

Others

Source: VST Tillers Tractors Ltd, Ventura Research,TMA

 Tiller market has huge untapped potential It is quite surprising that Bangladesh, despite having an arable land mass (76,800 Sq. Km)that is only 5% of India’s total arable land mass of 15,69,844 Sq Km, has a tiller market size of nearly 2,00,000 or around 4X of that of India (FY16 sales of 50,000 units). One of the reasons for the widespread use of tillers in the Bangladesh market is the dearth of cattle for agricultural purposes (which are primarily consumed as part of their staple diet).

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State wise arable land

Bangladesh

India

West Bengal

Tamil Nadu

Rajasthan

Punjab

Orissa

Haryana

Chattisgarh

Bihar

Assam

Uttar pradesh

Maharashtra

Madhya …

Karnataka

Gujarat

In lakh Sq.km

Andhra …

18 16 14 12 10 8 6 4 2 0


Considering the area of arable land of major states of India which is of comparable size with that of Bangladesh, the potential for growth of the tillers market in India is stupendous. In India, mainly cattle is used for ploughing and with the cost of maintaining cattle going up, it is but natural that the shift towards automation would take place sooner rather than later. Also, farm mechanization has a tendency to improve farm yield.

Farm mechanization chart Farm mechanization leads to increase in farm yield Kg/hectare

Kw/hr

2500

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

2000

1500 1000 500

Farm Yield

2012-13

2010-11

2000-01

1990-91

1980-81

1970-71

1960-61

1950-51

0

Farm Mechanization (RHS)

Source: EIMA agrimach 2015 report, Ventura Research

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 Tillers are the preferred choice for marginal farmers over expensive tractors In a country where farm size holdings are diminishing and there is a rise in the number of marginal holdings, the cost of tractor ownership (range of ~ `2.5-8 lakh/unit) can be quite prohibitive, given the high cost. This, in turn, throws up a huge opportunity for the domestic power tiller sector wherein a power tiller costs ~ ` 1.25 lakh but suffices to perform all requisite agricultural operations performed by a tractor. Further, given the government’s thrust on increasing farm productivity through greater penetration of farm mechanization and its support through various subsidy programmes, power tillers may turn out to be the preferred farm equipment choice for domestic farmers. VST with its dominant share in the tillers market is best placed to exploit this opportunity. Farm holdings

Marginal and small farm holdings have increased while size of holdings have also shrunk

Category of Holding Marginal(< 1 hectare) Small(1-2 hectare) Semi-Medium(2-4 hectare) Medium(4-10 hectare) Large(> 10 hectare) All Holdings (hectare/holding) Holdings (%)

No of Holding (mn) 2000-01 2005-06 2010-11 75.4 83.7 92.4 22.7 23.9 24.7 14 14.1 13.8 6.6 6.4 5.9 1.2 1.1 1 119.9 129.2 137.8 81.8

83.3

Area (mn hectare) 2000-01 2005-06 29.8 32 32.1 33.1 38.2 37.9 38.2 36.6 21.1 18.7 159.4 158.3 1.33 1.23

2010-11 35.4 35.1 37.5 33.7 17.4 159.1 1.15

85

Source: VST Tillers Tractors Ltd ,Ventura Research

 Strong Government initiative to improve farm produce to fuel demand for tillers We believe that as the efforts of the government to enhance productivity and double the income of farmers over the next five years bears fruit, demand for tillers would also improve. Pradhanmantri Fasal Bima Yojna (PMFBY) to ensure income security which in turn should lead to increased investments Historically, farm produce has been erratic and highly dependent on precipitation and its timeliness. While the crop insurance scheme is nothing new, however, the earlier NAIS scheme (National Agriculture Insurance Scheme) had many drawbacks which thwarted its success:

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It was implemented only in 14 states of India whereas PMFBY is implemented in all the states of India. Premium of NAIS were higher as compared to PMFBY. Schemes were only given to those farmers who had taken a loan for purchasing agriculture machineries, crop seeds, insecticides, pesticides etc. There was a provision of capping the premium rate due to which low claims were paid to farmers. In PMFBY it is removed and now farmers will get their full claim against the assured sum. The PMFBY (Pradhanmantri Fasal Bima Yojna) has replaced the NAIS, which provides crop insurance to farmers on liberal terms which should go a long way in raising farmers’ income security. The PMFBY scores on many counts over its predecessor the NAIS: Prevented Sowing/ Planting Risk: Insured area is prevented from sowing/ planting due to deficit rainfall or adverse seasonal conditions Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non- preventable risks, viz. Drought, Flood, etc. Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting for those crops which are allowed to dry in cut and spread condition in the field after harvesting against specific perils of cyclone and cyclonic rains and unseasonal rains. Localized Calamities: Loss/ damage resulting from occurrence of identified localized risks of hailstorm, landslide, and inundation affecting isolated farms in the notified area. These measures will ensure stability of farm income encouraging investments in automation.  Farm subsidy to boost demand for tillers

Subsidy given by the government enables farmers to significantly reduce the cost of ownership

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Government subsidy for tillers General subsidy

Pow er

For reserved category

%

Max Am t

%

Max Am t

8 HP

40

0.6 lakh

50

0.75 lakh


 Good monsoon expectation portend strong sales for tillers The sale of tillers is strongly correlated with the intensity of the monsoon with sales spiking when rainfall has been plentiful and sharply contracting when the rainfall is deficient. And with better rainfall expected during the current year, we expect strong sales during the current year. Tiller sales strongly dependant on good monsoons

80000

as a % of LPA

In %

120

70000

100

60000 80

50000

40000

60

30000

40

20000 20

10000

Tillers Industry Sales

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY10

0

FY09

0

Rainfall (RHS)


 Sales of VST tillers to grow ahead of the market Barring FY11, VST Tillers has always grown faster than the market and during the period FY12-FY16, when the rainfall has been rather erratic, VST has increased its market share (with FY16 seeing a huge share add of 700 bps YoY to 55%).

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The strong growth in FY16 sales can be attributed to new incentive based sales schemes, strengthening of the dealer network, replacement of the sales team by younger, motivated and dynamic personnel, exploring newer markets for tillers

48

57

57

FY19

49

56

FY18

45

55

FY17

44

FY15

43

FY13

49

FY12

47

FY11

50

FY14

In %

60

FY16

VST tillers market share

40

30 20 10

FY10

FY09

0


We expect tillers’ sales numbers to grow at a CAGR of 12.3% to 38,820 units by FY19 and correspondingly revenues are expected to grow at a CAGR of 13.46% to Rs 519 crore over the commensurate period. Margins which, however, are in the range of ~17% -18%, are more or less expected to trend as per historicals.

- 10 of 22-

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VST tillers revenues to exhibit strong growth

600

` in crore

500 400 300 200 100

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY10

FY09

0


 Low Tractor penetration in India presents a huge opportunity With over 52% of India’s population directly or indirectly associated with the agricultural economy, it is only logical that India’s economy cannot grow while ignoring the agricultural sector. Further, as per World Bank forecasts, the workforce in the rural segment is expected to drop to 25.7% by 2050 thereby giving an impetus to farm mechanization. Tractors constitute a bulk of the farm mechanization industry and India’s tractor penetration being one of the lowest among major economies represents significant latent demand. Although tractor penetration has increased from one per 150 hectares to one per 30 hectares in 2015, it is still one of the lowest among major economies. Further, given the fact that use of proper equipment can increase the productivity by up to 30% and reduce costs by ~20%, the need for farm mechanization is a top priority. Recognizing this, the Modi government has announced path breaking reforms in the agricultural sector, which should boost the trajectory of growth.

- 11 of 22-

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 Agricultural reforms announced in Budget 2016

Agriculture reforms in budget 2016 Farmer welfare & education • Allocation for Agriculture and Farmers’ welfare has increased from `15,000 crore to ` 35,984 crore. • Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and 'Organic Value Chain Development in North East Region'. • To reduce the burden of loan repayment on farmers, a provision of `15,000 crore has been made in the BE 2016-17 towards interest subvention. • Allocation under Pradhan Mantri Gram Sadak Yojana increased to `19,000 crore. Will connect remaining 65,000 eligible habitations by 2019. • Allocation under Prime Minister Fasal Bima Yojana ` 5,500 crore. Irrigation • ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode. `28.5 lakh hectares will be brought under irrigation. • Implementation of 89 irrigation projects under AIBP (Acclerated Benefit Irrigation Programme), which are languishing for a long time, will be fast tracked. • A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about ` 20,000 crore. • Programme for sustainable management of ground water resources with an estimated cost of ` 6,000 crore will be implemented through 3 multilateral funding. • 5 lakh farm ponds and dug wells in rain fed areas and `10 lakh compost pits for production of organic manure will be taken up under MGNREGA. Soil & Seeds • Soil Health Card scheme will cover all 14 crore farm holdings by March 2017. • 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years. Marketing of Agricultural Products • Unified Agricultural Marketing ePlatform to provide a common e- market platform for wholesale markets.

- 12 of 22-

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 VST a strong player in 20 HP Segment The tractor industry in India can be bifurcated on the basis of power. VST is present in the lowest category i.e. sub 20 HP, which constitutes 4.1% of the total tractor industry. Player wise breakup of tractor industry (In %)

1

1

1

25

24

23

10

10

12

12

41

40

38

38

6 12

6 11

7 10

9 9

FY15

FY16

1 25

FY14

in %

FY13

100 90 80 70 60 50 40 30 20 10 0

Escorts

John Deere

M&M Group

Sonalika

Tafe Group

VST Tractors


Player wise breakup upto 30HP tractor (In %)

3 year CAGR growth - 6.7%

14

FY13 total tractor sales 66562 units

9 18

27

49 56

4 8

FY16 total tractor sales - 54736 units

4

11

M&M

Sonalika

Others

Tafe

VST


- 13 of 22-

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 Compact tractor segment to grow manifold Although this segment has experienced tepid growth over the last few years, the management believes that the compact tractors segment should grow 4X (to 2,00,000 units from the current 55,000 units over the next 4-5 years). VST has made significant inroads and grown faster than the market (18% CAGR over FY11-FY16). Its current market share stands at an enviable 33% in the sub 20HP segment. We believe that VST’s performance will continue to outstrip the segment growth and project sales should hit 11,535 units by FY19 (15 % CAGR for sub 20 HP segment). VST Tractor sales in units

14000

in units

12000 10000 8000

6000 4000 2000

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY10

FY09

0


 VST entering new segment Recently VST has also made a foray into the 30 HP segment with the launch of its model VST Shakti MT 270 (27 HP). Initial sales of 150 units in the last two months of the previous year are encouraging and the management is hopeful of selling 1000 units. However, we have conservatively modeled 950 nos. in our forecast for FY17 with sales scaling 1425 units by FY19. Overall forecasted sales for the tractor segment should grow at a CAGR of 18% from the current 7,801 to 12,960 units by FY19. Accordingly, revenues from tractor sales should grow at a CAGR of 21% from the current `194 crore to `347 by FY19. - 14 of 22-

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Brisk growth in VST tractor revenues

400

` in Crore

350 300 250 200 150

100 50

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY10

FY09

0


- 15 of 22-

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 Financial Performance : In Q4FY16, VST’s consolidated revenues grew by 26% to `177.3 crore driven by some aggressive marketing schemes as well as the launch of the 27-HP tractor towards the fag end of the year. Although the EBIDTA margin contracted by 100 bps to 17%, the EBITDA grew by 15% to `29.5 crore over the same period. The PAT came in flat at `19.5 crore compared to `19.0 crore in Q4FY15, due to an increase in the depreciation cost by 15% and tax expenses by 20% and a decrease in other income by 18% compared to Q4FY15. Overall, for FY16 the consolidated revenue increased by 17% YoY to `646.7 crore. The EBITDA at `112.9 crore was 12.7% higher compared to `100.2 crore in FY15. However, margins contracted by 100 bps. In FY16, the PAT grew 6.6% to `74.1 crore compared to `69.5 crore.

Quarterly financial performance (` in crore) Particulars

Q4FY16

Q4FY15

FY16

FY15

Sales

177.3

140.9

646.7

551.6

Growth

26%

Expenditure

147.9

115.3

533.8

451.4

EBITDA (ex Ol)

29.5

25.7

112.9

100.2

as a % of sales

17%

18%

17%

18%

Depreciation

3.2

2.8

12.5

9.4

EBIT(Ex.Ol)

26.3

22.9

100.3

90.8

Other Income

4.7

5.6

12.3

11.9

EBIT

30.9

28.6

112.6

102.7

Margin %

17%

20%

17%

19%

Interest

0.7

0.5

2.6

2.1

PBT

30.3

28.1

110.0

100.5

Margin %

17%

20%

17%

18%

Provision for tax

10.8

9.1

35.9

31.0

PAT

19.5

19.0

74.1

69.5

PAT Margin %

11%

13%

11%

13%

17%


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 Financial Outlook : We expect VST’s revenue to grow at a 3 year CAGR of 16.31% to `1017 crore by FY19 driven by the growth at 13.46% CAGR in tillers sales to `519.4 crore and the 21.35% CAGR rise in tractor sales to `346.7 crore, respectively. Margins are expected to increase from 17.5% in FY16 to 17.8% in FY19. The EBITDA is expected to increase at a CAGR of 17.0% from `113 crore to `181 crore. The PAT is expected to increase at a CAGR of 18.3% from `74.1 crore to `122.7 crore. Brisk growth in revenues

Revenue

EBITDA

Revenue growth (RHS)

FY19E

FY18E

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

0

FY17E

200

FY16

400

FY15

600

FY14

800

FY13

1000

In %

20 18 16 14 12 10 8 6 4 2 0

35 30 25 20 15 10 5 0 -5 -10 -15

FY12

In %

FY11

In crore 1200

EBITDA margin to stay stable

PAT

Source: VST Tractors Tillers Ltd, Ventura Research Source: VST Tractors Tillers Ltd ,Ventura Research

ROE and ROCE to remain stable In % 60 50 40 30 20 10

ROE

FY19E

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

0

ROCE


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Peer comparison

Y/E March

Sales

EBITDA

EBITDA PAT Margin (%) Margin (%) ROE(%)

PAT

P/E

P/BV

EV/ EBITDA

VST Tillers 2015

552.0

100.0

70.0

18.1%

12.7%

20.6%

23.6

4.5

14.2

2016

647.0

112.9

74.1

17.5%

11.5%

17.6%

22.0

3.9

10.9

2017E

768.0

134.8

89.3

17.6%

11.6%

18.5%

18.3

3.4

9.2

2018E

887.0

157.1

105.1

17.7%

11.8%

18.8%

15.6

2.9

7.8

2019E

1,017.5

180.6

122.7

17.8%

12.1%

18.9%

13.3

2.5

7.8

2015

38,391.6

4,232.6

3,321.1

11.0%

8.7%

18.4%

21.1

3.7

16.6

2016

40,396.7

4,571.2

3,167.5

11.3%

7.8%

15.5%

22.6

3.3

15.1

2017E

46,903.0

5,642.4

3,790.0

12.0%

8.1%

16.4%

23.5

3.5

15.6

2018E

53,533.9

6,570.5

4,505.7

12.3%

8.4%

16.8%

19.9

3.1

13.4

2019E

60,150.2

7,261.0

4,993.8

12.1%

8.3%

17.4%

17.6

2.8

12.1

2015

4,112.7

160.5

75.7

3.9%

1.8%

4.1%

20.4

0.9

0.4

2016

3,537.6

146.4

76.3

4.1%

2.2%

4.2%

32.8

1.4

0.7

2017E

4,103.4

272.3

153.2

6.6%

3.7%

7.9%

16.5

1.3

0.6

2018E

4,727.5

340.4

208.7

7.2%

4.4%

10.0%

12.1

1.2

0.5

Mahindra & Mahindra

Escorts Ltd


Attractive ROE as compared to peers

25 20

Mahindra

P/E

15 VST Tillers

Escorts

10 5

20

18

16

14

12

10

8

6

4

2

0

0

ROE


- 18 of 22-

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 Valuation : We initiate coverage on VST with a Buy, with a price objective of `2451 (19X FY19), representing an upside potential of 24.9% from the CMP of `1962 over a period of 27 – 30 months. Currently, the stock is trading at 15X its estimated earnings for FY19. While our valuation target is demanding, we believe that the following factors warrant a premium: I. the dominance in the tillers segment II. strong growth of the compact tractor segment puts VST in a sweet spot for strong visibility of earnings over the forecast period III. robust margins IV. superior return ratios

VST P/E chart 2500

VST P/B chart 2500

Price in `

Book value in `

2000

2000

1500

1500

1000

1000

500 500

2X

4.5X

7X

9.5X

Source: VST Tractors Tillers Ltd, Ventura Research

- 19 of 22-

12X

CMP

0.5X

1X

1.5X

2X

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Mar-03

CMP

Mar-03

0 0

2.5X

Source: VST Tractors Tillers Ltd ,Ventura Research

th


VST EV/EBITDA chart 1800

EV in crore

1600 1400 1200 1000 800 600 400 200

EV

2X

3.5X

5X

6.5X

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Mar-03

0

8X

Source: VST Tractors Tillers Ltd, Ventura Research

- 20 of 22-

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Financials and Projections

Y/E March, Fig in ` Cr

FY16

FY17E

FY18E

Y/E March, Fig in ` Cr

FY19E

646.7

% Chg. Total Expenditure

533.8

% Chg. EBDITA EBDITA Margin % Other Income PBDIT Depreciation

FY18E

FY19E

768.2

887.3

1017.5

Adj. EPS

86.21

103.79

122.17

142.69

18.8%

15.5%

14.7%

Cash EPS

100.3

118.9

138.3

159.3

633.4

730.3

836.9

18.7%

15.3%

14.6%

112.9

134.8

157.1

180.6

17.5%

17.6%

17.7%

17.8%

12.3

13.8

16.0

19.3

125.1

148.6

173.0

199.9

DPS Book Value

13.0

13.0

13.0

13.0

488.5

559.6

648.4

755.5

0.0

0.0

0.0

0.0

Capital, Liquidity, Returns Ratio Debt / Equity (x) Current Ratio (x)

5.4

4.6

5.5

6.3

ROE (%)

17.6%

18.5%

18.8%

18.9%

ROCE (%)

26.8%

28.1%

28.4%

28.5%

12.5

13.5

14.4

14.9

Interest

2.6

1.9

1.8

1.8

Dividend Yield (%)

Exceptional items

0.0

0.0

0.0

0.0

Valuation Ratio (x)

PBT

FY17E

Per Share Data (Rs)

Profit & Loss Statement Net Sales

FY16

110.0

133.2

156.8

183.2

P/E

22.8

18.9

16.1

13.7

Tax Provisions

35.9

44.0

51.8

60.4

P/BV

4.0

3.5

3.0

2.6

Reported PAT

74.1

89.3

105.1

122.7

Minority Interest

0.0

0.0

0.0

0.0

Share of Associate

EV/Sales EV/EBIDTA

2.4

2.0

1.7

1.4

13.6

11.2

9.3

7.9

Efficiency Ratio (x)

0

0

0

0

74.1

89.3

105.1

122.7

Inventory (days)

45

38

35

32

PAT Margin (%)

11.5%

11.6%

11.8%

12.1%

Debtors (days)

70

73

73

73

RM / Sales (%)

65.1%

64.8%

64.8%

64.6%

Creditors (days)

18

24

20

18

8.6

8.6

8.6

8.6

110.0

133.2

156.8

183.2

PAT

Balance Sheet

Cash Flow Statement

Share Capital Reserves & Surplus

Profit Before Tax

411.5

472.7

549.0

641.1

Minority Interest

0.0

0.0

0.0

0.0

Working Capital Changes

Long Term Borrowings

0.0

0.0

0.0

0.0

Others

-55.0

9.4

6.4

16.0

Deferred Tax Liability

4.6

5.3

5.9

6.3

Operating Cash Flow

72.3

123.5

141.5

167.2

Other Non Current Liabilities

Depreciation

13.5

14.4

14.9

4.7

-32.7

-36.2

-47.0

38.7

38.2

39.0

42.0

-5.6

-19.6

-17.2

-14.0

Total Liabilities

463.3

524.8

602.5

698.0

Other Investment Activities

-21.8

3.6

4.0

6.3

Gross Block

189.4

208.4

225.0

238.5

Cash Flow from Investing

-27.3

-16.0

-13.2

-7.7

Less: Acc. Depreciation Net Block

Capital Expenditure

12.5

62.4

75.9

90.4

105.3

Changes in Share Capital

0.0

0.0

0.0

0.0

127.0

132.4

134.7

133.2

Changes in Borrowings

0.0

0.0

0.0

0.0

Dividend and Interest

-18.2

-17.6

-17.5

-17.5

Cash Flow from Financing

-18.2

-17.6

-17.5

-17.5

Net Change in Cash

Capital Work in Progress

2.8

3.5

4.0

4.5

Other Non Current Assets

16.5

16.5

16.5

16.5

305.5

360.8

435.3

531.8

26.7

89.9

110.8

142.0

11.5

11.6

12.0

12.0

Opening Cash Balance

18

28

50

75

463.3

524.8

602.5

698.0

Closing Cash Balance

28

50

75

110

Net Current Assets Long term Loans & Advances Total Assets

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