SHARETIPSINFO >>Research Reports >>HSIL Ltd

COMPANY OVERVIEW:
In 1960 Mr. RK Somany established Hindustan Twyfords in collaboration with Twyfords Ltd of UK. Its Bhadurgarh Plant commenced production in 1962.
Company business is divided into two section container glass and building products. The glass container section products serve the beverage, pharmaceuticals, FMCG and Liquor. The container glass is sold under the brand name of AGI.
The other section building products provide kitchen and bathing solution. This section includes PVC cisterns, tubs, sanitary ware, shower enclosures, whirlpool systems, seat cover, fittings and shower panels. The kitchen solution includes hoods, sinks and chimneys.
Company in the sanitary ware market commands 40% market share.
Manufacturing Units: Company has one manufacturing unit in Bhadurgarh, Haryana and three in Andhra Pradesh. 
Distribution Network: company has more than 1000 dealers and 10000 sub-dealers to cater the entire Indian market.

PRODUCT MIX:

INDUSTRY OUTLOOK:
A dramatic growth in the Sanitary ware industry is seen in the past couple of years and the growth is expected to continue. The demand for high value sanitary ware in India is growing very fast. The industry is registering 20% annual growth.
The availability of raw material is in abundance in Gujarat and Rajasthan, so the companies have their manufacturing bases in these states.
The government push for tax rebate on housing loans is helping the sector growing very fast. The other fueling the demand for high end sanitary ware is increasing disposable income of the Indian and growing urbanization.

INVESTMENT RATIONAL:
In sanitary ware industry HSIL commands around 40% market share.
It has demonstrated consistent growth in the top line and bottom line.
Growing urbanization will help the company maintain its growth and is expected to gain most because of the leadership position.
Company has launched KERAMAG largest selling brand in Europe in India. This will help in capturing the taste of ultra premium segment.
PEG ratio is just at 0.4.

SHAREHOLDING PATTERN:

FINANCIAL:

Key Highlights:
CAGR IN TOTAL INCOME IS 14.42%
CAGR IN PBDITA IS 12.7%
CAGR IN PAT IS 25.7%

RATIOS:

Key Highlights:
EPS has grown at CAGR of 25.7% over the past 4 years to Rs 9.39.
PBDITA Margin remained almost stable in past 4 years.
NPM increased from 5.8% in FY06 to 7.7% in FY09.
Interest cover has increased from 4.12 in FY06 to 5.1 in FY09.This shows company is decreasing the reliance on debt as the operation expands.
COMPARISION OF Q2FY2010 WITH Q2FY2009:

Key Highlights:
Total Income increased by 27.65 % on YoY basis to Rs 207.43 crores in Q3FY10.
PBDITA increased by 45.08 % on YoY basis to Rs 38.04 crores in Q3FY10.
PAT increased by 1.73 % on YoY basis to Rs 9.97 crores in Q3FY10.

VALUATION &OUTLOOK:
At cmp of Rs 75 stock is trading at 10X to trailing twelve month earning. The PEG (PE to growth ratio) ratio is at 0.40. Company stock still has the room to appreciate. Even on conservative basis if we take the PEG at 0.8 lower than ideal 1, the fair price for the stock come at Rs 154.
The stock seems to be undervalued at this level. The outlook is good as demand is expected to be good from the housing sector.

CONCLUSION:
Investors with time horizon of 6-8 months could take exposure on the counter.

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