VIL was incorporated on 18th June, 1981 as 'Visaka Asbestos Cement Products Limited'. With effect from 9th August 1990, the name of the Company was changed to Visaka Industries Limited. The Company is a Rs. 500 cr. turnover, multi product/location establishment, presently engaged in the manufacture of Building Products, Synthetic Blended Yarn.
The Company's Building Product Plants (Asbestos Cement Sheets) are located at 7 different places. The Synthetic Blended Yarn factory is located at Nagpur in Maharashtra.
Product Profile:
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Asbestos Cement Sheets: It is a 70 years old industry with a total annual production capacity in India being 2.70 mn tonnes. There are mainly 4 major players in this industry cumulating to 59% of the total production capacity.
During the year 2006-2007 the ACS Industry has grown at 16% p.a. ACS is mainly used as roofing materials in rural, semi urban areas and by Industrial sector. The company presently has production facilities.
The company has recently set a factory to make a new product 'Reinforced Building Boards' new age multi-purpose cement board with a wide range of applications. The project cost was Rs. 40 cr. for setting up 60,000 MT production facility, funded through fund raised by shares through QIP route on 24.01.07.
RBB is extensively used for false ceiling. Doors, Partitions pre-fabricated structures. Wall Paneling, backliners and to variety of other applications in residential, commercial as well as industrial segments. These boards have gained wide market acceptance and is widely preferred over wood/gypsum based products. There is a wider scope for exports to Srilanka, Pakistan, Bangladesh and Middle Eastern Countries.
Textile Division:
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VIL diversified in 1992, to manufacture Synthetic Blended Yarns, using Twin Air Jet technology of Murata, Japan. Its manufacturing plant at Nagpur, Maharashtra, has 28 Murata Twin air jet machines, with a total of 1816 spindle position. The yarn produced, range from 100% Polyester to Polyester-Viscose blends (85/15). The plant produced 6619 tonnes of yarn after the capacity was increased by 50%. Visaka's production facility at Nagpur is the single largest Twin Air Jet Spinning Installation in the world. Visaka's Yarns are used by leading textile mills to manufacture a wide range of fabrics including shirtings, suitings, fashion fabrics, upholstery and embroidery laces. The company exports 40% of Yarn production to Europe.
Company has reported bumper results for 9 Months:
a) Topline has gone up by 39% as against 9 months of previous year.
b) PAT is up a massive 617% as PAT in 9 months of previous year.
c) Even Tax Provision is 15.58 crs. as against 2.85 cr. in 9 months previous year.
d) 9 months profits are higher by 264% as compared to profit of entire 07-08.
A.C. Sheets Ind. continues to grow at 15% which bodes well for Visaka and company may plan further expansions. It is already setting up 'RBB Sandwiched Panel' unit which will start production by Nov. '08.
In last one year, Visaka fortunes have changed dramatically. Due to sharp rise in demand, company has been able to pass on increased cost of cement and other R/M. Further, its profit margins have expanded dramatically. For Example last year, company was selling A.C. Sheets at around Rs. 88/-. In current year, A.C. Sheet prices are ruling around Rs. 130/-.
This scrip has unique blend of low P.E. Ratio, high book value and very high dividend yield. GRAB NOW.
Valuations:
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Stock is trading at:
1) 2.72 x FY09E EPS.
2) 2.30 X FY10E EPS.
3) 0.50 x BVFY09E.
Needless to say that scrip is a screaming buy. It has un-interrupted dividend record of 16 years. Pays 30% dividend. Market cap is just 97 crs as against 09E sales of 540 crs. Dividend for 08-09 likely to be hiked to 45% which means tax free dividend yield can be nearly 8%. Promoters are investor friendly and aggressive. Turnover has grown from 5 crs. to 500 crs. in 15 years. Our price target:
a) Rs. 90/- in 6 months.
b) Rs. 110 in less than 12 months./-
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