Description
financial performance of videocon industries, liquidity analysis, profitability analysis, solvency analysis and valuation of videocon of industries
Key Highlights
India’s no 1 consumer electronic and home appliances company. 30% market share in consumer electronics Serves lower, middle and premium segments. Wide distribution network 3rd largest color picture tube producer in the world but the technology is getting outdated and hence it has to go in flat panel displays . Videocon Kenstar, Hundai , Akai ,Sansui ,Electrolux ,York
Line of Business
Consumer Durable
CPT
Oil and Gas CRT Glass
Company Profile
Financial Analysis
Valuation
Shareholding Patterns
Share Holding Pattern as on 31st Mar '08 Corporate
bodies FII Public 5% 5% 4% MF/FI 4%
Custodian 14%
Promoters 68%
Company Profile
Financial Analysis
Valuation
Future Expansion Plans
Videocon is eyeing 1 crore DTH subscribers, 15 lakhs in 2009 and continuing with the same addition every year. The company has already got 2G licenses in GSM telecom in 21 circles and has applies for 3G licenses via its subsidiary Datacomm. The company has huge capex plans for telecom(6000 cr. In next two years)and oil business.
Industry Electronics
CAGR (2009 -13) 14.80%
DTH
Cruder Oil Natural gas Retail Telecom
30%
2.60% 7.50% 28% 18.30%
The company plans to expand the wholesale cash and carry business with the setting up of 60 stores at an investment of Rs 2000 crores in the next 3 years.
Company Profile
Financial Analysis
Valuation
Financial Highlights Asset turnover
75% 70% 65% 65% 74% 74% 74% 15000 10000
Turnover (in Rs cr)
12963 12597 12237 6914 11132 50 40 30
EPS after Minority Interest (Rs.)
47.57 35.21 15.02 30.83
60%
55% 2005 2006 2007 2008
5000
0 2005 2006 2007 2008 2009(E)
20
10 0
2005
2006
2007
2008
EBITA as % of Sale
25% 20% 15% 10% 5% 0% 2005 2006 2007 2008 2009(E) 14% 13% 17% 22% 17%
Sales turnover is Rs 8198.808 cr as compared to Rs 8197.53 cr last year. This is because of 58% dip in revenues in crude oil and natural gas segment in the last 3 quarters . EBITDA margin is 18% as compared to 22% last year.
Company Profile
Financial Analysis
Valuation
Financial Highlights SEGMENTAL REVENUE(%)
1.2
1 0.8 Crude Oil & Natural Gas Consumer Electronics & Home Appliances 14,000.00
Revenue as Import and Export
12,000.00
10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 Export Domestic
0.6
0.4 0.2
0
2005 2006 2007 2008 2009[E]
0.00 2006 2007 2008
EBIT as a perecntage of sales
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2005 2006 2007 2008
Consumer Electronics & Home Appliances Crude Oil & Natural Gas
Oil and gas segment achieves higher operating profit margin. The electronics segment margins are improving. Huge capital expenditure has been done for the oil and gas exploration and expected further more in the next 2 years in telecom.
Company Profile
Financial Analysis
Valuation
Share Price Volatility
Beta = 0.861
Sept 2009 : :After announcement Amalgamation ofDTH409 to 847 )rich Encana 2008 2004 to bharat petroleum to launch (Rs service cash firm AprilDec JuneVedioconSept 2004
f plans of Onidaacquire Brazilian109 to Rs 2007 : Rumors2005 : After payment of dividends (Rs 235 of Acquisition venture Petrocon (Rs (Rs March127 ) to May 270 company with videocon. (Rs 60 to 145) 173) to 2005 to 405)
Company Profile Financial Analysis Valuation
Activity Ratios
(all in days) Inventory Turnover Receivable collection Creditor Payable Cash To Cash Cycle Cash Flow From Operations ( in Rs Crore) 2005 125 158 218 65 -2498
Videocon 2006 2007 92 87 85 65 115 79 62 73
661 1016
2008 88 54 63 79 285
LG 2007 23 66 60 28
329.68
SAMSUNG 2008 20 55 74 1
-18.99
Key Highlights: 1. Increasing cash to cash cycle is unfavorable and very high as compared to other companies 2. Creditors payable is decreasing at par with the peers 3. Debtors collection period is decreasing lower than the peers 4. Cash flow from operations is not steady at par with peers 5. Inventory turnover period is very high as compared to peers
Company Profile
Financial Analysis
Valuation
Liquidity Ratios
Videocon 2005 2006 2007 Current Ratio: 3.26 3.03 4.18 Quick Ratio: 2.85 2.33 3.18 Cash Ratio 0.79 0.68 0.91 Cash Debt coverage -0.59 0.10 0.13 Debt income ratio 6.12 5.37 4.57 Working capital 4725.45 5591.32 6216.21
2008 8.19 6.78 1.43 0.02 4.88 7946.88
LG SAMSUNG 2007 2007 1.69 1.15 0.75 0.69 0.13 0.21 1.05 138.88 0.83 0.01 980.32 170.14
Key highlights :1. The current ratio and quick ratio have an increasing trend much higher than the peers 2. The cash ratio is also very strong. The current liabilities have decreased by a higher proportion hence leading to an improvement in the cash ratio. 3. The cash debt coverage ratio is decreasing. This is because the cash flow from operations has decreased drastically over the year. 4. The debt income ratio has decreased ads the income has increased in more proportion than the debt 5. The working capital has increased as their cash to cash cycle is huge. Hence they need a high working capital
Profitability Ratios
2005 Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Investment ROCE EPS (in Rs) 37.07%
Videocon 2006 2007
35.20% 36.69%
2008 44.82% 21.82% 9.25% 6.0% 6.0% 6% Rs 47.83
LG 2007
34.2% 4.7% 2.0% 5.1% 10.1% 12% 13
SAMSUNG 2008
29.7% 3.8% 1.6% 5.7% 10.0% 23% 3.6
13.67% 12.97% 16.75% 6.67% 6.08% 5.74% 4.1% 4.8% 4.3% 5.1% 6.0% 5.0% 5% 5% 6% Rs 23.35 Rs 35.68 Rs 31.74
Key highlights :1. The company has shown growth in gross profit margin and operating profit margin in the last two years and are better as compared to peers. 2. Asset turnover and ROCE have also shown increase in last year but are worse than peers. 3. EPS has shown a positive trend and is better than peers.
Company Profile
Financial Analysis
Valuation
Unconsolidated Analysis
Sales Turnover Gross Profit Margins Operating Profit Net Profit EPS
2005 2006 2007 2008 2009(E) 5,653.83 7,580.33 8,710.26 10,105.13 9000.53 0.45 0.12 0.08 16 0.42 0.19 0.11 36 0.43 0.19 0.1 38 0.46 0.22 0.09 37 0.44 0.19 0.05 21
Key Highlights Growth in sales is more in their main business but the profitability ratios are almost showing similar trends, However in 2009 the main business got a hit due to in oil segment.
Company Profile
Financial Analysis
Valuation
DuPont Analysis
Videocon 2006 2007 0.06 0.06 0.74 0.74 2.44 2.36 11% 10% LG 2007 0.02 3.40 1.65 17% SAMSUNG 2007 0.02 5.13 1.30 42%
Net Profit Margin Asset Turnover Ratio Financial leverage ROE
2005 0.07 0.74 2.37 12%
2008 0.09 0.65 2.67 16%
Key highlights :Company’s profitability is driven by financial leverage due to huge debt on balance sheet which is not the case with its peers.
Company Profile
Financial Analysis
Valuation
Solvency Ratios
2005 0.92 1711 2.37 1.55
Debt to equity ratio Defensive interval period Equity multiplier Interest coverage ratio
Videocon 2006 2007 0.95 1.00
945 2.44 2.47 764 2.36 2.02
2008 1.65 760 2.67 2.40
LG 2007 0.65
269
SAMSUNG 2007 0.65
239
6.65
10.66
Key financials: 1. Debt to equity position is worsening for the company over the years and is worse than peers. This is due to huge debt required for working capital and capex. 2. Defensive interval is worsening and is worse as compared to peers showing lack of sustainability of funding without additional revenues. 3. The ability to pay back debt is improving over the years but is worse than peers.
Company Profile
Financial Analysis
Valuation
Valuation Ratios
Videocon P/E EV/EBITDA Price to Book Value Market cap to sales
2009 (E) 11.95 8.42 0.92 0.63
MIRC 8.39 9.88 .24 .04
Key financials:1. Company’s forward PE is more as compared to peers. 2. Low EV/EBIDTA signifies that the company might be undervalued.
Company Profile
Financial Analysis
Valuation
Repeatable And Controllable Earnings
2004-05 381.35 6.89% 2004-05 Other income as a percentage of total income Income from exchange rate fluctuation as a percentage of total income 1.56% 2005-06 748.23 9.87% 2005-06 7.18% 2006-07 916.55 10.52% 2006-07 5.67% 2007-08 1265.96 12.53% 2007-08 4.36%
Adjusted PBT(Unconsolidated) As a percentage of sales
0.33%
0.23%
1.01%
0.00%
Maintainable ,growing and sustainable Earnings after adjusting for exceptional and non-recurring, non-operational items.
Company Profile
Financial Analysis
Valuation
Bankable Earnings
2004-05
Cash flow from operations -1814.08
2005-06 2006-07
1351.72
2007-08
1133.68 -1193.44
Negative cash flows primarily because of exchange rate fluctuations, huge debtors, inventories and loans and advances.
2004-05 Doubtful debts as a percentage of sales
2005-06 2006-07
2007-08
0.46%
0.51%
0.47%
0.45%
Doubtful debt not increasing as percentage of sales .
Company Profile
Financial Analysis
Valuation
Off Balance-sheet Risk Contingent liabilities of Rs 5,057.10 crore. Is a potential risk to company’s healthy earnings. Negligible amount of operating leases.
Company Profile
Financial Analysis
Valuation
External Risks
(all in Cr) Net Forex earnings / expenditure
2004-05 -297.51
2005-06 -741.86
2006-07 2007-08 -558.29 -789.31
Small exposure to Exchange rate Fluctuations. Sales tax deferment loan. Outstanding FCCBs Convertible at fixed exchange rate of Rs 545.24/Rs 511.25 . Need to reduce conversion price to get more conversions.
2007-08 Loans in Indian rupees Loans in foreign currency
6985.794 1053.269
Company Profile
Financial Analysis
Valuation
Acquisitions In all 11 acquisitions in 2007-08 .All of these had negative effect on P & L ,Needs to focus on their profitability.
Company Profile
Financial Analysis
Valuation
Discounted Cash Flows Four approaches are used for valuation Market comparable(PECV) Net Asset Value Discounted cash flow Market price method
Three stage growth model using percentage of sales method for independently consumer durables and oil based on past four years average and for telecom based on market players in telecom (Bharti Airtel)
Cost of capital comes out to be 8.16% using market premium of 11% and beta of .8 and risk free rate of 7.4%.
Company Profile
Financial Analysis
Valuation
PECV Maintainable PBT adjusted for exceptional and non-recurring, non-operational items is calculated and adjusted for investments, contingent liabilities and deposits. PE multiple of 4.37(intrinsic value) is taken as expectation.
NAV
Net asset value is taken for valuing the share price.
Company Profile
Financial Analysis
Valuation
Valuations
Value per Share Method Net Assets Method PECV Method Market Price Method Discounted cash flow Total Fair Value per share 144.89 792.02 209.59 324.21 Weight Product
Four approaches are used for valuation Market comparable(PECV) Net Asset Value Discounted cash flow Market price method
1 2 2 3 8 BUY
144.89 792.02 419.17 972.63 2,328.73 291.09
Market Price Rs 255 (as on October 3rd )
Company Profile
Financial Analysis
Valuation
The company should foray into Retail more aggressively widening their portfolio in other categories. Speed up the telecom business with growing opportunity as they already have licenses in 21 circles. By diversifying into different industry like DTH, the company can reduce the impact of failing revenues in their existing business. They also need to focus on changing technology in television sector else they will loose share to MNC’s
Company Profile
Financial Analysis
Valuation
Company Profile
Financial Analysis
Valuation
doc_184712313.pptx
financial performance of videocon industries, liquidity analysis, profitability analysis, solvency analysis and valuation of videocon of industries
Key Highlights
India’s no 1 consumer electronic and home appliances company. 30% market share in consumer electronics Serves lower, middle and premium segments. Wide distribution network 3rd largest color picture tube producer in the world but the technology is getting outdated and hence it has to go in flat panel displays . Videocon Kenstar, Hundai , Akai ,Sansui ,Electrolux ,York
Line of Business
Consumer Durable
CPT
Oil and Gas CRT Glass
Company Profile
Financial Analysis
Valuation
Shareholding Patterns
Share Holding Pattern as on 31st Mar '08 Corporate
bodies FII Public 5% 5% 4% MF/FI 4%
Custodian 14%
Promoters 68%
Company Profile
Financial Analysis
Valuation
Future Expansion Plans
Videocon is eyeing 1 crore DTH subscribers, 15 lakhs in 2009 and continuing with the same addition every year. The company has already got 2G licenses in GSM telecom in 21 circles and has applies for 3G licenses via its subsidiary Datacomm. The company has huge capex plans for telecom(6000 cr. In next two years)and oil business.
Industry Electronics
CAGR (2009 -13) 14.80%
DTH
Cruder Oil Natural gas Retail Telecom
30%
2.60% 7.50% 28% 18.30%
The company plans to expand the wholesale cash and carry business with the setting up of 60 stores at an investment of Rs 2000 crores in the next 3 years.
Company Profile
Financial Analysis
Valuation
Financial Highlights Asset turnover
75% 70% 65% 65% 74% 74% 74% 15000 10000
Turnover (in Rs cr)
12963 12597 12237 6914 11132 50 40 30
EPS after Minority Interest (Rs.)
47.57 35.21 15.02 30.83
60%
55% 2005 2006 2007 2008
5000
0 2005 2006 2007 2008 2009(E)
20
10 0
2005
2006
2007
2008
EBITA as % of Sale
25% 20% 15% 10% 5% 0% 2005 2006 2007 2008 2009(E) 14% 13% 17% 22% 17%
Sales turnover is Rs 8198.808 cr as compared to Rs 8197.53 cr last year. This is because of 58% dip in revenues in crude oil and natural gas segment in the last 3 quarters . EBITDA margin is 18% as compared to 22% last year.
Company Profile
Financial Analysis
Valuation
Financial Highlights SEGMENTAL REVENUE(%)
1.2
1 0.8 Crude Oil & Natural Gas Consumer Electronics & Home Appliances 14,000.00
Revenue as Import and Export
12,000.00
10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 Export Domestic
0.6
0.4 0.2
0
2005 2006 2007 2008 2009[E]
0.00 2006 2007 2008
EBIT as a perecntage of sales
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2005 2006 2007 2008
Consumer Electronics & Home Appliances Crude Oil & Natural Gas
Oil and gas segment achieves higher operating profit margin. The electronics segment margins are improving. Huge capital expenditure has been done for the oil and gas exploration and expected further more in the next 2 years in telecom.
Company Profile
Financial Analysis
Valuation
Share Price Volatility
Beta = 0.861
Sept 2009 : :After announcement Amalgamation ofDTH409 to 847 )rich Encana 2008 2004 to bharat petroleum to launch (Rs service cash firm AprilDec JuneVedioconSept 2004
f plans of Onidaacquire Brazilian109 to Rs 2007 : Rumors2005 : After payment of dividends (Rs 235 of Acquisition venture Petrocon (Rs (Rs March127 ) to May 270 company with videocon. (Rs 60 to 145) 173) to 2005 to 405)Company Profile Financial Analysis Valuation
Activity Ratios
(all in days) Inventory Turnover Receivable collection Creditor Payable Cash To Cash Cycle Cash Flow From Operations ( in Rs Crore) 2005 125 158 218 65 -2498
Videocon 2006 2007 92 87 85 65 115 79 62 73
661 1016
2008 88 54 63 79 285
LG 2007 23 66 60 28
329.68
SAMSUNG 2008 20 55 74 1
-18.99
Key Highlights: 1. Increasing cash to cash cycle is unfavorable and very high as compared to other companies 2. Creditors payable is decreasing at par with the peers 3. Debtors collection period is decreasing lower than the peers 4. Cash flow from operations is not steady at par with peers 5. Inventory turnover period is very high as compared to peers
Company Profile
Financial Analysis
Valuation
Liquidity Ratios
Videocon 2005 2006 2007 Current Ratio: 3.26 3.03 4.18 Quick Ratio: 2.85 2.33 3.18 Cash Ratio 0.79 0.68 0.91 Cash Debt coverage -0.59 0.10 0.13 Debt income ratio 6.12 5.37 4.57 Working capital 4725.45 5591.32 6216.21
2008 8.19 6.78 1.43 0.02 4.88 7946.88
LG SAMSUNG 2007 2007 1.69 1.15 0.75 0.69 0.13 0.21 1.05 138.88 0.83 0.01 980.32 170.14
Key highlights :1. The current ratio and quick ratio have an increasing trend much higher than the peers 2. The cash ratio is also very strong. The current liabilities have decreased by a higher proportion hence leading to an improvement in the cash ratio. 3. The cash debt coverage ratio is decreasing. This is because the cash flow from operations has decreased drastically over the year. 4. The debt income ratio has decreased ads the income has increased in more proportion than the debt 5. The working capital has increased as their cash to cash cycle is huge. Hence they need a high working capital
Profitability Ratios
2005 Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Investment ROCE EPS (in Rs) 37.07%
Videocon 2006 2007
35.20% 36.69%
2008 44.82% 21.82% 9.25% 6.0% 6.0% 6% Rs 47.83
LG 2007
34.2% 4.7% 2.0% 5.1% 10.1% 12% 13
SAMSUNG 2008
29.7% 3.8% 1.6% 5.7% 10.0% 23% 3.6
13.67% 12.97% 16.75% 6.67% 6.08% 5.74% 4.1% 4.8% 4.3% 5.1% 6.0% 5.0% 5% 5% 6% Rs 23.35 Rs 35.68 Rs 31.74
Key highlights :1. The company has shown growth in gross profit margin and operating profit margin in the last two years and are better as compared to peers. 2. Asset turnover and ROCE have also shown increase in last year but are worse than peers. 3. EPS has shown a positive trend and is better than peers.
Company Profile
Financial Analysis
Valuation
Unconsolidated Analysis
Sales Turnover Gross Profit Margins Operating Profit Net Profit EPS
2005 2006 2007 2008 2009(E) 5,653.83 7,580.33 8,710.26 10,105.13 9000.53 0.45 0.12 0.08 16 0.42 0.19 0.11 36 0.43 0.19 0.1 38 0.46 0.22 0.09 37 0.44 0.19 0.05 21
Key Highlights Growth in sales is more in their main business but the profitability ratios are almost showing similar trends, However in 2009 the main business got a hit due to in oil segment.
Company Profile
Financial Analysis
Valuation
DuPont Analysis
Videocon 2006 2007 0.06 0.06 0.74 0.74 2.44 2.36 11% 10% LG 2007 0.02 3.40 1.65 17% SAMSUNG 2007 0.02 5.13 1.30 42%
Net Profit Margin Asset Turnover Ratio Financial leverage ROE
2005 0.07 0.74 2.37 12%
2008 0.09 0.65 2.67 16%
Key highlights :Company’s profitability is driven by financial leverage due to huge debt on balance sheet which is not the case with its peers.
Company Profile
Financial Analysis
Valuation
Solvency Ratios
2005 0.92 1711 2.37 1.55
Debt to equity ratio Defensive interval period Equity multiplier Interest coverage ratio
Videocon 2006 2007 0.95 1.00
945 2.44 2.47 764 2.36 2.02
2008 1.65 760 2.67 2.40
LG 2007 0.65
269
SAMSUNG 2007 0.65
239
6.65
10.66
Key financials: 1. Debt to equity position is worsening for the company over the years and is worse than peers. This is due to huge debt required for working capital and capex. 2. Defensive interval is worsening and is worse as compared to peers showing lack of sustainability of funding without additional revenues. 3. The ability to pay back debt is improving over the years but is worse than peers.
Company Profile
Financial Analysis
Valuation
Valuation Ratios
Videocon P/E EV/EBITDA Price to Book Value Market cap to sales
2009 (E) 11.95 8.42 0.92 0.63
MIRC 8.39 9.88 .24 .04
Key financials:1. Company’s forward PE is more as compared to peers. 2. Low EV/EBIDTA signifies that the company might be undervalued.
Company Profile
Financial Analysis
Valuation
Repeatable And Controllable Earnings
2004-05 381.35 6.89% 2004-05 Other income as a percentage of total income Income from exchange rate fluctuation as a percentage of total income 1.56% 2005-06 748.23 9.87% 2005-06 7.18% 2006-07 916.55 10.52% 2006-07 5.67% 2007-08 1265.96 12.53% 2007-08 4.36%
Adjusted PBT(Unconsolidated) As a percentage of sales
0.33%
0.23%
1.01%
0.00%
Maintainable ,growing and sustainable Earnings after adjusting for exceptional and non-recurring, non-operational items.
Company Profile
Financial Analysis
Valuation
Bankable Earnings
2004-05
Cash flow from operations -1814.08
2005-06 2006-07
1351.72
2007-08
1133.68 -1193.44
Negative cash flows primarily because of exchange rate fluctuations, huge debtors, inventories and loans and advances.
2004-05 Doubtful debts as a percentage of sales
2005-06 2006-07
2007-08
0.46%
0.51%
0.47%
0.45%
Doubtful debt not increasing as percentage of sales .
Company Profile
Financial Analysis
Valuation
Off Balance-sheet Risk Contingent liabilities of Rs 5,057.10 crore. Is a potential risk to company’s healthy earnings. Negligible amount of operating leases.
Company Profile
Financial Analysis
Valuation
External Risks
(all in Cr) Net Forex earnings / expenditure
2004-05 -297.51
2005-06 -741.86
2006-07 2007-08 -558.29 -789.31
Small exposure to Exchange rate Fluctuations. Sales tax deferment loan. Outstanding FCCBs Convertible at fixed exchange rate of Rs 545.24/Rs 511.25 . Need to reduce conversion price to get more conversions.
2007-08 Loans in Indian rupees Loans in foreign currency
6985.794 1053.269
Company Profile
Financial Analysis
Valuation
Acquisitions In all 11 acquisitions in 2007-08 .All of these had negative effect on P & L ,Needs to focus on their profitability.
Company Profile
Financial Analysis
Valuation
Discounted Cash Flows Four approaches are used for valuation Market comparable(PECV) Net Asset Value Discounted cash flow Market price method
Three stage growth model using percentage of sales method for independently consumer durables and oil based on past four years average and for telecom based on market players in telecom (Bharti Airtel)
Cost of capital comes out to be 8.16% using market premium of 11% and beta of .8 and risk free rate of 7.4%.
Company Profile
Financial Analysis
Valuation
PECV Maintainable PBT adjusted for exceptional and non-recurring, non-operational items is calculated and adjusted for investments, contingent liabilities and deposits. PE multiple of 4.37(intrinsic value) is taken as expectation.
NAV
Net asset value is taken for valuing the share price.
Company Profile
Financial Analysis
Valuation
Valuations
Value per Share Method Net Assets Method PECV Method Market Price Method Discounted cash flow Total Fair Value per share 144.89 792.02 209.59 324.21 Weight Product
Four approaches are used for valuation Market comparable(PECV) Net Asset Value Discounted cash flow Market price method
1 2 2 3 8 BUY
144.89 792.02 419.17 972.63 2,328.73 291.09
Market Price Rs 255 (as on October 3rd )
Company Profile
Financial Analysis
Valuation
The company should foray into Retail more aggressively widening their portfolio in other categories. Speed up the telecom business with growing opportunity as they already have licenses in 21 circles. By diversifying into different industry like DTH, the company can reduce the impact of failing revenues in their existing business. They also need to focus on changing technology in television sector else they will loose share to MNC’s
Company Profile
Financial Analysis
Valuation
Company Profile
Financial Analysis
Valuation
doc_184712313.pptx