SHANKARA BUILDING PRODUCTS – IPO
SHANKARA BUILDING PRODUCTS LTD
SUBSCRIBE
Investment rationale :
“Key drivers for the company are healthy economic growth, changing demographic profile, increasing disposable incomes, changing consumer tastes and preferences in the organised retail market in India.
It has grown its retail stores from 43 in FY 12 to 100 in FY 17. Also the retail sales per square per annum is estimated to increase from Rs. 23452 in FY 12 to Rs. 25564 in FY 17 E with focus on increasing on retail customer and reducing ticket size.
Differentiators:
> Unique customer experience by offering a comprehensive range of home improvement and building products.
> Strong vendor network and relationship built over two decades.
> Presence across the entire value chain.
> Robust back-end infrastructure ensuring efficient supply chain management.
> Experienced and dedicated management team.
The shift from the unorganised to organised sector along with GST implementation are key tailwinds for the company.
It caters to multiple sectors general engineering, automotive,renewable energy and agriculture apart from the real estate sector.
It also offers customised solutions to enterprise clients.
The real estate has already been beaten down and further downside looks limited.
Margins will improve post debt repayment.
| Particulars | FY 12 | FY 13 | FY 14 | FY 15 | FY 16 | 9M FY 16 |
|---|---|---|---|---|---|---|
| Total Revenue | 1414 | 1767 | 1928 | 1980 | 2037 | 1710 |
| Operating Revenue | 1414 | 1767 | 1928 | 1980 | 2037 | 1710 |
| % of Total Revenue | 99.99% | 99.98% | 99.96% | 99.96% | 99.97% | 99.99% |
| EBITDA | 70 | 87 | 89 | 90 | 120 | 109 |
| % EBITDA margin | 4.98% | 4.94% | 4.64% | 4.57% | 4.89% | 4.37% |
| PBT, excap. and extra item | 45 | 48 | 42 | 35 | 65 | 63 |
| % PBT margin | 3.16% | 2.70% | 2.18% | 1.74% | 3.19% | 3.68% |
| PAT, excap. and extra item | 31 | 32 | 29 | 23 | 41 | 42 |
| % PAT margin | 2.19% | 1.80% | 1.49% | 1.41% | 2.03% | 2.43% |
| EPS after excap. & extra. items (Pre-issue) | 14.13 | 14.54 | 13.12 | 10.33 | 18.88 | 18.89 |
| EPS after excap. & extra. items (post-issue) | 18.11 | 18.20 |