th TUBE INVESTMENTS OF INDIA LTD ISIN...TII's Revenue for the quarter was higher by 10% at Rs. 12240 mn as against Rs. 11090 mn in the corresponding quarter of the previous year. The

Document code: FOTL_060520193_4 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved

TUBE INVESTMENTS OF INDIA LTDResult Update (CONSOLIDATED BASIS): Q4 FY19

CMP: 375.00 MAY 6th, 2019

Overweight ISIN:INE974X01010

Index DetailsSYNOPSIS

Tube Investments of India Limited (TIL) is engagedin manufacturing products for automotive andindustrial applications.

TIL achieved a consolidated turnover of Rs.13474.40 mn for Q4 FY19 as against Rs. 12245.40mn in Q4 FY18, an increase of 10.04%.

During the quarter, consolidated EBIDTA stood atRs. 1398.40 mn as against Rs. 1039.60 mn in thecorresponding period of the previous year, up by34.51%.

During the quarter, consolidated PBT increased by85.35% to Rs. 879.30 mn from Rs. 474.40 mn in thecorresponding period of the previous year.

During the quarter, consolidated net profit increasedby 48.49% to Rs. 547.50 mn from Rs. 368.70 mn inthe corresponding quarter ending of previous year.

EPS of the company stood at Rs. 2.92 in Q4 FY19against Rs. 1.97 in the corresponding quarter of theprevious year.

The company has recommended a final dividend ofRs. 0.75/- per equity share of Rs. 1/- each for thefinancial year ended 31st March, 2019.

TII's consolidated Revenue for the year was higherby 13% at Rs. 57747.70 mn as against Rs. 50887.60mn in the previous year.

The consolidated Net Profit for the year was at Rs2404.20 mn as against Rs. 1473.90 mn in theprevious year.

Net Sales and PAT of the company are expected togrow at a CAGR of 10% and 18% over 2018 to2021E, respectively.

Stock DataSector Auto Parts & EquipmentBSE Code 540762Face Value 1.0052wk. High / Low (Rs.) 432.00/211.00Volume (2wk. Avg.) 3963Market Cap (Rs. in mn.) 70387.50

Annual Estimated Results(A*: Actual / E*: Estimated)Years(Rs in mn) FY19A FY20E FY21ENet Sales 57747.70 64099.95 71791.94EBITDA 5978.90 6680.35 7478.78Net Profit 2404.20 2813.02 3298.08EPS 12.81 14.99 17.57P/E 29.28 25.02 21.34

Shareholding Pattern (%)

As on Mar 2019 As on Dec 2018

Promoter 48.46 49.00

Public 51.16 50.62

Others 0.38 0.38

1 Year Comparative Graph

TUBE INVESTMENTS OF INDIA LTD S&P BSE SENSEX

PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)Tube Investments of India Ltd 375.00 70387.50 12.81 29.28 4.77 250.00Sundram Fasteners Ltd 542.00 113889.60 20.12 26.94 7.17 460.00Gabriel India Ltd 139.45 20031.10 7.20 19.37 3.82 140.00Minda Industries Ltd 351.30 92116.80 13.26 26.49 7.25 140.00


QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)

Results updates- Q4 FY19,

(Rs. in Million) Mar-19 Mar-18 % Change

Revenue 13474.40 12245.40 10.04%

Net Profit 547.50 368.70 48.49%

EPS 2.92 1.97 48.34%

EBIDTA 1398.40 1039.60 34.51%

The company achieved a turnover of Rs. 13474.40 million for the 4th quarter of the FY2018-19 as against Rs. 12245.40

million in the corresponding quarter of the previous year, an increase of 10.04%. During the quarter, net profit increased

by 48.49% to Rs. 547.50 million from Rs. 368.70 million in the corresponding quarter ending of previous year. Reported

earnings per share of the company stood at Rs. 2.92 in Q4 FY19 against Rs. 1.97 in the corresponding quarter of the

previous year. Profit before interest, depreciation and tax stood at Rs. 1398.40 million as against Rs. 1039.60 million in

the corresponding period of the previous year.

Break up of Expenditure

Break up ofExpenditure

Q4 FY19 Q4 FY18 %CHNG

Cost of MaterialsConsumed 7331.30 7648.70 -4%

Purchases of Stock-in-Trade 545.90 284.10 92%

Employee BenefitExpenses 1342.20 1394.60 -4%

Depreciation andAmortisationExpenses

405.60 381.20 6%

Other expenses 2680.00 2652.80 1%


Segment Revenue

Highlights (STANDALONE):

TII's Revenue for the quarter was higher by 10% at Rs. 12240 mn as against Rs. 11090 mn in the corresponding

quarter of the previous year. The profit after tax for the quarter was at Rs. 550 mn as against Rs. 210 mn in the

corresponding quarter of the previous year. For the year ended 31st March 2019, higher profitability and lower capital

employed enabled improvement in Return on Capital Employed (ROCE) to 21% from 14% in the previous year. The

Company generated a cumulative free cash flow of Rs. 2080 mn for the year ended 31st March 2019.

Shanthi Gears Ltd

Shanthi Gears Ltd., a subsidiary company in the Gears Business, in which the Company holds 70.12% stake, registered

revenue of Rs 600 mn during the quarter as against Rs. 550 mn in the corresponding quarter of the previous year,

registering a growth of 10%. Profit after tax for the quarter was at Rs. 60 mn as against Rs. 100 mn in the corresponding

quarter of previous year. The Revenue for the full year was at Rs. 2430 mn compared with Rs.2140 mn in the previous

year. Profit before tax for the year was at Rs. 420 mn as against Rs. 330 mn in the previous year.

Dividend:

The company has recommended a final dividend of Rs. 0.75/- per equity share of Rs. 1/- each for the financial year ended

31st March, 2019.

COMPANY PROFILE

Tube Investments of India Limited is an India-based mobility focused manufacturing company. The Company is engaged

in manufacturing products for automotive and industrial applications.


Engineering

Manufacture and supply of high quality safety critical CDW tubes, ERW and tubular components for automobile

application, large diameter tubes for hydraulic cylinders and off-road application and special grade Cold Rolled Steel

Strips (CRSS)

Metal Formed Products

Manufacture and supply of sheet metal formed products, industrial chains, motor casings, agri blades and fine blanked

components for automotive, industrial and railway segments.

Bicycles

Manufacture and marketing of wide range of bicycles and accessories from standard bicycles to premium bicycles for

kids, health and performance segments. Its brands command a leadership position in India.

About Murugappa Group

Founded in 1900, the Rs 329 Billion Murugappa Group is one of India's leading business conglomerates. The Group has

28 businesses including nine listed Companies traded in NSE & BSE. Headquartered in Chennai, the major Companies of

the Group include Carborundum Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam

MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering Company Ltd., E.I.D.

Parry (India) Ltd., Parry Agro Industries Ltd., Shanthi Gears Ltd., Tube Investments of India Ltd., TI Financial Holdings

Ltd and Wendt (India) Ltd.


FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as of March 31, 2018 -2021E

FY-18A FY-19A FY-20E FY-21EASSETSNon-Current Assets

a) Property, Plant and Equipment 10264.70 10975.70 11634.24 12215.95b) Capital Work in Progress 901.00 688.60 757.46 818.06c) Intangible Assets 109.00 101.10 107.17 113.60d) Investment Property 121.20 120.20 117.80 114.26e) Goodwill on Consolidation 3081.70 3091.30 3122.21 3153.44f) Investment in Joint Ventures 88.50 0.00 0.00 0.00g) Financial Assets

i) Investments 232.90 227.60 218.50 214.13ii) Other Financial Assets 246.10 296.40 337.90 381.82iii) Derivative Instruments 0.00 21.20 22.05 22.71

h) Non-Current Tax Assets 160.60 211.30 245.11 281.87i) Other Non -Current Assets 316.10 520.50 593.37 664.57

1. Sub Total - Non- Current Assets 15521.80 16253.90 17155.80 17980.41Current Assets

a) Inventories 7608.60 8147.90 8555.30 8897.51b) Financial Assets

i) Investments 1014.00 1096.90 1162.71 1220.85ii) Loans 16.40 16.30 16.95 17.63iii) Trade Receivables 6970.10 6806.30 7078.55 7432.48iv) Derivative Instruments 0.00 71.60 75.18 79.69v) Cash and Cash Equivalents 324.60 525.40 614.72 700.78vi) Bank Balances other than Cash 0.00 34.70 36.44 37.89vii) Other Financial Assets 788.50 242.70 274.25 298.93

c) Other Current Assets 872.10 623.20 673.06 713.442. Sub Total - Current Assets 17594.30 17565.00 18487.15 19399.20Total Assets (1+2) 33116.10 33818.90 35642.95 37379.61EQUITY AND LIABILITIESEQUITY

a) Equity Share Capital 187.50 187.70 187.70 187.70b) Other Equity 12535.60 14566.30 17188.23 20110.23

1. Total Equity 12723.10 14754.00 17375.93 20297.932. Non-controlling Interest 1004.80 962.00 990.86 1010.68Non Current Liabilities

a) Financial Liabilitiesi) Borrowings 2285.60 1209.60 967.68 832.20ii) Other Financial Liabilities 8.80 10.70 12.52 14.15

b) Deferred Tax Liabilities (Net) 226.20 381.00 361.95 351.09c) Other Non - Current Liabilities 0.00 90.00 94.50 98.28

3. Sub Total - Non - Current Liabilities 2520.60 1691.30 1436.65 1295.72Current Liabilities

a) Financial Liabilitiesi) Borrowings 2978.00 3869.20 3559.66 3346.08ii) Trade Payables 9615.90 9614.00 9142.17 8131.57iii) Derivative Instruments 3.10 0.00 0.00 0.00iv) Other Financial Liabilities 2968.00 1574.50 1731.95 1853.19

b) Government Grants 10.80 32.10 36.92 40.61c) Provisions 714.20 735.10 764.50 787.44d) Current Tax Liabilities 3.00 0.00 0.00 0.00e) Other Current Liabilities 574.60 586.70 604.30 616.39

4. Sub Total - Current Liabilities 16867.60 16411.60 15839.50 14775.27Total Equity and Liabilities (1+2+3+4) 33116.10 33818.90 35642.95 37379.61


Annual Profit & Loss Statement for the period of 2018 to 2021E

Value(Rs.in.mn) FY18A FY19A FY20E FY21E

Description 12m 12m 12m 12mNet Sales 50887.60 57747.70 64099.95 71791.94Other Income 585.70 532.20 558.81 586.75Total Income 51473.30 58279.90 64658.76 72378.69Expenditure -47051.30 -52301.00 -57978.40 -64899.91Operating Profit 4422.00 5978.90 6680.35 7478.78Interest -584.90 -528.20 -507.07 -537.50Gross profit 3837.10 5450.70 6173.28 6941.28Depreciation -1535.40 -1615.80 -1712.75 -1798.39Exceptional Items -32.60 30.00 0.00 0.00Profit Before Tax 2269.10 3864.90 4460.53 5142.90Tax -583.20 -1268.10 -1467.52 -1676.58Profit After Tax 1685.90 2596.80 2993.02 3466.31Minority Interest -81.20 -104.10 -96.81 -90.04Share of Profit/ Loss from Joint Venture -130.80 -88.50 -83.19 -78.20Net Profit 1473.90 2404.20 2813.02 3298.08Equity capital 187.50 187.70 187.70 187.70Reserves 12535.60 14566.30 17188.23 20110.23Face value 1.00 1.00 1.00 1.00EPS 7.86 12.81 14.99 17.57

Quarterly Profit & Loss Statement for the period of 30th Sep, 2018 to 30th June, 2019E

Value(Rs.in.mn) 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19EDescription 3m 3m 3m 3mNet sales 14954.00 14584.40 13474.40 15360.82Other income 91.80 108.30 172.80 146.88Total Income 15045.80 14692.70 13647.20 15507.70Expenditure -13484.30 -13115.20 -12248.80 -13947.62Operating profit 1561.50 1577.50 1398.40 1560.08Interest -171.70 -115.00 -113.50 -118.04Gross profit 1389.80 1462.50 1284.90 1442.04Depreciation -409.00 -403.40 -405.60 -421.82Profit Before Tax 980.80 1059.10 879.30 1020.21Tax -301.00 -340.90 -314.30 -335.65Profit After Tax 679.80 718.20 565.00 684.56Minority Interest -29.90 -31.40 -17.50 -18.20Share of Profit/ Loss from Joint Venture -11.80 -65.20 0.00 0.00Net Profit 638.10 621.60 547.50 666.36Equity capital 187.00 187.00 187.70 187.70Face value 1.00 1.00 1.00 1.00EPS 3.41 3.32 2.92 3.55


Ratio Analysis

Particulars FY18A FY19A FY20E FY21E

EPS (Rs.) 7.86 12.81 14.99 17.57

EBITDA Margin (%) 8.69% 10.35% 10.42% 10.42%

PBT Margin (%) 4.46% 6.69% 6.96% 7.16%

PAT Margin (%) 3.31% 4.50% 4.67% 4.83%

P/E Ratio (x) 47.71 29.28 25.02 21.34

ROE (%) 13.25% 17.60% 17.23% 17.08%

ROCE (%) 16.05% 22.00% 22.68% 23.21%

Debt Equity Ratio 0.41 0.34 0.26 0.21

EV/EBITDA (x) 16.79 12.34 10.94 9.71

Book Value (Rs.) 67.86 78.60 92.57 108.14

P/BV 5.53 4.77 4.05 3.47

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 375.00, the stock P/E ratio is at 25.02 x FY20E and 21.34 x FY21E respectively.

Earning per share (EPS) of the company for the earnings for FY20E and FY21E is seen at Rs. 14.99 and Rs. 17.57

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 18% over 2018 to 2021E,

respectively.

On the basis of EV/EBITDA, the stock trades at 10.94 x for FY20E and 9.71 x for FY21E.

Price to Book Value of the stock is expected to be at 4.05 x and 3.47 x for FY20E and FY21E, respectively.

Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

INDUSTRY OVERVIEW

The Cycles and Components segment of the Company comprises bicycles of the Standard and Special variety including

alloy bikes & specialty performance bikes, cycling accessories, bicycle components sold as spares and home fitness

equipment.

Bicycles fall under two distinct categories – Standards and Specials. While Standard cycles are largely used for

commuting, especially in small towns & rural areas, Specials cycles cater to recreational usage, where the product is used

for fun, fitness and leisure activities.

As per the industry estimates, bicycle industry volumes grew by 5% during 2017-18. While orders from the Government

Schemes witnessed a growth of 30% over previous year, trade volumes witnessed a decline of around 10% during the

year. The year 2017-18 was a very challenging one for the bicycle industry with the Standards segment registering a drop

of 21% over previous year in trade. On the other hand, due to increasing aspirations, higher purchasing power,


international exposure to usage patterns and growing fitness consciousness, the use of high-end special bicycles continued

to receive impetus, contributing to the continued steady growth of sale volumes year-on-year.

Nearly 80% of the country’s requirements are met by four major players. The smaller regional players and imports

constitute the balance. The Company enjoys a share of over one-fourth of the total organised market with a much higher

share in the premium segment.

The Engineering Segment of the Company consists of cold rolled steel strips and precision steel tubes viz., Cold Drawn

Welded tubes (CDW) and Electric Resistance Welded tubes (ERW). These products primarily cater to the needs of the

automotive, boiler, bicycle, general engineering and process industries. The Company is further engaged in the

manufacture of large diameter welded tubes mainly for non-auto application. In the past, such products were largely

imported.

During 2017-18, the overall automotive industry growth was at 15%. The passenger vehicle, commercial vehicle and two-

wheeler segments registered growth of 5%, 10% and 16% respectively over the last fiscal. In the two wheeler segment,

the sale volumes in scooters grew by 20%, while motorcycles grew by 16%.

In Cold Rolled Steel Strips, in a market which is dominated by integrated steel manufacturers, the Company continued to

be a ‘niche player’ by focusing on special grades catering to varied applications in different sizes and grades.

Metal Formed Products

Automotive & industrial chains, fine blanked products, stamped products, roll-formed car doorframes and cold rolled

formed sections for railway wagons and passenger coaches constitute the Metal Formed Products segment.

During 2017-18, the two wheeler segment grew 16% driven by scooter growth of 20% and the passenger vehicles

segment by 5%. The segment is one of the major players manufacturing roller chains and fine blanked parts for the

automotive industry in India. The replacement market for chains and sprockets continued to register a good growth due to

the increasing two wheeler population. The domestic demand for industrial chains has grown moderately.

With international car majors continuing to invest in the country and increasingly using India as an export base, many

component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and their Tier 1

suppliers. Within the railway segment, the freight sub-segment is yet to show any sign of a major revival. The passenger

coach segment witnessed huge growth as the Ministry of Railways is focussing on passenger safety by initiating

conversion of all old type coaches into stainless steel.


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Name of the Analyst Qualifications SectorsCovered

Exposure/Interest tocompany/sector UnderCoverage in the CurrentReport

Dr.C.V.S.L. Kameswari M.Sc, PGDCA,M.B.A,Ph.D (Finance)

Pharma &Diversified

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B. Anil Kumar M.B.A Auto, IT &FMCG


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Documents

th TUBE INVESTMENTS OF INDIA LTD ISIN...TII's Revenue for the quarter was higher by 10% at Rs. 12240 mn as against Rs. 11090 mn in the corresponding quarter of the previous year. The