SECTOR: CAPITAL GOODS
Skipper Ltd.
STOCK INFO.
BLOOMBERG
BSE Sensex:23962
S&P CNX:7277
SKIPPER.IN
REUTERS CODE
22 January 2016
Initiating Coverage
(INR CRORES)
Buy
INR162
SKIP.NS
Y/E MARCH
Net sales
EBITDA
RPAT
BV/Share (Rs.)
Adj. EPS (Rs.)
EPS growth (%)
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div yld (%)
ROE (%)
RoCE (%)
FY15A
1,270
229
89
29.7
8.7
214%
18.7
5.5
10.4
1.5%
33%
24%
FY16E
1,498
264
121
38.6
11.8
36%
13.7
4.2
7.8
1.3%
35%
32%
FY17E
1,837
315
161
51.4
15.8
34%
10.3
3.2
5.9
1.0%
35%
38%
KEY FINANCIALS
Shares Outstanding (cr)
Market Cap. (Rs cr)
Market Cap. (US$ m)
Past 3 yrs Sales Growth (%)
Past 3 yrs NP Growth (%)
10.2
1656
247
20%
117%
STOCK DATA
52-W High/Low Range (INR)
Major Shareholders
(as of September 2015)
Promoter
Institutions
Public & Others
Average Daily Turnover(6 months)
Volume
Value (Rs cr)
1/6/12 Month Rel. Performance (%)
1/6/12 Month Abs. Performance (%)
220/117
72.4
0.0
27.6
51521
87.8
-3/9/3
-9/-2.5/-12
Maximum Buy Price :INR170
We recommend to BUY Skipper for a target of INR 235.
PGCIL capex will boost order book:
Skipper is a supplier of
transmission towers to Power Grid and has one of the largest capacity
of towers at 175K tonnes in a 15Lakh tonne industry. India will invite
bids for INR1 Lakh worth of power transmission projects in FY16, of
which Power Grid is expected to win a lions share of EPC contracts.
PGCIL is also expected to bag orders on nomination and is also
expected to work on Green corridor at a cost of INR30000cr. Skipper
has 46% of the order book from PGCIL and can maintain this ratio.
Exports to add to FY16 to FY18 revenue growth:
Skipper has
INR1200 cr worth of orders from overseas clients. The company has
a tie-up with a Latin Americian Transmission body that has resulted in
orders for supply of transmission towers for a few projects being
executed in the region. Similar to India, South America too is working
on expansion and revamp of infrastructure. This can continue to result
in further orders for the company.
Backward integration - an advantage for Skipper:
Skipper has
facilities to roll billets into angles that form the core of transmission
towers. Further, the company's facilities are in East India which has
steel manufacturing capacities. Inward freight advantage is equal to
3-4% of total cost of tower as compared to majority of the tower
manufacturing capacity which is set up near Nagpur (Maharashtra).
Further, Skipper has galvanising facilities for upto 14M length and 2Lakh
tonnes per annum. All this helps achieve the required quality standards
cheap. Also, the company's plants are close to Eastern India's largest
ports resulting in lower freight for exports too.
PVC - a new growth engine:
Skipper had announced plans to raise
PVC pipes capacity from 10000 tonnes to 40000 tonnes by the end of
the year. This is being done in phases and in asset light model. The
company leases land and sets up a plant so that land acquisition costs
and time delays are eliminated. The company plans to spend INR40cr
on this capex and will be able to double its business every year over
FY15-FY17E. PVC, thus, has potential to become a INR500cr business
in the next 3-4 years and raise ROCE of the company.
Valuations & View:
We expect Skipper to have a 20% revenue
CAGR and 35% Profit CAGR over FY15-FY17E. We remain
confident of a 25%+ CAGR in profits upto FY19E. Hence we see
potential for a further rerating from the current 9.6xFY17E EPS. We
value Skipper at 15xFY17E and recommend to BUY for a target of
INR. 235 from a 1 year perspective.
Ravi Shenoy (ravi.shenoy@MotilalOswal.com); Tel: +91 22 30896865

Skipper Ltd.
INVESTMENT CONCERNS
Delay in order inflow or execution:
Transmission towers account for about 90% of Skipper's sales and the
existing order book gives it a visibility of about 2-2.5 years. However, any delay in execution or slowdown in
order inflow (both from the domestic and export markets) will impact our earnings estimates.
Foreign exchange fluctuations:
As Skipper books income from rolling over/cancellation of forward contracts
immediately and the premium it earns depends on the spot rate at the time of roll over, it adds to the uncertainty
in predicting the PBT.
New player in PVC segment:
Although Skipper has a clear strategy in its expansion in this business, the
sector is dominated by the likes of Finolex Industries, Astral Polytechnik, and Supreme Industries. Moreover,
the management plans to take Skipper from a regional player to pan-India, following an asset-light strategy that
is new to the industry. Any delay in expansion plans or inability to capture sufficient share in any of the markets
will impact our growth estimates.
Company background:
Skipper is a power transmission and PVC pipes company engaged in supply of transmission towers to PGCIL
and sales of PVC pipes and fittings under the "Skipper Brand". The company has also bagged large orders for
exports of power transmission towers. Skipper, run by three third generation and young Bansal brothers from
Kolkotta, was listed on Kolkotta stock exchange earlier and is now listed on both the BSE and NSE.
22 January 2016
2

Skipper Ltd.
IVRCL: Financials and Valuation
Skipper Ltd. Financials & Valuation
INCOME STATEMENT
Y/E MARCH
FY13A FY14A
(INRCR)
FY15 FY16E FY17E
RATIOS
Y/E MARCH
FY13A FY14A
FY15 FY16E FY17E
Net sales
Growth
Other Income
Total Income
Staff Costs
Raw material
Other Expenses
Total Expenditure
EBITDA
% of net Sales
Depreciation/Amortization
Finance Charges
PBT
Tax
PAT
Growth
PAT Margin
BALANCE SHEET
Y/E MARCH
900 1,042 1,270 1,498 1,837
21%
1
17
683
110
810
92
10%
13
51
28
9
19
76%
2%
16%
2
24
760
139
120
12%
15
69
37
10
27
3%
22%
44
34
172
229
17%
22
70
136
47
89
7%
18%
18
48
202
264
17%
25
55
185
64
121
36%
8%
23%
0
60
1,214
248
315
17%
28
44
243
82
161
34%
9%
(INRCR)
FY13A FY14A
FY15 FY16E FY17E
Adj. EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (Incl. Div. Tax)
Valuation
P/E
Cash P/E
Price/Book Value
EV/EBITDA
EV/Sales
Div. Yld
Return Ratios
RoE
RoCE
Leverage
Debt/Equity (x)
CASH FLOW
1.9
28%
3.2
21.2
0.1
5%
84.3
50.4
7.7
21.7
2.2
0.1%
10%
14%
2.1
2.8
44%
4.3
23.7
0.2
5%
58.6
37.6
6.8
16.5
1.9
0.1%
12%
16%
1.9
8.7
214%
10.8
29.7
1.3
15%
18.7
14.9
5.5
10.4
1.5
0.8%
33%
24%
1.1
11.8
36%
14.2
38.6
2.5
21%
13.7
11.4
4.2
7.8
1.3
1.5%
35%
32%
0.7
15.8
34%
18.5
51.4
2.5
16%
10.3
8.8
3.2
5.9
1.0
1.5%
35%
38%
0.5
902 1,044 1,314 1,517 1,837
880 1,002
923 1,086 1,252 1,521
44% 230%
(INRCR)
FY13A FY14A
FY15 FY16E FY17E
Y/E MARCH
Equity Share Capital
Reserves
Networth
Debt
Other Liabilities
Net deferred tax
SOURCES OF FUNDS
Net Block
CWIP
Current Assets
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
10
196
206
424
2
18
650
326
4
456
238
155
13
51
0
10
221
231
439
1
22
693
338
8
533
229
232
26
45
0
188
345
2
0
693
10
294
304
343
0
26
673
351
3
706
228
376
56
46
0
390
316
3
0
673
10
384
394
294
0
33
722
386
3
793
269
443
35
46
0
461
332
0
0
722
10
516
526
243
0
42
811
418
3
947
330
543
28
46
0
557
390
0
0
811
PBT
Depreciation
Interest
(Inc)/Dec in WC
Others
CF from Operations
(Inc)/Dec in Fixed assets
Others
CF from Investing act.
Inc/(Dec) in debt
Dividend paid
Less: Interest paid
Others
CF from Financing act.
Inc/(Dec) in cash
Add: Beginning balance
Closing Balance
28
13
51
(126)
(2)
(36)
(57)
0
(57)
125
(1)
(51)
9
97
4
9
13
37
15
69
(12)
(6)
102
(32)
0
(32)
136
22
70
59
(45)
243
(30)
0
(30)
185
25
55
(38)
(58)
169
(60)
0
(60)
243
28
44
(69)
(74)
172
(60)
0
(60)
15 (96) (50) (50)
(1) (13) (26) (26)
(69) (70) (55) (44)
(35)
0
0
0
(56) (182) (130) (120)
15
13
26
30
26
56
(21)
56
35
(7)
35
28
Current Liabilities & Prov. 137
Net current assets
319
Other Assets
Misc expenses
Application of Funds
1
0
650
22 January 2016
3

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