CMP 36.00

Target Price 40.00

ISIN: INE087B01017

JAN 10th

, 2013

ANIK INDUSTRIES LIMITED Result Update: Q2 FY13

BUYBUYBUYBUY

Stock Data

Sector Agricultural Products

BSE Code 519383

Face Value 10.00

52wk. High / Low (Rs.) 40.55/24.25

Volume (2wk. Avg ) 70000

Market Cap ( Rs in mn ) 999.14

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY12A FY13E FY14E

Net Sales 16076.96 17845.43 19273.06

EBITDA 796.28 929.31 1038.35

Net Profit 133.22 156.53 181.82

EPS 4.80 5.64 6.55

P/E 7.50 6.38 5.50

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX ANIK INDUSTRIES LTD

SYNOPSIS

We initiated coverage of Anik Industries

Ltd and set a target price of Rs. 40.00 for

Medium term Investment.

ANIK is primarily engaged in the business

of processing of Milk & Milk Products,

Trading of Agri- Commodities & coal and

Wind power Generation.

During the quarter, the robust growth of

Net Profit is increased by 99.68% to Rs.

18.81 million.

The Company is planning to setup a new

dairy plant at Etah for better quality of milk

powder to cater northern and north-east

part of the country.

The Company is enthusiastic to set up

mineral based industry in Madhya Pradesh

to process minerals to be explored from its

own mines.

Company is keen to set up an IT project

under one of its sole proprietary concern

M/s Ruchi Infosystems in West Bengal.

Net Sales and PAT of the company are

expected to grow at a CAGR of 15% and

17% over 2011 to 2014E respectively.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Anik Industries Ltd 36.00 999.14 4.80 7.50 0.44 0.00

DFM Foods Ltd 225.00 2293.40 8.63 26.57 7.61 25.00

Agro Tech Foods Ltd 509.00 12430.80 15.65 32.59 5.96 17.50

Kwality Diary (India) Ltd 34.30 6989.60 5.60 6.14 3.89 10.00

Investment Highlights

Results updates- Q2 FY13,

ANIK has made a benchmark in its dairy products all

over India and in order to keep ahead and make its

presence felt globally and in other fields too,

reported its financial results for the quarter ended

30 September, 2012. The company is exploring

business opportunities for implementing the

expansion plans of the existing businesses and few

years back has diversified in mining and mineral

based new projects.

Months SEP-12 SEP-11 % Change

Net Sales 3017.05 3287.89 -8.24%

PAT 18.81 9.42 99.68%

EPS 0.68 0.34 99.68%

EBITDA 192.23 106.65 80.24%

The company’s net profit jumps to Rs.18.81 million against Rs.9.42 million in the corresponding quarter ending

of previous year, an increase of 99.68%. Revenue for the quarter decreased 8.24% to Rs.3017.05 million from

Rs.3287.89 million, when compared with the prior year period. Reported earnings per share of the company

stood at Rs.0.68 a share during the quarter, registering 99.68% increase over previous year period. Profit before

interest, depreciation and tax is Rs.192.23 millions as against Rs.106.65 millions in the corresponding period of

the previous year.

Break up of Expenditure

Expenditures

(Rs. In Millions) Q2 FY13 Q2 FY12

Depreciation 14.34 14.05

Cost of Material Consumed 796.03 1196.49

Employee Benefit Expenses

26.92 25.06

Other Expenditure 87.66 120.71

Purchase of Traded Goods 737.40 522.40

Segment Revenue

Latest Updates

� The Company is planning to set up a new dairy plant at Etah for better quality of milk powder to cater

northern and north-east part of the country. This plant is expected to be operational by April 2013.

� The Company is enthusiastic to set up mineral based industry in Madhya Pradesh to process minerals to be

explored from its own mines. Land has been indentified at two locations and project work shall start in near

future.

� The Company has been allotted land by the Maharashtra Industrial Development Corporation at Butibori

Industrial Area in Nagpur and also acquired land near to Kolkata Leather Complex, KITP, Gangapur, and West

Bengal where also Company is keen to set up an IT project under one of its sole proprietary concern M/s

Ruchi Infosystems.

� During the year, Company has successfully entered in states of Central India and Western India and dairy

products of the Company are welcomed in these markets.

Company Profile

Anik Industries Limited, having its registered office at Mumbai and Corporate office at Indore, India, is a more

than four decade old company previously known as Madhya Pradesh Glychem Industries Limited and later on

changed its name to Anik Industries Limited with a view to link it with its renowned brand “ANIK” in the field of

dairy industry.

ANIK has already made a benchmark in its dairy products all over India and in order to keep ahead and make its

presence felt globally, Anik Industries Limited has diversified and has widened its focus to, Mining of Minerals,

Realty, International Coal Trading and mining, Agri Commodities, Power Generation, Integrated Ferro- Alloys

and Mineral based Industries.

The Company insists on honesty, integrity and fairness in all aspects of its business which has earned it the trust

and respect of every strata of society that it has come in contact with.

Business Area

• Milk Processing

� Milk, Ghee, Milk Powder and other Dairy products

• Mining & Coal

� Coal, Maganese and Rock Phosphate

• Expansion Plans

� MINING BUSINESS

Anik has taken initiatives of diversification in the mining business. Anik is in the process of setting up

mineral based industries in metal mineral and nature stone base minerals like iron ore, manganese ore,

bauxite, granite, quartz, marble, silica sand, dolomite, limestone etc.

� REAL ESTATE BUSINESS

Company is planning to launch similar integrated townships at other places of the country viz. Indore,

Jamshedpur etc after getting incredible response in the integrated township project “Active Acres” at

Kolkata launched in 2008 and “Ruchi Lifescapes” at Bhopal.

� NEW DAIRY PLANT

Company is expanding its capacity of Milk Processing, Ghee Manufacturing & Milk Powder Manufacturing

in near future to grab great opportunity available in domestic as well as overseas market.

� FERRO ALLOYS BUSINESS

Anik has taken a step forward in the process of setting up Ferro Alloys plant in the state of Gujarat for

which an MOU has been signed with the Government of Gujarat.

• Ferro-Alloys

Anik has taken a step in the process of setting up Ferro-Alloys Plant through one of our subsidiaries M/s Anik

Ferro-Alloys Pvt. Ltd at Meghnagar Dist. Jhabua (MP). Also to speed up this objective, the company has

purchased an existing plant of Ferro-Alloys, from where it expects to take commercial production soon. India,

with a 5-7% share of the global Ferro alloys industry, is among the 10 largest producers of the material in the

world.

• Real Estate

Company’s first Project has been initiated at Kolkata which comprises of a modern residential condominium

of about 2 million sq. ft. The second one is the 85 acre fully integrated township at Bhopal.

• Agri Commodities

ANIK’s Agro Commodities business is focused on trading in various Agro products in India and

internationally. The company has been trading & merchandising Cotton, Oilseeds, Grains, Pulses, Spices, and

various agro based products in all the principal world markets and to the end users in major consumption

markets. The Keys Products of Anik are : Wheat, Sesame seeds, Corn, Rice, Cumin seeds, Cotton, Gram etc.

• Power

� CONVENTIONAL POWER

Anik Group has identified various opportunities to develop power plants based on various conventional

resources of energy such as Small Hydro, Coal and Gas, etc.

� SOLAR POWER

Anik has a consolidated plan of setting up Solar PV plants in Rajasthan and Western Madhya Pradesh and

have registered the initial phases with the nodal agencies.

� WIND POWER

The Company has Two Wind Power projects at Nagda Hills, Dewas (MP) and Jaisalmer (Rajasthan) are

successfully generating energy and have shown the ability of Company to diversify in Non Conventional

Energy Sector.

� SMALL AND MINI HYDEL POWER

Hydro electricity is the world's leading source of renewable energy, supplying 19 per cent of electricity.

� BIOMASS

Anik Group is working on setting up a Biomass Energy Generation plant in Rajasthan and Western

districts of Madhya Pradesh of about 10 MW capacities each, with the initial feasibility study completed.

Bio energy is the multi-talent of the renewable energy sources. It is diverse and flexible and can be used

in gaseous, liquid and solid form.

Financial Highlight

Balance sheet as at March31, 2012

(A*- Actual, E* -Estimations & Rs. In Millions)

FY12 FY13E FY14E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 277.54 277.54 277.54

Reserves and Surplus 2013.19 2169.72 2351.53

Net worth (a) 2290.73 2447.26 2629.07

Non-Current Liabilities:

long-term borrowings 195.61 162.36 144.50

Deferred Tax Liabilities [Net] 98.70 103.64 109.85

Long Term Provisions 7.95 8.19 8.43

Long term liabilities (b) 302.26 274.18 262.78

Current Liabilities:

Short-term borrowings 2990.04 3827.25 4669.25

Trade Payables 4117.72 4900.09 5693.90

Other Current Liabilities 268.53 290.01 313.21

Short Term Provisions 4.25 6.80 9.86

Current Liabilities © 7380.54 9024.15 10686.22

Total (a+b+c) 9973.53 11745.59 13578.08

ASSETS:

Non-Current Assets:

Fixed Assets:

Tangible Assets 1163.03 1133.95 1105.61

Intangible Assets 3.89 4.01 4.21

Capital work-in-progress 18.23 18.59 19.06

(d) 1185.15 1156.56 1128.87

Non Current Investments 0.70 0.60 0.50

Long Term Loans and Advances 51.70 67.21 79.31

(e) 52.40 67.81 79.81

Current Assets:

Current Investments 246.13 347.04 449.07

Inventories 1414.33 1310.46 1271.15

Trade Receivables 4436.65 5767.65 7070.52

Cash and Bank Balances 1624.80 2079.74 2558.09

Short Term Loans and Advances 809.15 792.97 777.11

Other Current Assets 204.92 223.36 243.47

(f) 8735.98 10521.22 12369.40

Total (d+e+f) 9973.53 11745.59 13578.08

Annual Profit & Loss Statement for the period of 2011 to 2014E

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 12722.31 16076.96 17845.43 19273.06

Other Income 261.39 509.98 331.49 341.43

Total Income 12983.70 16586.94 18176.91 19614.49

Expenditure -12470.60 -15790.66 -17247.60 -18576.15

Operating Profit 513.10 796.28 929.31 1038.35

Interest -298.86 -578.72 -648.17 -712.98

Gross profit 214.24 217.56 281.14 325.36

Depreciation -45.99 -56.41 -63.74 -71.07

Profit Before Tax 168.25 161.15 217.40 254.29

Tax -56.00 -27.93 -60.87 -72.47

Net Profit 112.25 133.22 156.53 181.82

Equity capital 277.54 277.54 277.54 277.54

Reserves 1880.75 2013.19 2169.72 2351.53

Face value 10.00 10.00 10.00 10.00

EPS 4.04 4.80 5.64 6.55

Quarterly Profit & Loss Statement for the period of 31 Mar, 2012 to 31 Dec, 12E

Value(Rs.in.mn) 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12E

Description 3m 3m 3m 3m

Net sales 6043.72 3178.20 3017.05 3198.07

Other income 80.00 75.23 47.93 54.64

Total Income 6123.72 3253.43 3064.98 3252.71

Expenditure -5996.41 -3119.19 -2872.75 -3050.64

Operating profit 127.31 134.24 192.23 202.07

Interest -20.34 -92.35 -150.08 -165.09

Gross profit 106.97 41.89 42.15 36.98

Depreciation -14.17 -14.21 -14.34 -14.63

Profit Before Tax 92.80 27.68 27.81 22.36

Tax -8.00 -7.00 -9.00 -5.37

Net Profit 84.80 20.68 18.81 16.99

Equity capital 277.54 277.54 277.54 277.54

Face value 10.00 10.00 10.00 10.00

EPS 3.06 0.75 0.68 0.61

Ratio Analysis

Particulars FY11 FY12 FY13E FY14E

EPS (Rs.) 4.04 4.80 5.64 6.55

EBITDA Margin (%) 4.03% 4.95% 5.21% 5.39%

PBT Margin (%) 1.32% 1.00% 1.22% 1.32%

PAT Margin (%) 0.88% 0.83% 0.88% 0.94%

P/E Ratio (x) 8.90 7.50 6.38 5.50

ROE (%) 5.20% 5.82% 6.40% 6.92%

ROCE (%) 11.79% 15.57% 17.14% 18.07%

Debt Equity Ratio 1.20 1.39 1.37 1.34

EV/EBITDA (x) 1.95 1.25 1.08 0.96

Book Value (Rs.) 77.77 82.54 88.18 94.73

P/BV 0.46 0.44 0.41 0.38

Charts

Outlook and Conclusion

� At the current market price of Rs.36.00, the stock P/E ratio is at 6.38 x FY13E and 5.50 x FY14E respectively.

� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.5.64 and Rs.6.55

respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 17% over 2011 to 2014E

respectively.

� On the basis of EV/EBITDA, the stock trades at 1.08 x for FY13E and 0.96 x for FY14E.

� Price to Book Value of the stock is expected to be at 0.41 x and 0.38 x respectively for FY13E and FY14E

� We expect that the company surplus scenario is likely to continue for the next three years, will keep its

growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.40.00 for Medium to Long term investment.

Industry Overview

India is amongst one of the fastest growing consumer markets in the world with its huge population & powerful

purchasing power and can be seen as rising star of the world economy in near future. In 2011-12 the Indian

Economy has registered a Growth Rate of 6.5% driven on strong domestic demand despite the industrial

sluggishness throughout the world.

Company is primarily engaged in the business of processing of Milk & Milk Products, Trading of Agri-

Commodities & coal and Wind power Generation. India, the largest Milk Producing country in the World accounts

for around 20 per cent of global milk production, with most of it consumed domestically, which is also the fastest

growing market for milk and milk products with about 10% growth rate annually. The market size in value term

for milk and milk product including the organized and un-organized sector is estimated to be around USD 70

Billion. India, where consumption of dairy products is rapidly increasing, having great business opportunities in

dairy sector. As per Assocham “milk production is likely to reach about 190 million tones in 2015 from current

level of about 123 million tonnes,".

In terms of wind power installed capacity, India is the number five in the world. The unexploited resource has

the potential to sustain the growth of wind energy in future. The renewable energy in India already has a

significant share of India’s installed power capacity & it is expected, that this share will keep on growing.

Dairy Business:

The Indian Dairy industry is rapidly growing, trying to keep the pace with global growth rate. In India potential is

there for expansion in smaller towns. The Govt. of India is planning to spend nearly US $ 3700 Million (Rs. 18,000

crores) for the dairy sector under the National Dairy Plan during the next few years.

Indian Dairy industry is in unorganized form where quality of milk and animal are poor with yield per cow less

than that of foreign producers who are on the verge of entering in Indian dairy market and will soon have access

to India with favorable environment of globalization. Indian dairy industry will see tough competition from

exporters. Technological up gradation with aim to provide nutrition, health and high quality are key factors for

success in dairy business.

Wind Power:

With the encouraging policy for renewable energy, this sector has shown great growth pace helped India to

become new “Wind Superpower”. The Company has Two Wind Power projects at Nagda Hills, Dewas (MP) and

Jaisalmer (Rajasthan) are successfully generating energy and have shown the ability of Company to diversify in

Non Conventional Energy Sector.

OUTLOOK

With increasing demand of dairy products, the Company has successfully set up a new dairy plant at Dewas,

whereby the total milk processing capacity reached to 10 lacs liters milk per day. Company is also setting up a

new dairy plant at Etah (UP) where an old dairy plant is already exists. During the year under review Company

has successfully entered in states of Central India and Western India and products of the Company are welcomed

in these markets. Endeavors are continuing to enter into remaining parts of Central, Western and Southern parts

of India also. It started concentrating more on hygienic consumer packaged products instead of bulk and are

hopeful that this will further strengthen our position in the market.

Further, the Wind Power Projects of the Company are generating electricity satisfactorily. Electricity produced in

Rajasthan Plant is being sold to Rajasthan Electricity Board (RSEB) while in Madhya Pradesh has captive

consumption in its plant and remaining electricity is sold to Madhya Pradesh Electricity Board.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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