SWASTIKA PMS TEAM Aug 10, 2015

COMPANY PROFILE- SECTOR- Cables Telephone

Incorporated in July 2006, SCTL was formerly known as Rosenberger Shilpi Cable Technologies, has a massive

monthly production capacity of 1200 Kms. spread on a considerable area of 10 acres with a work area of 3.5

acres. This capacity is expected to rise two-fold in future.

AREA OF BUSINESS Product Portfolio includes RF Cables of various sizes for the telecom sector, Low Voltage

Power cables and Cable Accessories

COMPANY KEY DATA (As on March 31, 2015)

M Cap PE* Industry PE

Div. Yield

ROE** EPS^ Deb/Equity Net Profit Net Sales BV# Face Value

Beta

(` In Cr.) (X) (X) (%) (%) (`) Ratio (` In Cr.) (` In Cr.) (`) (`) (%)

506.49 3.20 24.12 0.00 30.85 15.59 0.65 159.88 3,212.93 50.53 10.00 2.46 NOTE: - *PE-PRICE EARNINGS RATIO, **ROE-RETURN ON EARNINGS, ^EPS-EARNING PER SHARE, #BV-BOOK VALUE

PEER GROUP CMP

(07.08.15)

Market Cap.

PE (X) EPS BV P/BV

(X) DIVIDEND Net Sales

Net Profit

Total Assets

Company Name

(`) (` In Cr.) Ratio (`) (`) Ratio (%) (` In Cr.) (` In Cr.) (` In Cr.)

Shilpi Cable 49.50 506.49 3.20 15.59 50.53 0.98 10.00 3,212.93 159.88 369.03

Surana Telecom

6.30 65.22 33.00 0.19 5.71 1.10 12.00 17.46 1.99 80.90

Bhagyanagar Ind

17.50 115.82 54.59 0.32 32.86 0.53 15.00 251.51 2.05 303.04

49.50CMP

(07.08.15)48-50

BUY AT

(`)

(98)

97%

UP

SIDE

18

MonthsDURATION

GROWTH METER (Past 3 Years)

Sales Growth 71.36

Profit Growth 93.03

ROE 33.44

STOCK

TREASURE SHILPI CABLE

TECHNICAL VIEW-

On the technical chart, the stock is in bull phase from last

many trading sessions. And stock is also trading above its

resistance level i.e. 50 days daily moving average, hence we

are recommending to ‘buy’ the particular stock at current

levels.

FUNDAMENTAL VIEW-

The Company has reported a Net sales of ` 902.45 cr. for

Q4FY15 as compared to ` 663.57 cr. in the last quarter

and Net Profit of ` 42.29 cr. as compared to ` 28.33 cr. for

Q4FY14.

EBITDA for the Q4FY15 has been growing around 49.52%

and EPS stood at ` 4.27 in Q4FY15 as compared to ` 7.55

in Q4FY14.

Net Income for the financial year ended 31st Mar 2015

was ` 3212.93 cr. as compared to ` 1752.94 cr., up by

29.90% and Net profit for the year was ` 159.88 cr. as

against ` 100.89 cr. last year, registering a growth at

around 17.96% YoY basis.

Earnings per share for the year stood at ` 15.59 and

the Book value per share stood at ` 50.53.

NPM is 4.98% and Interest Coverage ratio is 2.50 for

FY15.

The company has declared an equity dividend of

10.00%, amounting to ` 1.00 per share for the financial

year 2014.

We are expecting Net Sales and PAT of the company to

grow at a CAGR of 37.43% and 33.12% over 2014 to

2017E respectively.

EARNINGS ALERT

PARTICULARS Q4FY15 Q4FY14 Growth

Q-o-Q (%)

Net Sales (` In Cr.)

902.45 663.57 36.12

Net Profit (` In Cr.)

42.29 28.33 49.28

EPS (`)

4.27 7.55 -43.44

EBITDA (` In Cr.)

79.41 53.11 49.52

ONE YEAR PERFORMANCE NIFTY VS STOCK (2014-15)

KEY DISCUSSIONS

The company involves in all activities including Site Acquisition, Municipal Clearances, Civil Works,

Tower & Shelter Erection, Electrical Works, Project Management and other Engineering, Procurement &

Construction related activities. The Indian auto industry has registered healthy growth over the last two

years. The growth can be attributed to factors such as strong buoyancy in the end-user industry, recovery

of the global economy, improved consumer sentiment and return of adequate liquidity in the financial

system and stable government . The revival of the auto industry was initially driven by the fiscal stimulus

programme (Maken In India plan ) of the new government.

SCTL is engaged in manufacturing of products such as RF Cables in various sizes for the telecom sector,

low voltage power cables and cable accessories. These products are used in telecom towers. In mobile

towers, feeders cables are used as a high frequency transmission medium to carry high-frequency or

broadband signals between antenna and its base station. These feeder cables are vital for site's optimal

performance starting from Civil Survey & Site Identification.

Shilpi cables Manufacturing Plants are located in Choupanki and Bhiwadi, 1.5 hr away from NCR, Shilpi

Plant is spread over 10.5 acres with ample space available for expansion. Shilpi is an ISO 9001: 2008; ISO

TS 16949; ISO 14001: 2004; OHSAS 18001:2007 certified company with a capacity to produce over

950,000 km of wires and 10,000 km of RF Feeder Cable in a year equipped with latest quality testing

equipment, with Grid availability more than 97% with power back up systems in place, Effluent

treatment plant & Rain water harvesting systems in place.

SHILPI CABLE

NIFTY

NIFTY

NIFTY

CIPLA

Investment Rationale

Radio Frequency Cables

The superlative quality Radio Frequency Corrugated Feeder Cables of Shilpi Cable Technologies Ltd. are

outcome of the state-of-the-art production facility of the company located in India at Chopanki in Rajasthan.

With a view to empower its clients with world class Radio Frequency Cables, Shilpi Cable has acquired the

international class manufacturing technology by Rosen Dahl. Shilpi Cable uses advanced 'Physical Foaming'

along with 'Triple Layer Extrusion' for achieving higher foaming percentage. Increased foaming percentage in

Radio Frequency Corrugated Feeder Cables reduces the chances of communication loss while the cable is in use.

Clients

• Bsnl • Mtnl • Airtel

• Tata indicom • Idea • Nokia

• Ericsson • Videocon • Zte

• Aircel • Tata • Reliance

Auto Wiring Facilities

The superlative quality Auto PVC insulated wires of Shilpi Cable Technologies Ltd. are outcome of the state-

ofthe-art production facility of the company located in India at Chopanki in Rajasthan. With a vision of best

quality with best supplier for Auto wires and harnesses. Shilpi Cable has acquired the international class

automated manufacturing technology by Neihoff, Maillfer. Manufacturing as per standards referred by customer

or recognized internationally i.e. JIS 3406, ISO 6722 or ISO 14572.

Clients

• Ashok Leyland • Hero • Eicher

• Tata Motors • Yamaha • Bajaj

• TVS • Honda • Sonalika

Quality Assurance

The ISO 9001:2008 Quality Management System certification is successfully implemented and maintained for RF

Cable manufacturing. The ISO/TS 16949:2009 Quality Management System certification is successfully

implemented and maintained for automotive cable manufacturing.

Products

• RF Cables • RF Connectors • RF Jumpers

• Automotive Cable • PVC Insulated Battery Cable •Photovoltaic

Cables Solar

• Power Cord • Power Energy Cables • Control Cables

• Telephone Cables • LAN Cable • Co Axial Cables

• Solar Cables • House Wire • IBS

• PVC Insulated Power Control Cable • Wiring Harness

INDUSTRY OVERVIEW

India is the world's second-largest telecommunications market, with 974 million subscribers as of

December 2014. With 169.81 million internet subscriptions, India also stood third-highest in terms of

total internet users in 2013-2014. The number of internet subscribers increased at a (CAGR) of 52% to

243 million in 2014 from 8.6 million in 2006. The wireless segment (97% of total telephone

subscriptions) dominates the market, while the wireline segment accounts for the rest. During FY 07-14,

wireless subscriptions increased at a CAGR of 27.5% to 904.51 million. Telecom penetration in the

nation's rural market is expected to increase from 41% as of March 2013 to 70% by 2017.

The Indian auto industry has registered a steady growth over the last two years after a de-growth. The

growth can be related to aspects such as strong buoyancy in the end-user industry, recovery in global

economy, improved consumer sentiment and return of adequate liquidity in the financial system and

stable government. The rejuvenation of the auto industry was initially driven by the fiscal stimulus

programme (Maken In India) of the new government.

In accordance to the vision of Automotive Mission Plan 2006–2016, The Indian Automobile industry

currently accounts for almost 8% of GDP of India and employs people at around 19 million, currently

working with auto industry. The escalating development in infrastructure, recovery in domestic market,

increasing purchasing power and stable government framework have made India a favourable

destination for FIIs investment.

NET SALES & NET PROFIT GROWTH (` In Cr.):

EPS & BOOK VALUE GROWTH (In `):

FINANCIAL PERFORMANCE-

Sources: Company research

OUTLOOK & VALUATION-

At the market price of ` 50.00, the stock PE is ~2.62 for FY16x and ~2.15 for FY17x.

Earnings per share of the company for FY16E and FY17E are seen at ` 19.01 and ` 23.22 respectively.

We are expecting Net Sales and PAT of the company to grow at a CAGR of 37.43% and 33.21% over 2014

to 2017E respectively.

Hence, we recommend ‘BUY’ in this particular stock with a target price of ` 98.00 for Medium to Long

term Investment.

Source: nseindia.com, bseindia.com, Wikipedia.com, moneycontrol.com, business standard & ET.

PARTICULARS FY13A FY14A* FY15A FY16E** FY17E

Net Sales (` In Cr.) 957.07 1752.94 3212.93 3855.52 4549.51

Net Profit (` In Cr.) 58.87 100.89 159.88 195.94 238.51

EPS (`) 15.69 20.30 15.59 19.01 23.22

PE Ratio (x) 3.18 2.46 3.20 2.62 2.15

Book Value (`) 53.79 68.69 50.53 69.54 92.76

Price/Book Ratio (x) 0.92 0.72 0.98 0.71 0.53

ROE (%) 29.17 29.55 30.85 27.34 25.04

Note: - *A-Actual & **E-Estimated & (Figures on consolidated Basis for the period ended March.)

SWASTIKA PMS TEAM Aug 10, 2015

SWASTIKA INVESTMART LTD. PMS DESK

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Research Team Designation Email ID Contact

Sandeep Choubey Technical Research Analyst sandeep.choubey@swastika.co.in 0731-6688024

Anisha Agrawal Fundamental Research Analyst anisha.agrawal@swastika.co.in 0731-6688096

Santosh Meena Senior Research Analyst santosh.meena@swastika.co.in 0731-6688005

Amit Khare Senior Research Analyst amit.khare@swastika.co.in 0731-6644134

Manish Bimal Technical Research Analyst Manish.bimal@swastika.co.in 0731-6688012

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TREASURE