HSIL Reports 47% Jump in Net

HSIL has reported a good set of numbers for the fourth quarter of FY13. The company has reported a total income of Rs 494 crore, with a growth of 28%. Its net profit stands at a handsome Rs 48 crore, showing even better growth of 47% on a year-on-year basis. The EBITDA margins have too shown a sequential improvement.

The container glass division, its largest business segment, has reported a 40% rise in revenues. This division was under pressure for the last two quarter, and with the topline growth, it has again come back to into profits. Besides, the PBIT margins of this division are at 10.16% against that of 3.87% a quarter ago, showing that the company is well on track. The building products division has reported  17% growth, with revenues at Rs 220 crore. The margins in this division are slightly pressurised, but this has been more than made up for by growth in the container glass division.

HSIL's overall EBITDA margins for the quarter are at 15.63%, marking growth on a sequential basis. The raw material cost, employee cost and fuel cost as a percentage of sales have all declined, which helped improve its  overall EBITDA margins.

During the quarter, the company's inventories have increased from Rs 305 crore to Rs 389 crore. The company, however, has been facing issues on this front due to lower orders in the container glass division.

Finance costs during the quarter rose from Rs 9 crore to Rs 17 crore, mainly due to the rise in the long and short-term debt. Its debt-to-equity ratio, however, remained below 1x, which we believe is comfortable.

On the valuations front, the stock is trading at a price-to-earnings multiple of 5.9x its FY13 EPS of Rs 16.56. As far as the EV/EBITDA goes, the stock is available at 5.8x, which looks attractive. We would advise readers to enter the counter, with a good capital appreciation opportunity.