Healthy Q3FY15 & 9MFY15 Results

BUY

A S S OC IA T ED S TO NE I N DU S T RI ES
LONG TERM PROPOSITION

Rating

Buy

CMP (`)

65

Target Price (`)

98

Upside (%)

51

Retail Desk

15 April 2015
Company Description:
Established in 1945, during the time of the British Raj, Associated Stone
Industries (Kotah) (ASIKL) has a long and distinguished history of providing its
customers with beautiful, sophisticated and exotic products for the last 70 years
hence, ASIKL still holds the largest quarries in the world spread across 10 sq kms
at Ramganjmandi, situated in Rajasthan, the home of the most flawless Kotah
Stone.

CORP.

Key Data
BSE Code
NSE Code
Reuters code
Bloomberg Code
Sensex
Face Value (`)
Mcap (` Cr.)
52 week H/L (`)
2 Wk Avg Qty
Share holding,
December14
Promoters
Corporates
Foreign
Public
Performance
(%)
3M
Stock-ASIKL
47.7
BSE 200
4.2
BSE 500
4.3

502015
ASOCSTONE
ASOS.BO
ASIK IN
28799
5
86
71/22
17000
Holding %
70.4
7.2
0.5
21.9

ASIKL produces a staggering 15 crore sq. ft. of Kota Stone each year. It is
equipped with the best diamond tool units for cutting, sawing & shaping various
natural stones, and produces some of the finest natural stones, all at par with
global standards.
Wind Power:
ASIKL has installed machines with a total of 4.75MW wind power capacity in
Tamil Nadu, Karnataka and Maharashtra. These plants contribute to the
reduction in Carbon-Di-Oxide emissions to the extent of 4000 tonnes per year.
Under the Kyoto Protocol of the United Nations Framework Convention on
Climate Change (UNFCCC), the company has been successful in getting these
projects registered under Clean Development Mechanism (CDM) with the
Executive Board at Bonn, Germany. ASIKL will soon become eligible for receiving
Carbon Credits for the next ten years from April 2011.
To Foray into Solar Energy:
Apart from wind power, ASIKL is also exploring the possibility of venturing into
solar power generation which again is a part of its green initiative. All these
efforts are only a small part of the plans the company has for sustaining the
environment and proves that green power is a major cornerstone of its policies.

LTD

Price Chart: (One-Year)

6M
58.5
13.9
13.8

12M
170.8
35.4
36.5

Q3FY15, 9MFY15 & FY14 Results:

During Q3FY15, net profit rose 70% to `9.2 crore on 88% higher sales of `74
crore. Q3FY15 EPS is `6.0. During 9MFY15, NP rose 341% to `7.5 crore on 47%
higher sales of `135 crore. 9MFY15 EPS is `5.6 against `1.3 in 9MFY14. During
FY14, NP fell 2% to `9.9 crore on 25% lower sales of `131 crore. FY14 EPS was
`7.7. A dividend of 25% was paid. Traditionally, ASIKL fares better in Q3 & Q4.
Key Financial:

Year-March

http://www.asistone.com
Vijay Dave
vijaydave@sunidhi.com
Ph: 91-22-6760 7700

Sales
PBIDT
Interest
PBDT
Depreciation
PBT
Tax
PAT
Equity
Reserves
Book Value (`)
EPS (`)
CEPS (`)
OP Margin (%)
PAT Margin (%)
P/E

(GMDV)

9MFY15A

9MFY14A

135.3
23.2
5.0
18.2
4.9
13.3
5.8
7.5

91.6
14.0
4.7
9.3
5.9
3.4
1.7
1.7

5.7
9.4
17.1
5.5

1.3
5.8
1.5
1.9

(` crore)

FY13A

FY14A

FY15E

FY16E

169.6
34.5
7.4
27.1
7.8
19.3
6.4
12.9
6.6
71.7
59.3
9.8
15.7
20.3
7.6

130.7
29.3
5.8
23.5
7.9
15.6
5.5
10.1
6.6
80.8
66.2
7.7
13.6
22.4
7.7

180.0
40.1
8.0
32.1
6.6
25.5
8.9
16.6
6.6
97.4
78.8
12.6
17.9
22.6
9.2
5.1

205.0
45.9
9.5
36.4
8.0
28.4
9.9
18.5
6.6
115.9
92.8
14.0
20.1
22.4
9.0
4.6

Associated Stone Industries

Acquisition & Expansion

ASIKLs wholly owned subsidiary ASI Global Limited (ASIGL) Mauritius has
acquired Al Rawasi Rocks and Aggregates L.L.C, Fujairah U.A.E (having lime
stone quarry & stone crusher unit) for a consideration of AED 21.71 million
(US$5.915 Million) or for `36.7 crore. As the unit is non operational, the
ASIGL will be investing further about AED 43.63 Million (US$11.89 Million or
`69 crore.) towards quarry development, plant & machinery & working
capital margin. The unit is expected to re-start its commercial operation in
the near future.

New Initiatives

ASIKL is taking up research and development for enhancing production and

improving quality. And this is not only up to the product i.e. Kota Stone, but
also extended to the waste. Along with the dimensional Kota Stone tiles,
huge waste is generated due to removal of over burden. As of now, this
waste is being dumped without any utilization.
ASIKL is working on a project to explore value addition for kota stone waste.
For this, firstly the waste materials require an estimation of its chemical and
physical conditions. A systematic analysis of several properties is of utmost
importance to understand their window of variations as they originate from
natural deposits. Subsequently possible modes of value additions will be
explored to generate additional income from this waste.

Financial

Equity capital is `6.6 crore. With reserves of `81 crore, the book value of the
share works out to `66.0. Debts of `40 crore as at H1FY15 give the DER of
0.48:1. The value of the gross block is `119 crore. Cash, short term/long
term loans and in investments totally were `30.9 crore. (`23.4/share) as at
H1FY15.

Prospects

With a new government having been formed at the center, with a strong
mandate to stimulate economic growth, the outlook for the construction &
realty sectors appears positive in the medium-to-long term.
The recent spate of reforms from the government will help gradually revive
the domestic economy and augurs well for the company as an improved
Capex from the private sector will ensure a strong revival in the companys
fortunes.
The Planning Commission (a department formed to develop and coordinate
investment plans for the central government) had projected a US$1 trillion
investment in infrastructure in the 2012-17 period, and the new government
has expressed an intent to remove bottlenecks and barriers hindering new
investment; growth in investment particularly in infrastructure and
industrial projects is expected spur demand for construction over the next
12-18 months. This augurs well for ASIKL.

Valuation & Recommendation

The improving macro economics, value addition initiatives, UAE acquisition

and the further Capex on acquisition will give strong visibility to the topline
and bottomline going forward.
Based on the going, ASIKL is all set to post an EPS of `12.6 in FY15 and `14 in
FY16. At the current market price of `65, the share is traded at a forward
P/E of 5.1x on FY15E and 4.6x on FY16E. The reasonable P/E of 7.5x will
take the share price to `98 in the medium-to-long term.

Sunidhi Research |

Associated Stone Industries

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