E.I.D.-Parry (India) Ltd. – Value Analysis (BSE INDIA:500125) : January 3, 2017

Capitalcube gives E.I.D.-Parry (India) Ltd. a score of 44.

Our analysis is based on comparing E.I.D.-Parry (India) Ltd. with the following peers – Bannari Amman Sugars Limited, Bajaj Hindusthan Sugar Limited, Bayer Cropscience India Limited, Balrampur Chini Mills Ltd and Shree Renuka Sugars Limited (500041-IN, 500032-IN, 506285-IN, 500038-IN and 532670-IN).

Investment Outlook

E.I.D.-Parry (India) Ltd. has a fundamental score of 44 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • E.I.D.-Parry (India) Limited trades at a lower Price/Book multiple (1.40) than its peer median (2.12).
  • The market expects faster earnings growth from 500125-IN than from its peers and also a turnaround in its current ROE.
  • 500125-IN has relatively low net profit margins while its asset efficiency is relatively high.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, 500125-IN‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • Compared with the peers chosen, 500125-IN has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • 500125-IN seems too levered to raise additional debt.

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Leverage & Liquidity

500125-IN would seem to have a hard time raising additional debt.

  • With debt at a relatively high 51.69% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 45.30%), and relatively tight interest coverage level of -5.93x, 500125-IN would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • Of the 5 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include 506285-IN.

500125-IN has maintained its Limited Flexibility profile from the prior year-end.

  • 500125-IN‘s interest coverage is downward trending but is still within one standard deviation above its four-year average interest coverage of -6.83x.
  • Though its interest coverage has remained relatively stable at -5.93x compared to 2015, its peer median has increased to 1.54x from -0.56x during this period.
  • Interest coverage fell 2.55 points relative to peers.
  • 500125-IN‘s debt-EV is its lowest over the last four years and compares to a high of 63.66% in 2013.
  • The decrease in its debt-EV to 51.69% from 57.24% (in 2015) was also accompanied by a decrease in its peer median during this period to 45.30% from 57.30%.
  • Relative to peers, debt-EV rose 6.44 percentage points (and is now higher than its peer median).

Access the detailed analysis for E.I.D.-Parry (India) Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Bannari Amman Sugars Limited 30.94 1.6 2.95 6.89
Bajaj Hindusthan Sugar Limited 77.04 1.28 0.13 10
Bayer Cropscience India Limited 0 2.87 43.15 93314.29
Balrampur Chini Mills Ltd 38.92 1.22 4.22 20.12
Shree Renuka Sugars Limited 87.51 0.44 -0.61 -1.93
E.I.D.-Parry (India) Limited 51.69 1.04 -5.93 11.2
Peer Median 45.3 1.25 1.54 10.6
Best In Class 30.94 2.87 43.15 93314.29

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Company Profile

E.I.D.-Parry (India) Ltd. engages in the manufacture and marketing of sugar. It operates through the following segments: Sugar, Power, Distillery, Bio-Pesticides and Nutraceuticals. The Sugar segment is engaged in manufacturing and marketing sugar. The Power segment is engaged in the generation and distribution of power. The Distillery segment is engaged in manufacturing spirits. The Bio-Pesticides segment is engaged in manufacturing of neem based products and Nutraceuticals. The company was founded on September 22, 1975 and is headquartered in Chennai, India.

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