Paushak Ltd earns INR38m in net on net sales of INR212.4m in Q4FY15; 'Buy'

1. CMP 559.60
Target Price 615.00
ISIN: INE111F01016
MAY 21st
2015
PAUSHAK LTD
Result Update (PARENT BASIS): Q4 FY15
BUY
Index Details
Stock Data
Sector Agrochemicals
BSE Code 532742
Face Value 10.00
52wk. High / Low (Rs.) 670.00/125.00
Volume (2wk. Avg.) 2797
Market Cap (Rs. in mn.) 1796.32
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 691.50 810.44 907.69
EBITDA 203.70 251.71 288.63
Net Profit 130.00 164.02 188.54
EPS 40.50 51.10 58.74
P/E 13.82 10.95 9.53
Shareholding Pattern (%)
1 Year Comparative Graph
PAUSHAK LTD S&P BSE SENSEX
SYNOPSIS
Paushak Limited is engaged in the development
and manufacture of phosgene based specialty
chemicals and intermediates.
In Q4 FY15, Net profit stands at Rs. 38.00 million
as against Rs. 7.90 million in the corresponding
quarter of previous year, an increase of 381.01%.
The company’s net sales increased by 44.98% in
Q4 FY15 and stood at Rs. 212.40 million from Rs.
146.50 million over the previous year quarter.
During the quarter operating profit is Rs. 62.10
million as against Rs. 17.50 million in the
corresponding period of the previous year, an
increase of 254.86%.
Reported earnings per share of the company stood
at Rs. 11.84 in Q4 FY15 as against Rs. 2.46 in Q4
FY14.
During the quarter Profit before tax stood at Rs.
54.60 million as against Rs. 13.00 million over the
corresponding quarter of previous year,
registering a growth of 320.00%.
Total income during the quarter stood at Rs.
213.60 million as compared to Rs. 142.80 million
in Q4 FY14.
The company has recommended a dividend of Rs.
3/- (30%) per Share of face value of Rs. 10 each.
Net Sales and PAT of the company are expected to
grow at a CAGR of 15% and 25% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Paushak Ltd 559.60 1796.32 40.50 13.82 3.13 30.00
Aimco Pesticides Ltd 48.50 448.00 2.86 16.96 72.39 0.00
Rallis India Ltd 215.00 41810.80 7.48 28.74 4.87 250.00
Excel Industries Ltd 319.80 3807.40 31.77 10.07 2.59 75.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results Updates- Q4 FY15
Paushak Limited is engaged in the development and
manufacture of phosgene based specialty chemicals and
intermediates, reported its financial results for the
quarter ended 31st Mar, 2015.
The company’s net profit increased by 381.01% and stood at Rs. 38.00 million against Rs. 7.90 million in the
corresponding quarter ending of previous year. Revenue for the quarter increased by 44.98% to Rs. 212.40
million from Rs. 146.50 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 11.84 a share during the quarter as against Rs. 2.46 over previous year period. Profit before
interest, depreciation and tax is Rs. 62.10 million as against Rs. 17.50 million in the corresponding period of the
previous year.
Break up of Expenditure
Months Mar-15 Mar-14 % Change
Net Sales 212.40 146.50 44.98
PAT 38.00 7.90 381.01
EPS 11.84 2.46 381.01
EBITDA 62.10 17.50 254.86
Break up of Expenditure
(Rs in millions)
Q4 FY15 Q4 FY14
%
CHNG
Consumption of Raw
Materials
68.40 39.10 75%
Employees Cost 19.20 15.40 25%
Depreciation 5.30 4.40 20%
Research & Development
Expenses
3.50 2.10 67%
Manufacturing Expenses 23.90 11.70 104%
Other Expenses 26.70 32.20 -17%

3. COMPANY PROFILE
Paushak Limited is engaged in the development and manufacture of phosgene based specialty chemicals and
intermediates in India. Paushak is part of the Alembic group of companies. Alembic Ltd is the oldest
pharmaceutical company in India founded in 1907. Its products include isocyanates, cholroformates, carbamoyl
chlorides, and others. The company also exports its products.
Paushak's core competencies are in the development and manufacturing of phosgene based speciality chemicals
and intermediates. The company uses innovative process engineering to achieve a low cost and yet achieve
global quality and regulatory standards
The company offers unique capabilities in development and commercialization of phosgene based products. It
accepts challenging product development requests on a routine basis. Laboratory facilities are specifically
designed and equipped for safely conducting the Phosgenation and related reactions.
Products
• Isocyanates
• Cholroformates
• Carbamoyl chlorides
• Other Products

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 32.10 32.10 32.10 32.10
Reserves and Surplus 424.66 541.90 674.67 823.09
1. Sub Total - Net worth 456.76 574.00 706.77 855.19
Non Current Liabilities
Deferred Tax Liabilities 7.36 12.70 18.42 23.02
Other Long term Liabilities 2.50 2.50 2.60 2.68
Long term Provisions 1.54 2.40 3.17 3.77
2. Sub Total - Non Current Liabilities 11.40 17.60 24.18 29.47
Current Liabilities
Short term Borrowings 0.14 2.50 3.50 4.55
Trade Payables 46.46 69.10 90.52 110.44
Other Current Liabilities 6.13 6.90 7.66 8.35
Short Term Provisions 17.37 15.30 13.77 12.67
3. Sub Total - Current Liabilities 70.10 93.80 115.45 136.00
Total Liabilities (1+2+3) 538.26 685.40 846.40 1020.66
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible assets 92.17 178.40 246.19 322.51
Capital Work in Progress 35.43 10.70 6.63 5.17
a) Sub Total - Fixed Assets 127.60 189.10 252.83 327.69
b) Non-current investments 91.77 113.80 134.28 155.77
1. Sub Total - Non Current Assets 219.37 302.90 387.11 483.46
Current Assets
Current Investment 86.00 80.70 76.67 73.60
Inventories 76.13 70.50 66.27 62.96
Trade receivables 142.59 215.20 298.49 381.24
Cash and Bank Balances 2.40 3.20 3.94 4.64
Short-terms loans & advances 11.77 12.90 13.93 14.77
2. Sub Total - Current Assets 318.89 382.50 459.29 537.21
Total Assets (1+2) 538.26 685.40 846.40 1020.66

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 567.40 691.50 810.44 907.69
Other Income 12.70 25.20 27.22 29.94
Total Income 580.10 716.70 837.65 937.63
Expenditure -434.90 -513.00 -585.95 -649.00
Operating Profit 145.20 203.70 251.71 288.63
Interest -1.20 -0.40 -0.46 -0.27
Gross profit 144.00 203.30 251.24 288.36
Depreciation -17.80 -21.40 -23.75 -26.13
Exceptional items 0.00 -2.00 0.00 0.00
Profit Before Tax 126.20 179.90 227.49 262.23
Tax -38.00 -49.90 -63.47 -73.69
Net Profit 88.20 130.00 164.02 188.54
Equity capital 32.10 32.10 32.10 32.10
Reserves 424.70 541.90 674.67 823.09
Face value 10.00 10.00 10.00 10.00
EPS 27.48 40.50 51.10 58.74
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th Jun, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 162.10 178.40 212.40 216.65
Other income 22.40 1.10 1.20 0.26
Total Income 184.50 179.50 213.60 216.91
Expenditure -119.00 -132.10 -151.50 -152.09
Operating profit 65.50 47.40 62.10 64.82
Interest -0.20 0.00 -0.20 -0.15
Gross profit 65.30 47.40 61.90 64.67
Depreciation -4.80 -6.70 -5.30 -5.07
Exceptional Items 0.00 0.00 -2.00 0.00
Profit Before Tax 60.50 40.70 54.60 59.60
Tax -15.40 -10.30 -16.60 -17.40
Net Profit 45.10 30.40 38.00 42.20
Equity capital 32.10 32.10 32.10 32.10
Face value 10.00 10.00 10.00 10.00
EPS 14.05 9.47 11.84 13.15

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 27.48 40.50 51.10 58.74
EBITDA Margin (%) 25.59 29.46 31.06 31.80
PBT Margin (%) 22.24 26.02 28.07 28.89
PAT Margin (%) 15.54 18.80 20.24 20.77
P/E Ratio (x) 20.37 13.82 10.95 9.53
ROE (%) 19.31 22.65 23.21 22.05
ROCE (%) 35.67 39.05 38.78 36.61
Debt Equity Ratio 0.00 0.00 0.00 0.01
EV/EBITDA (x) 11.76 8.42 6.83 5.97
Book Value (Rs.) 142.31 178.82 220.18 266.41
P/BV 3.93 3.13 2.54 2.10
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 559.60, the stock P/E ratio is at 10.95 x FY16E and 9.53 x FY17E
respectively.
Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs. 51.10 and Rs.
58.74 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 25% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 6.83 x for FY16E and 5.97 x for FY17E.
Price to Book Value of the stock is expected to be at 2.54 x and 2.10 x respectively for FY16E and FY17E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 615.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
Chemical industry is one of India’s oldest industries, contributing significantly towards the industrial and
economic growth of the nation. The Indian Chemical Industry forms the backbone of the industrial and
agricultural development of India and provides building blocks for several downstream industries. Basic
chemicals and their related products form a very significant part of the Indian economy and account for about 3
per cent of India's GDP. Among the most diversified industrial sectors, it covers an array of more than 70,000
commercial products. The total investment in the Indian chemical industry is approximately US$ 60 bn and total
employment generated was about 1 mn. In terms of volume, it is 12th largest in the world and 3rd largest in Asia.
Exports of chemicals from India have increased significantly and account for about 14% of total exports and 9%
of total imports of the country. The Indian chemical industry comprises both small and large-scale units. Fiscal
concessions granted to the small sector in the mid-eighties led to the establishment of a large number of units in
the Small Scale Industries (SSI) sector.
The major sub segments of this industry include alkali, organic chemicals, inorganic chemicals, pesticides, dyes &
dyestuffs and specialty chemicals. The Indian chemical industry deals in products like fertilizers, bromine
compounds, catalyst, sodium and sodium compounds, dye intermediates, inks and resins, phosphorous, paint
chemicals, coatings, isobutyl, zinc sulphate, zinc chloride, water treatment chemicals, organic surfactants,
pigment dispersions, industrial aerosols and many more.
The commodity chemicals are the largest segment in the chemical market. Some of the major markets for
chemicals are North America, Western Europe, Japan and emerging economies in Asia and Latin America. The

8. Indian chemical industry is matured and is in the midst of a major restructuring and consolidation phase.
Globalization has opened the doors for this sector to capture a major part of the global market pie.
The sector has experienced many reforms in India and is expected to grow at 15% p.a. in the near future. The
investment in R&D will also play a vital role in this sector. In a nutshell, the Indian chemical industry has a large
potential to grow in domestic as well as in export markets. In the current market conditions, with an appreciating
rupee, pricing will be a crucial factor while competing with other exporting countries.
Disclaimer:
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