Hyderabad Ind. Ltd. (HIL) is a flagship company of the C.K. Birla group, incorporated in 1946. HIL has blazed a pioneering path in the building products ind. and led the ind. for well over five decades.
It is the largest manufacturer of asbestos cement roofing sheets with a total capacity of 747,000 tonnes p.a. and also a market leader in this product.
in India. HIL is also the largest manufacturer of calcium silicate, insulation blocks, pipe sections and jointings for gasketing.
Basic Product Range :- The company’s business consists of the following product lines: 1. Fibre Cement Sheets (Asbestos as well as Non Asbestos).,
2. Autoclaved Aerated Concrete Blocks (Light Bricks).,
3. Aerocon Panels.,
4. Industrial Products (Thermal Insulation Products, Jointings etc.).
5. Autoclaved Aerated Concrete Blocks (AAC) :- AAC is one of the lightest forms of Concrete and is the most technically advanced material used for the manufacture of mass produced concrete blocks. Unique properties provided in one product. 1. Acoustic., 2. Energy Conservation., 3. Fire Resistance., 4.
Structural Properties.
6. Advantages of AAC :- 1. Large quantities of fly ash from coal based power plants can be utilized for construction purposes instead of using mining materials for construction., 2. Optimum use of resources thereby causing minimum damage to natural and social environment., 3. Bricks are manufactured using top layer of the agricultural soil and wood for burning them. 4. Reduction in consumption of heavier quarried material., 5. Minimizes wastage and contributes significantly to the health and safety of construction workers by providing easily handled light weight units.
Thermal Insulation Products : - The thermal insulation products are mainly used in cement, fertilizers and power sector in the kilns, furnaces and boilers.
07-08 Performance :- During the year, sales of A.C. Sheets increased by 19% to 6.50 lakh tonnes. Sales of AAC Blocks increased by 10% to 79421 cu.m. Sales of Aerocon Panels increased by 11% to 17140 tonnes. Sales of Thermal Insulation Products increased by 9%. EPS stood at 18.86 and it paid 50% dividend. Although total sales increased by 10% but, profits were maintained at 06-07 levels
due to higher cement prices.
Valuations :- After touching a high of Rs. 337/ -, HIL at Rs. 169/- appears not only the most underpriced scrip in building products ind. but also
one of the most attractive buy at BSE/NSE. Considering the foll:
1) Stock is trading at 2.08 x FY09E EPS.,
2)Stock is available at 1.90 x FY10E EPS.,
3) Book value is Rs. 202/- which means stock is available at 0.84 x BV. Book value will increase to Rs. 270/- by March 2009.,
4) Current market cap is just 0.25 x FY08 sales.,
5) Company is likely to earn PAT of 128 crs. in 08-09, 09-10 and total
market cap is just 125-127 crs.,
6) Company is a bonus candidate.,
7) Potential Land Bank: Its Hyderabad factory is situated on 70 acres land in a very prime area of Sanatnagar which is like Heart of the city. Govt. policy is to shift all factories from Sanatnagar so that residential and office buildings can come up. Currently, It is not very far fetched that management of HIL plans to shift this factory in next 1-2 years itself. As and when it happens, it will bring huge value for the stake holders.
At CMP, scrip is almost riskfree. Once market sentiment stabilizes, HIL share holders will stand to gain immensely. It has potential to deliver 80% appreciation in 9-12 months even in lacklustre markets. Fundamentally, even if company gets P.E. Ratio of 4, share prices deserves to be Rs. 300/-
based upon FY09E EPS. A strong buy for every investor as company belongs to one of the leading industrial houses of India. Not everyday, you get an opportunity to buy a well managed company with better future prospects at such screaming low valuations.
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