Automobile Corporation of Goa Limited Date: 17 th February, 216 Stock Performance Details Shareholding Details September 215 Current Price : ` 434.1^ Face Value : ` 1 per share 52 wk High / Low : ` 59. / 38. Total Traded Volume : 8,787 shares^ Market Cap : ` 278.7 crore^ Sector : Auto Parts & Equipment EPS (H1 FY16) : ` 11.9 per share Equity Share Capital : ` 6.4 crore P/E (TTM) : 15.13 (x)^ P/BV (TTM) : 1.6 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : ACGL BSE Scrip Code : 5536 ^ as on 15 th February, 216 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 34,35,831 53.5 Total Institutional Holdings (FIIs & DIIs) 1,8,96 2.82 Public Holdings 28,4,885 43.68 Total 64,21,622 1. Background Incorporated in the year 198, Automobile Corporation of Goa Ltd. (ACGL) was jointly promoted by Tata Motors Ltd (formerly known as Tata Engineering & Locomotive Co. Ltd.) and EDC Ltd (formerly known as Economic Development Corporation of Goa, Daman & Diu Ltd.) AGCL is engaged in the manufacture of pressed parts, components and sub-assemblies for automobiles, and manufacture of bus bodies and component parts. The Company has two business segments: Pressing Division and Bus body Building Division. The Pressing Division is engaged in the manufacturing of pressed parts, components, sub-assemblies and assemblies for automobiles. The Bus body Building Division is engaged in the manufacturing of bus bodies and component parts for bus bodies. The Company's products include staff transport application buses, luxury application buses, city application buses, defense application buses, airport application buses, school application buses, sleeper buses, special application vehicles and sheet metal products. The company has been operational since 1982 and is a major supplier of pressings and assemblies to Tata Motor s Pune factory. To meet Just In Time supplies to the customer, it has set up a press shop at Jejuri, Pune. The Sheet Metal Division at its three units has high tonnage presses with an output of more than 17,62 tonnes. In 1987, the company entered into a Technical Collaboration Agreement with Fuji Heavy Industries Ltd., Japan, makers of Subaru car for various models of chassis mounted bus bodies and set up a full-fledged Bus Body Building Division. An Initiative of the BSE Investors Protection Fund1
Financial Snapshot Particulars Standalone (` Million) Income Statement H1 FY16 H1 FY15 Income from Operations 1,987. 2,223.8 Y-o-Y Growth (%) (1.6) 67.5 EBITDA 73.1 93.3 Y-o-Y Growth (%) (21.7) 181. EBITDA Margin (%) 3.7 4.2 Net Profit 76.4 12.8 Y-o-Y Growth (%) (25.7) 68.5 NPM (%) 3.8 4.6 Balance Sheet Fixed Assets 785.6 743.9 Cash and Bank Balances 18.8 32.5 Inventories 321. 362.6 Net Working Capital 684.6 1,112.9 Net Worth 1822.1 1,811.5 Balance Sheet Ratios ROCE (%) 4. 5.3 RONW (%) 4.2 5.7 Source: Capitaline From the Research Desk of LKW s Gurukshetra During H1 FY16, the Standalone Income from Operations stood at Rs. 1,987 million which is a decrease of 1.6% y-o-y from Rs. 2,223.8 million reported in H1 FY15. As per the Segmental Revenues, Pressing Segment reported revenues of Rs. 355 million in H1 FY16, thus marking an increase of 24.9% on a y-o-y basis. Revenues from the Bus Body Segment declined by 15.9% y-o-y from Rs. 2,1.4 million in H1 FY15 to Rs. 1,691.1 million in H1 FY16. Material Cost decreased by 16.4% on a y-o-y basis to Rs. 1,391.3 million in H1 FY16 from Rs. 1,664.8 million in H1 FY15. Employee Cost increased by 7.3% on y-o-y from Rs. 191.4 million in H1 FY15 to Rs. 25.4 million in H1 FY16. Other Expenses stood lower at Rs. 291.8 million in H1 FY16 as compared to Rs. 33.9 million in H1 FY15. In line with the y-o-y decline of 1.6% at the topline, EBIDTA decreased by 21.7% on a y-o-y basis from Rs. 93.3 million in H1 FY15 to Rs. 73.1 million in H1 FY16. Thus, EBIDTA Margin stood lower at 3.7% in H1 FY16 versus 4.2% in H1 FY15. Depreciation & Amortization Cost decreased to Rs. 27.6 million in H1 FY16 from Rs. 29.6 million in H1 FY15. Other income stood at Rs. 31.4 million in H1 FY16 as compared to Rs. 36 million in H1 FY15. PAT decreased by 25.7% on a y-o-y basis to Rs. 76.4 million in H1 FY16 from Rs. 12.8 million in H1 FY15. Resultantly, PAT Margin stood lower at 3.8% in H1 FY16 versus 4.6% in H1 FY15. An Initiative of the BSE Investors Protection Fund2
Inventories of the Company decreased to Rs. 321 million in H1 FY16 from Rs.362.6 million reported in H1 FY15. Debtors decreased to Rs. 331.8 million in H1 FY16 from Rs. 566million in H1 FY15. Cash and Cash Equivalents stood at Rs. 18.8 million in H1 FY16 as compared to Rs. 32.5 million in H1 FY15. The Company informed the Exchange on 4 th July, 215 that the Credit Rating Agency - Credit Analysis and Research Limited (CARE) has assigned CARE AA Ratings for its Long Term Banking facilities and CARE A1+ for its Short Term Banking facilities. Performance on the Bourses % 12 1 8 6 4 2 Stock Performance Automobile Corporation Of Goa as on 12th February, 216 BSE Small Cap Peer Comparison The following table gives a snapshot view of the company s performance vis-à-vis its closest peers for H1 FY16 operating in the cars and utility vehicles industry. (` In millions) Particulars Automobile Jay Bharat Omax Autos Corporation of Goa Maruti Income from Operations 1,987. 5,157.7 7,53.9 EBIDTA 73.1 285.3 1,15.2 Net Profit 76.4 41. 179.2 EBIDTA Margins (%) 3.7 5.5 15.7 PAT Margins (%) 3.8.8 2.9 Book Value Per Share 271.9 1.4 95.7 P/E (x) 17.99^ 17.79^ 8.61^ P/BV (x) 1.9^.84^ 1.57^ RONW (%) 4.2 1.9 8. Source: Capitaline; Financials on Standalone Basis; ^ On a Standalone Basis as on December, 215 (TTM Basis) An Initiative of the BSE Investors Protection Fund3
About the Industry The Indian auto industry is one of the largest in the world with an annual production of 23.37 million vehicles in FY 214-15, following a growth of 8.7% over the last year. The automobile industry accounts for 7.1% of the country's gross domestic product (GDP). The Two Wheelers segment with 81% market share is the leader of the Indian Automobile market owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has 13% market share. The sales of Passenger Vehicles grew by 3.9% in April-March 215 over the same period last year. Within the Passenger Vehicles segment, Passenger Cars and Utility Vehicles grew by 5% and 5.3% respectively, while Vans declined by 1.2% in April- March 215 over the same period last year. The overall Commercial Vehicles segment registered a de-growth of 2.8% in April-March 215 as compared to same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 16% and Light Commercial Vehicles declined by 11.6%. Three Wheelers sales grew by 1.8% in April-March 215 over the same period last year. Passenger Carriers and Goods Carriers grew by 12.2% and 5.3% respectively in April-March 215 over April- March 214. Two Wheelers sales registered growth of 8.1% in April-March 215 over April-March 214. Within the Two Wheelers segment, Scooters, Motorcycles and Mopeds grew by 25.1%, 2.5% and 4.5% respectively in April-March 215 over April-March 214. In April-March 215, overall automobile exports grew by 14.9% over the same period last year. Passenger Vehicles, Commercial Vehicles, Three Wheelers and Two Wheelers grew by 4.4%, 11.3%, 15.4% and 17.9% respectively during April-March 215 over the same period last year. In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry in recent times. The industry has attracted foreign direct investment (FDI) worth US$ 13.48 billion during the period April 2 to June 215, according to data released by Department of Industrial Policy and Promotion (DIPP). Management Outlook The Government of India aims to make automobile manufacturing the main driver of its Make in India initiative, as it expects passenger vehicles market to triple to 9.4 million units by 226, as highlighted in the Auto Mission Plan (AMP) 216-26. The Government plans to promote eco-friendly cars in the country like CNG based vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5% ethanol blending in petrol.india is expected to become a major automobile manufacturing hub and the third largest market for automobiles by 22. The global automotive manufacturers are expanding their production capacities in India, leading to global competition which can only be countered by maintaining low cost product development. Although rising inflation, interest rates and crude oil prices are concerns of short term, the Company is optimistic about medium and long term and is gearing up for growth. ACGL mainly caters to the bus segment and sheet metal assemblies in the industry. The bus industry is one of the vital integral segments of Indian automobile industry andit is a common widespread public transport in India. ACGL launched Jupiter, a new complete galvanized Iron Bus Body in the range of MCV, ICV and LCV.The new Jupiter bus model has a modular sheet metal fascia that enables this to be used for MCV, ICV and LCV sized body variant. 'Jupiter Executive' an AC coach has also been introduced in the staff segment that focuses on passenger comfort and safety for commuters travelling to officeand back. Further, some of the positive factors like expected growth on Healthcare sector, growth from rural penetration of schools and increased need for rural transport, advent of smart cities that would fuel demand for transportation resulting in demand for mid and MCV buses, expected growth in service sector and staff hiring, cool off in fuel pricing and implementation of Bus Body Code (AIS 52/AIS 63) would increase demand of fully built busesin the future. Some concerns faced by ACGL are the increase in the material cost, increase in the number of low margin buses, high labour cost, over-dependence on its single customer named Tata Motors, lower penetration in the domestic market and foreign exchange rate fluctuations. Investments at Dharwad in terms of leasehold land from Karnataka Industrial Area Development Board (KIADB) and a factory shed is still underutilized. The Company is making efforts to explore new business opportunities in Dharwad to make these investments sustainable. An Initiative of the BSE Investors Protection Fund4
Financial Graphs 23 Net Income from Operations ` in Million 22 21 2 2,223.8 19 18 H1 FY15 1,987. H1 FY16 EBIDTA & EBIDTA Margins 12 5 ` in Million 9 6 3 4.2 93.3 73.1 3.7 4 % H1 FY15 H1 FY16 3 EBIDTA EBIDTA Margins PAT & PAT Margins ` in Million 12 8 4 4.6 12.8 3.8 76.4 5 4 3 2 1 % H1 FY15 H1 FY16 PAT PAT Margins An Initiative of the BSE Investors Protection Fund5
Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements based on available data, and LKW s Gurukshetra shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW) commenced business in 1991 and is currently engaged in providing CAPITAL MARKET RESEARCH, INVESTMENT ADVISORY and STRATEGY services. GURUKSHETRA is the Research and Training arm of LKW. LKW Investment Advisers is the SEBI registered Investment Advisory arm of LKW. 5 Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office: B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai 4 53. Email: enquiry@lotusknowlwealth.com Tel: 22-41 5482 41 5483 Website: www.lkwindia.com An Initiative of the BSE Investors Protection Fund6