Firstcall: Shilp Gravures is recommended for the mid- to long-term for a target of Rs57

1. CMP 49.05
Target Price 57.00
ISIN: INE960A01017
APRIL 16th
2015
SHILP GRAVURES LTD
Result Update (PARENT BASIS): Q3 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Industrial Machinery
BSE Code 513709
Face Value 10.00
52wk. High / Low (Rs.) 59.50/30.05
Volume (2wk. Avg.) 2855
Market Cap (Rs. in mn.) 301.66
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 539.34 556.87 601.42
EBITDA 150.50 139.85 164.06
Net Profit 42.29 43.35 54.33
EPS 6.88 7.05 8.83
P/E 7.13 6.96 5.55
Shareholding Pattern (%)
1 Year Comparative Graph
SHILP GRAVURES LTD S&P BSE SENSEX
SYNOPSIS
Shilp Gravures Limited manufactures and sells
engraved copper rollers and automation
equipments in India and internationally.
Revenue for the quarter stood at Rs. 128.67 million
as compared to Rs. 129.56 million, when compared
with the prior year period.
The company has reported an EBITDA of Rs. 33.99
million in Q3 FY15 as against Rs. 32.20 million in Q3
FY14, grew by 5.56%.
During the quarter, net profit was Rs. 9.69 million
against Rs. 5.12 million in the corresponding
quarter of the previous year, an increase of 89.26%.
During Q3 FY15, PBT grew up by 35.01% to Rs.
12.92 million from Rs. 9.57 million in the previous
year same period.
The company has reported an EPS of Rs. 1.58 for the
3rd quarter as against an EPS of Rs. 0.83 in the
corresponding quarter of the previous year.
During 9M period of current fiscal 2014-15, revenue
increased by 4.59% to Rs. 412.76 mn from Rs.
394.65 mn in the 9M period of previous year.
During 9M of FY15, PAT rose by 5.99% to Rs. 30.97
mn from Rs. 29.22 mn in 9M of FY14.
Net Sales of the company are expected to grow at a
CAGR of 4% over 2013 to 2016E.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Shilp Gravures Ltd 49.05 301.66 6.88 7.13 0.72 12.00
Kilburn Engineering Ltd 62.45 827.80 3.85 16.22 0.88 0.00
Rexnord Electronics and Controls Ltd 28.00 212.20 2.84 9.86 1.57 0.00
Patels Airtemp (India) Ltd 159.10 806.70 11.05 14.40 1.64 20.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q3 FY15,
Months Dec-14 Dec-13 % Change
Net Sales 128.67 129.56 (0.69)
PAT 9.69 5.12 89.26
EPS 1.58 0.83 89.26
EBITDA 33.99 32.20 5.56
Revenue for the quarter stood at Rs. 128.67 million as compared to Rs. 129.56 million, when compared with the
prior year period. The company has reported an EBITDA of Rs. 33.99 million in Q3 FY15 as against Rs. 32.20
million in Q3 FY14. In the same period, net profit was Rs. 9.69 million against Rs. 5.12 million in the
corresponding quarter of the previous year, an increase of 89.26%. The company has reported an EPS of Rs. 1.58
for the 3rd quarter as against an EPS of Rs. 0.83 in the corresponding quarter of the previous year.
Break up of Expenditure
Particulars
Rs. Million
Q3 FY15 Q3 FY14
%
Change
Cost of Material
Consumed
32.27 34.33 -6%
Employee Benefit
Expense
35.64 33.78 6%
Depreciation &
Amortization Expense
15.67 16.44 -5%
Cost of Spares
consumed
7.81 9.25 -16%
Other Expenditure 19.79 20.9 -5%

3. Segment Revenue
COMPANY PROFILE
Shilp Gravures Limited was founded in 1989 and is based in Ahmedabad, India. Shilp Gravures is India's pioneer
and undisputed leader in Electro-Mechanical Engraving, with a substantial market share of the flexible packaging
industry. Electro-Mechanical Engraving is a precision technology, and Shilp Gravures has assimilated the world's
best equipment and infrastructure available in the field at its plant. The company has focused all its activities and
quality pursuits around that core knowledge that at the end of it all, it is part of a marketing / branding exercise.
Shilp Gravures Limited manufactures and sells engraved copper rollers and automation equipments in India and
internationally. It offers gravure cylinders, such as electro-mechanically and mechanically engraved rollers,
chemically etched rollers, and laser technology; flexo plate processing, base shell, pre-press, and embossing
products; rubber sleeves and mandrills; solventless adhesives; and doctor blades for gravure printing. The
company provides its products for use in various segments of gravure industry, such as flexible packaging, PVC
flooring, artificial leather, specialty coatings, anilox rollers, decorative laminates, gift wrappers, fine text, labels,
ceramic anilox rollers, embossing, and engraved screens.
Plants Locations
Pramukh Industrial Estate, Village Rakanpur, Taluka Kalol, Dist. Gandhinagar.
Engineering Division:
Raghuvir Industrial Estate, Nr. Kothari Cross Road, Village: Santej, Tal. Kalol, Dist. Gandhinagar.
Plant of Subsidiary
Raghuvir Industrial Estate, Nr. Kothari Cross Road, Village: Santej, Tal. Kalol, Dist. Gandhinagar.

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance sheet as at March 31, 2013A-2016E
FY13A FY14A FY15E FY16E
EQUITY AND LIABILITIES:
Shareholders’ Funds:
a) Share Capital 61.50 61.50 61.50 61.50
b) Reserves and Surplus 321.70 355.40 398.74 453.08
1) Sub Total Net worth 383.20 416.90 460.24 514.58
Non-Current Liabilities:
a) Long-term borrowings 76.50 92.40 69.30 60.98
b) Deferred Tax Liabilities [Net] 51.90 56.60 58.30 60.63
c) Long Term Provisions 9.90 9.40 8.93 9.38
2) Sub Total - Non-Current Liabilities 138.30 158.40 136.53 130.99
Current Liabilities:
a) Short-term borrowings 74.90 65.36 92.81 102.09
b) Trade Payables 49.00 44.30 57.59 65.65
c) Other Current Liabilities 32.30 40.71 44.78 48.36
d) Short Term Provisions 11.60 9.51 4.66 4.94
3) Sub Total - Current Liabilities 167.80 159.88 199.84 221.05
Total Liabilities (1+2+3) 689.30 735.18 796.61 866.61
ASSETS:
Non-Current Assets:
Fixed Assets
i. Tangible Assets 406.33 489.90 504.60 534.87
ii. Intangible Assets 9.75 0.70 0.00 0.00
iii. Capital work-in-progress 1.23 3.20 2.56 2.82
a) Sub Total Fixed Assets 417.31 493.80 507.16 537.69
b) Non Current Investments 12.92 27.89 34.03 39.47
c) Long Term Loans and Advances 65.53 15.54 22.69 26.77
d) Other non-current assets 0.17 0.00 0.00 0.00
4) Non-Current Assets 495.93 537.23 563.87 603.93
Current Assets:
a) Current Investments 0.18 0.18 0.20 0.22
b) Inventories 42.74 44.71 57.23 66.46
c) Trade Receivables 124.18 124.85 142.57 159.68
d) Cash and Bank Balances 10.57 10.21 13.48 15.90
e) Short Term Loans and Advances 15.70 18.00 19.26 20.42
5) Current Assets 193.37 197.95 232.74 262.68
Total Assets (4+5) 689.30 735.18 796.61 866.61

5. Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs. mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 545.36 539.34 556.87 601.42
Other Income 2.91 4.55 7.32 7.69
Total Income 548.27 543.89 564.20 609.11
Expenditure -391.17 -393.39 -424.34 -445.05
Operating Profit 157.10 150.50 139.85 164.06
Interest -18.68 -22.47 -21.62 -22.92
Gross profit 138.42 128.03 118.24 141.15
Depreciation -62.21 -64.63 -62.95 -66.10
Profit Before Tax 76.21 63.40 55.29 75.05
Tax -21.29 -21.11 -11.93 -20.71
Net Profit 54.92 42.29 43.35 54.33
Equity capital 61.50 61.50 61.50 61.50
Reserves 321.73 355.39 398.74 453.08
Face value 10.00 10.00 10.00 10.00
EPS 8.93 6.88 7.05 8.83
Quarterly Profit & Loss Statement for the period of 30th June, 2014 to 31st Mar, 2015E
Value(Rs. mn) 30-Jun-14 30-Sep-14 31-Dec-14 31-Mar-15E
Description 3m 3m 3m 3m
Net Sales 140.20 143.89 128.67 144.11
Other income 1.01 0.83 3.89 1.59
Total Income 141.21 144.72 132.56 145.71
Expenditure -101.59 -115.81 -98.57 -108.37
Operating profit 39.62 28.91 33.99 37.33
Interest -5.73 -5.25 -5.40 -5.24
Gross profit 33.89 23.66 28.59 32.10
Depreciation -15.75 -15.39 -15.67 -16.14
Profit Before Tax 18.14 8.27 12.92 15.96
Tax -4.41 -0.72 -3.23 -3.57
Net Profit 13.73 7.55 9.69 12.38
Equity capital 61.50 61.50 61.50 61.50
Face value 10.00 10.00 10.00 10.00
EPS 2.23 1.23 1.58 2.01

6. Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 8.93 6.88 7.05 8.83
EBITDA Margin (%) 28.81% 27.90% 25.11% 27.28%
PBT Margin (%) 13.97% 11.76% 9.93% 12.48%
PAT Margin (%) 10.07% 7.84% 7.78% 9.03%
P/E Ratio (x) 5.49 7.13 6.96 5.55
ROE (%) 14.33% 10.14% 9.42% 10.56%
ROCE (%) 41.02% 37.44% 32.59% 33.96%
Debt Equity Ratio 0.40 0.38 0.35 0.32
EV/EBITDA (x) 2.82 2.98 3.22 2.73
Book Value (Rs.) 62.31 67.79 74.84 83.67
P/BV 0.79 0.72 0.66 0.59
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs.49.05, the stock P/E ratio is at 6.96 x FY15E and 5.55 x FY16E respectively.
Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 7.05 and Rs.
8.83 respectively.
Net Sales of the company are expected to grow at a CAGR of 4% over 2013 to 2016E.
On the basis of EV/EBITDA, the stock trades at 3.22 x for FY15E and 2.73 x for FY16E.
Price to Book Value of the stock is expected to be at 0.66 x and 0.59 x respectively for FY15E and FY16E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs. 57.00 for Medium to Long term investment.

8. INDUSTRY OVERVIEW
Capital goods and engineering turnover in India is expected to reach US$ 125.4 billion by 2017 from US$ 57.6
billion in 2012, while the electrical equipment market size is forecasted to touch US$ 105 billion by 2022 from
US$ 24.2 billion in 2011. Also, the Indian telecom equipment market is expected to grow over two times by 2020.
The Indian engineering sector is divided into two major segments - heavy engineering and light engineering.
Indian engineering exports stood at US$ 62.3 billion in FY14 while it registered a compound annual growth rate
(CAGR) of 10.8 per cent over FY08-14. Transport equipment is the leading contributor to engineering exports
accounting for 32.5 per cent of the total engineering exports in FY13, followed by machinery and instruments
with a share of 26.8 per cent.
The Government of India has de-licensed the engineering industry and 100 per cent foreign direct investment
(FDI) has been permitted in the sector. The government has also eliminated tariff protection on capital goods and
reduced custom duties on a range of engineering equipment. It launched the National Manufacturing Policy with
the aim of enhancing the sector's share in gross domestic product (GDP) to 25 per cent within a decade and
creating 100 million jobs by 2022.
With increasing demand for engineering goods in a number of sectors such as defence, civil nuclear and
automobiles, the engineering industry in India have plenty of scope for growth in the years to come.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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