IFB Agro Result Review 4QFY2013

IFB Agro reported better than expected results for 4QFY2013. Revenue came in at `86cr as compared to our estimate of `82cr, while on a yoy basis, revenue decline dby 9.3% primarily due to fall in revenue in the alcohol division due to closure of the molasses distillery. However, EBITDA margin expanded by 298bp yoy to 6.8% in 4QFY2013 from 3.8% in 4QFY2012, due to a sharp decline in other expenses during the quarter. This coupled with lower depreciation and higher other income led to a net profit `4cr during the quarter as compared to a net profit of `0.3cr in 4QFY2012. For FY2013, overall revenue growth stood at 4.5% yoy to `462cr from `442cr in FY2012. Decline in revenue growth is attributable to lower contribution from the alcohol division. EBITDA margin contracted by 71bp to 10.3% on account of increase in net raw material cost. This was offset by lower depreciation and higher other income which led to 2.5% yoy growth in net profit to `26cr for FY2013. Going forward we expect the revenue to post a 19.2% CAGR to `657cr over FY2013-15 at the back of new distillery capacity, which is expected to be operational by FY2015E. We expect the net profit to post a CAGR of 32.4% on the back of margin expansion arising from high margin distillery business. At the current market price, the stock is trading at P/B of 0.6x for FY2015E, which we feel is attractive. Source: AngelBroking