Nilkamal is the India’s largest manufacturer of material handling plastic crates and a leader in moulded furniture.
The company operates mainly in 3 business segments i.e. life style furniture, plastics, furnishing & accessories.
Nilkamal is one of the strong brands in the plastic segment that can be further classified into material handling and moulded furniture category.
Nilkamal ltd is one of the Multibagger Shares, identified by Dynamic Research based on technical and fundamental research. Nilkamal share price has touched a 52 week high of Rs. 1631.95 on 13 -Jan -2016 and a 52 week low of Rs.780.00 on 26-Aug -2016, and is currently trading at Rs. 1220.15.
Share Holding
The promoters holding in the company stood at 64.13%, while Institutions and Non-Institutions held 8.07% and 27.80% respectively.
Some of the Non-Promoters holding securities holding more than 1% of total number of shares are
- Narendra Kumar Agarwal: 2.85%
- Sundar Iyer: 1.34%
- Seetha Kumari: 1.22%>
Financial Analysis
Quarterly Results
For the quarter ended June 2016, the total income from operations of Nilkamal ltd has reported a growth of 8.36 % on Y-o-Y basis to Rs. 495.78 cr as against Rs. 457.55 cr during the same quarter last year. A boost in total income from operations shows sturdy development in business.
The operating profit of Nilkamal ltd on standalone has shown a growth of 16.12% Y-o-Y to Rs. 45.89 cr as against Rs. 39.52 cr during the same quarter last year. This is mainly due to rise in topline of the company.
The net profit of Nilkamal has registered a growth of 25.18% Y-o-Y to Rs.31.67 cr as against Rs 25.30 during the same quarter previous year.
The earnings per share of the company have showed a growth of 25.12% Y-o-Y to Rs. 21.22 as against Rs. 16.96 during same period last year.
Annual Results
For the year ended March 31, 2016 Nilkamal ltd on Consolidated basis reported net sales of Rs. 1996 cr compared to Rs. 1887.81 cr FY2015 increased by 5.73% annually.
For the year ended March 31, 2016 Nilkamal on Consolidated basis reported net profit of Rs. 113.32 cr compared to profit of Rs. 51.26 cr FY2015, registering a very marginal growth of 121.07% annually.
Ratio Analysis
| Name | Ratio |
| Current Ratio | 2.48 |
| Quick Ratio | 1.38 |
| Dividend Yield% | 0.59 |
| Interest Coverage Ratio | 13.49 |
| Debt Equity Ratio | 0.13 |
| Return On Asset (%) | 11.67 |
| Return On Equity (%) | 18.09 |
The above ratio suggests that the company is operating with a very minimal level of debt on it shoulders, and have enough liquidity to pay its short term obligation and can easily meet up with the interest expenses pertaining to its debt obligations. The company has reduced its interest cost from 5.06 cr in June quarter 2015 to 3.96 cr in June quarter 2016.
Manufacturing Capacities
Nilkamal has nine manufacturing units for manufacture of plastic moulded furniture and material handling solutions. Material handling and moulded furniture contribute 57% and 43% to segment revenues, respectively.
Investment Rationale
- The Indian economy was relatively stable during the fiscal year 2015-16. The country’s gross domestic product (GDP) grew by 7.4% compared to 7.2% growth in GDP in 2014-15.
- The country’s GDP is expected to grow by 7.7% during the year. Domestic consumption is expected to be the main driver of the likely acceleration in economic growth this year.
- The Plastic Business has achieved a volume growth of 3% and value growth of 5%. During the financial year 2015-16 it has achieved total turnover of Rs. 176,572 lacs as compared to Rs. 169,521 lacs in the previous year.
- Nilkamal continues to enjoy the market leadership & holds the market share of approx. 32%, which is double over its closest competitor.
- Nilkamal has taken steps to invest in range of differentiated products in the Premium Monoblock and other range in the moulded vertical.
- The hybrid chair, combining metal and plastic, introduced in last three financial years showed a robust growth even in the current fiscal year.
- To enhance product offering, this Year the company has widen school furniture and SOHO (small office/home office) furniture range by adding more than 50 products in this segment. The Company has reinforced their market presence by adding more Modern Trade outlets, E-commerce portals and just dial to promote the sales of various value added products.
- The Company has rationalized the prices of Mattress and enhanced the dealer engagement programs to further enhance the market share in South, West & East.
- In the current financial year the Company plans to enhance its range of rubberized coir, foam and spring Mattress which will serve the comfort, back support for the spine and wellness factors sought by our esteemed customers.
- The company is in process to partner with digital Payment/Wallet companies to further improve customer experience both in Online and Offline Channel.
- Nilkamal is optimistic on a revival in demand for material handling products, going forward, supported by various initiatives (like “Swachh Bharat Abhiyan”) taken by the newly formed government at the Centre.
In the long run we remain bullish on the prospect of Furniture business. The growing middle class would need quality furniture from reliable manufacturers to meet their aspirants of modern living.
At CMP of Rs.1220 the stock is trading at a P/E of 15.97, the market cap of the company is 1763.10 crore as of today. Dynamic Levels recommends a buy on Nilkamal at 1220 with a target of Rs.1380.
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