starch sector

Industry Covered – Starch & Starch Derivatives

Industry Players Covered – 8 [ All SE-Listed Players (Constituting 80 % of the Industry Size) ]

Name of Companies Covered – Riddhi Siddhi Gluco Biols Ltd.

Anil Products Ltd.

Sukhjit Starch & Chemicals Ltd.

Gujarat Ambuja Exports Ltd. (Maize-Processing Division)

English Indian Clays Ltd. (Starch Division)

Universal Starch-Chem Allied Ltd.

Gayatri Bioorganics Ltd.

Tirupati Starch & Chemicals Ltd.

Contents - Last Fives Years' Performance of Starch Industry as a whole

Percentage Contribution by each of the Listed Player to industry Sales & EBIDTA over last 5 Years

Q1'FY11 Performance of Starch Industry as a whole

Percentage Contribution by each of the Listed Player to industry Sales & EBIDTA (Q1'FY11 over Q1'FY10)

Current Valuation Commanded by each of the Listed Company (execept GAEL & EICL) based on price as on 13th August 2010

Last 10 Years' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Last 10 Years' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Last 10 Years' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Last 10 Years' Margin Scenario of Top 3 Listed Companies

Last 9 Quarters' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Last 9 Quarters' Sales, EBIDTA, OP & NP Growth % of Top 3 Listed Companies

Last 9 Quarters' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Last 9 Quarters' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Last 9 Quarters' Margin Scenario of Top 3 Listed Companies

Brief Textual Overview & Analysis of the Industry asto Why It will Start Carving its Place in Every Portfolio meant for Growth

Brief Textual Overview of All Listed PlayersRiddhi Siddhi Gluco Biols Ltd. - An Industry OutperformerAnil Products Ltd. - An Industry PerformerSukhjit Starch & Chemicals Ltd. - A Consistent PerformerGujarat Ambuja Exports Ltd. - A Dark HorseEnglish Indian Clays Ltd. - A Sell-off StoryUniversal Starch-Chem Allied Ltd. - A Possible Risky WinnerGayatri Bioorganics & Tirupati Starch – A Complete Avoid

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Yearly Performance of Starch Industry (Organised -Listed Players)

FY10 FY09 FY'08 FY'07 FY'06

Sales (in ` cr.) 2082.17 1544.19 1180.78 1123.42 880.99

Growth in Sales 34.84% 30.78% 5.11% 27.51% 10.83%

EBIDTA (in ` cr.) 273.67 143.04 144.88 146.79 79.42

Growth in EBIDTA

91.32% -1.27% -1.30% 84.82% 31.46%

% Contribution of Each Player to Yearly Sales & EBIDTA of Starch Industry(Organised -Listed Players)

FY10 FY09 FY'08 FY'07 FY'06

Riddhi SiddhiSales 35.83% 34.61% 28.26% 31.71% 28.16%

EBIDTA 43.85% 43.02% 37.74% 37.05% 41.66%

Guj. Ambuja Exports

Sales 16.51% 13.99% 11.25% 10.99% 11.39%

EBIDTA 16.26% 11.08% 8.21% 13.91% 10.10%

Anil ProductsSales 17.99% 18.06% 19.51% 18.04% 19.47%

EBIDTA 19.16% 21.02% 17.85% 12.73% 15.89%

Sukhjit StarchSales 12.45% 13.19% 15.36% 14.50% 13.94%

EBIDTA 11.67% 17.35% 21.49% 21.45% 17.12%

English Indian Clays

Sales 7.65% 9.21% 11.46% 11.03% 11.79%

EBIDTA 3.13% 3.98% 7.12% 5.64% 4.89%

Universal Starch

Sales 4.34% 5.13% 7.03% 7.08% 8.32%

EBIDTA 2.71% 1.48% 3.69% 5.75% 8.95%

Gayatri Bioorganics

Sales 2.99% 3.09% 3.49% 3.04% 3.18%

EBIDTA 1.92% 0.03% 0.59% 0.71% 0.45%

Tirupati StarchSales 2.24% 2.72% 3.64% 3.61% 3.75%

EBIDTA 1.30% 2.04% 3.31% 2.76% 0.94%

Q1FY11 Performance of Starch Industry (Organised -Listed Players)

Q1FY11 Q1FY10

Sales (in ` cr.) 580.09 462.76

Growth in Sales(YoY)

25.35% 29.39%

EBIDTA (in ` cr.) 104.23 47.55

Growth in EBIDTA

(YoY)

119.20% 9.66%

% Contribution of Each Player to Quarterly Sales & EBIDTA of Starch Industry(Organised -Listed Players)

Q1FY11 Q1FY10

Riddhi SiddhiSales 34.99% 33.81%

EBIDTA 43.18% 39.36%

Guj. Ambuja Exports

Sales 16.10% 17.02%

EBIDTA 16.06% 17.05%

Anil ProductsSales 18.34% 18.48%

EBIDTA 18.48% 19.47%

Sukhjit StarchSales 13.59% 12.50%

EBIDTA 13.09% 10.09%

English Indian Clays

Sales 6.96% 8.45%

EBIDTA 2.85% 4.29%

Universal Starch

Sales 4.63% 4.57%

EBIDTA 3.27% 4.85%

Gayatri Bioorganics

Sales 3.27% 2.68%

EBIDTA 1.79% 1.61%

Tirupati StarchSales 2.07% 2.49%

EBIDTA 1.28% 3.28%

Current Valuation of Pure Listed Players based on Price as on 13th August 2010

P/E{ TTM EPS

(FY10) }

P/E{ Q1FY11 EPS Annualised }

P/E{ FY11

Expected EPS }

Marketcap/Sales{ TTM Sales

(FY10) }

Marketcap/Sales{FY11 Expected

Sales}

Riddhi Siddhi 11.26 3.51 5.04 0.58 0.41

Anil Products 8.01 5.44 5.21 0.52 0.43

Sukhjit Starch 12.32 5.29 6.02 0.7 0.57

Universal Starch 70.16 3.49 8.83 0.21 0.17

Gayatri Bioorganics 35.91 17.96 13.27 0.86 0.64

Tirupati Starch 5.86 2.21 3.56 0.19 0.17

Last 10 Years' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Yearly Performance of Riddhi Siddhi

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02

(in ` cr.)

Sales 745.61 533.99 333.15 355.87 248.15 198.87 158.81 115.48 92.83

EBIDTA 119.91 61.5 54.62 54.33 33.09 25.28 22.5 18.5 11.66

Operating Profit

95.69 46.78 42.01 43.46 24.88 17.56 15.24 12.67 8.5

Net Profit

39.21 13.98 19.93 26.76 11.34 3.95 1.5 1.26 2.33

Yearly Performance of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in ` cr.)

Sales 374.59 279.03 230.42 202.74 171.56 181.34 140.32

EBIDTA 52.44 30.08 25.87 18.69 12.62 11.36 10.01

Operating Profit

47.26 25.86 22.21 16.03 10.25 9.4 8.13

Net Profit 23.99 10.52 7.24 5.47 2.03 1.77 0.65

Yearly Performance of Sukhjit Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02 FY'01

(in ` cr.)

Sales 259.27 203.69 181.48 162.96 122.88 91.83 80.12 68.74 61.14 61.73

EBIDTA 31.95 24.82 31.14 31.5 13.6 8.64 8.03 8.54 7.91 8.01

Operating Profit

26.01 19.71 27.89 28.64 11.2 6.63 6.13 6.99 6.56 6.81

Net Profit

14.67 11.6 20.15 20.7 6.46 2.66 2.47 3.56 3.48 3.31

Yearly Performance of Guj. Ambuja Exports (Maize Processing Division)

FY10 FY09 FY'08 FY'07

(in ` cr.)

Sales 343.84 216.07 132.88 123.48

EBIDTA 44.51 15.85 11.9 20.42

Operating Profit NA NA NA NA

Net Profit NA NA NA NA

Yearly Performance of English Indian Clays (Starch Division)

FY10 FY09 FY'08 FY'07 FY'06

(in ` cr.)

Sales 159.34 142.24 135.42 123.92 103.92

EBIDTA NA NA NA NA NA

Operating Profit 8.57 5.7 10.32 8.29 3.89

Net Profit NA NA NA NA NA

Yearly Performance of Universal Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Sales 90.57 79.3 83.08 79.59 73.36 67.26 69.46 70.96

EBIDTA 7.44 2.12 5.36 8.45 7.11 5.13 6.17 6.18

Operating Profit 4.28 -1.08 2.38 5.65 4.51 3.09 4.35 4.45

Net Profit 0.71 -3.46 -0.8 1.65 0.61 0.68 1.44 2

Yearly Performance of Gayatri Bioorganics


(in ` cr.)

Sales 62.27 47.81 41.3 34.25 28.04 15.44 16.29 21.4

EBIDTA 5.28 0.05 0.86 1.05 0.36 -1.4 -2.65 -2.5

Operating Profit 2.34 -2.81 -1.89 -1.69 -2.39 -4.14 -5.38 -5.26

Net Profit 1.49 -3.35 -1.99 -2.59 -5.41 -9.29 -10.57 -10.55

Yearly Performance of Tirupati Starch


(in ` cr.)

Sales 46.68 42.06 43.05 40.61 33.08 35.57 38.6 42.1

EBIDTA 3.57 2.92 4.81 4.06 0.75 0.86 1.6 1.94

Operating Profit 2.77 2.11 4.03 3.31 -0.09 0.06 0.82 1.17

Net Profit 1.51 0.96 2.56 1.99 -1.08 -0.92 -0.36 0.27

Last 10 Years' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Yearly Expenditure Trend of Riddhi Siddhi


(in ` cr.)

Deprec. 24.22 14.72 12.61 10.87 8.21 7.72 7.26 5.83 3.16

Finan. Expenses

20.82 27.17 12.49 10.91 11.89 12.19 12.37 10.37 5.96

Tax 37.21 7.17 9.58 5.52 1.57 1.32 1.34 0.99 0.21

Yearly Expenditure Trend of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in ` cr.)

Deprec. 5.18 4.22 3.66 2.66 2.37 1.96 1.88

Finan. Expenses

15.94 10.41 9.96 6.9 5.49 6.15 6.61

Tax 7.3 4.92 5.01 3.34 2.27 1.48 0.77

Yearly Expenditure Trend of Sukhjit Starch


(in ` cr.)

Deprec. 5.94 5.11 3.25 2.86 2.4 2.01 1.9 1.55 1.35 1.2

Finan. Expenses

7.09 5.39 4.63 3.18 3.23 2.86 2.66 2.23 2.02 2.6

Tax 4.23 2.71 3.1 4.75 1.5 1.1 1 1.2 1.05 0.9

Yearly Expenditure Trend of Universal Starch


(in ` cr.)

Deprec. 3.16 3.2 2.98 2.8 2.6 2.04 1.82 1.73

Finan. Expenses 2.34 2.91 3.6 3.57 3.46 2.15 2.12 1.81

Tax 1.23 -0.53 -0.42 0.43 0.44 0.26 0.8 0.64

Yearly Expenditure Trend of Gayatri


(in ` cr.)

Deprec. 2.94 2.86 2.75 2.74 2.75 2.74 2.73 2.76

Finan. Expenses 0.84 0.52 0.09 0.84 3 5.14 5.18 5.27

Tax 0 0.01 0.01 0.01 0.01 0 0 0

Yearly Expenditure Trend of Tirupati Starch


(in ` cr.)

Deprec. 0.8 0.81 0.78 0.75 0.84 0.8 0.78 0.77

Finan. Expenses 0.84 1.14 1.3 1.06 0.99 0.98 1.18 0.87

Tax 0.35 0.01 0.16 0.25 0 0 0 0.02

Last 10 Years' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Yearly Expenditure viewed with respect to Sales and EBIDTA of Riddhi Siddhi


(in %)

Deprec. (% Sales)

3.24 2.75 3.78 3.05 3.3 3.88 4.57 5.04 3.4

Fin. Exp. (%

EBIDTA)

17.36 44.17 22.86 20 35.93 48.21 54.97 56.05 51.11

Tax (%

EBIDTA)

31.03 11.65 17.53 10.16 4.74 5.22 5.95 5.35 1.8

Yearly Expenditure viewed with respect to Sales and EBIDTA of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in %)

Deprec. (% Sales)

1.38 1.51 1.58 1.31 1.38 1.08 1.33

Fin. Exp. (%

EBIDTA)

30.39 34.6 38.5 36.91 43.5 54.13 66.03

Tax (%

EBIDTA)

13.92 16.35 19.36 17.87 17.98 13.02 7.69

Yearly Expenditure viewed with respect to Sales and EBIDTA of Sukhjit Starch


(in %)

Deprec. (% Sales)

2.29 2.5 1.79 1.75 1.95 2.18 2.37 2.25 2.2 1.94

Fin. Exp. (%

EBIDTA)

22.19 21.71 14.86 10.09 23.75 33.1 33.12 26.11 25.53 32.45

Tax (%

EBIDTA)

13.23 10.91 9.95 15.07 11.02 12.73 12.45 14 13.27 11.23

Last 10 Years' Margin Scenario of Top 3 Listed Companies

Yearly Margin Scenario for Riddhi Siddhi


(in %)

EBIDTA Margins

16.08 11.51 16.39 15.26 13.33 12.71 14.16 16.02 12.56

OPM 12.83 8.76 12.6 12.21 10.02 8.82 9.59 10.97 9.15

NPM 5.25 2.61 5.98 7.51 4.56 1.98 0.94 1.09 2.5

Yearly Margin Scenario for Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in %)

EBIDTA Margins

13.99 10.78 11.22 9.21 7.35 6.26 7.13

OPM 12.61 9.26 9.63 7.9 5.97 5.18 5.79

NPM 6.4 3.77 3.14 2.69 1.18 0.97 0.46

Yearly Margin Scenario for Sukhjit Starch


(in %)

EBIDTA Margin

12.32 12.18 17.15 19.32 11.06 9.4 10.02 12.42 12.93 12.97

OPM 10.03 9.67 15.36 17.57 9.11 7.21 7.65 10.16 10.72 11.03

NPM 5.65 5.69 11.1 12.7 5.25 2.89 3.08 5.17 5.69 5.36

Last 9 Quarters' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Quarterly Performance of Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 202.76 231.26 193.58 164.43 156.33 161.53 124.05 126.01 122.4

EBIDTA 44.97 49.09 28.68 23.42 18.7 5.11 15.19 20.79 21.18

Operating Profit

39.49 38.72 24.41 18.79 13.76 3.89 10.94 16.59 17.13

Net Profit 27.4 12.13 12.77 9.15 5.14 3.5 1.26 1 8.22

Quarterly Performance of Anil Products


(in ` cr.)

Sales 106.41 102.24 96.57 90.23 85.53 87.06 81.32 57.29 53.35

EBIDTA 19.27 18.47 13.96 10.7 9.26 11.07 8.54 4.61 6.24

Operating Profit

17.75 17.12 12.53 9.46 8.11 9.76 7.57 3.64 5.28

Net Profit 8.82 7.52 7.15 5.33 3.98 4.26 3.89 0.86 1.5

Quarterly Performance of Sukhjit Starch


(in ` cr.)

Sales 78.89 73.02 69.17 58.16 57.85 51.57 52.62 50.22 49.04

EBIDTA 13.65 13.2 7.68 5.7 4.8 4.88 5.42 6.74 7.61

Operating Profit

12.15 11.7 6.48 4.45 3.55 3.38 4.22 5.84 6.71

Net Profit 8.54 7.13 4.03 2.3 1.81 1.34 2.05 3.8 4.81

Quarterly Performance of Guj. Ambuja Exports (Maize Processing Division)


(in ` cr.)

Sales 93.49 94.63 91.01 73.26 78.77 58.86 54.65 47.82 52.7

EBIDTA 16.74 16.16 9.02 7.73 8.11 5.25 1.11 4.72 3.86

Operating Profit

NA NA NA NA NA NA NA NA NA

Net Profit NA NA NA NA NA NA NA NA NA

Quarterly Performance of English Indian Clays (Starch Division)


(in ` cr.)

Sales 40.44 44.66 39.09 36.47 39.12 35.43 37.98 35.08 39.12

EBIDTA NA NA NA NA NA NA NA NA NA

Operating Profit

2.98 3.44 1.53 1.56 2.04 0.37 1.81 1.93 2.04

Net Profit NA NA NA NA NA NA NA NA NA

Quarterly Performance of Universal Starch


(in ` cr.)

Sales 26.87 25.8 18.74 18.44 21.19 18.34 18.91 18.01 18.71

EBIDTA 3.41 3.92 -0.27 -0.46 2.31 -0.37 0.15 0.35 1.24

Operating Profit

2.53 3.08 -1.05 -1.24 1.53 -1.17 -0.65 -0.45 0.44

Net Profit 1.27 1.41 -0.5 -0.7 0.49 -0.97 -1.05 -1.02 -0.43

Quarterly Performance of Gayatri Bioorganics


(in ` cr.)

Sales 19.22 20.01 15.19 14.01 12.42 11.82 11.44 11.74 11.88

EBIDTA 1.87 3.69 0.36 0.45 0.77 0.14 -0.01 -0.23 0.15

Operating Profit

1.11 2.95 -0.37 -0.28 0.05 -0.56 -0.73 -0.95 -0.55

Net Profit 0.75 2.6 -0.59 -0.4 -0.11 -0.73 -0.93 -1.06 -0.61

Quarterly Performance of Tirupati Starch


(in ` cr.)

Sales 12.01 11.91 11.3 11.91 11.55 10.92 9.91 10.77 10.44

EBIDTA 1.34 0.5 0.66 0.75 1.56 1.19 0.06 0.63 1.04

Operating Profit

1.14 0.3 0.46 0.58 1.34 0.9 -0.11 0.47 0.87

Net Profit 1 -0.26 0.21 0.36 1.08 0.59 -0.36 0.16 0.56

Last 9 Quarters' Sales, EBIDTA, OP & NP Growth % of Top 3 Listed Companies

Quarterly Growth of Riddhi Siddhi


(in %)

Sales -12.32 19.46 17.73 5.18 -3.22 30.21 -1.55 2.95% 122.4

EBIDTA -8.39 71.16 22.46 25.24 265.95 -66.36 -26.94 -1.84 21.18

Operating Profit

1.99 58.62 29.91 36.56 253.73 -64.44 -34.06 -3.15 17.13

Net Profit 125.89 -5.01 39.56 78.02 46.86 177.78 26 -87.83 8.22

Quarterly Growth of Anil Products


(in %)

Sales 4.07 5.87 7.03 5.5 -1.76 7.06 41.94 7.39 49.04

EBIDTA 4.33 32.31 30.47 15.55 -16.35 29.62 85.25 -26.12 7.61

Operating Profit

3.67 36.63 32.45 16.65 -16.91 28.93 107.97 -31.06 6.71

Net Profit 17.28 5.17 34.15 33.92 -6.57 9.51 352.33 -42.67 4.81

Quarterly Growth of Sukhjit Starch


(in %)

Sales 8.04 5.57 18.93 0.54 12.18 -2 4.78 2.41 49.04

EBIDTA 3.41 71.88 34.74 18.75 -1.64 -9.96 -19.58 -11.43 7.61

Operating Profit

3.85 80.56 45.62 25.35 5.03 -19.91 -27.74 -12.97 6.71

Net Profit 19.78 76.92 75.22 27.07 35.07 -34.63 -46.05 -21 4.81

Last 9 Quarters' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Quarterly Expenditure Trend of Riddhi Siddhi


(in ` cr.)

Deprec. 5.48 10.37 4.27 4.63 4.95 2.22 4.25 4.2 4.05

Finan. Expenses

4.52 4.09 4.81 5.78 6.14 -1.67 7.79 13.77 6.13

Tax 8.18 23.26 7.1 4.29 2.56 1.33 1.89 1.82 2.78

Quarterly Expenditure Trend of Anil Products


(in ` cr.)

Deprec. 1.52 1.35 1.43 1.24 1.15 1.31 0.97 0.97 0.96

Finan. Expenses

6.52 5.79 4.11 3.27 2.76 2.53 2.93 2.47 2.47

Tax 2.41 3.8 1.26 0.86 1.36 2.96 0.75 0.3 0.9

Quarterly Expenditure Trend of Sukhjit Starch


(in ` cr.)

Deprec. 1.5 1.5 1.2 1.25 1.25 1.5 1.2 0.9 0.9

Finan. Expenses

1.69 2.55 1.71 1.55 1.24 1.44 1.32 1.64 1.15

Tax 2 2.25 0.9 0.8 0.5 0.6 0.85 0.5 0.65

Quarterly Expenditure Trend of Universal Starch


(in ` cr.)

Deprec. 0.88 0.84 0.78 0.78 0.78 0.8 0.8 0.8 0.8

Finan. Expenses

0.75 0.5 0.52 0.71 0.62 0.64 0.7 0.77 0.8

Tax 0.51 1.17 -0.03 -0.33 0.42 0.1 -0.3 -0.2 0.07

Quarterly Expenditure Trend of Gayatri Bioorganics


(in ` cr.)

Deprec. 0.76 0.74 0.73 0.73 0.72 0.7 0.72 0.72 0.7

Finan. Expenses

0.53 0.34 0.21 0.11 0.17 0.14 0.2 0.11 0.05

Tax 0 0 0 0 0 0 0 0 0

Quarterly Expenditure Trend of Tirupati Starch


(in ` cr.)

Deprec. 0.2 0.2 0.2 0.17 0.22 0.29 0.17 0.16 0.18

Finan. Expenses

0.14 0.25 0.14 0.19 0.24 0.31 0.24 0.29 0.29

Tax 0 0.25 0.1 0 0 0 0 0 0

Last 9 Quarters' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Riddhi Siddhi


(in %)

Deprec. (% Sales)

2.7 4.48 2.21 2.82 3.17 1.37 3.43 3.33 3.31

Fin. Exp. (%

EBIDTA)

10.05 8.33 16.77 24.68 32.83 -32.68 51.28 66.23 28.94

Tax (%

EBIDTA)

18.19 47.38 24.76 18.32 13.69 26.02 12.44 8.75 13.13

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Anil Products


(in %)

Deprec. (% Sales)

1.42 1.32 1.48 1.37 1.34 1.5 1.19 1.69 1.8

Fin. Exp. (%

EBIDTA)

33.83 31.35 29.44 30.56 29.81 22.85 34.31 53.58 39.58

Tax (%

EBIDTA)

12.51 20.57 9.03 8.04 14.69 26.74 8.78 6.51 14.42

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Sukhjit Starch


(in %)

Deprec. (% Sales)

1.9 2.05 1.73 2.15 2.16 2.91 2.28 1.79 1.84

Fin. Exp. (%

EBIDTA)

12.38 19.32 22.27 27.19 25.83 29.51 24.35 24.33 15.11

Tax (%

EBIDTA)

14.65 17.05 11.72 14.04 10.42 12.3 15.68 7.42 8.54

Last 9 Quarters' Margin Scenario of Top 3 Listed Companies

Quarterly Margin Scenario for Riddhi Siddhi


(in %)

EBIDTA 22.17 21.22 14.81 14.24 11.96 3.16 12.24 16.49 17.3

Operating Profit

19.47 16.74 12.6 11.42 8.8 2.41 8.81 13.16 13.99

Net Profit 13.51 5.24 6.59 5.56 3.28 2.16 1.01 0.79 6.71

Quarterly Margin Scenario for Anil Products


(in %)

EBIDTA Margins

18.11 18.06 14.45 11.86 10.82 12.71 10.5 8.04 11.69

OPM 16.68 16.74 12.97 10.48 9.48 11.21 9.3 6.35 9.89

NPM 8.28 7.35 7.4 5.9 4.65 4.89 4.78 1.5 2.81

Quarterly Margin Scenario for Sukhjit Starch


(in %)

EBIDTA Margins

17.3 18.07 11.1 9.8 8.29 9.46 10.3 13.42 15.51

OPM 15.4 16.02 9.36 7.65 6.13 6.55 8.01 11.62 13.68

NPM 10.82 9.76 5.82 3.95 3.12 2.59 3.89 7.56 9.8

Brief Textual Overview & Analysis of the Industry asto Why It will Start Carving its Place in Every Portfolio meant for Growth

With a current Industry size (Organised) of ` 2082.17 cr. and a 15 % p.a. growth expected till 2015, Starch & Starch Derivatives is an industry commanding a definite place in any growing portfolio. It is not the sheer size but the pace of achievement of such size which deserves an attention. Over the last five years, industry has grown at a CAGR of 21.8 % from a meager ` 880.99 cr. in FY06 to the current ` 2082.17 cr. in FY10. To add, this growth in size is coupled with a strong cash generation which is evident from the fact that EBIDTA of the industry has grown at a CAGR of 41 % from a meager ` 79.42 cr. in FY06 to ` 273.67 cr. in FY10. This growth in EBIDTA is achieved inspite of the fact that the price of the main input of the industry viz., maize, which constitutes 65 % cost for the industry, has almost doubled in last five years. This trend depicts a widening of the marketplace for the industry as well as the ability of the industry players to command pricing environment of their products. With a stable pricing scenario expected for maize in coming few years and factors like :

➢ high price of sugar prompting need to search for its alternatives, especially in Food & Beverages Industry,

➢ extremely low per capita starch consumption in India which is less than 1 kg. as compared to US where it is 64 kg. and global average which is at 6 kg.,

➢ emergence of starch as an environment-friendly alternative to plastics in many applications like carry-bags,

➢ use of starch in innovative applications like manufacture of ethanol and biodegradable plastics, etc.

: the Starch & Starch Derivatives industry is likely to experience a rapid scale-up in size alongwith robust cash-generation in coming few years. A glimpse of the healthy future cash-generation is evident in Q1FY11 where industry has posted an EBIDTA which is 38 % of the EBIDTA of entire FY10. To talk in numbers, in Q1FY11, the industry has posted ` 580.09 cr. sales with an EBIDTA of ` 104.23 cr. which entails to a YoY growth of 119.20 %. Normally, June (Q1) is the leanest quarter for the industry and to post such healthy numbers in a lean quarter paints an extremely rosy picture for the industry.

When an industry is growing at a CAGR of 21.8 % and experiencing robust cash-generation, its players are expected to reap handsome rewards out of it. From an EBIDTA margin of just 9.01 % in FY06, industry achieved an EBIDTA margin of 13.14 % in FY10 and an even healthier EBIDTA margin of 17.97 % in Q1FY11. Such healthy numbers call for an expansion in valuation of the listed players of the industry which, to everybody's surprise, are still quoting at single digit P/E. Agreed, Starch & Starch Derivatives industry is having a very concentrated nature with top 4 players accounting for more than 70 % of the industry size. Still, a consistent growth since last five years and an expected robust growth environment for next five years call for a valuation-adjustment of top 4 players and an investment-on-merit in other players.

In this report we provide a brief textual overview and deep tabular analysis of all the listed players.

Riddhi Siddhi Gluco Biols Ltd. - An Industry Outperformer

Riddhi Siddhi Gluco Biols Ltd. is an industry by itself rather than an industry player. It is this company which has contributed tremendously towards the growth of Starch & Starch Derivatives industry and has brought the industry to such a level that it is hard to imagine a growth portfolio without the presence of this industry.

To talk in financial terms, if we take into account just last five financial years, Riddhi has swelled its topline by a whooping 200.40 % vis-a-vis industry which has swelled its topline by 136.34 %. On EBIDTA front too, Riddhi has swelled it by 262.37 % vis-a-vis industry EBIDTA which swelled by 244.58 % over last five years. Riddhi enjoys a 35 % market share of the industry and is an undisputed leader of the industry. A strategic equity stake of 14.95 % by world's 4th largest cornstarch producer Roquette adds visibility to Riddhi's leadership status remaining undisputed for many many years to come.

Rather than going into other details, here we will only briefly discuss the financial terms of Riddhi. On financial front, Riddhi is a very strong company with almost the entire investment phase having got concluded with the commisioning of 30 % additional capacity at Rudrapur plant in June 2010. Going forward we can see a significant reduction in debt position of Riddhi because of the healthy cash generated by it in FY10 and expected robust cash that will get generated in FY11. Q1FY11 was a curtain-raiser to this with expansion of OPM by 1067 basis points YoY and 270 basis points QoQ. In the same quarter, Riddhi expanded its NPM by 1022 basis points YoY and 829 basis points QoQ. For FY11, Riddhi is expected to achieve an EBIDTA margin of 17.5-18.5 % on a topline of ` 1056 cr. with an EPS of ` 77.60. FY12 will see its expanded capacity attaining a utilisation level 85 % + which will see its topline getting swelled to ` 1380 cr.

One important point to note regarding the quality of earnings of Riddhi is the fact that its depreciation and tax charge has consistently been much higher than all the peers including Anil Products and Sukhjit Starch while its EBIDTA margins have traditionally been better than all its peers.

At the current market price of ` 391.65, Riddhi is trading at a P/E of 5.04 based on FY11E EPS of ` 77.60 and at a P/E multiple of just 4.63 based on FY12E EPS of ` 84.50 (after factoring in an equity dilution in FY12). This is the cheapest valuation at which one can get the leader of an industry which by itself is growing at 15 % + and the company which has consistent track record of last ten years of outperforming the industry by quite a wide margin. Hence, Riddhi is a strong rerating candidate and the safest bet for the Starch & Starch Derivatives industry and untill the time it adjusts its valuation and starts trading at a historical multiple band of 8-8.5 its FY11E EPS, it will retain a 'Safe Buy” status.

Anil Products Ltd. - An Industry Performer

Anil Products can best be described as an 'Industry Performer' which will grow its topline inline with the industry while outperforming the industry in terms of EBIDTA. Over last five financial years, Anil swelled its topline by 118.34 % which is lower than the growth of industry topline which swelled by 136.34 % over the same period. However, Anil managed a swelling of 315.53 % in EBIDTA over last five years which is far ahead of the industry EBIDTA which got swelled by 244.58 %. This is because the company's main focus has always been value-added products which command a higher margin. However, with a three-fold capacity expansion planned in next 3 years, this scenario could very well change and the company is expected to grow its topline inline or ahead of the industry topline. Margins could take a hit as company will enter into an investment phase over the next 2-3 years which could very well see it underperforning Riddhi and Sukhjit.

At the current market price of ` 196.70, Anil trades at a P/E multiple of 5.21 based on its FY11E EPS of ` 37.75 (FY11E Topline – ` 455 cr.). After Riddhi, Anil will command the 'Second-Best Buy' status for the Starch & Starch Derivatives industry.

Sukhjit Starch & Chemicals Ltd. - A Consistent Performer

Inspite of underperforming the industry on topline and EBIDTA front over the span of last five years, Sukhjit has managed to trade at higher valuation than all its peers including the leader Riddhi is because of the fact that it has a low floating stock and consistent bottomline performance over last many years. Lets look in number terms, Sukhjit swelled its topline by 111 % which is lower than the industry topline which got swelled by 118.34 % over the last five years. On EBIDTA front too, Sukhjit swelled it by 134.92 % which is far lower than the industry EBIDTA which got swelled by 244.58 % over the last live years' period. With the robust Q1FY11 numbers posted as well as a capacity expansion planned, Sukhjit could very well perform inline with the industry topline growth while its underperformance on EBIDTA front could also very well continue. However, because of the low floating stock and limited options available to invest in the sunrise sector of Starch & Starch Derivatives, Sukhjit could very well continue to trade at a premium to Riddhi and Anil in the near future but over the medium term it is expected to show underperformance vis-a-vis Riddhi valuation and perform at par with Anil's valuation. In the medium term, Riddhi's valuation is expected to correct itself higher to trade at a premium to Sukhjit's and Anil's valuation after which, based on the expansion attained by the industry valuation, Sukhjit's investment rationale will need to be reassesed.

Gujarat Ambuja Exports Ltd. - A Dark Horse

Although 'Maize Processing Division' constitutes just a small segment of Gujarat Ambuja Exports, but, its performance is hard to get ignored by anyone. Over the last five years' period, the division has swelled its topline by 232 % which is far ahead than the industry topline which got swelled by 118.34 % over the same period. Similarly, the division has registered a EBIDTA swelling by almost 256 % over the last five years which is again higher than the industry EBIDTA swelling of 244.58 % over the same period. Going forward, this division is expected to perform exceedingly well with FY11E topline of ` 410 cr. with an EBIDTA of ` 69 cr. Although this might not mean anything for the valuation of Gujarat Ambuja Exports as other divisions of it are expected to drag down its valuation downwards, but, it is clearly a demerger story down the line wherein we can see this division getting demerged into a seperate listed entity somewhere two years down the line and hence, valuation getting unlocked for the shareholders. Hence, we term Gujarat Ambuja Exports as a 'Dark Horse' of Starch & Starch Derivatives Industry.

English Indian Clays Ltd. - A Sell-off Story

Totally in contrast of what we see in Gujarat Ambuja Exports, 'Starch' division of English Indian Clays has consistently underperformed on both topline and EBIDTA fronts as compared to the industry. This is the reason why, over the last five years, we have seen its marketshare in the industry shrink to 7.65 % in FY10 from 11.79 % in FY06 inspite of the industry registering robust growth. This is clearly the case of lack of focus and inability to manage the available resources well. Hence, we term EICL's 'Starch' division a sell-off candidate which will eventually get absorbed by a larger player two or three years down the line.

Universal Starch-Chem Allied Ltd. - A Possible Risky Winner

'Risk' is the best word to describe investment into Universal Starch which might eventually turn out to be a surprise winner but, when you have industry's top companies available at single digit P/E multiples, why take such unnecessary risks. It is last two quarters' performance which merits a status of 'Possible Risky Winner' status for Universal Starch, but, if you look at its past trackrecord, it is best to avoid it till the time it proves itself. Since already a sharp run-up has already taken place in the valuation of Universal Starch, at a P/E multiple of 8.83 based on its FY11E EPS of ` 4.76, it is best to reasses the investment decision into it at a later stage once expansion of valuation of entire industry takes place.

Gayatri Bioorganics & Tirupati Starch – A Complete Avoid

If we term Universal Starch as 'Risk' then Gayatri and Tirupati are a complete 'Avoid' at this stage as Riddhi, Anil and Sukhjit are far superior bets for Starch & Starch Derivatives industry available at attractive valuation at the current stage. Hence, when we are at a stage where the industry has just started carving its place in every portfolio meant for growth, top 3 companies will give much better returns than bottom 3 companies.

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