SHANKARA BUILDING PRODUCTS - Q4 FY 20 - PERFORMANCE REVIEW

SHANKARA BUILDING PRODUCTS

Q4 FY 20 PERFORMANCE REVIEW

SHANKARA BUILDING PRODUCTS has done well in Q4 FY 20 despite tough LOCK DOWN conditions in March 20 later half.

SHANKARA  says :

·       Q4 is generally good for us from Revenue and cash flow perspective which got impacted

·       Employee/community safety measures for Covid 19 are being followed well

·       We are navigating the impact of the Pandemic :

·       Liquidity is the Key focus now; strong focus on collections; liquidating existing inventory; No fresh capex plans; Focus on reducing Overall debt levels

·       COST Control : Align cost structure according to current Business needs; Rentals negotiation is undertaken; Further store rationalization to be undertaken;

·       Balance sheet strengthening measures will be key priority

·         The present statistical info is as follows :

·       RETAIL SPACE :          0.54 MN SFT

·       PRODFUCTS         75+

·       SKUs                    30,000+

·       STATES/UTS        9 / 1

·       STRONG GROWTH IN REVENUES AND PROFITS

·       Q4 VOLUME GROWTH        14% YOY

·       Jan & Feb 2020                  23% YoY

·       Q4 FY 20 VALUE GROWTH  12% YOY     

·       Jan & Feb 2020                  19% YOY

·       Comparable Sales Growth : Q4 FY 20     6.5% YoY

·       Jan & Feb 2020                  21.5% YoY

·       Retail Margin Q4 FY 20       7.9%

·       Q4 FY 20 PAT GROWTH      326% YOY     

·       Revenue : Q4 FY 19 : 598 Cr; Q3 FY 20:700 Cr; Q4 FY 20 : Rs.667 Cr

·       EBITDA IN CRs : Q4 FY 19 :16 CR;Q1 :31 CR; Q3 FY 20 :32 CR; Q4 FY 20 : 27 CR

·       PAT in Crs : Q4 FY 19 :3 Cr;Q1 :8 Cr; Q2 :10Cr;Q3 :13 Cr; Q4FY20 : 11 Cr

·       NET DEBT +ACCEPTANCES : Q4 FY 19 : 368 CR; Q1 :318 CR; Q4 FY 20 : 340 CR

·       COVID-19 IMPACT ON Q4 PERFORMANCE:

RS.CR    Q4 FY20(A) : Q4FY19(A) : ACTUAL GROWTH

REVENUE      667.3                   598               12%

EBITDA         27.1                     15.5              74%

PAT               10.9                     2.6                326%

Q4 FY 20 PERFORMANCE :

·       REVENUE BREAK UP  FY 20 :

·       KARNATAKA 47%; AP 6%;  TN 15%; KERALA 12%; TELANGANA 9%; OTHER STATES 11%

·       NO. OF RETAIL STORES     : 115 :

·       TOTAL AREA         :542,233 SFT :     (5,67,202 FY 19)

·       AVERAGE STORE SIZE        4,519 SFT     (4233 FY19)

·       AVERAGE TICKET SIZE       29,212   (28,003 FY 19)

·       REVENUE FROM RETAIL STORES :   1441.8 CR (1431.1 FY 19)

·       EBITDA        : 115.5 CRS  (126.5 FY 19)

·       MARGIN%     :     8%         (8.8%)

·       AVERAGE RENTAL COST PER SFT  PM : 19.87(19.10)

The company has 115 stores. It has shut five stores in Kunnamangalam, Calicut; Mancheryal, Telangana; Medavakkam and KK Nagar, Chennai, and Marathahalli, Bangalore during the quarter. 

The company has also put on hold the fresh capex projects and said that only ongoing necessary capex is being completed.

The management says - 

it is very difficult to assess the future outlook for the company at this stage of Covid-19 crisis. April had negligible sales. But, May had picked up reasonably. 

Profit & loss picture is healthy. Balance sheet is concern as net debt plus acceptances  have gone up QoQ by Rs 64 crore. 

Receivables days at 60 have also shot up from 48 days in FY19.       

SHANKARA BLDG	Mar-20	Mar-19	YOY
TOTAL INCOME	667.3	598	11.6%
EBITDA	27.1	15.5	74.3%
P B T	14.8	3.6	313%
Tax	3.9	1.0
Net Profit	10.9	2.6	325.6%
MP (NSE)	364.35
PE	8.075221
11.06.2020
TECHNICAL RATING
Bullish

·       TOTAL EQUITY :507.5  (479.1 FY 19)

·       CASH AND EQUIVALENTS   :13.5 (9.2 FY 19)

·       Bank Balances                   :7.3 (8.3 FY 19)

·       Basic EPS                          :4.94      (0.71 FY 19)

·       MP (NSE)                          :364.35        

·       PE (MP/(Q4 EPS*4)            :18.5

·       Market Cap (Rs Cr.)           :783.73

·       P/E (LAST FULL YEAR EPS): 35.99

·       Book Value (Rs)                 :141.69

·       Dividend (%)                     : 0

·       Industry P/E                      :23.47

·       EPS (TTM)                         : 9.52

·       P/C                                   :25.43

·       Price/Book                         :2.42

·       Face Value (RS)                 :10

Equity stake	Mar-20	Dec-19	Sep-19	Jun-19
Promoters	56.44	56.31	56.31	56.21
Pledged	0	0	0	0
FII/FPI	25.48	23.84	23.57	24.4
Total DII	9.53	8.24	8.79	8.83
Fin.Insts	0	0.05	0.09	0.06
Insurance Co	0	0	0	0
MF	4.33	4.32	4.25	4.25
Others DIIs	5.2	3.87	4.45	4.52
Others	8.55	11.62	11.34	10.57
Total	100	100.01	100.01	100.01

If construction Industry picks up reasonably in states where Shankara is present, Shankara will be the first candidate to flourish. 

Government is giving support to construction industry also in many ways, as part of the UNLOCK policies. 

So, Long Term outlook is definitely good – but short term outlook  is unpredictable.