Wednesday, December 29, 2010

ESS DEE ALUMINIUM LIMITED - An Analysis

Recommendation : BUY
December 29, 2010.

Debt/Equity of ESS DEE ALUMINIUM LIMITED as of now has dropped to 0.42 vs 0.35 as in March 2010 quarter. Reserves and Surplus have increased by 45% at 474.68 crores in the September quarter from 327.57 crores in the March quarter this year. Capital Employed has increased by 29% to 814.14 crores in September quarter from 632.15 crores in March quarter.


Income from Operations have increased by 15% to 162.22 crores in the September quarter from 141.59 crores in the corresponding quarter last year. Operating Profit Margins are 27% in this quarter vs 29% in the same quarter last year. The breakdown of Quarterly Financial Statements is given below.


If we compare things annually, Income from Operations in 2010 increased 30% to 588.45 crores from 451.51 crores in 2009. Operating Profit Margins for financial year ending March 2010 was 27% as compared to 11% for the financial year ending March 2009, which brings things back on track. The breakdown of Annual Financial Statements is given below.



Return over Capital Employed (ROCE) for the current year ending six months is coming out to be 11% as compared to an ROCE of 25% in the whole financial year of 2009-10, which seems fair enough.

Cash Conversion Cycle (CCC) for the current year ending six months is coming out to be 134 days as compared to 140 days for the whole financial year ending March 2010. The improvement seems to be because of their certain understanding with their suppliers.

Total Assets per Share of the company is coming out to be Rs. 324.69. Earning per Share of the company for the past four quarters is coming out to be Rs. 21.21. Current Price of the scrip is Rs. 461.15. Trailing P/E of the company is coming out to be 21.74.

Equity Section believes that post-merger of Indian Foils Ltd., ESS DEE ALUMINIUM LIMITED can leverage  on the enhanced capacities and also, there has been lifting of work suspension in IFL Hoera unit. Also, the Current Price of the scrip is at 1.42 times Total Assets per Share. Therefore, Equity Section issues a BUY rating on ESS DEE ALUMINIUM LIMITED on the assets front.

Discalimer : Equity Section doesn't hold this scrip.

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