Multi Baggers

Everest Industries Ltd.

From Corrugated Sheets to Complete Building Solutions, Everest Industries today has offerings for creation of Infrastructure not just for rural India but also Industrial Infrastructure. With a PE of 4 and dividend yield of 5%, we believe Everest Industries is a growth stock available at compelling valuations.

Background

Everest Industries Ltd. was established in 1934, in Katni, Madhya Pradesh, and was formerly known as Eternit Everest. The company set up India's first plant to manufacture Fiber-Cement Roofing Sheets & Accessories.

Everest Industries was was put on the block in 2006 after Holcim, the world's second largest cement producer, gained control of ACC by acquiring a majority stake in Ambuja Cement India, an investment arm of the Sekhsarias. Following the Holcim's decision to exit the cement products business, Everest Finvest (India) controlled by Sekhsaria (erstwhile promoters of Gujarat Ambuja Cement) acquired majority control of Everest Industries and subsequently made an open offer to acquire additional 20 per cent shares at Rs 184 per share.

Business

Everest Industries offers a complete range of world-class building solutions: roofing, ceiling, wall, flooring, cladding, door and pre-engineered steel buildings for the industrial, commercial and residential sectors. Historically, the company has provided rural shelters, by making corrugated roofing sheets available to farmers at a competitive price. The company is poised to capitalize on the opportunities in rural India, where various housing and infrastructure initiatives are envisaged by the Government.

The company has state-of-the-art manufacturing facilities located at Kymore, Nashik, Coimbatore, Kolkata and Roorkee. With over 6000 retail points spread across the nation, together with the strength of over 1285 highly qualified and experienced engineers, designers and technicians, Everest provides building solutions that successfully meet the highest standards of quality and durability.

Financials

For FY 12, the company has achieved Revenues of Rs. 886.86 Crores (up by 22.5%   over FY 11) and has made a PAT of of Rs. 52.78 Crores (up by 30% over FY 11). This translates into an EPS of Rs.35 on its current Equity Capital of Rs. 15.11 crores. The Board has recommended a dividend of 70% which at the current price translates into a dividend yield of 5%.

Conclusion

From Corrugated Sheets to Complete Building Solutions, Everest Industries has come a long way. In the transformation the company has undergone, the company has introduced technologies which are the needs of today & have great potential for buildings of tomorrow - pre engineered buildings, claddings, rooflights, roofings, false ceilings, Wall Linings, Wall Partitions, Floors etc.

Industrial Building Solutions

Everest Hi-Tech is a modern non-asbestos roofing system using specially developed technology imported from Brasilit, a division of St Gobain. It is manufactured in a world class production facility, conforming to all relevant international standards. Everest Hi-Tech is ideal roofing and cladding solution for factories and warehouses, and targets sectors like petrochemicals, food, pharma, automobiles, engineering, metallurgy, chemicals, textiles etc.

Infrastructure

Everest has embarked on a vigorous growth phase with the establishment of Everest steel building solutions. The concept of metal frame buildings is taking root amongst corporate India and the industry is growing at 40% annually. Everest's Steel Building Solutions division manufactures and erects customized steel rigid frame buildings. The division provides multiple customized possibilities in steel construction. These can be used for industries, airports, stations, residential complexes, stadiums, warehouses, villas, resorts, sports facilities, site office, canteen and utility buildings.

The company has over the past few years regularly scaled up its business operations through introduction of new products and setting up new manufacturing facilities for manufacturing those products.

The company has been quite generous with its dividend payouts and has regularly paid dividend to the shareholders. The board of the company has recently recommended a dividend of 70% (Rs.7 per share) to the shareholders of Everest Industries. This at its current price translates into a dividend yield of over 5%.

We believe the company caters to a potential growth sector not just in India but has product offerings which have great export potential with potential for infrastructure creation in other parts of the world, primarily Africa, Asia Pacific and Middle East. We believe, the stock available at a PE of less than 4 and a 5% dividend yield, backed by good management, offers value and margin of safety at its current market price. We believe Everest Industries is a growth stock available at extremely compelling valuations.