Riddhi Siddhi Gluco Biols - Q1FY11 Results Analysis Target Price Revised to Rs. 615

[maheshi]

Re: Riddhi Siddhi Gluco Biols - Q1FY11 Results Analysis Target Price Revised to Rs.

Interview of Riddhi Siddhi MD post Roquette Deal --- EV for the deal indicated at Rs. 1250 cr.


In an interview with CNBC-TV18, Ganpatraj Chowdhary, Managing Director of Riddhi Siddhi Gluco Biols talks about the investment made by Roquette Freres and its expected valuations. Roquette has a majority stake in the Riddhi Siddhi subsidiary. Among all the manufacturing units of Riddhi Siddhi, three of them will be tasked to the subsidiary company. Roquette will take a majority stake in this subsidiary company. The enterprise value is estimated approximately at Rs 1,250 crore, says Chowdhary.

He also sees FY11 profit at Rs 1,000 crore with an EBITDA margin of 20%. We are expecting EBITDA for the current year to be around Rs 200 crore plus, he adds.



Below is a verbatim transcript of Ganpatraj Chowdhary's interview with CNBC-TV18's Reema Tendulkar and Soniya Shenoy. Also watch the accompanying video.

Q: Could you tell us the investment Roquette Freres is looking to make in your corn subsidiary? How much stake are they acquiring and at what valuation?

A: Among all the manufacturing units of Riddhi Siddhi, three of them will be tasked to the subsidiary company. Roquette will take a majority stake in this subsidiary company. They have option to acquire the entire stake of Riddhi Siddhi. After this, the subsidiary will become a joint venture between Riddhi Siddhi and Roquette Freres and Riddhi Siddhi will have a minority stake.

Q: What valuation is Roquette Freres giving to your corn subsidiary?

A: The enterprise value is estimated approximately at Rs 1,250 crore, which will be released after the due diligence of the closure of the current financial year. Accordingly, the benefit of till closure date will also be available to the pertained stakeholders.

Q: What kind of acquisition is this? Will it take place in tranches? How much will be acquired first tranche if you could tell us and what is the eventual game plan?

A: Initially, Roquette will take a majority stake and can move up to 75% stake. They have a right to take the balance stake of Riddhi Siddhi. As a part of restructuring share holding, in this deal, the Roquette Freres already hold the stake in our company 14.95% in RSGPL. That equity will be cancelled as a part of restructuring of this exercise. Accordingly, the benefit of this enterprise value of Rs 1,250 crore would be available to the balanced portion of 85% equity stake holder.

Q: By when do you expect this to be done?

A: We are estimating the time frame for completing the entire transaction between six to nine months.

Q: There are some really aggressive estimates that analysts have come out with for your company. It is expected that with your power business coming on board, the restructuring that you have announced and the money that may come in, your sales will grow by almost about 35% from FY11 to FY12. Your net profits too may grow from about Rs 100 crore in FY11, estimated to about Rs 130 crore in FY12. Is that a fair estimate or is that being somewhere ballpark?

A: We are confident of receiving Rs 1,000 crore turnover for the current year, with the EBITDA margin of 20%. We are expecting EBITDA for the current year to be around Rs 200 crore plus.

Q: And in FY12 thereafter?

A: We have been growing only 25% per annum and we are confident of doing the same 25% in FY12.

 

[maheshi]

Re: Riddhi Siddhi Gluco Biols - Q1FY11 Results Analysis Target Price Revised to Rs.

In an interview to CNBC yesterday MD talked rgdg. the EV value of 3 plants being put at 1250 cr.

EV value simply means the total valuation applied by Roquette to all the 3 plants that are transferred to the subs... Out of 1250 EV value, the main thing of concern for us is the cash the listed entity will receive... As per simple calculation, out of 1250 cr. if we deduct 15 % for the stake held by roquette in listed co. the cash comes to 1250-187.5= 1062.5 cr. Now from this we need to deduct the debt on the books of listd co. in case it gets transferred to subs. - then the figure comes to 1062.5 - 220 = 842.5 cr... Now, if we deduct misc. expenses as also deferred tax, in case it gets transferred to subs. then the figure comes to somewhere at 780-800 cr.

Hence, in all, the listed co. should receive atleast 750 + cr. cash without deducting taxation.. if this is so then the deal is fair and we need not worry much since we will be shareholders of a co. which at some point in FY12 is bound to have a cash per share of around Rs. 770-800 and so a special dividend of 50-100 rs. might come our way which will be great..

 

[ppmatkari]

Re: Riddhi Siddhi Gluco Biols - Q1FY11 Results Analysis Target Price Revised to Rs.

Mr maheshi, could you please elaborate about the future of the company post the completion of this deal & Whether will it still be worth holding post the deal?

 

[maheshi]

Riddhi Siddhi Gluco Q3FY11 Results Update --- Surprise Continues --- Surpasses even t

Riddhi Siddhi Gluco Q3FY11 Results Update --- Surprise Continues --- Surpasses even the most Optimist Expectations
--------------------------------------------------------------------------------

Riddhi Siddhi Gluco announced Q3FY11 results today which surpassed even the most optimist expectations by quite a wide margin especially on the bottomline front. Given below are the brief highlights of the results of Q3 as well nine months ending 31st Dec. 2010.

(1) Company reported a Q3FY11 topline of Rs. 267.15 cr. which entails to a QoQ sequential growth of 28.05 % and a YoY growth of 37.95 %.

(2) Company reported an Operating Profit of Rs. 60.20 cr. which entails to a QoQ sequential growth of a whooping 73.28 % and a YoY growth of huge 145.21 %.

(3) Q3FY11 Net Profit of Riddhi stood at Rs. 41.91 cr. which is a sequential QoQ growth of 70.36 % and a YoY growth of an astonishing 228.19 %.

(4) For nine months ending 31st Dec. 2010, company has reported a topline of Rs. 676.44 cr. which is a growth of 31.43 % over the same period last year.

(5) For nine months ending 31st Dec. 2010, company has reported Operating Profit of Rs. 134.43 cr. which is a growth of 134.77 % over the same period last year.

(6) For nine months ending 31st Dec. 2010, company has reported a Net Profit of Rs. 97.68 cr. which is a growth of huge 260.70 % over the same period last year.

(7) Company has reported an EPS of Rs. 87.41 for nine months ending Dec. 2010 on current equity capital of 11.13 cr. which is to be reduced because of a scheme of arrangement with Roquette. Hence, on such reduced equity capital post scheme of arrangement, the EPS for nine months ending Dec.2010 works out to be Rs. 103.

(8) Annualised EPS for FY11 based on the results so far announced, on the current expanded equity capital works out to be Rs. 119.6 whereas EPS for FY11 on the reduced equity capital post restructuring scheme becoming effective, works out to be Rs. 141.

Outlook on the Company :

The robust results declared by the company for Q3FY11 singnify a great management of business by the company as also its undisputed leadership of the Starch & Starch Derivatives sector. At the current rate of Rs. 332, it discounts current FY11 EPS (post scheme of restruc.) by just 2.35 which makes it a great value Buy at current levels with an expected safe upside of atleast 86 % by Q1FY12. If the company would have not sold its running business to Roquette, then based on the current results it would have easily got a P/E of atleast 7.5 which would have made its target price at Rs. 1055. However, considering the fact that running business is already sold to Roquette but management has acted shrewdly by retaining FY11 profits with the listed entity which will mean an addition of atleast Rs. 125 cr. to the cash likely to be received by the company from Roquette. Hence, based on a 30 % discount to the likely cash on the books of the company by Q2FY12, it hardly has any downside left at current rate and will inch up to trade between Rs. 550-618 by Q1FY12 which makes it a Safe Value Buy in current uncertain markets.