Everest Industries is a 78yrs old company offering building solutions to industrial, commercial, and residential sectors primarily in India.
In addition to the above, its products include asbestos and fiber cement, corrugated sheets, and steel and fiber cement doors.
Roofing: Out of the estimated 25 Cr buildings in India, 46% are considered to have pucca roofs and the rest 54% are made of thatch (kuchcha roofing). The company is into Fibre Cement Roofing which is used for pucca roofing and it costs 1/3rd the cost of an RCC ceiling slab. Everest has a good brand and 17% market share in this business.
Boards and Panels: The company is into producing Fibre Cement Boards. It is increasingly being recommended by architects, interior decorators and contractors as a substitute for plywood and gypsum boards due to energy efficient parameters (good sound & thermal insulation), high strength, dimensional stability in interior & exterior applications, and resistance against termite and moisture. The company also makes Solid Wall Panels which rapids construction, maximizes space utilization with durability. Everest is a major player in this segment.
Steel Building Division (PEB): Started in July, 2008, the growth in this segment has been over 25% and co does about 160 Cr turnover in this segment. Strongly recommended by Architects and Structural Consultants, its major benefits are erection of a strong long-lasting building with minimal on-site work and accelerated speed of construction as compared to conventional structures. It is atleast 50% faster and cheaper also. Increasingly used in infrastructure projects like airports, cargo, metro rails, railways, power plants etc. Everest’s market share in this segment is about 5%.
Why am I interested in this co??
- The company’s turnover growth for last 5 years is about 24% CAGR.
- Its a debt decreasing company.
- Its major clientage for roofing business is RURAL which is growing each day in terms of consumption and pucca roof is the first basic need of any family. This business segment should provide steady growth and earnings.
- Pre- Engineered buildings are the next practical thing. So this business segment may keep growing at about 20-25% for next few years.
- Expansion plan in Orissa for 100,000 MT in roofing business. Everest targets to cross 1000 Cr turnover in FY 2012 and 1300 Cr turnover by FY 2013.
- Over the last few years, Everest has been increasing the range of products to become a complete building solutions provider.
- At CMP of 165, the stock is available at 6 times FY 2011 EPS of 27.
- Stock is trading at 1.2 times its BV of approx 138.
- Stock is cum dividend of 4.5 per share
- Company is in expansion mode and is targeting aggressive growth of about 30% for next 2 years. So one is getting a good company with bright outlook at just 6 times earnings.