He said there is a high level of investor interest and the outlook going forward is very robust. The industry is not expected to see low RoCs and low EBITDA margins as it has been showing.
For the full year, the company expects a volume growth of 30-40 percent. It is eyeing 15 percent volume growth in the organic segment and the rest from the inorganic segment.
Also Read: Won't shy away from exiting non-profitable ventures: Diageo
Below is the verbatim transcript of K L Narasimhan's interview on CNBC-TV18
Q: The company was looking at a potential stake sell, you had also appointed merchant bankers, could you give us an update on that, where has it progressed?
A: Yes, we had appointed a merchant banker. The interest in the segment has risen strongly ever since the acquisition of the United Spirits by Diageo and so, we are also eliciting very high level of interest. It is a very small place with only three listed players, one was United Spirits, other is Radico Khaitan and the third is Tilaknagar Industries .
Q: What is the percentage of equity that you are willing to sell out and what is the valuation that you have got so far, will the deal conclude anytime soon?
A: There is a high level of investor interest and it all depends on two things, how we look at the outlook going forward and two, what have the multiples and valuations come about. That is always a benchmark that anyone would use for evaluating or looking at stake purchases in any entity, what is the EBITDA multiples and what is the outlook going forward.
Outlook going forward is very robust for the simple reason that the industry will get redefined with Diageo's entry, it will not show low RoCs and low EBITDA margins as it has been showing. It is too vast for me to discuss on the phone but suffice to say that the outlook for the industry in the long term will become much healthier than what it has been in the past and after that it is a question of multiples as to what people think is the multiple that can be commanded by any company.
Q: You had decent volume growth this quarter, what is the expectation for full year?
A: For the full year our numbers are we have put out a very strong number for volumes. We are looking at 30-40 percent growth, but I must qualify that statement by saying that our organic growth could be in the vicinity of 15 percent. We have done some acquisition and so, the inorganic growth also comes in. Overall, we should be looking at 30 percent volume growth, 15 percent in organic and rest coming to inorganic stacking up.
Tilaknagar Ind stock price
On November 20, 2013, Tilaknagar Industries closed at Rs 58.15, down Rs 0.3, or 0.51 percent. The 52-week high of the share was Rs 86.95 and the 52-week low was Rs 44.85.
The company's trailing 12-month (TTM) EPS was at Rs 4.69 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 12.4. The latest book value of the company is Rs 40.76 per share. At current value, the price-to-book value of the company is 1.43.
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