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Honeywell Automation India Ltd


Let's gather some insights on an excellent company which is a prime candidate for PF addition on dips.

FY19-20 Annual Report summary:
(1) Principal Business Activities of Company
Manufacture of Electronic systems & components: 56%
Repair & Maintenance: 31%
Trading of machinery, equipment & supplies: 13%
(2) The Company continues to focus on operating cash flows, has no outstanding borrowings and it believes that the working capital is sufficient to meet its current requirements.
(3) There were 3,310 permanent employees on the rolls of Company as on March 31, 2020.
(4) Strong management pedigree
Mr. Ashish Modi is VPGM Honeywell Building Technologies (HBT) India. In this role, he leads the strategy and operations for HBT in India to drive focus and attention on accelerating growth in one of the fastest growing economies in the world.
(5) Strong management pedigree
Mr. Akshay Bellare was appointed President, Honeywell India, in October 2019. In this role, he is responsible for the continued growth of India operations across Honeywell's four strategic business groups:
Aerospace, Honeywell Building Technologies (HBT), Performance Materials and Technologies (PMT), and Safety and Productivity Solutions (SPS).
(6) There was an increase of 9.9% in the median remuneration of employees, which was in line with the performance of the Company.
(7) The average increase in the remuneration of KMPs was 11.2%.
(8) The Company has a diversified portfolio, The Company's business related to pharma, healthcare sector is likely to see a positive impact and
Public Sector Undertakings (PSUs) /smart city projects are expected to witness an uptick after a temporary set-back.
(9) Your Company is well positioned to drive growth in areas such as pharmaceuticals, specialty chemicals, physical security and cyber security.
(10) Based on past performance, we expect that our operating cash flows will be sufficient to meet our future operating cash needs. Credit terms and liquidity constraints may impact our usual credit terms in short term but we believe
that company has enough cash and liquidity to not allow disruption of business and continue to stay invested with our strategic partners, be it vendors or customers.
(11) Building Solutions business provides automation and control technologies that help make
buildings green, safe, and productive.
As part of its intelligent buildings suite, it provides building management systems, fire detection and alarm systems, access control systems, video surveillance systems, integrated security systems, and
integrated building management systems based on Honeywell's Enterprise Buildings Integrator™.
(12)BMS business is a global leader in the connected buildings space and maintains a leadership position in India with the widest range of building automation technologies.
(13) Sensing and Internet of Things (IOT) has multiple diversified customer accounts from Transportation, Aerospace, Medical, Industrial Verticals.
(14) Net Cash Flow from operations was INR 330 Crore, as compared to INR 312 Crore in the previous year, reflecting
higher profitability and better working capital management. Your Company will continue to focus on working capital performance and positive operating cash flows.
(15) 3.6% annualised sales growth delivered.
Exports sales 44% of total sales, decreased compared to 46% YoY
Operating profit margin increased by 4.2%
Debtors turnover ratio has reduced to 4.8 as compared to 5.2 in previous year
Inventory turnover reduced to 14.5 as compared to 17.8 in previous year
Current ratio increased to 2.5 as compared to 2.3 in previous year
(16) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and GST
which have not been deposited as on March 31 , 2020 on account of disputes are:
Income Tax: 26.502 cr
CST/VAT/ET: 80.00 cr
Customs: 0.8135 cr
Excise: 0.02 cr
As investors we need to be aware of any risks associated with companies.
(17) 12 years Data:
PAT: 2122 cr
CFO: 1672 cr
Company has been doing quite well with an asset light model.
Debt to Equity: 0.04
ROCE: 34%*
ROE: 25%*
*Above parameters will get affected once FY21 numbers start coming. Will be a good opportunity to buy
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