Havells Reported Mixed Set of 4QFY14 Results India Business Continued to Do Well While

Havells Reported Mixed Set of 4QFY14 Results India Business Continued to Do Well While

Havells reported mixed set of 4QFY14 results – India business continued to do well while Sylvania reported disappointing numbers.

Standalone Results

  • Revenue at Rs13.1bn grew by 12% YoY – broadly inline with our (Rs13.4bn) and street expectation (Rs12.6bn)
  • The topline was driven by strong growth Cables & Wires (+21% YoY). Lightings grew by 9% YoY, Durables by 8% while switchgears reported muted growth of 3% YoY (seasonal impact, as per the management).
  • EBITDA margins expanded by 30bps YoY to 12.8% – along expected lines.
  • EBITDA at Rs1.68bn (+15% YoY) – was again inline with our and street estimate of Rs1.67bn.
  • EBIT margins expanded for almost all divisions. Switchgears reported margin decline of 650bps YoY due to one-time provision of Rs400mn – adjusted for that, margins expanded for Switchgears too.
  • PAT at Rs1.37bn (+25% YoY) was ahead of the consensus estimates of Rs1.18bn on the back of higher other income and FX gain.
  • FY14 saw strong cash flow generation from operations (Rs6.52bn), taking the cash balance for the company to Rs6.3bn (Rs2.5bn at FY13).

Sylvania Results

  • Sylvania reported muted set of numbers with 2% YoY growth in topline.
  • EBITDA margins fell to 1.6% (from 6.1% in 4QFY13) on the back of one-time provision for pension liability (€4.3mn) and Latin America (€1.6mn). Adjusted for those, the margins would have been at 6.7%.
  • The one-time provision led to PAT loss of €3.3mn compared to profit of €6.1mn in 4QFY13.

Management Guidance

  • The management has upgraded its guidance to +15% revenue growth for the Indian business (from the earlier 12-14% growth). Margins are expected to be stable in the range of 14 – 15%. We note that the Indian business reported EBITDA margins of 13.8% in FY14 (14.6% adjusted for switchgear provision).
  • On the Sylvania front, the management guided to 5-6% growth in topline and 6-7% blended EBITDA margins.

Outlook and Valuation

  • Havells continues to report strong growth in the domestic business, aided by new product launches and market share capture. We remain positive on the company with a fundamentally superior business at the helm, delivering 20% and 25% ROEs at the standalone and consolidated level respectively.
  • We also expect the company to benefit from the migration of customers from CFL to LED based fixtures, over the next few years, with its Sylvania product portfolio giving it clear advantage ahead of its peers.
  • However, at current levels, the stock is trading at 21x FY15E standalone earnings – which, in our opinion, limits the upside potential.
  • We have made minor revisions to our FY15 and FY16 estimates. We value Havells standalone at 18x average FY15-16 P/E (earlier 17x) and Sylvania at 6x average FY15-16 P/E (same as before). Our price target of Rs900 (earlier Rs800), represents -6% downside from current levels. We maintain NEUTRAL.

NEUTRAL

HAVL IN | CMP RS 953

TARGET RS 900 (-6%)

Company Data

O/S SHARES (MN) : / 125
MARKET CAP (RSBN) : / 118
MARKET CAP (USDBN) : / 2.0
52 - WK HI/LO (RS) : / 992 / 586
LIQUIDITY 3M (USDMN) : / 4.0
FACE VALUE (RS) : / 5

Share Holding Pattern, %

PROMOTERS : / 61.7
FII / NRI : / 31.4
FI / MF : / 0.5
NON PROMOTER CORP. HOLDINGS : / 1.3
PUBLIC & OTHERS : / 5.1

Price Performance, %

1mth / 3mth / 1yr
ABS / -1.1 / 22.6 / 31.0
REL TO BSE / -9.6 / 6.4 / 9.2

Price Vs. Sensex (Rebased values)

Source: Bloomberg, Phillip Capital Research

Other Key Ratios (Standalone)

Rs mn / FY14E / FY15E / FY16E
Net Sales / 47,197 / 54,064 / 62,207
EBIDTA / 6,500 / 7,625 / 8,970
Net Profit / 4,787 / 5,610 / 6,433
EPS, Rs / 38.4 / 45.0 / 51.6
PER, x / 24.8 / 21.2 / 18.5
EV/EBIDTA, x / 17.6 / 14.6 / 12.1
P/BV, x / 5.6 / 4.8 / 4.1
ROE, % / 22.5 / 22.7 / 22.2
Debt/Equity (%) / 7.3 / 6.3 / 5.4

Source: PhillipCapital India Research Est.

Vibhor Singhal (+ 9122 6667 9949)

Please refer to Disclosures and Disclaimers at the end of the Research Report.

Standalone - Quarterly performance

Particulars (Rs mn) / 4QFY13 / 1QFY14 / 2QFY14 / 3QFY14 / 4QFY14
Net Income from operations* / 11,696 / 10,513 / 11,740 / 11,844 / 13,100
YoY growth / 11.7 / 1.8 / 21.8 / 11.9 / 12.0
QoQ growth / 10.5 / -10.1 / 11.7 / 0.9 / 10.6
Adjusted Income from operations / 11,696 / 10,513 / 11,740 / 11,844 / 13,100
Expenditure
Change in stock / (235) / 332 / (579) / (41) / 246
% of sales / -2.0 / 3.2 / -4.9 / -0.3 / 1.9
Consumption of raw material / 6,516 / 5,152 / 6,691 / 6,546 / 7,041
% of sales / 55.7 / 49.0 / 57.0 / 55.3 / 53.7
Purchase of traded goods / 1,202 / 907 / 1,065 / 848 / 778
% of sales / 10.3 / 8.6 / 9.1 / 7.2 / 5.9
Employee cost / 416 / 539 / 530 / 527 / 647
% of sales / 3.6 / 5.1 / 4.5 / 4.4 / 4.9
Other expenses / 2,337 / 2,173 / 2,342 / 2,332 / 2,705
% of sales / 20.0 / 20.7 / 20.0 / 19.7 / 20.7
Total expenditure / 10,237 / 9,102 / 10,050 / 10,212 / 11,417
% of sales / 87.5 / 86.6 / 85.6 / 86.2 / 87.2
EBITDA / 1,460 / 1,411 / 1,690 / 1,633 / 1,683
YoY growth / 18.1 / 10.1 / 41.8 / 16.7 / 15.3
QoQ growth / 4.3 / -3.4 / 19.8 / -3.4 / 3.1
EBITDA Margin (%) / 12.5% / 13.4% / 14.4% / 13.8% / 12.8%
Other income / 34 / 32 / 78 / 107 / 141
Interest / 27 / 56 / 61 / 85 / 67
Depreciation / 156 / 156 / 159 / 161 / 160
FX loss / (gain) / (29) / 77 / (5) / (66) / (89)
PBT / 1,340 / 1,154 / 1,554 / 1,559 / 1,685
YoY growth / 20.9 / 14.9 / 47.3 / 32.9 / 25.8
Tax / 243 / 207 / 296 / 345 / 316
Tax rate / 18% / 18% / 19% / 22% / 19%
PAT / 1,097 / 947 / 1,257 / 1,215 / 1,369
YoY growth / 19.8 / 18.2 / 44.6 / 28.3 / 24.8
QoQ growth / 15.9 / -13.7 / 32.8 / -3.4 / 12.7
Adjusted PAT / 1,097 / 947 / 1,257 / 1,215 / 1,369
YoY growth / 20% / 18% / 45% / 28% / 25%
EPS / 8.79 / 7.59 / 10.08 / 9.73 / 10.97

Source: Company, PhillipCapital India Research

Sylvania - Quarterly performance

€ mn / 4QFY13 / 1QFY14 / 2QFY14 / 3QFY14 / 4QFY14
Net Sales / 113.2 / 106.7 / 106.8 / 111.6 / 115.0
% Growth / 1.1% / -1.1% / -2.6% / 2.2% / 1.6%
Total expenses / 106.3 / 102.5 / 103.7 / 102.9 / 113.2
% of sales / 94% / 96% / 97% / 92% / 98%
EBITDA / 6.9 / 4.2 / 3.1 / 8.7 / 1.8
Margin / 6.1% / 3.9% / 2.9% / 7.8% / 1.6%
Other Income / (0.4) / 0.2 / 0.1 / 0.3 / 0.4
Depreciation / 2.2 / 1.7 / 1.7 / 1.5 / 1.5
Interest expense / 0.6 / 1.4 / 1.3 / 1.3 / 1.3
Exceptional / (1.1) / 1.5 / 1.0 / 4.0 / 0.8
PBT / 4.8 / (0.2) / (0.8) / 2.2 / (1.4)
Tax / (1.3) / 0.6 / 0.8 / 0.5 / 1.9
Tax rate / -27% / -300% / -100% / 23% / -136%
PAT / 6.1 / (0.8) / (1.6) / 1.7 / (3.3)
Margin / 5.4% / -0.7% / -1.5% / 1.5% / -2.9%

Source: Company, PhillipCapital India Research

Standalone – Segmental break-up

4QFY13 / 1QFY14 / 2QFY14 / 3QFY14 / 4QFY14
Revenue (Rs mn)
Switchgears / 3,118 / 2,760 / 3,135 / 3,093 / 3,204
Cable and Wires / 4,620 / 4,049 / 4,874 / 4,751 / 5,591
Lighting & Fixtures / 1,823 / 1,482 / 1,798 / 1,935 / 1,993
Electrical Durables / 2,136 / 2,223 / 1,933 / 2,066 / 2,313
TOTAL / 11,696 / 10,513 / 11,740 / 11,844 / 13,100

YoY Growth (%)
Switchgears / 31% / 14% / 23% / 15% / 3%
Cable and Wires / -3% / -6% / 25% / 16% / 21%
Lighting & Fixtures / 21% / -1% / 15% / 9% / 9%
Electrical Durables / 18% / 6% / 19% / 2% / 8%
TOTAL / 12% / 2% / 22% / 12% / 12%
EBIT (Rsmn)
Switchgears / 977 / 996 / 1,146 / 1,096 / 794
Cable and Wires / 279 / 405 / 499 / 486 / 720
Lighting & Fixtures / 449 / 372 / 405 / 450 / 559
Electrical Durables / 571 / 597 / 529 / 541 / 638
Less: Unallocable / (910) / (1,160) / (965) / (928) / (959)
Less: Other Income / (34) / (32) / (78) / (85) / (67)
Total / 1,332 / 1,178 / 1,536 / 1,559 / 1,685
(0)
EBIT Margins (%)
Switchgears / 31.3% / 36.1% / 36.6% / 35.4% / 24.8%
Cable and Wires / 6.0% / 10.0% / 10.2% / 10.2% / 12.9%
Lighting & Fixtures / 24.6% / 25.1% / 22.5% / 23.3% / 28.1%
Electrical Durables / 26.7% / 26.9% / 27.4% / 26.2% / 27.6%
Total / 11.4% / 11.2% / 13.1% / 13.2% / 12.9%

Source: Company, PhillipCapital India Research

Sylvania – Geographical break-up

€ mn / 4QFY13 / 1QFY14 / 2QFY14 / 3QFY14 / 4QFY14
Revenue
Europe / 69.7 / 60.5 / 59.8 / 66.0 / 70.7
Americas / 36.4 / 39.8 / 40.2 / 37.6 / 37.7
Other / 7.0 / 6.4 / 6.8 / 6.8 / 6.6
Total / 113 / 107 / 107 / 112 / 115
EBITDA
Europe / 6.5 / 1.8 / 1.0 / 6.7 / 1.6
Americas / 1.4 / 1.8 / 2.5 / 1.8 / 1.3
Other / (1.0) / 0.6 / (0.4) / - / (1.1)
Total / 6.9 / 4.2 / 3.1 / 8.7 / 1.8
EBITDA Margins
Europe / 9.3% / 3.0% / 1.7% / 10.2% / 2.3%
Americas / 3.8% / 4.5% / 6.2% / 4.8% / 3.4%
Total / 6.1% / 3.9% / 2.9% / 7.8% / 1.6%

Source: Company, PhillipCapital India Research

Valuations

Havells standalone
Average FY15-16 EPS / Rs / 48.3
P/E Multiple / 18
Valuation / Rs mn / 108,390
Per Share / Rs / 869
Sylvania
Average FY15-16 EPS / Rs / 5.1
P/E Multiple / 6
Valuation / Rs mn / 3,820
Per share / Rs / 31
Total Equity Value / Rs mn / 112,210
Per Share / Rs / 900

Source: PhillipCapital India Research

Revision of Estimates

______New______ / ______Old______ / ______Change______
FY15E / FY16E / FY15E / FY16E / FY15E / FY16E
Standalone (Rs mn)
Revenue / 54,064 / 62,207 / 53,165 / 60,194 / 2% / 3%
EBITDA / 7,625 / 8,970 / 7,283 / 8,543 / 5% / 5%
PAT / 5,610 / 6,433 / 5,284 / 5,984 / 6% / 7%
Sylvania (€ mn)
Revenue / 452.1 / 464.5 / 453.9 / 466.9 / 0% / -1%
EBITDA / 23.9 / 24.7 / 24.8 / 25.7 / -4% / -4%
PAT / 7.7 / 8.2 / 8.3 / 8.8 / -7% / -7%
Consolidated (Rs mn)
Revenue / 90,229 / 99,367 / 89,478 / 97,547 / 1% / 2%
EBITDA / 9,535 / 10,945 / 9,270 / 10,599 / 3% / 3%
PAT* / 6,225 / 7,092 / 5,945 / 6,692 / 5% / 6%

Source: PhillipCapital India Research Estimates

Summary of Assumptions

Standalone Sylvania

FY14A / FY15E / FY16E / FY14A / FY15E / FY16E
Switchgears / Rev growth
Revenue Growth / 13.1% / 18.0% / 18.0% / Europe / 0% / 1% / 1%
EBIT Margin / 33.1% / 34.0% / 34.0% / Americas / -1% / 6% / 6%
Cables & Wires / Total / 0.1% / 2.7% / 2.8%
Revenue Growth / 13.8% / 12.0% / 12.0%
EBIT Margin / 11.0% / 10.5% / 10.0% / EBITDA Margins
Lightings & Fixtures / Europe / 3.8% / 5.0% / 5.0%
Revenue Growth / 8.3% / 15.0% / 18.0% / Americas / 4.7% / 7.0% / 7.0%
EBIT Margin / 24.8% / 26.0% / 27.0% / Total / 3.7% / 5.3% / 5.3%
Durables
Revenue Growth / 8.1% / 15.0% / 15.0%
EBIT Margin / 27.0% / 27.0% / 27.0%

Source: PhillipCapital India Research Estimates

Financials (Standalone)

– 1 of 9 –

Income Statement

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Net sales / 42,250 / 47,197 / 54,064 / 62,207
Growth, % / 17 / 12 / 15 / 15
Total income / 42,250 / 47,197 / 54,064 / 62,207
Raw material expenses / -26,514 / -29,017 / -35,142 / -40,434
Employee expenses / -2,022 / -2,475 / -2,163 / -2,488
Other Operating expenses / -8,357 / -9,205 / -9,135 / -10,314
EBITDA (Core) / 5,357 / 6,500 / 7,625 / 8,970
Growth, % / 17.6 / 21.3 / 17.3 / 17.6
Margin, % / 12.7 / 13.8 / 14.1 / 14.4
Depreciation / -579 / -636 / -638 / -693
EBIT / 4,779 / 5,864 / 6,988 / 8,277
Growth, % / 16.3 / 22.7 / 19.2 / 18.5
Margin, % / 11.3 / 12.4 / 12.9 / 13.3
Interest paid / -286 / -269 / -245 / -215
Other Non-Operating Income / 79 / 357 / 450 / 515
Pre-tax profit / 4,572 / 5,951 / 7,193 / 8,577
Tax provided / -858 / -1,164 / -1,582 / -2,144
Profit after tax / 3,714 / 4,787 / 5,610 / 6,433
Net Profit / 3,714 / 4,787 / 5,610 / 6,433
Growth, % / 21.6 / 28.9 / 17.2 / 14.7
Net Profit (adjusted) / 3,714 / 4,787 / 5,610 / 6,433
Unadj. shares (m) / 125 / 125 / 125 / 125
Wtd avg shares (m) / 125 / 125 / 125 / 125

Balance Sheet

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Cash & bank / 2,465 / 6,262 / 8,927 / 12,159
Debtors / 1,302 / 1,365 / 1,576 / 1,813
Inventory / 6,630 / 6,827 / 8,667 / 9,972
Loans & advances / 996 / 1,161 / 788 / 907
Other current assets / 135 / 201 / 201 / 201
Total current assets / 11,528 / 15,815 / 20,158 / 25,052
Investments / 7,919 / 8,825 / 9,325 / 9,825
Gross fixed assets / 10,189 / 11,189 / 12,189 / 13,189
Less: Depreciation / -1,993 / -2,629 / -3,266 / -3,959
Add: Capital WIP / 939 / 780 / 780 / 780
Net fixed assets / 9,135 / 9,341 / 9,703 / 10,010
Total assets / 28,583 / 33,981 / 39,186 / 44,887
Current liabilities / 8,174 / 10,611 / 12,388 / 13,838
Total current liabilities / 8,174 / 10,611 / 12,388 / 13,838
Non-current liabilities / 1,707 / 2,072 / 2,072 / 2,072
Total liabilities / 9,881 / 12,683 / 14,460 / 15,910
Paid-up capital / 624 / 624 / 624 / 624
Reserves & surplus / 18,078 / 20,674 / 24,102 / 28,353
Shareholders’ equity / 18,702 / 21,298 / 24,726 / 28,977
Total equity & liabilities / 28,583 / 33,981 / 39,186 / 44,887

Source: Company, PhillipCapital India Research Estimates

Cash Flow

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Pre-tax profit / 4,572 / 5,951 / 7,193 / 8,577
Depreciation / 579 / 636 / 638 / 693
Chg in working capital / -731 / 1,946 / 100 / -211
Total tax paid / -795 / -1,266 / -1,582 / -2,144
Cash flow from operating activities / 3,624 / 7,268 / 6,348 / 6,915
Capital expenditure / -1,375 / -842 / -1,000 / -1,000
Chg in investments / -169 / -906 / -500 / -500
Cash flow from investing activities / -1,543 / -1,748 / -1,500 / -1,500
Free cash flow / 2,081 / 5,520 / 4,848 / 5,415
Equity raised/(repaid) / -4 / -8 / 0 / 0
Debt raised/(repaid) / 117 / 467 / 0 / 0
Dividend (incl. tax) / -1,091 / -2,182 / -2,182 / -2,182
Other financing activities / 0 / 0 / 0 / 0
Cash flow from financing activities / -978 / -1,724 / -2,182 / -2,182
Net chg in cash / 1,103 / 3,796 / 2,666 / 3,232

Valuation Ratios & Per Share Data

FY13 / FY14E / FY15E / FY16E
Per Share data
EPS (INR) / 29.8 / 38.4 / 45.0 / 51.6
Growth, % / 21.6 / 28.9 / 17.2 / 14.7
Book NAV/share (INR) / 149.9 / 170.7 / 198.2 / 232.2
FDEPS (INR) / 29.8 / 38.4 / 45.0 / 51.6
CEPS (INR) / 34.4 / 43.5 / 50.1 / 57.1
CFPS (INR) / 28.4 / 55.4 / 47.3 / 51.3
DPS (INR) / 7.5 / 15.0 / 15.0 / 15.0
Return ratios
Return on assets (%) / 14.2 / 15.9 / 15.8 / 15.6
Return on equity (%) / 19.9 / 22.5 / 22.7 / 22.2
Return on capital employed (%) / 20.5 / 22.7 / 23.0 / 22.7
Turnover ratios
Asset turnover (x) / 4.6 / 5.2 / 6.4 / 7.1
Sales/Total assets (x) / 1.5 / 1.5 / 1.5 / 1.5
Sales/Net FA (x) / 4.8 / 5.1 / 5.7 / 6.3
Receivable days / 11.2 / 10.6 / 10.6 / 10.6
Inventory days / 57.3 / 52.8 / 58.5 / 58.5
Payable days / 65.2 / 70.4 / 75.7 / 76.0
Working capital days / 7.7 / (8.2) / (7.8) / (5.6)
Liquidity ratios
Current ratio (x) / 1.4 / 1.5 / 1.6 / 1.8
Quick ratio (x) / 0.6 / 0.8 / 0.9 / 1.1
Interest cover (x) / 16.7 / 21.8 / 28.5 / 38.5
Dividend cover (x) / 4.0 / 2.6 / 3.0 / 3.4
Total debt/Equity (%) / 5.8 / 7.3 / 6.3 / 5.4
Net debt/Equity (%) / (7.4) / (22.1) / (29.8) / (36.6)
Valuation
PER (x) / 32.0 / 24.8 / 21.2 / 18.5
Price/Book (x) / 6.4 / 5.6 / 4.8 / 4.1
EV/Net sales (x) / 2.8 / 2.4 / 2.1 / 1.7
EV/EBITDA (x) / 21.9 / 17.6 / 14.6 / 12.1
EV/EBIT (x) / 24.6 / 19.5 / 16.0 / 13.1

– 1 of 9 –

Financials (Consolidated)

– 1 of 9 –

Income Statement

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Net sales / 72,479 / 81,858 / 90,229 / 99,367
Growth, % / 11 / 13 / 10 / 10
Total income / 72,479 / 81,858 / 90,229 / 99,367
Raw material expenses / -41,628 / -46,398 / -50,528 / -55,645
Employee expenses / -9,056 / -10,869 / -10,827 / -11,924
Other Operating expenses / -15,051 / -17,167 / -19,338 / -20,852
EBITDA (Core) / 6,744 / 7,425 / 9,535 / 10,945
Growth, % / 2.6 / 10.1 / 28.4 / 14.8
Margin, % / 9.3 / 9.1 / 10.6 / 11.0
Depreciation / -1,097 / -1,155 / -1,150 / -1,205
EBIT / 5,647 / 6,269 / 8,385 / 9,741
Growth, % / 0.4 / 11.0 / 33.7 / 16.2
Margin, % / 7.8 / 7.7 / 9.3 / 9.8
Interest paid / -1,232 / -741 / -565 / -535
Other Non-Operating Income / 279 / 413 / 290 / 355
Non-recurring Items / 1,944 / 0 / 0 / 0
Pre-tax profit / 6,638 / 5,941 / 8,110 / 9,561
Tax provided / -824 / -1,478 / -1,885 / -2,469
Profit after tax / 5,814 / 4,463 / 6,225 / 7,092
Net Profit / 5,814 / 4,463 / 6,225 / 7,092
Growth, % / 20.4 / 0.2 / 39.5 / 13.9
Net Profit (adjusted) / 4,453 / 4,463 / 6,225 / 7,092
Unadj. shares (m) / 125 / 125 / 125 / 125
Wtd avg shares (m) / 125 / 125 / 125 / 125

Balance Sheet

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Cash & bank / 4,736 / 8,819 / 8,597 / 10,833
Debtors / 8,623 / 10,005 / 11,124 / 12,251
Inventory / 13,184 / 14,934 / 17,304 / 19,057
Loans & advances / 2,653 / 2,916 / 2,966 / 3,267
Other current assets / 135 / 201 / 201 / 201
Total current assets / 29,330 / 36,876 / 40,192 / 45,608
Gross fixed assets / 32,271 / 33,956 / 34,956 / 35,956
Less: Depreciation / -18,389 / -19,545 / -20,694 / -21,899
Add: Capital WIP / 1,368 / 2,037 / 2,037 / 2,037
Net fixed assets / 15,250 / 16,448 / 16,298 / 16,094
Total assets / 44,718 / 53,375 / 56,541 / 61,753
Current liabilities / 20,556 / 27,177 / 27,261 / 28,522
Total current liabilities / 20,556 / 27,177 / 27,261 / 28,522
Non-current liabilities / 9,741 / 9,537 / 8,577 / 7,617
Total liabilities / 30,297 / 36,714 / 35,838 / 36,139
Paid-up capital / 624 / 624 / 624 / 624
Reserves & surplus / 13,796 / 16,036 / 20,079 / 24,988
Shareholders’ equity / 14,421 / 16,661 / 20,704 / 25,613
Total equity & liabilities / 44,718 / 53,375 / 56,541 / 61,753

Source: Company, PhillipCapital India Research Estimates

Cash Flow

Y/E Mar, Rs mn / FY13 / FY14E / FY15E / FY16E
Pre-tax profit / 6,638 / 5,941 / 8,110 / 9,561
Depreciation / 1,097 / 1,155 / 1,150 / 1,205
Chg in working capital / -1,588 / 3,158 / -3,455 / -1,918
Total tax paid / -899 / -1,492 / -1,885 / -2,469
Cash flow from operating activities / 5,247 / 8,763 / 3,920 / 6,379
Capital expenditure / -1,776 / -2,354 / -1,000 / -1,000
Cash flow from investing activities / -1,776 / -2,354 / -1,000 / -1,000
Free cash flow / 3,471 / 6,410 / 2,920 / 5,379
Equity raised/(repaid) / 141 / -41 / 0 / 0
Debt raised/(repaid) / -122 / -102 / -960 / -960
Dividend (incl. tax) / -1,091 / -2,182 / -2,182 / -2,182
Other financing activities / 0 / 0 / 0 / 0
Cash flow from financing activities / -1,072 / -2,326 / -3,142 / -3,142
Net chg in cash / 2,399 / 4,084 / -223 / 2,236

Valuation Ratios & Per Share Data

FY13 / FY14E / FY15E / FY16E
Per Share data
EPS (INR) / 35.7 / 35.8 / 49.9 / 56.8
Growth, % / 20.4 / 0.2 / 39.5 / 13.9
Book NAV/share (INR) / 115.6 / 133.5 / 165.9 / 205.3
FDEPS (INR) / 35.7 / 35.8 / 49.9 / 56.8
CEPS (INR) / 28.9 / 45.0 / 59.1 / 66.5
CFPS (INR) / 39.8 / 66.9 / 29.1 / 48.3
DPS (INR) / 7.5 / 15.0 / 15.0 / 15.0
Return ratios
Return on assets (%) / 15.3 / 10.1 / 12.0 / 12.6
Return on equity (%) / 30.9 / 26.8 / 30.1 / 27.7
Return on capital employed (%) / 30.3 / 19.6 / 23.7 / 23.8
Turnover ratios
Asset turnover (x) / 4.0 / 4.5 / 4.8 / 4.6
Sales/Total assets (x) / 1.7 / 1.7 / 1.6 / 1.7
Sales/Net FA (x) / 4.9 / 5.2 / 5.5 / 6.1
Working capital/Sales (x) / 0.1 / 0.0 / 0.0 / 0.1
Working capital days / 20.3 / 3.9 / 17.5 / 23.0
Liquidity ratios
Current ratio (x) / 1.4 / 1.4 / 1.5 / 1.6
Quick ratio (x) / 0.8 / 0.8 / 0.8 / 0.9
Interest cover (x) / 4.6 / 8.5 / 14.8 / 18.2
Dividend cover (x) / 4.8 / 2.4 / 3.3 / 3.8
Total debt/Equity (%) / 63.3 / 54.1 / 38.9 / 27.7
Net debt/Equity (%) / 30.4 / 1.2 / (2.6) / (14.6)
Valuation
PER (x) / 26.7 / 26.6 / 19.1 / 16.8
Price/Book (x) / 8.2 / 7.1 / 5.7 / 4.6
EV/Net sales (x) / 1.7 / 1.5 / 1.3 / 1.2
EV/EBITDA (x) / 18.3 / 16.0 / 12.4 / 10.5
EV/EBIT (x) / 21.8 / 19.0 / 14.1 / 11.8

– 1 of 9 –

Recommendation History

Source: PhillipCapital India Research

– 1 of 9 –

Contact Information (Regional Member Companies)

SINGAPORE
Phillip Securities Pte Ltd
250 North Bridge Road, #06-00 Raffles City Tower,
Singapore 179101
Tel : (65) 6533 6001 Fax: (65) 6535 3834
/ MALAYSIA
Phillip Capital Management Sdn Bhd
B-3-6 Block B Level 3, Megan Avenue II,
No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Tel (60) 3 2162 8841 Fax (60) 3 2166 5099
/ HONG KONG
Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway Hong Kong
Tel (852) 2277 6600 Fax: (852) 2868 5307

JAPAN
Phillip Securities Japan, Ltd
4-2 Nihonbashi Kabutocho, Chuo-ku
Tokyo 103-0026
Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141
/ INDONESIA
PT Phillip Securities Indonesia
ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A,
Jakarta 10220, Indonesia
Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809
/ CHINA
Phillip Financial Advisory (Shanghai) Co. Ltd.
No 550 Yan An East Road, Ocean Tower Unit 2318
Shanghai 200 001
Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940

THAILAND
Phillip Securities (Thailand) Public Co. Ltd.
15th Floor, Vorawat Building, 849 Silom Road,
Silom, Bangrak, Bangkok 10500 Thailand
Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921
/ FRANCE
King & Shaxson Capital Ltd.
3rd Floor, 35 Rue de la Bienfaisance
75008 Paris France
Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017
/ UNITED KINGDOM
King & Shaxson Ltd.
6th Floor, Candlewick House, 120 Cannon Street
London, EC4N 6AS
Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835

UNITED STATES
Phillip Futures Inc.
141 W Jackson Blvd Ste 3050
The Chicago Board of Trade Building
Chicago, IL 60604 USA
Tel (1) 312 356 9000 Fax: (1) 312 356 9005 / AUSTRALIA
PhillipCapital Australia
Level 37, 530 Collins Street
Melbourne, Victoria 3000, Australia
Tel: (61) 3 9629 8380 Fax: (61) 3 9614 8309
/ SRI LANKA
Asha Phillip Securities Limited
Level 4, Millennium House, 46/58 Navam Mawatha,
Colombo 2, Sri Lanka
Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

INDIA
PhillipCapital (India) Private Limited
No. 1, C-Block, 2nd Floor, Modern Center , Jacob Circle, K. K. Marg, Mahalaxmi Mumbai 400011
Tel: (9122) 2300 2999 Fax: (9122) 6667 9955

Disclosures and Disclaimers

PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may or may not match or may be contrary at times with the views, estimates, rating, target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

This report is issued by PhillipCapital (India) Pvt. Ltd. which is regulated by SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only and neither the information contained herein nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment or derivatives. The information and opinions contained in the Report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future performance.

This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax and financial advisors and reach their own regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. In no circumstances it be used or considered as an offer to sell or a solicitation of any offer to buy or sell the Securities mentioned in it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which we believe are reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice

Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst have no known conflict of interest and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific views or recommendations contained in this research report. The Research Analyst certifies that he /she or his / her family members does not own the stock(s) covered in this research report.

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it or its affiliates may hold either long or short positions in such securities. PhillipCapital (India) Pvt. Ltd does not hold more than 1% of the shares of the company(ies) covered in this report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic or political factors. Past performance is not necessarily indicative of future performance or results.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorized use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading in can be substantial. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

For U.S. persons only: This research report is a product of PhillipCapital (India) Pvt Ltd. which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

Top View