date: 27th january 2020

Date: 27th January 2020

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Equity Research Pick of the Week – Retail Research

Recent capacity addition of 5000 MTPA could benefit the top-line and margins from Q3FY20 onwards.

Strong brand presence, better product mix backed by new

launches, rising customer reach, and aggressive marketing.

Sound and improving financials.

DFM Foods Ltd

INDUSTRY

CMP

RECOMMEND ed

ADD ON DIPS TO

SEQUENTIAL TARGETS

TIME HORIZON ed

Packaged Foods

Rs 281.7

Buy in Rs.276-290 band & add on declines

Rs 245-250

Rs. 338-404 Rs.227

4 quarters

Investors may sell 60-65% of their holdings on first target being achieved and later keep a stop loss of first target for the balance holdings, in case the second target takes time to be achieved.

Investors may also maintain Rs. 227 as level below which investment position needs to be reviewed, including the possibility to exit

Increased consumption of snacks among Indian consumers augurs

well.

Acquisition of DFM shares by Advent raises confidence about the

future.

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HDFC Scrip Code DFMFOOEQNR

BSE Code 519588

NSE Code DFM

Bloomberg DFMF:IN

CMP 24th Jan 2020 281.7

Equity Capital (cr) 10.1

Face Value (Rs) 2

Eq- Share O/S(cr) 5

Market Cap(Rscr) 1411.6

Book Value (Rs) 25.8

Avg.52 Wk Volume 175302

52 Week High 315

52 Week Low 178.8

Shareholding Pattern % (Dec 31st, 2019)

Promoters 38.3

Institutions 10.9

Non Institutions 50.8

Total 100.0

Investment rationale:

Recent capacity addition of 5000 MTPA could benefit the top-line, and margins from Q3FY20 onwards.

Strong brand presence, better product mix backed by new launches, rising customer reach, and aggressive marketing.

Sound and improving financials.

Increased consumption of snacks among Indian consumers augurs well.

Acquisition of DFM shares by Advent raises confidence about the future.

Concerns:

Rise in raw material costs and stiff competition (with local/MNC players) can cause some pressure on the margins.

Change in management and strategies could bring some uncertainty for the next few quarters.

Market share in the North is still very low and geographical concentration.

Company Briefing: DFM Foods Limited is an India-based company engaged in manufacturing, and marketing of snack foods. The Company markets Corn Rings and Wheat Puffs under the CRAX and NATKHAT brand names. It offers a range of products consisting of over 15 product variants that include Bhujiyas, Daals, Mixtures, and Nut-Mixes. CRAX Corn Rings is available in various flavors, including Chatpata, Tangy Tomato, Masala Mania, Mast Cheese, Pudina Punch and Thai Sweet Chilli. The CRAX Namkeen range offerings include Aloo Bhujia, Bikaneri Bhujia, Corn Flakes, Double Mazza, Mast Moongphali and salted peanuts. It sells products in several pack sizes to cater to both casual/impulse consumption, as well as consumption at home. The Company sells its products through a distribution network spanning the states of Delhi, Uttar Pradesh, Punjab, Haryana, Uttarakhand, Himachal, Jammu and Kashmir, Rajasthan, Madhya Pradesh, Maharashtra and Gujarat. Its plants are located in Ghaziabad and Greater Noida, Uttar Pradesh.

View and valuation: DFM Foods has a total installed capacity in terms of extrusion at about 39100 metric tons per annum. In terms of revenues given the product mix, it can do about ~Rs 600cr given the current installed base. Further, an additional capacity (from Q3FY20) will add roughly about Rs 100cr in terms of revenue potential per annum. Recent change in management/ownership in favour of Advent international, appointment of new Management Director, recent capacity addition of 5000 tons and new launches will drive company’s top-line and bottom-line.

We feel investors could buy the stock in the Rs.276-290 band and add on declines to Rs.245-250 band (24.5x FY21E EPS) for sequential targets of Rs. 338(33.5x FY21E EPS) and Rs.404 (40x FY21E EPS) in 4 quarters.

FUNDAMENTAL ANALYST

Debanjana Chatterjee [email protected]

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Financial Summary

YE March (Rs cr) Q2FY20 Q2FY20 YoY (%) Q1FY20 QoQ (%) FY18 FY19 FY20E FY21E

Net Sales 135.9 118.3 14.8% 127.7 6.4% 425.3 483.6 558.9 630.3

EBITDA 16.3 15.4 5.6% 16.0 1.4% 50.8 64.9 71.1 81.6

APAT 14.8 7.1 109.5% 7.6 93.6% 23.3 32.8 45.4 50.8

Diluted EPS (Rs) 2.95 7.1 -58.1% 1.9 55.5% 4.7 6.5 9.0 10.1

P/E (x) 61.0 43.4 31.4 28.1

EV / EBITDA (x) 29.6 22.7 20.7 17.9

RoE (%) 22.8% 25.3% 27.6% 25.0%

Key Highlights

Capacity additions of 5,000 MTPA in the greater Noida facility, will boost revenues and margins.

Firm foothold in the North, with brand

value, and presence of more than two decades in the industry has made DFM a strong player in the packaged food business.

Innovation in products, and upgrading the existing ones has made its products children’s (primary customer) favourite savour, and helps in keeping the business rolling.

Changing patterns in snacking habits among Indians augur well for the company.

Advent International has stepped in as the owner of the company post buying out of the stake from the erstwhile promoters recently. Going by the track record of Advent in other investee companies, we can look forward to better times for shareholders of DFM going ahead.

(Source: Company, HDFC sec)

Company profile:

DFM Foods Ltd. is an India-based company incorporated in 1993. The company is engaged in the manufacturing and marketing of processed foods, which includes snack foods. This business pioneered the entry of packaged snacks in the Indian market with the introduction of its Crax Corn Rings product.

Today its Crax, and Natkhat brands are amongst the most popular in the Industry. The company’s products are sold through an extensive Distribution network spanning across the states of Delhi, Uttar Pradesh, Punjab, Haryana, Uttaranchal, Himachal, Jammu & Kashmir, Rajasthan and Madhya Pradesh. The Company’s processing facility is located at Ghaziabad in the state of Uttar Pradesh in close proximity to the Company’s Corporate office in Delhi. The facility makes use of state of the art manufacturing equipment from across the globe to ensure consistency and quality of all its products. A new plant at Greater Noida was expected go into production in Q3FY20. Corn Rings and Wheat Puffs are marketed under the CRAX and NATKHAT brand names respectively. Both these have become extremely popular snacks, especially among children. In the namkeens category, it offers a complete range of products consisting of 13 distinct product variants that include Bhujiyas, Daals, Mixtures, and Nut-Mixes. These are sold in several pack sizes to cater to both casual/impulse consumption as well as consumption at home. Q2FY20 Result Update: During the quarter the company posted a revenue growth of 14.8%, and 6.4% Y-o-Y, and Q-o-Q respectively, where it grew from Rs 118.3cr last year to Rs 135.9cr. EBITDA increased by 5.6% for the quarter. For H1FY20, revenue increased by 21.4% and EBITDA grew 17.7%. PAT doubled from Rs 7.1cr to Rs 14.8cr Y-o-Y during the quarter, and increased to Rs 22.4cr during H1FY20, up from Rs 12.1cr last year. Margins declined marginally in the quarter owing to increased material costs, which increased by 15.8% from Rs 69.7cr last year to Rs 80.6cr this year. Rise in other income, fall in interest costs and tax helped a good growth in bottom-line.

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DFM’s principal products: Curls, Fritts & Rings

Key updates/triggers

Recent capacity addition of 5000 MTPA could benefit the top-line, and margins from Q3FY20 onwards: The company successfully completed the Ghaziabad up-gradation project during Q2FY19 at a cost of Rs.18 cr, with oldest execution line being replaced with a new line of higher capacity. This resulted in an incremental capacity of approximately 3500 metric tons per annum translating into an incremental revenue potential of Rs 65cr.

To support higher demand due to new launches and greater penetration, the company will commission a new production capacity of 5000 MTPA in Oct 2019 by setting up a new extrusion line in the Greater Noida Facility. The company's existing capacity of 39100 MT per annum is currently being run at ~80% utilisation. The new capacity addition will require an investment of Rs 20cr. This shall roughly add incremental revenue of nearly Rs 100cr depending on the product mix. Further, the company has taken an industrial premise on a long-term lease in Greater Noida (Uttar Pradesh) for future expansion. Strong brand presence, better product mix backed by new launches, rising customer reach, and aggressive marketing: It was not until the 1980s that, Delhi Flour Mills began to diversify. On a suggestion by one of its Italian machine suppliers, it ventured into packaged snacks. In those times there was little demand for such products. Today, the company makes packaged snacks under three main brands - CRAX corn rings, Natkhat wheat puffs, and CRAX Namkeens - at its two plants in Greater Noida and Ghaziabad, on the outskirts of Delhi.

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Equity Research Pick of the Week – Retail Research Despite severe competition that has surfaced after the advent of big companies like, ITC, and PepsiCo, DFM has continued to grow due to its focus on marketing and advertising. DFM mainly operates in the Northern part of India, and enjoys enormous goodwill. Indian demography, by its virtue, holds a prominent place for vegetarians (by choice or customs), especially in and around northern India. It has been able to position its products with its business strategies, like, adding a surprise gift for kids (their most important target customers) inside the packs. This has made it popular among children between age group of 6-10 yrs. Its Rings category, the five rupees pack contains lucrative toys of various forms, which is the main driving factor of sales. This is a master strategy, as its toys are an attraction for kids.

The company enjoys wide distribution network, where, it has 3,00,000 outlets, 2,400 sub-stockists (smaller towns), and 12 lakh plus retail outlets. It is also planning to increase its touch-points by focusing on both small towns, and big cities. With the help of hub-and-spoke model the company continues to expand its reach in the smaller towns, and through go-to-market model it focuses on major cities. Through continued advertising, innovative consumer promotions, and aggressive trade marketing it will be able to realize the potential of both existing as well as new products.

As far as new launches are concerned, the company changes its toys roughly every two months, which gives continuously new toys to the consumers, keeping up with their changing choices. The company last year, launched a new brand mascot for Rings called Ring Bling. This is an animated cartoon character, which has now taken center stage on packs, and in communication. This will help them stay differentiated from other players, but, will also keep its core customers (children) stay put.

It’s another product Curls, launched in FY18 had seen unprecedented success in its first year. It continued to grow strongly in FY19, and H1FY20 as well. Encouraged by its success, the company further went on to launch two new products Fritts, and Pasta Crunch during FY19. Both Fritts & Pasta Crunch that was rolled out in Q3 is being heavily sold every month in Q2FY20. Curls is softer in bite with a value for money, offering large pack, high bag fill, and Fritts is of course, differentiated because it also has potato as an ingredient, and offers a different flavor.

With the introduction of these newer products, contribution of Rings has come down from a >85%, to a little more than 50% as of FY19 within a span of five years. This saliency of Rings has come down after introducing Curls, and Fritts into the market. Fritts & Curls do not have toys inside, and thus, although being advertised in the kids channel, does not limit itself as a children product. This move has saved the company that extra cost, which was being borne by the company. With these products, it has been able to move up the age ladder beyond 10 and 12 age limit. This will also help in covering larger market.

For FY20, the company is focusing on continuous advertising, and marketing by expanding its distribution channels, and introducing new products.

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

10.0

12.0

14.0

16.0

18.0

FY14 FY15 FY16 FY17 FY18 FY19

Selling & marketing expenses (Rs cr) and % to sales

Selling and marketing expenses % to sales

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Equity Research Pick of the Week – Retail Research Sound and improving financials: Substantial sales growth of 14.8%, quarterly on a Y-o-Y basis, and 21.4% for the half year ended FY20, is attributable to both higher sales of Rings as well as the success of new product launches. Quarter 2 is any which way, a delivering quarter, with schools reopening and summer abating. Improving return ratios staying well above 25% levels, due to healthy bottom-line, that has kept on increasing, is a sign that the company’s strategies has worked in favour of the company in generating revenue, and profits.

Lower borrowing cost, and growing EPS, increased cash, Improving Asset turnover ratio, shows its management efficiency. Its zero receivable days is an added bonus, which makes it free of any provision, and payment receivables, thereby making its working capital structure easy.

Increased consumption of snacks among Indian consumers augurs well: After 1995, India has seen a massive change in Snack food market. Due to, busier lifestyle, among Indian consumers, the demand for convenience products has increased a lot with a thrust over packaged food. With the advancement of technology, urbanization, increase in purchasing power, growth in female work population, and expansion of nuclear families, business of the packaged snack food has augmented, and attracted a large mass towards the snack market in India.

India’s savoury snacks market is estimated at Rs 33,500cr, as of FY19; while biscuits, snack bars, and fruit-based snacks are another Rs 36,400cr. Whereas, savoury snacks are expected to grow at a massive 22% over the next five years, this will be beneficial for DFM.

Indian consumers seem to have recovered their taste for traditional snacks such as farsan, bhujia and Namkeen going by the impressive growth rate of local firms such as Balaji Wafers, and Bikanervala at a time when their multinational rivals are struggling. With higher purchasing power resulted due to the high economic development of India has resulted in changing the preference of Indian consumers. The consumers are observed to be shifting from loose packaging Namkeen to standard, local, and regional, national brands.

Snacking has been on the rise for several years, but the last two years have been marked by notable growth. Today, consumers want a variety of easy-to-carry, price-effective snacks that do not compromise on taste and nutrition.

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Equity Research Pick of the Week – Retail Research Acquisition of DFM shares by Advent raises confidence about the future: On 26th of Nov 2019, buyout firm “Advent International” has offered to acquire up to 13,070,429 equity shares, fully paid-up equity shares of face value of Rupees 2 each, representing 26% of the expanded voting share capital, at per Equity share price of Rs 249.50. Earlier on September 9, 2019 the Acquirer entered into (i) SPA 1 with the Promoter and the Target Company to acquire the Promoter Shares constituting 38.27% of the Paid Up Share Capital and 38.14% of the Expanded Voting Share Capital; (ii) SPA 2 with WestBridge to acquire the WestBridge Shares constituting 24.87% of the Paid Up Share Capital and 24.79% of the Expanded Voting Share Capital; and (iii) SPA 3 with the Other Individual Shareholders to acquire Other Shareholder Shares constituting 4.99% of the Paid Up Share Capital and 4.97% Expanded Voting Share Capital. This shows increased interest, and confidence of this buyer in the performance of the company.

The open offer closed on Dec 18, 2019 and the acquirer succeeded in acquiring 4.62% stake in the company (out of 26% offered to be acquired). Westbridge sold 14.94% stake in DFM to the acquirer on Jan 13, 2020. A further 0.25% stake was acquired by the acquirer on Jan 14, 2020. Later on Jan 15, 2020, the acquirer acquired 54.1% stake from the promoters and some public shareholders. Post this the stake of the acquirer is now 73.94% (73.70% on diluted equity basis). On Jan 14, 2020 the erstwhile directors of the company resigned and new nominees of the acquirer came on board. Few of these directors have experience in brand marketing from the best of the companies in India. A new managing director has been appointed – Mr Lagan Shastri who in the past has worked in senior marketing positions in Hindustan Coca Cola Beverages for a total tenure of 21 years.

Across all of its funds, Advent has invested $44 billion in more than 345 private equity transactions in 41 countries. The firm’s current portfolio companies generated $50 billion in annual revenue.

Advent International has been investing in India for 11 years. Including Manjushree Technopak, Advent has invested about $1 billion in seven companies with headquarters or operations in India. Recent investments include Dixcy Textiles, a leading innerwear brand; ASK Group, a wealth and investment management business; QuEST, a global engineering solutions provider; and Crompton Greaves Consumer Electricals- supplier of consumer electrical goods, lighting and lighting automation systems. Advent International Corp. in November 2019 acquired a controlling stake in Bharat Serums and Vaccines Ltd, a leading maker of injectable biological and pharmaceutical products. The company operates in women’s healthcare, assisted reproductive treatment, critical care and emergency medicine in India and emerging markets.

Advent has deployed over $2 billion so far in India of which $875 million in last 12 months. Consumer, healthcare, financial services, Tech Services and selectively industrials are the 4 key sectors that it has been underwriting. It has 9 investee companies in India, of which 2 are in financial services, 3 in consumer, 1 in healthcare, 1 in Engineering Services and 1 in industrials.

Advent’s last four global private equity funds have produced a net internal rate of return of 23%.

Concerns

Rise in raw material costs and stiff competition (with local/MNC players) can cause some pressure on the margins: The company’s main raw material is maize (corn), which forms up most part of its raw material. Oil is the other main raw material. Volatility in the prices of either or both of these in particular quarters impacts gross and operating margins. However since FY19 the volatility has reduced, but one can still not rule out any sharp moves in margins.

DFM can pass the rising costs on to the consumers, within a short period of time, during lean quarters (Q1), it becomes hard for the company to raise prices. The government has estimated kharif maize output at 19.89 million tonne in 2019-20, nearly 5% higher than last season. This may give some respite to the company.

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Equity Research Pick of the Week – Retail Research Stiff competition among the snack makers creates pressure: There is a stiff competition between the company, and other players big, and small, organised, and unorganised. Among the listed players, Prataap snacks is one, which is also predominant in the North. Large national players like Pepsico and Bingo (ITC) also give stiff competition.

Market share in the North is still very low and geographical concentration: After being present for more than 25 years, and making so many efforts, the company has been able to grab a 20% market share in North India, which also happens to be its primary and focus market. This is being marred by the presence of Prataap Snacks Ltd, and other players. Price realisation thus, becomes difficult in such a scenario.

DFM’s revenue is concentrated in the Northern region of the country from where it derives around 75%-80% of its revenue. However, the company has been improving its distribution network in other parts of the country and has witnessed growth in revenue from other regions as well.

Change in management and strategies could bring some uncertainty for the next few quarters: The recent change in the ownership/management could bring some disruption in the strategies of the company that could hurt the smooth trajectory at least temporarily.

View and valuation DFM Foods has a total installed capacity in terms of extrusion at about 39100 metric tons per annum. In terms of revenues given the product mix, it can do about ~Rs 600cr given the current installed base. Further, an additional capacity (from Q3FY20) will add roughly about Rs 100cr in terms of revenue potential per annum. Recent change in management/ownership in favour of Advent international, appointment of new Management Director, recent capacity addition of 5000 tons and new launches will drive company’s top-line and bottom-line.

We feel investors could buy the stock in the Rs.276-290 band and add on declines to Rs.245-250 band (24.5x FY21E EPS) for sequential targets of Rs. 338 (33.5x FY21E EPS)

and Rs.404 (40x FY21E EPS) in 4 quarters.

Peer Comparison

Income

from

operations

(Rs in Cr)

OPM % PAT% EPS (Rs) CMP (Rs) P/E P/BV EV/EBITDA

Asset

turnover

ratio

ROE ROCE

DFM 483.6 13.4% 6.8% 6.5 281.8 43.1 10.9 22.5 2.8 25.3% 27.5%

Prataap 1164.1 7.1% 3.8% 19.0 828.0 43.5 3.5 22.6 1.9 8.0% 11.5%

ITC 49862.1 36.9% 25.7% 10.5 238.1 22.8 4.9 15.6 2.1 21.7% 36.0%

Britannia 10973.5 15.8% 10.5% 48.1 3191.6 66.4 18.0 45.1 5.0 27.2% 45.0%

Companies

FY19 Cons


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Particulars (Rs, cr) Q2FY20 Q2FY19 YoY-% Q1FY20 QoQ-%

Total Operating Income 135.9 118.3 14.8% 127.7 6.4%

Raw Material Consumed 80.6 69.7 15.6% 74.3 8.4%

Changes in inventories -1.3 0.0 6550.0% 0.8 -262.2%

Employee Expenses 13.9 11.2 24.0% 13.0 7.0%

Other Expenses 26.5 22.1 20.1% 23.6 12.3%

Total Expenditure 119.6 102.9 16.2% 111.7 7.1%

EBITDA 16.3 15.4 5.6% 16.0 1.4%

Depreciation 2.8 2.5 12.3% 2.8 3.3%

EBIT 13.4 12.9 4.3% 13.3 1.1%

Other Income 1.7 1.0 62.5% 0.9 85.7%

Interest 2.5 3.1 -20.6% 2.4 3.4%

Earning before tax 12.7 10.8 17.0% 11.8 7.1%

Tax Paid -2.1 3.8 -156.0% 4.2 -150.4%

Reported PAT 14.8 7.1 109.5% 7.6 93.6%

EPS (Adj) (Unit Curr.) 2.95 1.41 109.5% 1.53 93.6%

Particulars, Rs in Cr FY17 FY18 FY19 FY20E FY21E

Income from operations 344.9 425.3 483.6 558.9 630.3

Cost of materials consumed 208.8 256.0 283.8 334.1 378.8

Employee benefits expense 35.0 41.6 46.0 52.5 58.6

Other expenses 67.4 77.2 88.8 100.9 110.9

Total Expenses 310.7 374.5 418.7 487.7 548.7

EBITDA 34.2 50.8 64.9 71.1 81.6

Depr- and amort- exp 7.3 10.0 10.5 11.7 12.1

EBIT 27.0 40.9 54.4 59.5 69.5

Other income 0.5 4.3 5.1 7.0 9.1

Finance costs 6.3 10.0 10.6 10.1 9.7

PBT 21.1 35.2 47.4 56.3 68.9

Net tax expense 5.3 11.9 14.6 10.9 18.1

PAT 15.9 23.3 32.8 45.4 50.8

EPS (F.V 2) 3.2 4.7 6.5 9.0 10.1

Quarterly Financials

Financials: Income Statement


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Particulars, Rs in Cr FY17 FY18 FY19 FY20E FY21E EQUITY AND LIABILITIES

Share capital 10.0 10.0 10.0 10.1 10.1

Reserves and surplus 70.8 92.4 119.2 154.6 192.8

Long-term borrowings 75.7 80.9 83.4 81.8 81.0

Deferred tax liabilities 14.3 2.7 20.2 20.6 21.1

Other non-current liabilities 7.4 15.9 4.0 0.0 0.0

Long-term provisions 2.1 4.0 2.8 3.1 3.4

Short-term borrowings 10.4 5.7 3.8 3.4 3.1

Trade payables 39.0 34.7 43.0 46.4 45.8

Other current liabilities 28.0 23.1 23.9 25.1 26.4

Short-term provisions 0.6 0.1 0.7 0.7 0.6

TOTAL 258.2 269.4 311.2 345.7 384.1

ASSETS

Fixed assets 178.6 159.3 171.6 189.6 193.9

Non-current investments 0.0 0.0 0.0 0.0 0.0

Long-term loans and advances 6.2 0.0 0.0 4.5 5.0

Other non-current assets 8.0 30.5 22.8 18.0 20.5

Current Investments 42.3 51.9 55.1 70.0 90.0

Inventories 19.1 23.6 21.9 23.3 24.6

Trade receivables 0.0 0.0 0.0 0.0 0.0

Cash and cash equivalents 1.8 2.3 37.0 37.3 46.8

Short-term loans and advances 1.1 0.0 0.0 0.0 0.0

Other current assets 1.1 1.9 2.7 3.0 3.3

TOTAL 258.2 269.4 311.2 345.7 384.1

Particulars, Rs in Cr FY17 FY18 FY19 FY20E FY21E

EBT 21.1 23.3 32.8 56.3 68.9

Depreciation 7.3 10.0 10.5 11.7 12.1

Interest & Others 6.0 18.8 19.7 10.1 9.7

Change in working capital 1.1 -11.5 10.7 -12.0 -21.0

Tax expenses -5.7 -6.4 -10.5 -10.9 -18.1

CF from Operating activities 29.8 34.3 63.1 55.2 51.6

Net Capex -70.0 -13.3 -23.0 -29.7 -16.3

(Purchase)/Sale of Investment & Others 4.7 -0.3 -25.3 -2.9 -0.8

Div & int rec 0.6 0.6 0.4 0.4 0.5

Cash Flow

Balance Sheet


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CF from Investing activities -64.6 -13.0 -47.8 -32.2 -16.7

Borrowings/(Repayments) -13.0 -6.5 1.2 -1.3 -0.2

Dividends paid & Interest paid 46.0 -14.6 -14.2 -20.2 -22.3

CF from Financing activities 33.0 -21.1 -13.0 -21.5 -22.5

Net Cash Flow -1.8 0.2 2.3 1.5 12.4

Particulars FY17 FY18 FY19 FY20E FY21E

No of Equity Shares-cr 5.0 5.0 5.0 5.0 5.0

Enterprise Value-cr 1495.9 1495.8 1461.8 1463.8 1453.2

EPS 3.2 4.7 6.5 9.0 10.1

Cash EPS (PAT + Depreciation) 4.6 6.6 8.6 11.4 12.5

Book Value Per Share(Rs.) 16.1 20.4 25.8 32.8 40.4

PE(x) 88.9 60.6 43.1 31.2 27.9

P/BV (x) 17.5 13.8 10.9 8.6 7.0

Mcap/Sales(x) 4.1 3.3 2.9 2.6 2.3

EV/EBITDA 43.7 29.4 22.5 20.6 17.8

EBITDAM (%) 9.9% 12.0% 13.4% 12.7% 13.0%

EBITM (%) 7.8% 9.6% 11.3% 10.6% 11.0%

PATM (%) 4.6% 5.5% 6.8% 8.1% 8.1%

ROCE (%) 16.4% 23.9% 27.5% 26.6% 27.4%

RONW (%) 19.6% 22.8% 25.3% 27.6% 25.0%

Div Payout-% 157.8% 21.5% 19.1% 22.1% 24.7%

Current Ratio 0.3 0.3 0.4 0.4 0.4

Quick Ratio 0.3 0.4 0.9 0.8 1.0

Debt-Equity 1.1 0.8 0.7 0.5 0.4

Debt-EBITDA 1.9 2.7 2.8 2.9 3.3

Key Ratios


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Daily Closing Price

Chart

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Fundamental Research Analyst: Debanjana Chatterjee ([email protected])

Disclosure: I, Debanjana Chatterjee, Msc (economics), PGDM (Finance) authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate does not have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. Any holding in stock – No

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

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date: 27th january 2020

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