finolex cables, 1q fy 2014

7/27/2019 Finolex Cables, 1Q FY 2014

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Please refer to important disclosures at the end of this report 1

Y/E March ( ` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)

Total operating income 554 632 (12.4) 518 6.9EBITDA 51 67 (22.9) 49 5.2EBITDA Margin (%) 9.3 10.5 (127)bp 9.4 (15)bpAdj. PAT 34 39 (13.0) 25 35.1

Source: Company, Angel Research

Finolex Cables Ltd (FCL) reported a mixed set of numbers for 1QFY2014. Itstop-line reported a flat yoy growth of 6.9% to ` 554cr, as compared to ourestimate of ` 585cr. The EBITDA came in higher by 5.2% yoy to ` 51cr, in-line

with our estimate of ` 52cr. The EBITDA margin was down marginally by 15bpon a yoy basis to 9.3%. Nevertheless the Adjusted PAT soared by a whopping35.1% yoy to ` 34cr vis--vis our estimate of ` 28cr, aided by other income of

` 7.7cr (higher by 338% yoy). The PAT margin too expanded from 4.8% in1QFY2013 to 6.1% in the current quarter.

Revival in user industries to drive growth : FCL serves varied user industries,considering the wide usage of cables. With customers increasingly demandinghigh-quality and branded wires, FCL is poised to grow. The company, with itswide distribution reach and penetration in the market, is well placed to meetincrease in demand. Further, we expect the companys initiatives like- 1)

increase in advertisement spends 2) setting up of a solar power plant forcaptive consumption, 3) additions to product portfolio and 4) reduction in saleof copper rods to third party, to boost its top-line and enhance profitability going forward.

Outlook and valuation: We expect the companys sales to post an 13.0%CAGR over FY201315E to ` 2,899cr, and EBITDA to register a CAGR of 11.6%over the same period with margin at 9.8% in FY2015E. However, PAT is expectedto post a CAGR of 9.0% over the same period owing to closure of the derivativescontracts (included in exceptional items). At the current market price, FCL isavailable at an attractive valuation of 4.8x PE for FY2015E. We maintain our Buy

recommendation on the stock with a target price of`68 based on target PE of 6xfor FY2015E earnings.

Key financialsY/E March ( ` cr) FY2011 FY2012 FY2013 FY2014E FY2015ENet Sales 2,036 2,064 2,270 2,563 2,899% chg 25.8 1.4 10.0 12.9 13.1Net Profit 87 98 145 154 173% chg 50.7 13.0 47.9 6.0 12.1EBITDA Margin (%) 7.5 8.5 10.1 9.8 9.8FDEPS ( ` ) 5.7 6.4 9.5 10.1 11.3P/E (x) 9.6 8.5 5.7 5.4 4.8P/BV (x) 1.2 1.0 0.9 0.8 0.7RoE (%) 12.1 12.3 15.7 14.3 13.8RoCE (%) 20.9 18.7 22.5 22.2 23.1EV/Sales (x) 0.3 0.3 0.3 0.2 0.2EV/EBITDA (x) 4.0 4.0 2.8 2.5 2.0

Source: Company, Angel Research; Note: CMP as of August 8, 2013

BUYCMP ` 55Target Price ` 68Investment Period 12 Months

Stock Info

Sector

Net Debt

Bloomberg Code

Shareholding Pattern (%)Promoters 35.8MF / Banks / Indian Fls 10.5FII / NRIs / OCBs 22.0Indian Public / Others 31.7

Abs.(%) 3m 1yr 3yrSensex (5.8) 6.7 3.6Finolex (2.0) 36.8 (8.6)

Nifty 5,566Reuters Code FNXC.BO

FNXC.IN

52 Week High / Low

BSE Sensex 18,789

Power-CablesMarket Cap ( ` cr) 834

Beta 0.966/32

Avg. Daily Volume 102,815Face Value ( ` ) 2

(202.0)

Twinkle Gosar+91 22 3935 7800 Ext: [email protected]

Finolex Cables

Worst is behind now

1QFY2014 Result update | Power Cables August 12, 2013


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Finolex Cables | 1QFY2014 Result update

August 12, 2013 2

Exhibit 1: 1QFY2014 performance highlightsY/E March ( ` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg

Total operating income 553.8 632.1 (12.4) 518.0 6.9 2,270.1 2,063.9 10.0

Net raw material 417.2 465.9 (10.4) 378.0 10.4 1,688.6 1,568.5 7.7(% of Sales) 75.3 73.7 73.0 74.4 76.0

Employee cost 22.5 25.7 (12.4) 19.7 14.3 84.6 69.5 21.7

(% of Sales) 4.1 4.1 3.8 3.7 3.4

Other Expenses 62.7 74.0 (15.3) 71.6 (12.4) 268.1 251.3 6.7

(% of Sales) 11.3 11.7 13.8 11.8 12.2

Total expenditure 502.4 565.6 (11.2) 469.2 7.1 2,041.3 1,889.2 8.1

EBITDA 51.3 66.6 (22.9) 48.8 5.2 228.8 174.8 30.9

EBITDA Margin (%) 9.3 10.5 (127)bp 9.4 (15)bp 10.1 8.5 161bp

Interest 3.5 4.2 (17.6) 3.5 (0.3) 12.6 26.1 (51.7)

Depreciation 11.4 14.6 (21.8) 10.5 8.3 46.6 39.5 18.1

Other income 7.7 6.6 16.7 1.8 337.5 24.2 36.4 (33.6)

PBT (excl. exceptional items) 44.1 54.4 (18.8) 36.5 20.9 193.8 145.6 33.1

Exceptional items 0.0 8.0 6.5 23.0 36.4

PBT (incl. exceptional items) 44.1 46.4 (4.8) 30.1 46.9 170.8 109.3 56.3

(% of Sales) 8.0 7.3 5.8 7.5 5.3

Tax 10.3 7.4 38.3 5.0 106.4 25.5 11.1 130.5

(% of PBT) 23.2 16.0 16.5 15.0 10.1

Adjusted PAT 33.9 39.0 (13.0) 25.1 35.1 145.2 98.2 47.9

PATM (%) 6.1 6.2 4.8 6.4 4.8


Top-line & EBITDA in-line; bottom-line above expectation

For 1QFY2014, FCLs top-line reported a flat yoy growth of 6.9% to ` 554cr, ascompared to our estimate of ` 585cr. The EBITDA came in higher by 5.2% yoy to

` 51cr, in-line with our estimate of ` 52cr. The EBITDA margin was down marginally by 15bp on a yoy basis to 9.3%. Nevertheless the Adjusted PAT soared by awhopping 35.1% yoy to ` 34cr vis--vis our estimate of ` 28cr, aided by otherincome and absence of extra-ordinary items of derivatives losses. The PAT margintoo expanded from 4.8% in 1QFY2013 to 6.1% in the quarter under review.

Exhibit 2: Economy slowdown weighs on revenue growth


Exhibit 3: Lower other expenses aid sustain EBITDA margin


4 6 1

4 9 9

4 9 9

6 0 5

5 1 8

5 8 6

5 3 4

6 3 2

5 5 4

(6.6)1.7 (2.6)

12.112.4

17.4

7.0

4.56.9

(10)

(5)

0

5

10

15

20

-

100

200

300

400

500

600

700

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

4 Q F Y 1 2

1 Q F Y 1 3

2 Q F Y 1 3

3 Q F Y 1 3

4 Q F Y 1 3

1 Q F Y 1 4

( % )

( ` c r

)

Re ve nue ( LH S) R eve nue growth yoy ( RH S)

3 4

4 0

4 4

5 8

4 9

7 1

4 3

6 7

5 1

7.5 8.08.8

9.6 9.4

12.0

8.0

10.59.3

0

3

6

9

12

15

0

10

20

30

40

50

60

70

80

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

4 Q F Y 1 2

1 Q F Y 1 3

2 Q F Y 1 3

3 Q F Y 1 3

4 Q F Y 1 3

1 Q F Y 1 4

( % )

( ` c r

)

EBIT DA (LH S) EBITD A Margin (RH S)


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August 12, 2013 3

Exhibit 4: Actual vs EstimatesActual vs Angel's Estimates Actual ( ` cr) Estimate ( ` cr) % variation

Total Income ( ` cr) 554 585 (5.3)

EBITDA ( ` cr) 51 52 (1.8)EBITDA Margin (%) 9.3 8.9 33bp

Adjusted PAT ( ` cr) 34 28 22.6


Segment-wise performance

For 4QFY2013, the electrical cables segment reported a flat yoy growth of 3.9% insales to ` 474cr. The contribution of the segment stands at 85.7% as in 1QFY2014vis--vis 88.1% in 1QFY2013. The EBIT for the segment came in at ` 52cr ( ` 55cr in1QFY2013), 6.1% lower yoy while EBIT margin lower by 117bp yoy to 10.9%.

The communication cables segment posted a strong growth of 26.0% yoy in itstop-line, with sales of ` 47cr ( ` 38cr in 1QFY2013) and contributed 8.6% to thetotal revenue. The margin of the segment expanded significantly by 439bp yoy to12.2% from 7.8% in the same quarter previous year.

The continuous copper rods (CCC rods) segment reported a decline of 16.2% in itstop-line to ` 20cr ( ` 24cr in 1QFY2013) during the quarter. The segmentscontribution has been declining gradually since the company is reducing itsexposure to third parties owing to thin margins. The EBIT for the segment came inat ` 1.6cr, while margin stood at 8.1%, 748bp higher yoy.

Exhibit 5: Segment-wise performanceY/E March ( ` cr) 1QFY14 4QFY13 1QFY13 % chg (qoq) % chg (yoy)

Total Revenue

A) Electrical Cables 474 546 456 (13.1) 3.9

B) Communications Cables 47 50 38 (5.8) 26.0

C) Copper Rods 20 36 24 (43.6) (16.2)

D) Others 12 55 40 (78.2) (70.3)

Total 554 632 518 (12.4) 6.9

EBIT Margin (%) (bp chg )

A) Electrical Cables 10.9 13.7 12.1 (278) (117)B) Communications Cables 12.2 13.4 7.8 (127) 439

C) Copper Rods 8.1 6.0 0.7 497 748

D) Others (98.1) (0.8) (2.5) (9,731) (9,552)



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August 12, 2013 4

Investment arguments

Capex plans to complement rising demand

FCL has its manufacturing facilities located at Pune, Goa and Roorkee. Excludingthe older plants, the new plants with updated technology have been operatingoptimally at ~85-90% capacity utilisation. With customers increasingly demandinghigh-quality and branded wires, FCL is poised to grow. The company, with its widedistribution reach and penetration in the market, is well placed to meet increase indemand. The company has planned a total capex of ~ ` 100cr over the next 18months (~ ` 40-50cr in FY2013E) to double its capacity at Roorkee plant so as tosupport rising demand. The same will lead to top-line growth for the company.

Moreover, FCL has expanded its capacity at Urse and Goa from 6,000 km-a-month to 8,000 km (further to 10,000) in order to service its tender for theNational Optic Fibre Network project to connect all village panchayats (4,00,000-cable km project that can go up to even 8,00,000 km).

Organic growth and diversifying portfolio to extend borders

FCL has a substantial market share of ~15-16% in both, electrical andtelecommunication cables segments. The company has a wide range of productsin its offering, ranging within 1.1kv to 66kv, new range of speaker wires in thecommunication cables segment and latest versions of T5 tube lights and fittings inthe lighting division. Additions in the product portfolio by the company on the backof extensive research and development are expected to facilitate growth in top-linefor the company going forward.

Also, FCL plans to foray into manufacturing of electrical products like electricmotors and transformers to start with, at an investment of ~ ` 100cr with a separatedealer network for these products. This new facility is expected to be operational by FY2015. The company also has plans to set up a new switchgear division this fiscalthat will initially make miniature circuit breakers with investment quantum yet to befinalised. Thus, with an expansion of its product portfolio, FCL intends to change itslegacy image of being a cabler to a manufacturer of electrical products.

Reducing third party sale of copper rods to boost margins

The copper rods segment was initially set up as backward integration for thecables segment. The excess production after captive consumption is sold off tothird parties at market price. However, owing to thin and declining margins fromthird party transactions, FCL is gradually reducing its exposure to the segment. Thecontribution of the segment to the top-line has decreased from 21% in FY2010 to~5% currently. This trend is expected to continue, thereby improving the overallEBIT margin of the company.

Revival in user industry growth to drive top-line

FCL serves varied user industries considering the wide usage of cables due toelectrification. The contribution from the construction sector is the largest whileother segments include industrial, automotive, power and agriculture. In the nearterm construction sector appears positive with consumption being reported frominterior areas of country rather than limited to larger cities. In the long term,however, the outlook for the entire segment is positive, given the fact that sustainedeconomic growth of the country depends on a robust and stable infrastructure.


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August 12, 2013 5

Financials

Exhibit 6: Key AssumptionsParticulars (%) FY2014E FY2015E

Total Sales Growth 12.9 13.1

Finished Products

Volume growth

Electrical cables 11.0 11.0

Telephone Cables-Jelly Filled 5.0 5.0

Optical Fibre Cables 5.0 5.0

Continuous Cast Copper Rod (10.0) (10.0)

Realisation growth

Electrical cables 3.0 3.0

Telephone Cables-Jelly Filled 5.0 5.0

Optical Fibre Cables 5.0 5.0Continuous Cast Copper Rod - -

Raw Material

Volume growth 9.5 9.5

Realisation growth 3.6 3.3


Exhibit 7: Revised Estimates

Y/E MarchEarlier estimates Revised estimates % change

FY2014E FY2015E FY2014E FY2015E FY2014E FY2015E

Net Sales ( ` cr) 2,563 2,899 2,563 2,899 0.0 0.0

EBITDA Margin (%) 9.8 9.8 9.8 9.8 0.0 0.0

EPS ( ) 10 11 10 11 0.0 0.0

Source: Angel Research

Net sales to grow at CAGR of 13.0% over FY2013-15E

Owing to strong growth in varied user industries, additions in the product portfolio,and strategic alliances entered into by the company, the top-line is expected topost a CAGR of 13.0% over FY2013-15E to ` 2,899cr in FY2015E.

Exhibit 8: User industry growth to drive sales


Exhibit 9: Segmental contribution


1 , 6

1 9

2 , 0

3 6

2 , 0

6 4

2 , 2

7 0

2 , 5

6 3

2 , 8

9 9

20.7

25.81.4

10.012.9

13.1

0

5

10

15

20

25

30

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

( % )

( ` c r

)

Net sales (LHS) Net sales growth (RHS)

1,1091,407

1,7712,053

2,347

2,683

176 204 207 254280 308362

511

205 105 94 85-

500

1,000

1,500

2,000

2,500

3,000

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

( ` c r

)

Ele ctrical cable s C om munication C CC rods


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August 12, 2013 6

Revenue from the Electrical cables segment is assumed to grow at a CAGR of14.3% while the Communication cables segment (telephone jelly cables and opticfibre cables) is expected to post a CAGR of 10.3% over FY2013-15E. CCC rods

(net of inter segmental) contribution is however expected to dip at a CAGR of10.0% for the same period.

EBITDA to post CAGR of 11.6% over FY2013-15E

FCLs EBITDA, on back of healthy top-line growth and improved operationalefficiency, is expected to post a CAGR of 11.6% over FY2013-15E. The EBITDA isto rise from ` 229cr in FY2013 to ` 285cr in FY2015E. Despite reduced contributionfrom low-margin copper rods, owing to volatility in copper prices, we expectEBITDA margins to normalize at 9.8% in FY2014E and FY2015E.

Exhibit 10: EBITDA margin to normalise


Exhibit 11: PAT and PAT growth


End of tax exemption to restrict PAT CAGR at 9.0%

A robust top-line coupled with healthy EBITDA and closure of derivatives contractin 4QFY2013 is expected to aid PAT CAGR of 9.0% over FY2013-15E. Tax rate isexpected to increase from 10.1% in FY2012 to 15.0% in FY2013E; and 28.0% inFY2014E and FY2015E; owing to end of 100% tax exemption on the Roorkeeplant (30% exemption from FY2014E). As a result, despite closure of derivativecontracts, the bottom-line is expected to rise gradually from ` 145cr in FY2013 to

` 173cr in FY2015E.

195 173 175 229 250 285

5.2 7.58.5

10.1 9.89.8

0

2

4

6

8

10

12

0

50

100

150

200

250

300

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

( % )

( ` c r

)

EBITDA (LHS) EBITDA margin (RHS)

58 87 98 145 154 173

(262.4)

50.7

13.0

47.9

6.0 12.1

(300)

(250)

(200)

(150)

(100)

(50)

0

50

100

0

20

4060

80

100

120140

160

180

200

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

( % )

( ` c r

)

PAT (LHS) PAT growth (RHS)


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August 12, 2013 7

Concerns

Competition from the un-organized sector is a concern since the productsavailable from them are relatively cheaper and they thus cannibalize intomarket volumes.

Fluctuation in the price of copper which is an essential raw material (~86% oftotal raw material), is a key concern as it would directly impact operationalefficiency. Although prices have fallen recently, but volatility in commodity markets persists.

Competition

The cables industry, both electrical and tele-communication, is highly competitive,with co-existence of both - organised and un-organised players. FCL has a marketshare of ~15-20% each in the electrical and telecommunication cables segments.

Exhibit 12: Relative Valuation

TTM- Jun13 Sales(` cr)OPM

(%)PAT

(` cr)EPS(` )

ROIC(%)

PE(x)

PBV(x)

EV/EBITDA (x)

EV/Sales (x)

FCL 2,307 9.3 154 10.1 22 5.4 0.9 2.9 0.3Torrent Cables 323 8.1 14 16.4 11 4.1 0.3 1.8 0.1KEI Inds* 1,661 10.4 26 3.8 24 2.2 0.2 2.5 0.3

Source: Capital Line, Angel Research *TTM ending Mar13


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August 12, 2013 8

Outlook and Valuation

We remain positive on the companys prospects going ahead, given the revival ingrowth in user industries, additions in product portfolio, and strategic allianceswhich will aid the company to post a CAGR of 13.0% in top-line over FY2013-15Eto ` 2,899cr in FY2015E. EBITDA is expected to grow at a CAGR of 11.2% to

` 285cr while margins are to stabilize at 9.8% in FY2014E and FY2015E. Despiteend of long persisted derivative contract losses, PAT growth, owing to end of taxexemption, is expected to be restricted to a CAGR of 9.0% over FY2013-15E, ie to

` 173cr in FY2015E. At the current market price, the stock is available at a cheapvaluation of 4.8x PE for FY2015E. We continue to maintain our Buyrecommendation on the stock with a target price of ` 68 based on target PE of 6xFY2015E earnings.

Exhibit 13: One-year forward PE


0

20

40

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140

160

A u g -

1 0

F e b

- 1 1

A u g -

1 1

F e b

- 1 2

A u g -

1 2

F e b

- 1 3

A u g -

1 3

( ` )

Price 4.0x 7.5x 11.0x 14.5x


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August 12, 2013 9

About the company

FCL is Indias largest manufacturer of electrical and communication cables. Thecompany mainly operates through 4 divisions; 1) Electrical cables (80%) 2)Communication cables (~7%) 3) Continuous Cast Copper rods (~9%) and 4)Others (4%)- comprising switches and compact fluorescent lamps manufacturedthrough its facilities set up at Roorkee, Goa, and Pune (at Pimpri, Urse).

Exhibit 14: Segment details

Source: Company

Exhibit 15: Applications of different types of cablesCables Applications

Electrical Cables

LDEC Electrification in residential, commercial and industrialestablishmentsPower Cables Underground usage, main power supply

Communication cables

Copper based LAN- high speed networks

Coaxial- content input to TV sets

PE Insulated to connect telephone instruments

V-Sat- Dish to base stationOptic Fibre/ glassbased Maximum bandwidth and high speed

Trunk cables

Distribution by telecom companies

Multi service organisation and service provider

Traditional JFTC Laid underground 4 connecting land line telephone to exchanges


Segments

Electrical Cables

LDEC

Power Cables

CommunicationCables

Copper Based

Optic Fibre/Glass based

TraditionalJFTC's

Others

Switches

CompactFluoroscent

Lamps

Copper Rods


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August 12, 2013 10

Profit and loss statementY/E March ( ` cr) FY2011 FY2012 FY2013 FY2014E FY2015E

Gross sales 2,186 2,182 2,411 2,721 3,076

Less: Excise duty 151 118 141 158 177Net Sales 2,036 2,064 2,270 2,563 2,899

% chg 25.8 1.4 10.0 12.9 13.1

Net Raw Materials 1,575 1,568 1,689 1,914 2,163

% chg 33.6 (0.4) 7.7 13.4 13.0

Personnel 65 69 85 95 108

% chg 9.3 7.3 21.7 12.9 13.1

Other Mfg costs 82 84 113 127 144

% chg 14.7 2.6 33.2 12.9 13.1

Other 140 167 156 176 199

% chg 23.2 18.8 (6.7) 12.9 13.1

Total Expenditure 1,862 1,889 2,041 2,312 2,614

EBITDA 173 175 229 250 285

% chg (10.9) 0.8 30.9 9.5 13.9

EBITDA Margin 7.5 8.5 10.1 9.8 9.8

Depreciation& Amort. 39 39 47 48 51

EBIT 135 135 182 202 234

% chg (14.5) 0.5 34.7 11.1 15.5

(% of Net Sales) 6.6 6.6 8.0 7.9 8.1

Interest & other Charges 19 26 13 17 16

Other Income 26 36 24 31 24

(% of Net Sales) 1.3 1.8 1.1 1.2 0.8Recurring PBT 116 109 170 185 218

% chg (16.8) (5.5) 55.3 9 18

Exceptional Expense/(Inc.) 34 36 23 - -

PBT (reported) 107 109 171 216 242

Tax 20 11 26 62 69

(% of PBT) 19.0 10.1 15.0 28.0 28.0

PAT (reported) 87 98 145 154 173

ADJ. PAT 87 98 145 154 173

% chg 50.7 13.0 47.9 6.0 12.1

(% of Net Sales) 4.3 4.8 6.4 6.0 6.0

Basic EPS ( ) 5.7 6.4 9.5 10.1 11.3

Fully Diluted EPS ( ) 5.7 6.4 9.5 10.1 11.3

% chg 50.7 13.0 47.9 6.0 12.1


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August 12, 2013 11

Balance sheetY/E March ( ` cr) FY2011 FY2012 FY2013 FY2014E FY2015E

SOURCES OF FUNDS

Equity Share Capital 31 31 31 31 31Preference Capital - - - - -

Reserves& Surplus 687 770 894 1,048 1,220

Shareholders Funds 717 800 924 1,078 1,251

Total Loans 126 155 162 151 140

Other Long term liability 54 35 54 22 9

Net Deferred tax liability 31 33 34 22 14

Total Liabilities 928 1,022 1,175 1,273 1,413

APPLICATION OF FUNDS

Gross Block 826 871 937 993 1,072

Less: Acc. Depreciation 422 442 489 537 588

Net Block 403 429 448 456 484

Capital Work-in-Progress 19 12 - - -

Goodwill - - - - -

Long term Loans & Adv. 14 4 17 17 17

Investments 245 237 324 331 364

Other non-current assets - - 19 19 19

Current Assets 538 534 596 663 770

Cash 21 49 40 32 38

Loans & Advances 106 90 77 115 145

Other 411 395 479 516 588

Inventory 281 281 330 375 428

Debtors 130 114 150 141 159

Other current assets - - 0.0 0.0 0.0

Current liabilities 291 194 229 213 240

Net Current Assets 247 340 368 451 530

Mis. Exp. not written off - - - - -

Total Assets 928 1,022 1,175 1,273 1,413


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August 12, 2013 12

Cash flow statementY/E March ( ` cr) FY2011 FY2012 FY2013 FY2014E FY2015E

Profit before tax 107 109 171 216 242Depreciation 39 39 47 48 51

(Inc.)/ Dec. in Working Capital (26) (36) (24) (31) (24)

Less: Other income (40) (65) (37) (91) (73)

Direct taxes paid (20) (11) (26) (62) (69)

Cash Flow from Operations 59 36 131 80 127

(Inc.)/ Dec. in Fixed Assets (13) (39) (72) (56) (79)

(Inc.)/ Dec. in Investments 21 18 (100) (6) (33)

Other income 26 36 24 31 24

Cash Flow from Investing 34 16 (148) (32) (88)

Issue of Equity 0 0 0 0 0

Inc./(Dec.) in loans (96) 11 29 (56) (32)

Dividend Paid (Incl. Tax) (11) (12) 0 0 0

Others (2) (23) (21.4) - -

Cash Flow from Financing (109) (24) 8 (56) (32)

Inc./(Dec.) in Cash (16) 28 (9) (8) 6

Opening Cash balances 37 21 49 40 32

Closing Cash balances 21 49 40 32 38


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August 12, 2013 13

Key ratiosY/E March FY2011 FY2012 FY2013 FY2014E FY2015E

Valuation Ratio (x)

P/E (on FDEPS) 9.6 8.5 5.7 5.4 4.8P/CEPS 6.6 6.1 4.3 4.1 3.7

P/BV 1.2 1.0 0.9 0.8 0.7

Dividend yield (%) 1.3 1.5 - - -

EV/Sales 0.3 0.3 0.3 0.2 0.2

EV/EBITDA 4.0 4.0 2.8 2.5 2.0

EV / Total Assets 0.7 0.7 0.5 0.5 0.4

Per Share Data ( ` )

EPS (Basic) 25.0 6.4 9.5 10.1 11.3

EPS (fully diluted) 25.0 6.4 9.5 10.1 11.3

Cash EPS 28.2 9.0 12.5 13.2 14.6

DPS 0.7 0.8 0.8 0.8 0.8

Book Value 46.9 52.3 60.4 70.5 81.8

Dupont Analysis

EBIT margin 6.6 6.6 8.0 7.9 8.1

Tax retention ratio 0.8 0.9 0.9 0.7 0.7

Asset turnover (x) 3.2 2.9 2.8 2.8 2.9

ROIC (Post-tax) 17.0 16.8 19.1 16.0 16.6

Cost of Debt (Post Tax) 12.3 15.2 6.6 8.2 8.2

Leverage (x) (0.2) (0.2) (0.2) (0.2) (0.2)

Operating ROE 16.0 16.5 16.4 14.5 14.9

Returns (%)

ROCE (Pre-tax) 14.5 13.2 15.5 15.9 16.5

Angel ROIC (Pre-tax) 20.9 18.7 22.5 22.2 23.1

ROE 12.1 12.3 15.7 14.3 13.8

Turnover ratios (x)

Asset Turnover (Gross Block) 2.5 2.4 2.4 2.6 2.7

Inventory / Sales (days) 45 50 49 47 47

Receivables (days) 18 16 16 16 16

Payables (days) 47 47 47 47 47

WC cycle (ex-cash) (days) 37 37 53 60 62

Solvency ratios (x)Net debt to equity (0.2) (0.2) (0.2) (0.2) (0.2)

Net debt to EBITDA (0.8) (0.8) (0.9) (0.8) (0.9)

Interest Coverage (EBIT/Int.) 7.0 5.2 14.5 11.8 14.6


14/14


Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document shouldmake such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of thecompanies referred to in this document (including the merits and risks involved), and should consult their own advisors to determinethe merits and risks of such an investment.

Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, makeinvestment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in thisdocument are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions andtrading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company'sfundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannottestify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.

While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may beregulatory, compliance, or other reasons that prevent us from doing so.

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Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment bankingor other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report orin the past.

Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise fromor in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates mayhave investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Finolex Cables

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

finolex cables, 1q fy 2014

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