ic-excide industries- aditya vikram jha -r k global

7/31/2019 IC-Excide Industries- Aditya Vikram Jha -R K Global

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R K Global Shares & Securities Ltd-Private Client Research | Equity Research For Private Client Circulation 1

Exide Industries Limited | AutomobileInitiating Coverage | 6th August, 2012

Exide Industries reported better-than-expected Q1FY13 results

driven by robust growth in revenues. The companys top-lineregistered a better-than-expected 24.5% YoY (7.3% QoQ) growth

to `15535.8mn. The operating income grew by healthy 25% to

`15535.8 mn aided by improved sales in two wheeler and

industrial division though moderated by marginal growth in four

wheeler automotive battery. The industrial battery sales volume

grew by 19% while that of motorcycle grew by 28%. Four

wheeler battery sales volumes grew by 10%.

The OPM crashed by 200 bps to 15.6% largely due to steep rupee

depreciation despite stable lead prices in international market.

Thus the operating profit grew by constrained 11% to `2430.8

mn. However, on QoQ basis, the OPM improved by 130 bps on

lower raw material costs thus enabling 18% growth in operating

profit.

The PBT fell by 4% to `2185.3 mn on lower other income, higherdepreciation cost and incurring forex loss against gain in June2011 quarter. The other income crashed by notable 52% to

`147.4 mn on account of receiving nil dividend from subsidiaries

in June 2012 quarter compared to dividend income of`228.7 mn

received in June 2011 quarter. Excluding the dividend fromsubsidiaries in June 2011 quarter, the other income spiked by

whopping 86% in June 2012 quarter. The depreciation cost grew

by 17% to `276.2 mn while it incurred forex loss of `103.1 mn

(against forex gain of`38.6 mn in June 2011 quarter). Only savinggrace was 4% fall in interest cost to `13.6 mn. The net profit

settled with 7% fall to `1520.3 mn due to 200 bps hike in

effective tax rate. It has earmarked capex of`2700 mn for FY 13.

Valuation & Outlook:

We estimate margin recovery driven by a better mix, with

aftermarket sales forecast to increase ~16% in FY13E. The

companys net revenue to grow at a CAGR of ~15% over FY12-15

and earnings CAGR of ~23% CAGR (FY12-14E earnings CAGR is atad higher at ~25%). This reflects a weak base in FY12 (when

volumes and margins declined sharply). At the CMP of 132.5,

the stock is trading at P/E of 25x FY13E, EPS of `8.3 and

EV/EBITDA of 15.4x. We recommend a BUY on the stock with

target price 155.

Key Financials

Descriptions FY'11 FY'12E FY'13E FY'14E

Revenue 50651 51070 59996 68208

EBITDA (ExOI) 8814 6861 8805 10678

PBT 9856 7534 7633 9366

PAT 6664 4612 5966 7263

EPS 6.5 6.5 8.3 9.7

BVPS 32.3 35.9 41.0 47.1

ROE 24.9 15.9 18.2 19.4

ROCE 37.6 22.3 23.6 24.2

P/BV 3.6 3.2 2.8 2.4

EV/EBIDTA 12.3 16.8 15.9 17.1

P/E 18.2 27.4 16.4 13.5

Market Data

Bloomberg Code EXID IN

Reuters Code EXID.BO

SENSEX 17412.9

NIFTY 5282.5Dividend Yield (%) 1.2

52 Week High/ Low(`) 188.2/98.7

Equity Capital(`mn) 850.0Face Value (`) 1.0

Market Cap (`mn) 11016.0

Avg. 10 day Vol. NSE 911485.0Source: Ace Equity, R K Global Research, as on 6thAugust12

Key Market Ratios

TTM Latest EPS (`) 5.3

TTM Book Value (`) 37.4

TTM PE (x) 25.0

TTM P/BV (x) 3.5TTM EV/EBIDTA (x) 15.1EV/TTM Sales (x) 2.1

Mcap/TTM Sales (x) 2.1Source: Ace Equity, R K Global Research, as on 17th July12

Share-Holding Pattern (%)

Price vs Sensex

52.2%

33.5%

5.7%

8.8%

Promoters FII's DII's Others

65

75

85

95

105

115

125

May-11 Aug-11 Nov-11 Feb-12 May-12

Sensex Exide Industries

Research Analyst

Aditya Vikram Jha

[email protected]

CMP 129.8 BUY TP- 155


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Excide Industries Limited | Automobile

Investment Rationale: Leading the Indian Battery industry

Dominates Indias storage battery industry

With ~74% market share in the OEM space and 50-55% in the

organized aftermarket, Exide is the leader in auto batteries. Our Buy

rating is based on the following: 1) We think it is a better play on

secular auto demand; additionally, replacement demand is a natural

hedge against cyclicality; 2) A gradual decline in the share of

unorganized players (est. at ~50% of aftermarket) bodes well for

Exide with its strong brand positioning; 3) The widest dealer network

vs. peers.

Leading with the Indian auto growth story

Being the leader in Automotive battery space, Exide is well positioned

to reap the benefit of strong OEM sales and expectation of robust

demand from replacement market after phenomenal growth in auto

sales volume in FY10 and FY11, both in two wheeler and four wheelers

as vehicle sold during that period require replacement demand. We

believe investment in Exide would a safe bet in Auto space considering

growth in the industry and rising competition among existing and new

OEMs. Exide, being a Preferred Supplier in OEM space, gets maximum

demand from replacement batteries segment as customers usually

replace their old batteries with same brand as they used it and

experienced the reliability. Exide generated ~65% revenues from

automotive segment and high-margin automotive replacement

segment accounted for ~72% of automotive segment revenues in

FY11. With rising disposable income, compliance standard and

increasing brand awareness among consumers, we believe there

would be a natural shift to branded batteries where Exide has its

leadership position.

PV sales volume & YoY % growth 2W Sales volume & YoY % growth

Exides aftermarket business is a strong consumer-franchise

business

What we find appealing about the aftermarket isnt merely the highmargins associated with it, but also the attendant consumer buying

behavior that enables these margins to remain high. A battery is a

7.4%

18.8%

11.6%

0.2%

22.9%

25.6%

0%

5%

10%

15%

20%

25%

30%

0

0.5

1

1.5

2

2.5

3

FY06 FY07 FY08 FY09 FY10 FY11

Millions

12.7%

11.0%

-8.2%

2.6%

23.1%23.0%

-10%

0%

10%

20%

30%

0

2

4

6

8

10

12

14

FY06 FY07 FY08 FY09 FY10 FY11

Millions

0%

5%

10%

15%

20%

25%

30%

35%40%

45%

0

20

40

60

80

100

120

FY06 FY08 FY10 FY12 FY14

Thousands

Battery Sold YoY gr

Exide generate ~65% revenue from

automotive segment and within

automotive replacement segment

account for ~72% of the automotive

segment in FY11.


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critical piece of equipment (a car wont start without it) whose cost as

a % of the cost of the vehicle is disproportionately low. The benefit it

accords is significantly higher than the cost associated with it, and thus

the ability to price it with a relatively high margin. In the aftermarket,

a battery costs `4000-5000. Its effective life is 3-4 years. The cost /year is thus around `1000-1,500. Compared the capital cost of the car;

it is modest around 1-2%. Versus the annual gasoline / diesel oil

required to drive around 10000 km / year, the cost is again fairly

modest around 3-5% (depending on whether gasoline / diesel).

Industrial Batteries segment expected to grow at a moderate rate

Power Back-up segment (UPS/Inverter) accounted for ~62% and

Infrastructure segment (railway, telecom & power) accounted for

~22% of total Industrial batteries revenues in FY11.

Automotive battery volume trend Automotive industry growth

Power Back-up segment expected to grow at CAGR of 13%between FY10 and FY13

Considering computerization of banking systems and government

departments work, increasing penetration of personal computers as

well as creation of high-powered data centers in IT and financial

services industry are likely to drive a sustained demand for

UPS/inverters. In addition, consistent electricity power cut in the

country plays critical role for the demand of UPS/ Inverters. In FY11,Peak shortage was ~10% of peak demand in India. However, demand

scenario has been sluggish in the recent past mainly due to

improvement in the weather condition and lower electricity power cut

in the power deficient areas. Therefore, we expect the UPS/inverter

battery segment to grow at a moderate CAGR of 13% over FY11-13.

Infrastructure Segment to grow on the back of railway & powersegments

Considering the robust modernization and expansion plans of the

Indian railways, we expect demand of railway batteries to increasegoing forward. With rise in per capita consumption, we expect

continued demand-supply gap in power, therefore we expect demand

from power batteries to remain strong. We expect battery demand

11.913.2

14.916.2

19.020.7

23.1

26.7

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

5

10

15

20

25

30

FY07 FY08 FY09 FY10 FY11 FY12 FY13E F Y14E

mnunits

Automotive Battery Volume growth

12.8%

13.7%

-5.0%

0.7%

26.4%

26.2%

8.5%

8.9%

9.5%

-30%

-20%

-10%

0%

10%

20%

30%

40%

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E


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from telecom operations to slow down further and revenues fromoverall infrastructure battery segment is expected to grow at a CAGR

of 8% between FY11 and FY13. Therefore, we expect industrial

batteries segment revenue to grow at a CAGR of 10.1% between FY11-13 as we foresee strong demand from UPS, railways and power sectors

are likely to partially offset by the slowdown in the telecom space.

The Game Play: Heavy load on Indian Batteries

Entry of new players would upset industry dynamics

Given that the two entrenched players (Exide Industries & Amara Raja

batteries) are generating RoEs in excess of 25%, new players withdeep pockets might get interested in entering the battery industry,

which could lead to competition intensifying.

Volatility in input costs and its subsequent impact on margins:

Lead, the key input cost (around ~55% of revenues), is a highlyvolatile commodity and whilst prices can be passed through with a

lagged impact, it does tend to impact margins in the short term. Thisvolatility detracts from the stability in earnings that consumer

franchise businesses typically enjoy.

Heightened competitive intensity in the auto replacement / OEmarkets and also the power back up (inverter / UPS segments):

Over FY11, Exide hiked prices vs. competition, but the brand premium

couldnt sustain, and Exide was forced to cut prices over FY12 - in

2QFY12 for the industrial battery segment and certain categories inthe automotive segment (primarily 2Ws and truck batteries). The

company undertook another price cut in April 2012, this time for itspassenger car, jeeps and tractor batteries. The two price cuts were fordifferent sets of battery segments and the overall blended price cut

was ~2%. Exides profitability was adversely impacted over FY12, andwhilst we reckon margins could recover over FY13, there is the

possibility that pricing action by competition could impact demand.


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Battery Industry:The Indian storage battery industry is valued at more than `100bn

and out of which organized sector representing `~75bn. Out of

Organized Storage battery industry, organized battery market isvalued at`45bn and Auto OEM and replacement market represent 30-

35% and 65-70% respectively. Domestic Automobile industry hasregistered 17.1% CAGR between FY08 and FY11. On the back of

sustained demand and upcoming new launches, we believe automobile

industry to grow at a CAGR of ~9% and replacement demand for

batteries to growth at a CAGR of 16% between FY11 and FY13. OEM

Auto batteries sales provide low margin business however; it provides

good visibility and brand building for battery Company. On the other

hand, replacement demand provides a stable business by diversifying

the risk when OEM demand slows down.

Structure of Indian Battery Industry

Industrial batteries are classified into lead acid, valve-regulated lead

acid (VRLA) and nickel-cadmium batteries. VRLA batteries command~75% of the Indian industrial storage battery market. In the telecom

sector, the batteries support switching and transmission networks and

the Indian Railways use batteries for train lighting, coach air-

conditioning and signaling. In the power sector, the batteries supportgeneration, transmission and distribution networks. The UPS batteries

support IT system which provide backup power and regulate power

supply to critical equipment during voltage fluctuations. Small VRLA

batteries find application in small UPS and emergency lamps.

We believe strong demand from inverter/UPS segment on the back of

computerization of banking system, data-center system in IT/Financial

services industry and increasing penetration of computers. In addition,

power shortage would play important role in driving the demand of

inverter/UPS. Railway business is also likely to be strong growth

driver considering the Governments priority to expand connectivityand making India a manufacturing hub in South Asia.


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Business Overview:

Leading the market:

Exide is a leading battery manufacturer of both conventional floodedas well as VRLA batteries in the South and South East Asia. Exide has

two lead smelters and six manufacturing facilities that are strategicallylocated all over India. The batteries of the company have been used in

automotive, telecom, power back up, defense and railways. Exide has a

wide distribution networks that includes 41,500 retail outlets for the

aftermarket sales-services. It exports its products to Africa, Australia,

South and South East Asia. By the constant innovation, modernization

of manufacturing processes, country wide service networks, Exide has

grown steadily and become the solution provider along with

manufacturer of storage batteries. Exide divides its operations into

three major segments Automotive, Industrial and Submarine. Thissegmentation is primarily based on the companys customer profile. In

addition, Exide segregates its revenues based on geographies as well.

Exide Industries: Milestone Exide Industries: Acquisitions

Year M ilestones

1916Chloride Electric Storage Co. (CESCO) UK Sets up trading operations in

India as an import house.

1946 First factory set up in Shamnagar, West Bengal

1947Incorporated as Associated Battery Makers (Eastern) Limited on 31

January 1947 under the company Act.

1947Incorporated Chloride International Limited ( previously Exide

productes Limited

1969 Second factory at Chinchward, Pune

1972 The name of the Company changed to Chloride India Limited

1976 R&D Centre established at Kolkata

1981 Third factory at Haldia, West Bengal

1988 The name of the Company changed to Chloride Industries Limited

1995 Chloride Industries renamed Exide Industries Limited

1997 Fourth factory at Hosur, Tamil Nadu

2003 Commissioned pl ant at Bawal, Haryana

Year Acquisition Details

1994Technical col laboration with Shin Kobe Electric Machinery Co. Ltd., Japan,

a subsidiry of the Hitachi Group

1998Acquired industrial undertaking of Standard Batteries Ltd from Cosepa

Fiscal Industries Limited

1999 Acquired 51% Shareholding in Caldyne Automotive Ltd.

2000

Acquired 100% stake in Chloride Batteries SE Asia Pte Limited, Singapore.

Acquired 49% stake in As socited Battery M anufacturing (Cyclon) Limited,

Sri Lanka (ABML)

2003 Formed new JV with ESPEX in UK (51% stake)

2004 Increased stake in ABML to 61.5% from 49%

2005 Acquired 50% stake in ING Vysya Life Insurance

2007

Increased stake in Caldyne Automotive Ltd to 100% from 51%.Acquired 100% stake in Chloride Metals Ltd ( earlier Tandon Metals Ltd).

Acquired 26% shareholding in CEIL Motive Power Pty Ltd. A JV in

Australia (divested in FY10)

2008Acquired 51% stake in Chloride Alloy s India Ltd (formally Leadage Alloy s

India Ltd.)

2010Increased stake in Chloride Alloy s India Ltd ( formally Leadage Alloys

India Ltd) to 100% from 51%

2012

Technical collaboration with East Penn Manufacturing Co. Inc USA -

manufacturers of lead acid battery and accessories for the automotive,

telecommunications, UPS, commercial, marine and motive power market

Global Presence

Exide manufactures and sells a wide range of battery which is used inmainly three segments such as Automotive, Industrial and Submarine.The company has a market share of 72% in automotive OEM, 73% in

replacement auto and 45% in industrial segment. Exide has achieved

13% sales growth in automotive battery segment. It includes sales to

the vehicle manufacturers and aftermarket sales. It designs and

manufactures industrial batteries of 2.5 Ah to 20,600 Ah in

conventional flooded, VRLA and Nickel Cadmium batteries. Industrial

batteries sales growth is around 10%. The company also manufactures

high end submarine batteries to meet the defense requirements ofIndia, Russia and Germany.

Exide's Geographic distributions

India Overseas

Segment wise revenue distribution

Automotive Industrial Submarine


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Exide Industries Global Presence

Strong Distribution Channel

With the increasing proportion of costly vehicles and quality conscious

people, the number of brand oriented people has increased. In

addition to that battery manufacturers can able to get high marginsand greater sales stability from the replacement segment, therefore

strong distribution channel, after sales services can be the key factors

to enhance brand equity as well as overall growth. Exide sells its

products under the brand name of EXIDE, SF, SONIC, Standard

Furukawa in the domestic market and in the international markets, it

sells battery brands of DYNEX, INDEX and SONIC.

The company has a wide distribution channel across India with 41,500

retail outlets, around 11350 and 1200 authorized dealers in auto and

industrial battery segments respectively. To increase the number ofloyal customers, Exide not only concentrate on distribution networks

but also follow different models to serve the customers in better way.

Furthermore, Exide has introduced highly customer friendly service

batmobile, initially in eight cities where service is guaranteed to a carowner within an half an hour of his call from 7am till midnight and the

management is likely to cover every city under this model.

Key Concerns: Ionic fluctuation

Lead & lead alloys contribute ~80% of total raw material cost forthe company. We believe any sharp rise in commodity prices

would affect margins negatively. Inability of passing on fullincreased cost to end customers is a concern for the company.

Volatility in International crude oil prices affect the prices ofpolypropylene copolymer (PPCP) which is used for

manufacturing battery container. Sharp increase in international

crude oil prices could increase the prices of PPCP which in turn

could put pressure on margins.

We foresee strong growth in auto replacement battery marketwhere the company faces stiff competition from Unorganised

players. Unorganised players offer batteries at very cheap prices

as they supply lower quality products and don't pay various

taxes & duties. We believe increase in competition from


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unorganized players would result in a decline in revenues and

margins.

The company is planning to increase its lead requirement fromcaptive smelters. Therefore, we have forecasted margin

expansion as lead price of smelters are lower than outside lead

prices. Lower than expected ramp up of smelters capacities

could result in decline in EBITDA margin.

Exide has planned to increase its production capacity,particularly on the two wheeler side. Any slowdown in demand

from replacement segment could pressure on margins of the

company.

Exide is exposed to the risk of rising imports of cheaper batteriesfrom China. The company faces the risk of losing the market

share in the automotive replacement battery segment. Exide imports ~25% of its lead requirement from other

countries. Any adverse volatility in currency can impact its

earnings.

Being the leader in the industry, Exide enjoys good pricingpower. Exide and Amara Raja together hold ~90% market share

for Organized Automobile batteries. Therefore, we believe this

industry may face interference from regulatory authority. This

would have significant impact on pricing power enjoyed by

Exide.


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Quarterly Financials

Financials ( mn) Q1FY13 Q1FY12 YoY gr Q4FY12 QoQ gr

Gross Sales 17521.7 13773.7 24.1% 16044.1 8.8%

Less: Excise Duty 2010.9 1340.9 40.5% 1585.8 23.7%

Net Sales 15510.8 12432.8 22.1% 14458.3 7.0%

Net Sales & Other Operating Income 15535.8 12481.7 21.9% 14476 7.1%

Total Expenditure 13208.1 10294.9 24.9% 12346.2 6.7%

% of Net Sales 85.2% 82.8% - 85.39% -

Cost of Services & Raw Materials 10896.0 8996.8 19.2% 9922.7 9.4%

% of Net Sales 70.2% 72.4% - 68.63% -

Operating & Manufacturing Expenses 2150.6 1634.8 27.4% 1873.9 13.8%

% of Net Sales 13.9% 13.1% - 12.96% -

Employee Cost 840.5 719.5 15.5% 746.1 11.9%

% of Net Sales 5.4% 5.8% - 5.2% -

PBIDT (Excl OI) 2327.7 2186.8 6.2% 2129.8 8.9%

Other Income 147.4 346.4 -85.4% 146.6 0.5%

Operating Profit 2475.1 2533.2 -2.3% 2276.4 8.4%

Interest 13.6 14.2 -4.3% 13.6 0.0%

PBDT 2461.5 2519.0 -2.3% 2262.8 8.4%

Depreciation 276.2 237.0 15.3% 272.7 1.3%

Tax 665.0 649.5 2.4% 565 16.3%

Profit After Tax 1520.3 1632.5 -7.1% 1425.1 6.5%

EPS 1.8 1.9 -7.0% 1.68 6.3%

Margin Ratio Q1FY13 Q1FY12 YoY gr Q4FY12 QoQ gr

PBIDTM (Excl OI) 13.3% 17.6% -28.1% 14.7% -10.3%

PBDTM 14.0% 20.3% -36.6% 15.7% -10.8%PBTM 12.5% 16.6% -28.4% 12.4% 0.5%

PATM 8.7% 11.9% -31.2% 8.9% -2.3%

Quarterly review for Q1FY13

Exide Industries reported better-than-expected Q1FY13 results driven

by robust growth in revenues. The companys top -line registered a

better-than-expected 24.5% YoY (7.3% QoQ) growth to `15535.8mn.

The operating income grew by healthy 25% to `15535.8 mn aided by

improved sales in two wheeler and industrial division though

moderated by marginal growth in four wheeler automotive battery.The industrial battery sales volume grew by 19% while that of

motorcycle grew by 28%. Four wheeler battery sales volumes grew by

10%.

The OPM crashed by 200 bps to 15.6% largely due to steep rupeedepreciation despite stable lead prices in international market. Thus

the operating profit grew by constrained 11% to `2430.8 mn.

However, on QoQ basis, the OPM improved by 130 bps on lower raw

material costs thus enabling 18% growth in operating profit.The PBT fell by 4% to `2185.3 mn on lower other income, higher

depreciation cost and incurring forex loss against gain in June 2011

quarter. The other income crashed by notable 52% to `147.4 mn on

account of receiving nil dividend from subsidiaries in June 2012quarter compared to dividend income of`228.7 mn received in June

2011 quarter. Excluding the dividend from subsidiaries in June 2011


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quarter, the other income spiked by whopping 86% in June 2012quarter. The depreciation cost grew by 17% to `276.2 mn while it

incurred forex loss of `103.1 mn (against forex gain of `38.6 mn in

June 2011 quarter). Only saving grace was 4% fall in interest cost to`13.6 mn. The net profit settled with 7% fall to `1520.3 mn due to 200

bps hike in effective tax rate. It has earmarked capex of `2700 mn forFY 13.

Outlook and Valuation

Industry to get further concentrated: The unorganized players,

which account for ~30% of the Indian battery market, are expected to

find the going tough owing to the lead price volatility and EIL is

consuming lead scraps, the key raw material for all players. Thenation-wide GST roll out is also expected to erode price

competitiveness of the unorganized players. Overall, we expect theindustry to witness further consolidation going forward.

EV/EBITDA trend P/E trend

We estimate margin recovery driven by a better mix, with aftermarket

sales forecast to increase ~16% in FY13E. The companys net revenue

to grow at a CAGR of ~15% over FY12-15 and earnings CAGR of ~23%

CAGR (FY12-14E earnings CAGR is a tad higher at ~25%). This reflectsa weak base in FY12 (when volumes and margins declined sharply). At

the CMP of 132.5, the stock is trading at P/E of 25x FY13E, EPS of

`8.3 and EV/EBITDA of 15.4x. We recommend a BUYon the stock withtarget price 155.

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Company Financials:

Income Statement ( Mn) Balance Sheet ( Mn)

Descriptions FY'11 FY'12E FY'13E FY'14E Descriptions FY'11 FY'12 FY'13E FY'14E

Revenue 50651 51070 59996 68208 Sources Of Funds

Expenditure 41837 44209 46647 49151 Share Capital 850 850 850 850

EBITDA (ExOI) 8814 6861 8805 10678 Total Reserves 26575 29723 37770 48281

Other Income 1041 673 759 826 Shareholder's Funds 27425 30573 38620 49131

Interest 87 75 40 30 Total Debt 21.5 583.8 384 713

PBDT 9769 7459 8765 10648 Total Liabilities 27446 31157 39004 49844

Depreciation 835 1007 1132 1282 Application Of Funds

PBT 9856 7534 7633 9366 Gross Block 15612 17766 22754 26158

Tax 2738 1840 2557 3113 Less: Acc. Dep. 7253 8100 9418 9418

PAT 6664 4612 5966 7263 Net Block 8358 9666 13861 17613

CWIP 660 266 648 641

Financial Ratios Cash At Bank 148 577 620 729

Description FY'11 FY'12E FY'13E FY'14E Investments 13780 15730 18113 20681

Per Share (Rs) Net CA 13287 15282 16333 18301

CEPS 6.5 6.5 8.3 9.7 Total Asset 27446 31157 39211 46826

DPS 1.5 1.5 1.7 2.2

Book value 32.6 35.9 41.0 47.1 Cash Flow Statement ( Mn)

Margin Ratios (%) PAT 6664 4612 9860 13042

EBIDTM 17.4 13.4 14.6 15.6 Depreciation 835 1007 1318 1520

EBITM 17.5 11.4 12.8 13.8 Change in WC -2015 -568 -401 -825

PATM 14.6 9.0 9.9 10.6 Tax Paid 2740 1840 2465 3260

CPM 14.8 9.9 10.1 10.5 Cash from Operation 10668 8882 15815 22342

Performance Ratios (%) Cash Flow From Investments

ROE 26.9 15.9 18.2 19.4 CAPEX -2529 -1761 -1600 -1600

ROCE 37.6 22.3 23.6 24.2 Change in Investments -426 -1951 -938 -1269Sales/WC 8.8 8.9 9.1 9.7 Cash from Investing -2955 -3712 -2538 -2869

Efficiency Ratios (%) Cash Flow From Financing

Revenue Growth 10.9 12.5 17.5 13.7 Inc/ Dec in Debt -878 562 198 337

EBIDTA Growth -3.6 -20.2 30.2 22.6 Dividends Paid -1404 -1958 -1091 -1264

PAT Growth 24.1 -30.8 29.4 21.7 Cash from Financing -2027 -986 -893 -927

EPS Growth 24.1 -30.8 29.4 21.7 Net Change in Cash 119 429 186 208

Valuation ratios(x) Cash at the Binging 29 148 577 763

EV/EBIDTA 12.3 16.8 15.9 17.1 Cash At The End 148 577 763 971

EV/Sales 2.6 2.5 2.4 2.9

P/BV 3.6 3.2 2.8 2.4 DuPont Analysis

P/E 18.2 27.4 16.4 13.5 Description FY'11 FY'12E FY'13E FY'14E

PAT/PBT 0.7 0.6 0.7 0.7PBT/EBIT 1.1 1.1 1.0 1.1

EBIT/Sales 0.2 0.1 0.2 0.2

Sales/TA 1.8 1.6 1.7 1.5

TA/NW 1.0 1.0 1.0 1.0


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Rating CriteriaBUY Stock to generate return above 15% from CMP over the next 12 months period

HOLD Stock to generate return between 0-15% from CMP over the next 12 months period

SELL Stock to generate less than 0% from CMP over the next 12 months period

Coverage TerminologyIC = Initiating Coverage

RU = Result Update

EU = Event Update

NC = Not Covered

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