Centrum Equity Research is available on Bloomberg, Thomson Reuters and FactSet

Aspirational, but affordable

We initiate coverage on La Opala RG with a BUY rating and believe the company
will benefit as the largest organised opalware player in India. Volumes are
expected to grow at a CAGR of 21.5% over FY14-17E on the back of doubling of
capacity at the Sitargunj plant, pan India distribution network, aggressive
investment in brand building, focus on exports, increasing modern trade share
with affordable, value for money product positioning in an otherwise upscale
market. Improving product mix coupled with operating leverage and savings in
power cost will help expand margins. Healthy profitability, strong FCF generation
with reducing working capital and improving return ratios augur well for the firm
in the long term.
Timely capacity expansion to fuel growth: We expect the company to post a
CAGR of 21.5% in volumes over FY14-17E as it is planning to double capacity at the
Sitargunj plant from 8,000MT to 16,000MT in H1FY16 with a capex of Rs600mn. Our
interaction with over 50 dealers across India suggests that affordable pricing along
with high product quality and good dealer commission augurs well for La Opala.
The company has also focused a lot on the packaging of products along with the
release of ~12-15 new designs every year over two tranches as the bulk of sales
happen during the festive season. Pan India network of 135 distributors dedicated
to general trade is expected to give the company an edge over the competition.
Focus on premium products to drive profitability: We believe the shift to
premium products under Diva brand will continue as the new capacity being added
at the Sitargunj plant will further aid margins. Diva brand accounts for 60% of the
sales of the company and Crystal ~10%, both premium products with operating
margins of ~30% and ~20% respectively. The share of value for money brand
LaOpala reduced to ~30% in FY14. With new capacity expected in FY16 and high
demand for quality opalware products, the company is planning to expand its
distribution reach outside India to the Middle East, Africa and South East Asia.
Strong Financials: We expect sales to grow at a CAGR of 24.8% and operating
profit at 30.3% over FY14-17E led by healthy volume growth on the back of new
8000MT capacity at the Sitarganj plant from H1FY16. Despite high A&P spends,
operating leverage will help the company expand operating margins from 28.1% in
FY14 to 32% in FY17E. With increasing profitability and asset turnover, RoE & RoCE
will increase to 36.3% and 31.6% respectively in FY17E. Over the past 5 years, the
company has posted strong FCF on the back of marginal capex and improving
working capital. With reducing D/E ratio, we believe the company will maintain its
~20% dividend payout going forward.
Valuation & Risks: Market leadership positioning in the fast growing category,
strong brand presence, healthy momentum of 24.8% revenue and 34% PAT CAGR
over FY14-17E, increasing margins, strong balance sheet with FCF generation and
improving return ratios make La Opala attractive in the consumer segment. The
stock is attractively positioned against peers where it trades at FY16E PEG of 0.65x.
We initiate coverage on the stock with a target price of Rs1,270 (22x Sept 2016E EPS
of Rs57.7) and 0.9x PEG given that the full benefit of the capacity expansion would
come only in FY17. Key risks are removal of anti-dumping duty and delay in capex.



Target Price Rs1,270 Key Data
Bloomberg Code LOG IN
CMP* Rs904 Curr Shares O/S (mn) 10.6
Diluted Shares O/S(mn) 10.6
Upside 40% Mkt Cap (Rsbn/USDmn) 9.6/159.6
Price Performance (%)* 52 Wk H / L (Rs) 1008.9/354
1M 6M 1Yr 5 Year H / L (Rs) 1008.9/16.1
LOG IN (0.7) 50.4 154.9 Daily Vol. (3M NSE Avg.) 9909
Nifty 4.6 20.0 29.4
*as on 27 June 2014: Source: Bloomberg, Centrum Research
Shareholding pattern (%)*
Mar-14 Dec-13 Sep-13 Jun-13
Promoter 68.2 68.1 68.1 68.1
FIIs 5.5 4.9 3.8 0.1
DIIs 2.2 1.9 1.9 1.9
Others 24.2 25.1 26.2 29.9
Source: BSE, *as on 27 June 2014
Regular capacity expansion

Source: Company, Centrum Research Estimates
Sales breakup across products/brands

Source: Company, Centrum Research
Centrum vs. Bloomberg Consensus*
Particulars
(Rs mn)
FY15E FY16E
Centrum BBG Var (%) Centrum BBG Var (%)
Sales 2,146 2,153 (0.3) 2,671 2,572 3.8
EBITDA 642 627 2.4 825 758 8.8
PAT 404 377 7.1 500 462 8.2
*as on 27 June 2014; Source: Bloomberg, Centrum Research Estimates
Bloomberg Consensus*
Centrum
Target
Price
(Rs)
Variance
(%)
BUY SELL HOLD
Target Price
(Rs)
2 0 0 1,017 1,270 24.9
Source: Bloomberg, Centrum Research Estimates


Ankit Kedia, ankit.kedia@centrum.co.in; 91 22 4215 9634


Y/E Mar (Rsmn) Rev YoY (%) EBITDA EBITDA (%) Adj PAT YoY (%) EPS (Rs) RoE (%) RoCE (%) P/E (x) EV/EBITDA (x)
FY13 1,539 33.8 412 26.8 229 80.2 21.6 35.3 28.7 41.9 23.6
FY14 1,779 15.6 500 28.1 300 30.9 28.3 34.9 28.9 32.0 19.3
FY15E 2,146 20.6 642 29.9 404 34.7 38.1 35.4 30.4 23.7 14.9
FY16E 2,671 24.5 825 30.9 500 24.0 47.2 33.3 29.0 19.1 11.9
FY17E 3,459 29.5 1,108 32.0 722 44.4 68.2 36.3 31.6 13.3 8.5
Source: Company, Centrum Research Estimates
4580
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(
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Diva, 60%
Solitare,
10%
La Opala,
30%
Consumer
BUY
Initiating Coverage 30 June 2014
INDIA
La Opala RG


2
La Opala RG
Table of Contents
Niche industry with demand drivers in place .................................................................................... 3
Opalware industry to grow at a CAGR of 10-12% ...................................................................................................... 3
Demand drivers in place ...................................................................................................................................................... 4
Timely capacity expansion to fuel growth ......................................................................................... 5
Rs600mn capex in H1FY16 to help achieve growing demand ............................................................................. 5
21.5% CAGR in volume growth over FY14-17E .......................................................................................................... 6
Pan-India distribution network ......................................................................................................................................... 6
Strong product positioning, as evident from our survey ....................................................................................... 7
Focus on premium products to drive profitability ............................................................................ 8
Improving product mix to drive margins...................................................................................................................... 8
To start exporting opalware products ........................................................................................................................... 8
Increasing A&P spends for brand building .............................................................................................................. 9
with reducing fuel cost.................................................................................................................................................... 9
Healthy balance sheet; Strong FCF generation ............................................................................... 10
Healthy improvement in working capital cycle........................................................................................................ 10
Strong FCF generation despite high capex ............................................................................................................... 10
Return ratios to improve going forward ..................................................................................................................... 11
Financial Analysis .............................................................................................................................. 12
Revenue to grow at a CAGR of 24.8% over FY14-17E led by strong volume growth ................................ 12
Steady expansion in operating margin to 32% in FY17E from 28.1% in FY14 ............................................. 12
Valuation ............................................................................................................................................ 14
Key Risks ............................................................................................................................................. 16
Company Background ....................................................................................................................... 17
Financials ........................................................................................................................................... 18
Financials - Historical ......................................................................................................................... 19

















3
La Opala RG
Niche industry with demand drivers in place
Opalware industry to grow at a CAGR of 10-12%
Indian opalware industry is currently worth Rs3-3.5bn of the ~Rs20bn Indian tableware industry
excluding stainless steel. Unorganised players account for ~15% of the industry while imports form 40-
45% of the market with the remaining from La Opala. Inadequate investment in advertising on
building the category and brand coupled with weak distribution by international players who rely on
trade partners or importers hampered the growth of this industry which has been growing in double
digits. Corelle is the largest international player in the opalware market with sales of ~Rs0.6bn
followed by RAK and Luminarc among others. Glassware accounts for more than 35% of the tableware
industry with Melamine and BoneChina contributing 20% and 15% share respectively.
Exhibit 1: Market size of Indian tableware industry (Rsbn)

Source: Industry presentation by Mr.Swapan Guha (C MD, Hopewell Tableware Pvt Ltd and is associated with tableware industry for 3
decades)
We believe the tableware industrys growth will be similar to that of other industries such as cookers,
cookware, luggage and innerwear over the long term. These industries grew on the back of better
product substitutes, urbanisation, demographic change, aspirational need coupled with highly
unorganised market in the initial years with cheaper imports. Indian tableware industry is in a similar
position now and we believe growth of this industry will follow that of some of these industries over
the long term with a shift to organised players and higher penetration levels. Penetration level in most
consumer durables have reached upwards of 50% in urban areas as shown in exhibit 4. We believe
over a period of time, opalware products would have similar penetration levels aiding growth.
Opalware, 3.0
Glassware, 6.3
Glass bakeware,
0.7
BoneChina, 3.0
Melamine, 3.8
Other Ceramic &
Pottery, 2.5
Exhibit 2: TTK Prestige sales across products Exhibit 3: Indian luggage market (USD mn)

Bag
Segment
2006 2010 2015(E)
CAGR (%) CAGR (%)
(2006-2010) (2010-2015E)
Travel 225 412 866 16.4 16.0
Casual 172 321 687 16.9 16.5
Business 111 183 321 13.3 11.9
Total 508 916 1,874 15.9 15.4

Source: TTK Prestige, Centrum Research Source: Frost & Sullivan, Samsonite Prospectus



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4
La Opala RG
Demand drivers in place
Microwave friendly: Opalware is microwave friendly and hence is positioned accordingly by
dealers. Microwave industry is expected to grow at a CAGR of 16% over 2013-16E which will boost
sales of opalware products as well.
Exhibit 6: Market size of microwave Ovens

Source: Euromonitor India consumer appliances report, 2013
Change in demographic profile: Increasing urbanization, growing disposable income levels, shift
towards nuclear family from joint family and rising number of working couples.
Gifting concept: Gifting crockery and dinner sets have become a common trend in urban India
during marriages, festive seasons and house warming functions. Hence 32% of La Opoalas sales
are in December quarter on the back of festive season demand.
Replacing steel / owning multiple dinner sets: Customers prefer to own multiple dinner sets
these days which are used for parties and entertaining guests. It is also the preferred choice over
Bone China.
Exhibit 7: Comparison between close substitutes
Bone China Tableware Opal Glass Tableware
Rich & classy look, used for fine dining Rich & classy look. Suitable for daily use
Easily gets chipped, needs to be handled with care Is not unbreakable but more stable than bone china
Is microwave & dishwasher safe if gold/platinum is not used
on them. Gets scratches easily.
Is microwave & dishwasher safe and is scratch proof
Is price sensitive Is value for money
Low on durability More durable
Low on sustainability Can go into generations
More variety in product range Limited variety
Soft cleaners required, high maintenance Easy to clean
Heavy & cannot be held in your hand to eat. Difficult to handle. Is lighter than bone china. Easy to handle
Source: Industry presentation by Mr.Swapan Guha
4.8
5.8
7.0
8.6
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Exhibit 4: Ownership of consumer durables (% households) Exhibit 5: Market size of Indian innerwear industry

Source: Industry, Centrum Research Source: Industry, Rupa Company presentation
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5
La Opala RG
Timely capacity expansion to fuel growth
Rs600mn capex in H1FY16 to help achieve growing demand
To meet growing demand and healthy double digit volume growth, the company is planning to
double capacity at the Sitargunj plant from 8,000MT to 16,000MT in H1FY16 with a capex of Rs600mn
funded through internal accrual and marginal debt as in FY14. Capacity utilisation at the Madhupur
plant was 95% and 80-85% at the Sitargunj plant. This plant is contemporary and fully automatic with
an electric furnace which offers significant cost savings. As the company manufactures its premium
brand Diva at this facility, margins are expected to increase steadily. The company has sufficient land
and infrastructure in place for future capex at the same place. Typically, a La Oplala plant can achieve
an asset turnover of 2.5x. Hence the company needs to plan in advance for the future due to healthy
demand and strong volume growth. The company increased its capacity in FY13 from 8580MT to
13000MT with a capex of Rs230mn as capacity utilisation was peaking. Hence, it commissioned
brownfield expansion at Sitarganj plant and expanded capacity for the Diva brand. Currently, the
company has 2 plants in Madhupur, Jharkhand with a capacity of ~5000MT where it manufactures
LaOpala (4000MT) and Solitare (1000MT) while the Sitarganj plant in Uttarakhand has a capacity of
8000MT for producing Opalware under the Diva brand.
Exhibit 8: Regular capacity expansion

Source: Company, Centrum Research
Exhibit 9: Asset turnover ratio trend over years

Source: Company, Centrum Research Estimates





4580
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FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(
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1.3 1.3
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0.8
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1.2
1.4
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1.7
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6
La Opala RG
21.5% CAGR in volume growth over FY14-17E
We expect the company to post a CAGR of 21.5% in volumes over FY14-17E on the back of new
capacity expansion coupled with growing demand. The bulk of revenue growth was on the back of
healthy volume growth historically. FY14 volume growth was mere 14% against 30% in FY13 as the
company had a one-time corporate order of Rs120mn in FY13. Excluding the one-time order, FY13 and
FY14 volume growth was 21% and 24% respectively. Management hiked prices by 7-8% in the Diva
brand in April 2014 which contributes ~60% to sales. This should help the company get 4-5% pricing
growth in FY15. In FY14, management did not increase prices for any product while in FY13, pricing
growth was ~3% as the company raised prices by 7-8% for the La Opala brand.
The company has witnessed strong demand from the modern trade segment which now contributes
~15% of the sales from 11% in FY13. Management is also focussing on the catering segment which
contributes only 1-2% currently but is expected to increase to 4-5% over the next 2 years. Currently,
the company has 12 distributors for this segment and is planning to increase it on the back of healthy
demand.
Exhibit 10: Strong volume growth

Source: Company, Centrum Research Estimates
Pan-India distribution network
La Opala has a pan-India distribution network with 135 distributors dedicated to general trade. The
products are available in more than 500+ towns and 10K+ dealers / retail points. Management is
increasing the distribution network by 15-20 every year. Compared to competitors, La Opala is far
ahead not only in terms of the number of distributors but also in terms of towns covered giving the
company an edge. Typically, the company gives 10% distributor margin and dealer margin of 30-35%
which is similar to that of the competition while the unorganised segment offers higher trade margin.
North India is the largest contributor to sales followed by South, West and East India.
Exhibit 11: Pan India distribution network
Reach Distributors Towns
LaOpala 135 500+
Corelle ~30 60-70
Luminarc ~35 60-80
Source: Company, Industry, Centrum Research







15 17 17 18 20 27 32 41 47 54 66 84
8.1
11.6
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7.2
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14.0
16.0
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30
40
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20
40
60
80
100
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
(
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Pieces Sold (mn) Volume Growth (%)


7
La Opala RG
Strong product positioning, as evident from our survey
In our interaction with more than 50 dealers across India, we gauged that dealer discount along with
product pricing plays a very important role in customers decision making process followed by quality,
design, shapes/sizes and weight. We understand that La Opala is well positioned to take advantage of
its superior product quality, vast distribution reach and affordable pricing.
La Opala, through its Diva brand, sells mostly dinner sets while La Opala - Melody brand (60% of sales)
sells non-dinner sets and is positioned as a value-for-money brand. We believe La Opala is the best
player in the market to cater to the loose segment where demand is high from customers who do not
want to buy the full set but purchase only part sets such as cups, saucers, coffee mugs, tea sets, soup
bowls, dessert sets etc.
La Opala is competing with players such as Corelle (USA), Luminarc (France), Bormioli Rocco (Spain),
RAK (UAE), Larah and Roxx (India) in the opalware category. However, dealer interaction suggests that
Corelle is the most expensive brand in the market with the best quality and caters to the high end
segment but has limited stock in the market and design has not changed in the past years. Luminarc
has distribution issues though the product is widely accepted with some new designs available in the
market. RAK brand was abolished on 1
st
Jan 2014 and hence only limited stock is available in the
market. Lara and Rosa are two new brands available in the market in recent months from another
Indian manufacturer Hopewell Tableware of Jaipur. However, product quality is very low and there are
a lot of customer complaints on breakages. However, they are giving high dealer discounts, increasing
their sales. Hopewell is contract manufacturing for Roxx brand which has entered the market in the
past 1 month but received limited acceptance from the trade.
Advantage for La Opala is its affordable pricing along with high product quality and good dealer
commission. La Opala also focuses on packaging of the products as many customers buy them for
gifting. The company also releases ~12-15 new designs every year over two tranches as the bulk of
sales happen during the festive season.
Exhibit 12: Ranking across categories for different opalware brands
Brand Name Weight Quality Shapes/Sizes Design Dealer Discount
Luminarc 2 2 1 4 3
Corelle 1 1 2 5 5
La Opala Melody 5 4 5 3 3
Diva by La Opala 3 3 3 1 2
Larah 4 5 4 2 1
Source: Centrum Research, Note: Rank on a scale of 5 with 1 being the best
Exhibit 13: Price points across brands (27 piece dinner set)

Source: Industry, Centrum Research

7,000
5,000
3,000
2,600
2,400
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8
La Opala RG
Focus on premium products to drive profitability
Improving product mix to drive margins
60% of the sales of the company is from Diva brand and ~10% from Crystal, both premium products
with operating margins of ~30% and ~20% respectively. The share of value-for-money brand LaOpala
has reduced to ~30% in FY14. The company started manufacturing Diva brand at its Sitargunj plant in
2008 and since then operating margins have increased from 13.3% to 28.1% despite high A&P spends.
We believe the shift towards premium products under Diva will continue as new capacity is being
added at the Sitargunj plant which will further aid margins. Gross margins for the company have
improved by ~500bps from FY07-FY14 on the back of steady increase in sales of Diva brand given its
high realisation and premium positioning.
To start exporting opalware products
With new capacity expected in FY16 and high demand for quality opalware products, the company is
planning to expand its distribution reach. Currently, it has 35 distributors outside India and plans to
focus on the Middle East, Africa and South East Asia. From FY15 onwards, the company will export
~Rs200mn of opalware apart from crystal products as the market will stabilise before the new capacity
comes in FY16. The share of exports has reduced to mere ~10% of sales compared to 31% in FY09 as
the company exports mostly its crystal products to USA, France & Italy apart from 50 other countries
with marginal exports of opalware products because crystal capacity was only 1000MT and its share is
reducing. The margin for exports is at ~20% compared to domestic margins of ~30% for the Diva
brand.
Exhibit 16: Exports to pick up with new capacities in place

Source: Company, Centrum Research


196 177 183 204 236 180
31.5
23.5
19.0
17.7
15.3
10.0
0
5
10
15
20
25
30
35
0
50
100
150
200
250
FY09 FY10 FY11 FY12 FY13 FY14
(
%
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(
R
s

m
n
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Exports Revenue Share of exports (RHS)
Exhibit 14: Sales breakup across products/brands (FY14) Exhibit 15: Operating margins* across products/brands

Source: Company, Centrum Research Source: Company, Centrum Research; * Approximate margins, may not add up
Diva, 60%
Solitare, 10%
La Opala,
30%
30
15
20
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9
La Opala RG
Increasing A&P spends for brand building
We believe the company will continue to invest aggressively on brand building over the next 2-3 years
with A&P spends at ~12% of sales. ~70% of the advertising is on television with the remaining in print
which gives the company an edge over competition. Brand recall is high with retail customers as
LaOpala is the biggest player in the Indian market.
When the company started its premium brand Diva in 2008, it signed actress Bipasha Basu as brand
ambassador. It also had an exclusive design range from Manish Malhotra. This gave the brand much
needed push to stand out against international players apart from helping dealers and distributors to
sell to retail customers.
with reducing fuel cost
Fuel cost for the company has reduced steadily over the past few years to 13.9% of sales from 24% in
FY08. The companys new plant at Sitarganj is fully automatic and has an electric furnace while the
Madhupur plant is semi-automatic and the furnace was running on furnace oil resulting in high power
cost. In FY14, the company converted the Madhupur furnace to electricity with a capex of Rs120mn
which led to significant savings in power cost. Company sources electricity from the state grid. Power
cost is expected to be ~13.4% of sales and the incremental benefit will either be used for high A&P
spends or help in margin expansion.
Exhibit 19: Steady reduction in power cost as % of sales

Source: Company, Centrum Research Estimates


20.8
21.4
24.0
28.9
17.3
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17.4
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Y
1
4
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
(
%
)
Exhibit 17: Investment in A&P to remain high Exhibit 18: Best margins despite high A&P spends across
midcap consumer companies


Source: Company, Centrum Research Estimates Source: Company, Centrum Research
15 19 12 41 59 77 95 148 208 249 311 420
3.6
3.8
2.4
6.7
8.0
8.2
8.5
9.8
11.9 11.8 11.8
12.3
0
2
4
6
8
10
12
14
0
100
200
300
400
500
F
Y
0
6
F
Y
0
7
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Y
0
8
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0
9
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1
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1
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1
2
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1
3
F
Y
1
4
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Y
1
5
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Y
1
6
E
F
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1
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E
(
%
)
(
R
s

m
n
)
A&P Spends % of sales (RHS)
1.3
2.8
3.1 3.2 3.2
4.5 4.6
5.1
5.6
5.8
7.7
9.8
0
10
20
30
40
0
2
4
6
8
10
12
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(
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(
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Ad Spends as % of sales (2013) EBITDA Margin 2013 (RHS)


10
La Opala RG
Healthy balance sheet; Strong FCF generation
Healthy improvement in working capital cycle
The company currently has a working capital cycle of 76days with reducing debtor and inventory days.
Inventory days have been reducing over the past 6 years from a high of 148 days in FY09 to 58 days in
FY14. As the furnace is operated to full capacity irrespective of demand, inventory increased in FY09 on
the back of high supply and low demand. However, with good sales push, increasing distribution
reach and penetration coupled with strong brand building, inventory reduced gradually. But, we
expect the inventory to increase to 100 days in FY16E as the new capacity will come only in H1FY16
and sales will gradually increase over time.
Debtor days have come down from 71 in FY08 to 44 days in FY14 on the back of strong brand. The
company also offers cash discount of 1% to its distributors for prompt payment within 7 days which
~30% of the distributors avail of.
Strong FCF generation despite high capex
Over the past 5 years, the company has posted strong FCF on the back of marginal capex as most
expansion has been brownfield. We expect the company to post healthy FCF in FY17E against
negative FCF in FY16E on the back of 8000MT capacity expansion in FY16 at the existing Sitarganj
plant at a cost of Rs0.6bn. We expect the D/E to decline as most funding for the capex would be
through internal accrual as the company has healthy operating cashflows. We believe the company
would maintain its ~20% dividend payout going forward on the back of strong profitability and
healthy cashflows.


Exhibit 20: Strong check on inventory/debtor days Exhibit 21: Largely a debt free company now

Source: Company, Centrum Research Estimates Source: Company, Centrum Research Estimates
Exhibit 22: Strong FCF generation Exhibit 23: Steady dividend payout

Source: Company, Centrum Research Estimates Source: Company, Centrum Research Estimates
71
72
89
148
113
86
83
73
58
54
77
71 71
63
65
52
44 44
0
20
40
60
80
100
120
140
160
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
(
D
a
y
s
)
Inventory Days Debtor Days
0.1
0.6
0.9
1.2
1.0
0.4
0.3 0.3
0.1
0.1
0.2
0.1
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
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0
9
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1
1
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1
2
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1
3
F
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1
4
F
Y
1
5
E
F
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1
6
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F
Y
1
7
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(
%
)
(17)
(103) (110)
(53)
104
136
94 95
159
176
(103)
517
(200)
(100)
0
100
200
300
400
500
600
F
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0
6
F
Y
0
7
F
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0
8
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0
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3
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(
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34
20 20
19
21
20 20 20
0
5
10
15
20
25
30
35
40
F
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F
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1
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2
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3
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1
4
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1
5
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F
Y
1
6
E
F
Y
1
7
E
(
%
)


11
La Opala RG
Return ratios to improve going forward
With increasing profitability and asset turnover, we expect the RoE of the company to increase from
34.9% in FY14 to 36.3% in FY17E while RoCE should increase from 28.9% in FY14 to 31.6% in FY17E. We
believe return ratios are among the best in the midcap consumer space in India as shown in exhibit 33.
Exhibit 24: Steadily increasing return ratios

Source: Company, Centrum Research Estimates
Exhibit 25: Dupont Analysis
FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
PAT/Sales (x) 0.04 0.10 0.11 0.15 0.17 0.19 0.19 0.21
Sales/Assets (x) 0.89 1.25 1.56 1.71 1.59 1.56 1.45 1.49
Assets/Equity (x) 2.28 1.84 1.46 1.39 1.30 1.21 1.22 1.17
RoE (%) 7.5 22.3 24.9 35.3 34.9 35.4 33.3 36.3
Source: Company, Centrum Research Estimates

3.3 3.5
6.6
15.3
21.0
28.7
28.9
30.4
29.0
31.6
2.8
2.3
7.5
22.3
25.1
35.3
34.9
35.4
33.3
36.3
2.9
3.2
6.7
16.8
20.0
26.7
28.1
30.2
26.3
33.0
0
5
10
15
20
25
30
35
40
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(
%
)
RoCE RoE RoIC


12
La Opala RG

Financial Analysis
Revenue to grow at a CAGR of 24.8% over FY14-17E led by strong volume growth
We expect the company to post total net sales of Rs3459mn by FY17E at a CAGR of 24.8% over FY14-
17E led by healthy volume growth on the back of new 8000MT capacity at the Sitarganj Plant from
H1FY16. FY14 sales growth was mere 15.6% against 33.8% in FY13 as the company had a one-time
corporate order of Rs120mn in FY13. Excluding the one-time order, FY13 and FY14 revenue growth
were 23.4% and 25.3% respectively.
Exhibit 26: CAGR of 24.8% over FY14-17E led by strong volume growth

Source: Company, Centrum Research Estimates
Steady expansion in operating margin to 32% in FY17E from 28.1% in FY14
We expect the company to post operating profit of Rs1108mn in FY17E at a CAGR of 30.3% over FY14-
17E on the back of stable gross margins. Borax (imported) and silica sand (locally sourced) account for
~50% of the raw material and pricing has been stable for both of them. Despite high A&P spends, we
expect operating leverage to help the company expand operating margins from 28.1% in FY14 to 32%
in FY17E. On the back of strong operating profit, we expect PAT to increase 2.4x over FY14-17E to
Rs722mn at a CAGR of 34%.
Exhibit 27: Operating profit to grow at a CAGR of 30.3% over FY14-17E

Source: Company, Centrum Research Estimates




494
509
620 750 964 1,150 1,539 1,779 2,146 2,671 3,459
13.5
3.0
21.9
20.9
28.6
19.3
33.8
15.6
20.6
24.5
29.5
0
5
10
15
20
25
30
35
40
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
(
%
)
(
R
s

m
n
)
Net Sales Growth (RHS)
87 68 104 132 212 269 412 500 642 825 1,108
17.5
13.3
16.8
17.6
22.0
23.3
26.8
28.1
29.9
30.9
32.0
10
15
20
25
30
35
0
200
400
600
800
1,000
1,200
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(
%
)
(
R
s

m
n
)
Operating profit Operating Margins (RHS)


13
La Opala RG
Exhibit 28: 2.4x increase in PAT over FY14-17E

Source: Company, Centrum Research Estimates



















10
8 28 93 127 229 300 404 500 722
(78.1)
(18.6)
240.1
236.8
36.2
80.2
30.9
34.7
24.0
44.4
(100)
(50)
0
50
100
150
200
250
300
0
100
200
300
400
500
600
700
800
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(
%
)
(
R
s

m
n
)
Adj Net Profit % Growth


14
La Opala RG
Valuation
Market leadership in the fast growing category, strong brand presence, healthy momentum of 24.8%
revenue and 34% PAT CAGR over FY14-17E, increasing margins, strong balance sheet with FCF
generation and improving return ratios make La Opala an attractive bet in the Indian consumer
segment. The stock is attractively positioned against peers on PEG basis where it is currently trading at
FY16E PEG of 0.65x. The stock is currently trading at 23.7x and 19.1x FY15E and FY16E respectively. We
initiate coverage on the stock with a target price of Rs1270 (22x Sept 2016E EPS of Rs57.7) and 0.9x
PEG given that full benefit of the capacity expansion would come only in FY17.
Exhibit 29: 1 year forward EV/EBITDA chart Exhibit 30: 1 year forward P/E chart


Source: Bloomberg, Company, Centrum Research Estimates Source: Bloomberg, Company, Centrum Research Estimates
Exhibit 31: P/B vs RoE Exhibit 32: Earnings growth vs PE

Source: Bloomberg, Company, Centrum Research Estimates Source: Bloomberg, Centrum Research
Exhibit 33: Comparative Valuations
Company
Mkt Cap
(Rs mn)
CAGR FY14-FY16E (%) EBITDA Margin (%) PE (x) EV/EBITDA (x) RoE (%) Div Yield (%)
Rev. EBITDA PAT FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E
LA Opala RG* 9,579 22.8 28.5 29.2 28.6 30.4 31.3 32.0 23.7 19.1 19.3 14.9 11.9 34.9 35.4 33.3 0.6 0.7 0.9
Kajaria Ceramics* 39,432 21.3 24.2 29.8 15.2 15.7 15.9 31.3 24.7 19.5 14.9 12.6 10.0 28.3 26.7 26.2 0.7 0.9 1.1
Havells India 146,546 10.3 17.0 24.9 9.6 10.4 10.8 32.8 24.5 21.1 15.0 15.9 13.8 28.7 31.1 30.0 1.3 1.4 1.6
Berger Paints* 98,438 14.9 18.3 21.5 11.1 11.4 11.8 39.5 34.4 26.7 23.3 20.2 16.2 24.1 23.6 25.8 0.8 0.9 1.1
VIP Industries 15,100 15.8 40.1 30.5 8.5 10.6 12.4 26.2 21.8 15.3 18.0 12.9 9.4 21.2 22.8 29.2 1.6 2.3 3.3
TTK Prestige 41,539 17.9 24.5 22.9 12.4 13.4 13.8 37.2 29.5 24.4 22.0 NA NA 22.8 21.9 22.4 0.5 0.7 0.9
Page Industries 82,622 27.6 26.6 28.8 21.4 20.9 21.1 53.7 41.6 32.6 29.4 NA NA 61.2 58.4 55.6 0.7 1.1 1.3
Astral Polytechnik 38,114 26.2 26.1 38.5 14.5 14.4 14.5 49.4 33.9 25.8 17.4 19.9 16.0 27.7 28.7 28.4 0.1 0.1 0.3
Bajaj Electricals 33,742 17.1 128.1 NA 2.0 7.1 7.7 (634.9) 20.2 14.8 39.0 NA NA (0.7) 21.2 23.7 0.6 0.9 1.2
Whirlpool of India 40,542 17.8 22.3 25.1 7.8 7.9 8.4 33.0 26.8 21.1 12.5 NA NA 18.1 18.1 19.3 0.0 0.0 0.0
Relaxo Footwear 22,828 18.9 19.1 28.0 12.2 12.1 12.2 34.8 28.2 22.2 13.1 NA NA 26.7 25.1 27.4 0.1 0.4 0.4
Symphony 34,737 25.9 29.1 30.6 23.6 24.0 24.8 38.3 29.9 22.4 29.3 23.4 23.4 36.7 37.8 39.0 0.9 1.4 1.7
Source: Bloomberg consensus, Companies; *Centrum Research Estimates



0
2
4
6
8
10
12
14
16
O
c
t
-
0
7
F
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b
-
0
8
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EV/EBITDA Mean
Mean + Std Dev Mean - Std Dev
0
20
40
60
80
O
c
t
-
0
7
F
e
b
-
0
8
J
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1
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-
1
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-
1
4
P/E Mean
Mean + Std Dev Mean - Std Dev
0
2
4
6
8
10
18.0 23.0 28.0 33.0 38.0
P
/
B

F
Y
1
6
E
ROE FY16E
Kajaria Berger TTK Prestige Astral Poly Relaxo
Havells VIP Ind LA Opala Symphony Whirlpool
La Opala
5
10
15
20
25
30
35
22.0 24.0 26.0 28.0 30.0 32.0 34.0
P
/
E

F
Y
1
6
E
Earnings CAGR (FY14-16)
Kajaria Berger TTK Prestige Relaxo Havells
VIP Ind Page Ind LA Opala Symphony Whirlpool
La Opala


15
La Opala RG
Exhibit 34: Quarterly Financials
Y/E Mar (Rs mn) Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14
Total Income 270 371 502 399 322 398 570 489


COGS 92 62 100 73 87 90 123 96
Staff cost 36 49 54 53 46 51 62 59
Admin & other expenses 38 63 58 61 39 42 57 77
Power 38 63 74 67 47 54 70 72
A&P Expenses 11 39 69 29 21 48 91 46
Total Expenditure 215 276 356 283 240 286 403 351


EBITDA 55 95 145 116 82 113 167 138
Depreciation 11 15 15 14 15 18 19 19
EBIT 44 80 131 102 67 95 148 119
Interest 8 12 11 10 10 11 8 4
Other Income 4 2 3 1 2 2 5 2
Exceptional Item 0 0 0 0 0 0 0 0
PBT 39 70 122 93 60 86 145 117
Total tax 11 25 30 30 15 27 34 32
Reported PAT 28 45 93 63 45 59 110 85
Adj PAT 28 45 93 63 45 59 110 85


Growth %


Revenue 11.4 19.1 71.7 31.2 19.4 7.3 13.6 22.4
EBIDTA 1.4 26.0 82.5 91.7 49.3 18.4 14.9 18.6
Adj PAT 14.5 14.3 110.5 227.9 61.1 31.9 18.8 34.7


Margins %


Gross Margin 65.9 83.3 80.0 81.8 72.9 77.4 78.5 80.3
EBIDTA 20.4 25.6 29.0 29.2 25.5 28.2 29.3 28.3
EBIT 16.2 21.6 26.0 25.5 21.0 23.8 26.0 24.4
Adj PAT 10.4 12.0 18.5 15.9 14.0 14.8 19.4 17.5
Source: Company, Centrum Research
Exhibit 35: Assumptions
Assumptions FY12 FY13 FY14 FY15E FY16E FY17E
Volume Growth % 18.5 30.0 14.0 16.0 22.0 27.0
Source: Company, Centrum Research Estimates
Exhibit 36: Sensitivity Analysis
Sensitivity Analysis - FY16E EPS
Gross Margins (%)
-2% -1% Base 1% 2%
V
o
l
u
m
e

G
r
o
w
t
h

-2% 41.3 43.1 44.9 46.7 48.5
-1% 42.4 44.2 46.1 47.9 49.7
Base 43.5 45.4 47.2 49.1 50.9
1% 44.7 46.5 48.4 50.2 52.1
2% 45.8 47.6 49.5 51.4 53.2
Source: Centrum Research Estimates




16
La Opala RG
Key Risks
Removal of anti-dumping duty
Removal of anti-dumping duty by the Government of India which was imposed in August 2011 for 5
years in the range of 41-110% from China and 36.7% from UAE could increase competition and put
pressure on realisations. Organised and unorganised imports continue to account for more than 50%
of the market in India.
Exhibit 37: Anti-dumping duty across different countries
Sr No Country Producer Exporter Rate of duty (%)
1 China PR M/s WenzhouHuishunda Industrial Trade Co. Ltd. 41.61
2 China PR Any other combination of producer/exporter 110.17
3 UAE Any producer Any exporter 36.73
Source: GoI-Ministry of Finance, Centrum Research
Delay in capex
The company has been able to grow aggressively on the back of timely capex. Any delay in new capex
could impact volume growth given that by FY16 the company would reach its peak sales.
Reducing consumer demand
Moderation in consumer spending could impact volume growth given that opalware is a replacement
product and not a necessity. Downtrading to cheaper substitutes could further impact margins.



17
La Opala RG
Exhibit 38: Shareholding pattern (%)

Q4FY14 Q3FY14 Q2FY14 Q1FY14
Promoter 68.2 68.1 68.1 68.1
FIIs 5.5 4.9 3.8 0.1
DIIs 2.2 1.9 1.9 1.9
Others 24.2 25.1 26.2 29.9
Source: BSE


Company Background
La Opala RG promoted by Sushil & Ajit Jhunjhunwala is
headquartered in Kolkata and is a manufacturer of opalware
and crystalware products in India. The company has two
manufacturing plants in Madhupur, Jharkhand and Sitarganj,
Uttarakhand with total capacity of 13,000 MT. In started
manufacturing crystalware in 1996 with a tie-up with Doosan
Glass, South Korea which was later discontinued.
Exhibit 39: Milestones
1988 Pioneering in Opal Glass technology in India, the first Opal Glass plant was set up at Madhupur, Jharkhand
1991 La Opala earned the honor to be the first exporter of Opalware
1995 La Oplala became the first Public Limited tableware Company
1996 Pioneered 24% Lead Crystal Glassware technology in India and set up the first Crystal Glass plant at Madhupur, Jharkhand
1996 Launched Indias first 24% Lead Crystal Glassware, under the brand name Solitaire
1997 Became the first Indian company to export 24% Lead Crystal tableware
1999 The merger of La Opala Glass Ltd ,with Radha Glass & Industries Ltd, forming La Opala RG Ltd
2005 Received the honors of recognition as Export House from the Government of India
2007 First Indian company to supply 24% Lead Crystal Glassware to world renowned Rosenthal
2007 Fully automatic state-of-the-art plant set up at Sitarganj, Uttarakhand, to produce world class Opal Glass tableware
2008 Witnessed the launch of Diva , the hi-tech, world class opal brand in the premium segment
2012 The company completed the major expansion plan at their Sitarganj, Uttarakhand plant
Exhibit 40: Board of Directors
Name Designation Profile
Mr A C Chakrabortti Chairman
He was appointed as the Chairman and Non-executive Director in 1994. He is the fellow
member of the Institute of Chartered Accountants in England & Wales and India. He is
formerly, Senior Partner of S R Batliboi & Co., Chartered Accountants, Chairman of Ernst &
Young, President of ICAI and a Governing Committee Member of International Federation
of Accountants. He is also the Chairman of Peerless Funds Management Co. Ltd., Grindwell
Norton Ltd. and also on the Boards of numerous prominent companies.
Mr Sushil Jhunjhunwala Vice Chairman & Managing Director
He is the Promoter and Managing Director of the Company and has over 40 years of
specialisation in the Glass Industry. He has held important honorary positions in many
organisations that include, the President of All India Glass Manufacturers Federation,
President of Society of Glass Technology (Indian Section) and President of Calcutta
Chamber of Commerce. He is also a Non-executive Director of M/s RSWM Limited and M/s
BSL Limited.
Mr Ajit Jhunjhunwala Joint Managing Director
He is the Promoter and Dy Managing Director of the Company. He has over 20 years of
experience in the Glass Industry. He is the former President of Eastern India Glass
Manufacturers Association and Committee Member of Confederation of Indian Industries
(Marketing Committee).
Ms Nidhi Jhunjhunwala Executive Director
She was appointed as an Executive Director on the Board in 2010. She is responsible for the
marketing, planning and product designing of the Company. She is an active member of
Ladies Study Group, Indian Chamber of Commerce.
Mr G Narayana Non-Executive Director
He was appointed as a Non-executive Director in 1996. He has over 45 years of experience
in the field of Engineering, General Management, Human Relations, developing leaders and
in teaching. He has authored many path making books on management and leadership. At
present he is a Chairman Emeritus of Excel Industries Limited and Chairman of M/s Punjab
Chemicals & Pharmaceuticals Limited.
Mr Shakir Ali Non-Executive Director
He was appointed as a Non-executive Director in 1987. He is a reputed lawyer and
specialises in Industrial & HR Relations. He is associated with many companies of repute,
such as, M/s Century Ply Limited and M/s Manaksia Group of Industries
Mr Arun Churiwal Non-Executive Director
He was appointed as a Non-executive Director in 2004. He has over 40 years of experience
in the segments of textiles and agro products. He is currently the Managing Director of M/s
RSWM Limited and Chairman & Managing Director of M/s BSL Limited, a part of M/s LNJ
Bhilwara Group. He has held many important positions of honour in many organisations
such as President of Merchants Chamber of Commerce, Kolkata, Chairman of Indian
Woolen Mills Federation, Mumbai and President of Mewar Chamber of Commerce &
Industry Bhilwara, Rajasthan.
Mr Rajiv Gujral Non-Executive Director
He was appointed as a Non-executive Director in 2007. He has been associated with the
Tata Group for over 38 years and has been in senior management positions with Taj Group
of Hotels. Presently he is the CEO of Tata International / Taj Hotels JV for Africa. He is also on
the Board of M/s Peerless Hotels Ltd. and Ex Board Members of Taj International Hotels (HK)
Ltd. and Oriental Hotels International (HK) Ltd.
Source: Company


18
La Opala RG
Financials
Exhibit 41: Income Statement
Y/E March (Rs mn) FY13 FY14 FY15E FY16E FY17E
Net Sales 1,539 1,779 2,146 2,671 3,459
Growth (%) 33.8 15.6 20.6 24.5 29.5
Employee Cost 189 218 253 311 379
%of Sales 12.3 12.2 11.8 11.6 11.0
Material cost 327 403 481 593 769
%of Sales 21.2 22.7 22.4 22.2 22.2
Admin & other expenses 612 658 770 943 1,203
% of sales 39.7 37.0 35.9 35.3 34.8
EBIDTA 412 500 642 825 1,108
EBIDTA Margins (%) 26.8 28.1 29.9 30.9 32.0
Depreciation 56 70 81 108 114
Interest expenses 42 33 20 44 18
PBT for operations 314 397 541 672 975
Other income 10 11 12 13 14
Exceptional item - - - - -
PBT 325 408 553 685 990
Provision for tax 96 108 149 185 267
Effective tax rate (%) 29.5 26.5 27.0 27.0 27.0
Net Profit 229 300 404 500 722
Adj Net Profit 229 300 404 500 722
Source: Company, Centrum Research Estimates
Exhibit 42: Key Ratios
Y/E March FY13 FY14 FY15E FY16E FY17E
Growth ratios (%)
Revenues 33.8 15.6 20.6 24.5 29.5
EBIDTA 53.4 21.3 28.5 28.5 34.3
Adj Net Profit 80.2 30.9 34.7 24.0 44.4
Margin ratios (%)
EBIDTA Margins 26.8 28.1 29.9 30.9 32.0
PBIT Margins 23.1 24.2 26.1 26.8 28.7
PBT Margins 21.1 22.9 25.8 25.7 28.6
PAT Margins 14.9 16.8 18.8 18.7 20.9
Return Ratios (%)
ROCE 28.7 28.9 30.4 29.0 31.6
RoNW 35.3 34.9 35.4 33.3 36.3
RoIC 26.7 28.1 30.2 26.3 33.0
Turnover Ratios (Days)
Inventory period 73 58 75 100 100
Collection period 44 44 45 45 45
Payment period 56 34 50 50 50
Net Working Capital 70 76 78 102 103
Solvency Ratio
Debt-equity 0.3 0.1 0.1 0.2 0.1
Net Debt-equity 0.2 0.1 -0.0 0.1 -0.1
Current ratio 1.9 2.9 2.6 2.9 3.1
Interest coverage ratio 8.5 13.1 28.2 16.1 53.9
Dividend
Dividend (Rs) 3.5 5.0 6.5 8.0 11.5
Dividend yield (%) 0.4 0.6 0.7 0.9 1.3
Dividend Payout (%) 19.0 20.7 20.0 19.8 19.7
Per Share (Rs)
Basic (end pt) EPS - Rep 21.6 28.3 38.1 47.2 68.2
FDEPS (Adjusted) 21.6 28.3 38.1 47.2 68.2
Basic (end pt) EPS - Adj 21.6 28.3 38.1 47.2 68.2
FDEPS (Reported) 21.6 28.3 38.1 47.2 68.2
CEPS 26.8 34.9 45.7 57.4 78.9
Book Value 69.9 92.3 122.8 160.6 215.4
Valuations (x)
PER 41.9 32.0 23.7 19.1 13.3
P/BV 12.9 9.8 7.4 5.6 4.2
EV/EBIDTA 23.6 19.3 14.9 11.9 8.5
EV/Sales 6.3 5.4 4.4 3.7 2.7
M-cap/Sales 6.2 5.4 4.5 3.6 2.8
Source: Company, Centrum Research Estimates
Exhibit 43: Balance Sheet
Y/E March (Rs mn) FY13 FY14 FY15E FY16E FY17E
Share Capital 106 106 106 106 106
Reserves & Surplus 635 872 1,195 1,596 2,176
Total Shareholders Funds 741 978 1,301 1,702 2,282

Loan Funds 208 142 142 342 142
Deferred Tax Liabilities 75 94 94 94 94
Total Capital Employed 1,024 1,214 1,537 2,138 2,518

Fixed Asset
Gross Block 989 1,152 1,352 1,802 1,902
Less:- Accumulated Depreciation 351 421 502 610 724
Net Block 639 731 850 1,192 1,178
Capital WIP 9 22 50 50 50
Total fixed assets 647 753 900 1,242 1,228
Investments 75 1 1 1 1

Inventory 308 283 441 732 948
Debtors 186 215 265 329 426
Loans & advances 68 81 107 134 173
Other Current Assets 24 24 24 24 24
Cash & bank balances 8 91 179 145 315
Total current assets 594 694 1,015 1,364 1,886

Current liabilities and provisions 292 235 380 469 597
Net current assets 302 459 636 895 1,289
Total 1,024 1,214 1,537 2,138 2,518
Source: Company, Centrum Research Estimates
Exhibit 44: Cash Flow
Y/E March (Rs mn) FY13 FY14 FY15E FY16E FY17E
CF from operations
Profit before tax 325 408 553 685 990
Depreciation & amortisation 56 70 81 108 114
Others 66 22 8 31 4
CF before WC changes 446 500 642 825 1,108
Working capital changes (40) (75) (88) (293) (224)
Cash inflow from operations 406 425 553 532 884
Income tax paid (86) (90) (149) (185) (267)
Cash from Operations 320 335 404 347 617
Cash from investing
Capex (224) (176) (228) (450) (100)
Investments (74) 74 0 0 0
Others 1 11 12 13 14
Cash from investing (297) (91) (216) (437) (86)
Cash from financing
Borrowings/ repayments 46 (66) 0 200 (200)
Interest paid (36) (33) (20) (44) (18)
Equity/ Share Capital 0 0 0 0 0
Dividend & Dividend Tax (28) (62) (81) (99) (143)
Cash from financing (19) (161) (100) 56 (361)

Net change in cash 4 83 88 (34) 170
Source: Company, Centrum Research Estimates


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La Opala RG
Financials - Historical
Exhibit 45: Income Statement
Y/E March (Rs mn) FY08 FY09 FY10 FY11 FY12
Net Sales 509 620 750 964 1,150
Growth (%) 3 22 20.9 28.6 19.3
Employee Cost 77 96 103 134 159
%of Sales 15.2 15.4 13.8 13.9 13.8
Material cost 143 75 182 247 251
%of Sales 28.2 12.2 24.3 25.6 21.8
Admin & other expenses 220 345 332 371 472
% of sales 43.3 55.7 44.3 38.4 41.0
EBIDTA 68 104 132 212 269
EBIDTA Margins (%) 13.3 16.8 17.6 22.0 23.3
Depreciation 35 46 43 45 46
Interest expenses 19 41 46 35 41
PBT for operations 14 16 43 132 182
Other income 2 1 1 2 2
Exceptional item - - - - (1)
PBT 16 17 45 134 183
Provision for tax 6 9 17 41 57
Effective tax rate (%) 37.6 52.3 38.2 30.3 31.0
Net Profit 10 8 28 93 126
Adj Net Profit 10 8 28 93 127
Source: Company, Centrum Research
Exhibit 46: Key Ratios
Y/E March FY08 FY09 FY10 FY11 FY12
Growth ratios (%)
Revenues 3.0 21.9 20.9 28.6 19.3
EBIDTA (21.9) 53.8 27.1 60.8 26.4
Adj Net Profit (78.1) (18.6) 240.1 236.8 36.2
Margin ratios (%)
EBIDTA Margins 13.3 16.8 17.6 22.0 23.3
PBIT Margins 6.4 9.3 11.9 17.4 19.4
PBT Margins 3.2 2.8 6.0 13.9 15.9
PAT Margins 2.0 1.3 3.7 9.7 11.0
Return Ratios (%)
ROCE 3.3 3.5 6.6 15.3 21.0
RoNW 2.8 2.3 7.5 22.3 25.1
RoIC 2.9 3.2 6.7 16.8 20.0
Turnover Ratios (Days)
Inventory period 88.7 147.7 112.8 86 83
Collection period 70.7 70.7 62.8 65 52
Payment period 67.3 51.7 45.9 77 63
Net Working Capital 100.4 182.8 143.8 72 84
Solvency Ratio
Debt-equity 0.9 1.2 1.0 0.4 0.3
Net Debt-equity 0.9 1.2 1.0 0.4 0.3
Current ratio 2.3 4.0 3.6 1.7 2.0
Interest coverage ratio 1.7 1.4 1.9 4.8 5.5
Dividend
Dividend (Rs) 0.7 0.0 0.7 1.5 2.0
Dividend yield (%) 0.1 0.0 0.1 0.2 0.2
Dividend Payout (%) 92.9 0.0 33.6 19.8 19.5
Per Share (Rs)
Basic (end pt) EPS - Rep 0.9 0.8 2.6 8.8 11.9
FDEPS (Adjusted) 0.9 0.8 2.6 8.8 12.0
Basic (end pt) EPS - Adj 0.9 0.8 2.6 8.8 12.0
FDEPS (Reported) 0.9 0.8 2.6 8.8 11.9
CEPS 4.2 5.1 6.7 13.0 16.2
Book Value 33.4 34.2 35.9 42.9 52.5
Valuations (x)
PER 957.5 1,176.6 346.0 102.8 75.5
P/BV 27.1 26.5 25.2 21.0 17.2
EV/EBIDTA 146.5 96.4 75.4 45.9 36.3
EV/Sales 19.5 16.2 13.3 10.1 8.5
M-cap/Sales 18.8 15.4 12.8 9.9 8.3
Source: Company, Centrum Research Estimates
Exhibit 47: Balance Sheet
Y/E March (Rs mn) FY08 FY09 FY10 FY11 FY12
Share Capital 106 106 106 106 106
Reserves & Surplus 248 256 274 349 451
Total Shareholders Funds 354 362 380 455 557

Loan Funds 334 446 390 186 161
Deferred Tax Liabilities 41 47 67 62 57
Total Capital Employed 729 856 838 702 774

Fixed Asset
Gross Block 746 754 777 797 820
Less:- Accumulated Depreciation 170 214 256 300 334
Net Block 576 540 520 497 487
Capital WIP 1 0 10 8 20
Total fixed assets 577 540 530 506 506
Investments 1 1 1 1 1

Inventory 124 251 232 227 260
Debtors 99 120 129 171 163
Loans & advances 32 24 42 29 72
Other Current Assets - 14 8 13 18
Cash & bank balances 11 4 11 6 4
Total current assets 265 413 423 446 517

Current liabilities and provisions 114 98 116 250 250
Net current assets 151 314 306 196 267
Total 729 856 838 702 774
Source: Company, Centrum Research
Exhibit 48: Cash Flow
Y/E March (Rs mn) FY08 FY09 FY10 FY11 FY12
CF from operations
Profit before tax 16 17 45 134 183
Depreciation & amortisation 35 46 43 45 46
Others 16 59 47 36 42
CF before WC changes 67 123 135 215 271
Working capital changes (8) (157) 14 (28) (65)
Cash inflow from operations 59 (34) 149 187 206
Income tax paid (7) (3) (9) (29) (63)
Cash from Operations 52 (37) 141 158 143
Cash from investing
Capex (160) (16) (35) (21) (47)
Investments 7 0 0 0 0
Others 0 0 0 0 1
Cash from investing (153) (15) (35) (21) (47)
Cash from financing
Borrowings/ repayments 134 113 (56) (99) (39)
Interest paid (19) (41) (40) (26) (24)
Equity/ Share Capital 0 0 0 0 0
Dividend & Dividend Tax (17) (26) (3) (18) (34)
Cash from financing 98 46 (99) (143) (98)

Net change in cash (3) (7) 7 (5) (1)
Source: Company, Centrum Research


20
La Opala RG

Appendix A
Disclaimer
Centrum Broking Limited (Centrum) is a full-service, Stock Broking Company and a member of The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Ltd. (NSE). Our holding company, Centrum Capital Ltd, is an investment banker and an underwriter of securities. As a group Centrum
has Investment Banking, Advisory and other business relationships with a significant percentage of the companies covered by our Research Group. Our
research professionals provide important inputs into the Group's Investment Banking and other business selection processes.
Recipients of this report should assume that our Group is seeking or may seek or will seek Investment Banking, advisory, project finance or other
businesses and may receive commission, brokerage, fees or other compensation from the company or companies that are the subject of this
material/report. Our Company and Group companies and their officers, directors and employees, including the analysts and others involved in the
preparation or issuance of this material and their dependants, may on the date of this report or from, time to time have "long" or "short" positions in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Centrum or its affiliates do not own 1% or more in the
equity of this company Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to
our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. We may have earlier issued or may issue in future reports on the
companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you
should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We and our Group may rely on
information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or
affiliates of Centrum. Centrum or its affiliates do not make a market in the security of the company for which this report or any report was written.
Further, Centrum or its affiliates did not make a market in the subject companys securities at the time that the research report was published.
This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy,
purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is for the general
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will not treat recipients as clients by virtue of their receiving this report. It does not constitute a personal recommendation or take into account the
particular investment objectives, financial situations, or needs of individual clients. Similarly, this document does not have regard to the specific
investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities
discussed in this report may not be suitable for all investors. The securities described herein may not be eligible for sale in all jurisdictions or to all
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or dealings in securities by nationals of other countries. The appropriateness of a particular investment or strategy will depend on an investor's
individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for
his/ her/their particular circumstances and, if necessary, seek professional/financial advice. Any such person shall be responsible for conducting
his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved
in the securities forming the subject matter of this document.
The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates
on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase
over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company.
These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting
principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not
regard the inclusion of the projections and forecasts described herein as a representation or warranty by or on behalf of the Company, Centrum, the
authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you
should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the
assumptions underlying such projections and forecasts.
The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may
realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital
may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
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Certain transactions including those involving futures, options, and other derivatives as well as non-investment-grade securities give rise to substantial
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This report/document has been prepared by Centrum, based upon information available to the public and sources, believed to be reliable. No
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This report or recommendations or information contained herein do/does not constitute or purport to constitute investment advice in publicly accessible
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hereof may not be printed, sold or distributed without the written consent of Centrum.
The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions. Neither Centrum nor its directors, employees, agents or representatives shall be liable for any
damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with
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This document does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything
contained herein shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you
solely for your information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other person. The
distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves
about, and observe any such restrictions. By accepting this report, you agree to be bound by the fore going limitations. No representation is made that
this report is accurate or complete.


21
La Opala RG

The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking
and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this
report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection.
This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its
directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its
directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or
any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection
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affiliates have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this
report for service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a
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As per the declarations given by them, Mr. Ankit Kedia, research analyst and and/or any of his family members do not serve as an officer, director or any
way connected to the company/companies mentioned in this report. Further, as declared by him, he has not received any compensation from the above
companies in the preceding twelve months. He does not hold any shares by him or through his relatives or in case if holds the shares then will not to do
any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals are our employees and are paid a
salary. They do not have any other material conflict of interest of the research analyst or member of which the research analyst knows of has reason to
know at the time of publication of the research report or at the time of the public appearance.
While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum
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Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
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not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any
transaction to any U.S. person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this
document may be distributed in Canada or used by private customers in United Kingdom.
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Disclosure Document for Capital Market and Derivatives Segments as prescribed by Securities and Exchange Board of India before investing in Indian
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Rating Criteria

Rating Market cap < Rs20bn Market cap > Rs20bn but < 100bn Market cap > Rs100bn
Buy Upside > 25% Upside > 20% Upside > 15%
Hold Upside between -25% to +25% Upside between -20% to +20% Upside between -15% to +15%
Sell Downside > 25% Downside > 20% Downside > 15%

Member (NSE, BSE, MCX-SX), Depository Participant (CDSL) and SEBI registered Portfolio Manager
Registration Nos.
CAPITAL MARKET SEBI REGN. NO.: BSE: INB011454239, NSE: INB231454233
DERIVATIVES SEBI REGN. NO.: NSE: INF231454233 (TRADING & SELF CLEARING MEMBER)
CDSL DP ID: 12200. SEBI REGISTRATION NO.: IN-DP-CDSL-661-2012
PMS REGISTRATION NO.: INP000004383
MCX SX (Currency Derivative segment) REGN. NO.: INE261454230
Website: www.centrum.co.in
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