SRF Ltd.

At the Lower End of Valuations Cycle

Your success is our success

September 11, 2013

Rating

Not Rated

CMP

SRFs core growth is linked to the economys growth. Rupee

depn mitigates the business risks by making competing
imports expensive and exporting products attractive

SRF is in the middle of a high capex cycle, with Phase-1

beginning to pay off. High capex to continue with rise in debt
in FY14E, which should start paying off fully FY15 onwards

At CMP, SRF trades at P/BV of 0.4x & P/E of 4x. No cashflows

from CERs sale & economic concerns in the CMP, return on
new investments would drive the next wave of valuations

Target Price

Rs151

NA

EPS Chg FY14E/FY15E (%)

NA

Target Price change (%)

NA

Nifty

5,913

Sensex

19,997

Price Performance
(%)

1M

Absolute

15

-4

-20

-32

-8

-22

-39

Rel. to Nifty

3M

6M 12M

Source: Bloomberg

Relative price chart

Rs

200

-20

150

-40

100

-60

50

-80

0
Jan-12

Strong cash generation base from tyre-cord & refrigerant

business segments, while a promising growth opportunity
from flouro specialty chemicals

Previous Reco

Not Rated

250

Mar-12

May-12

Jul-12

SRF Ltd (LHS)

Sep-12

Nov-12

-100
Jan-13

Rel to Nifty (RHS)

Source: Bloomberg

Stock Details
Sector

Miscellaneous
SRF IB

Bloomberg

574

Equity Capital (Rs mn)

Face Value(Rs)

10

No of shares o/s (mn)

57
240/ 126

52 Week H/L
Market Cap (Rs bn/USD mn)

9/ 137

Daily Avg Volume (No of sh)

46,692

Daily Avg Turnover (US$mn)

0.1

Shareholding Pattern (%)

Jun'13 Mar'13 Dec'12
Promoters
FII/NRI
Institutions
Private Corp
Public

51.8

50.7

50.7

7.1

7.6

7.8

13.0

12.8

12.7

3.4

4.7

5.0

24.8

24.1

23.8

Source: Bloomberg

SRFs core business segments in oligopoly market, dominated by the

company
SRFs revenues are driven by two business segments: nylon tyre-cord fabric (used in
the manufacture of tyres for commercial vehicles) and refrigerants (used in industrial
cooling, commercial air-conditioning and passenger car cooling). Both segments have
limited Indian suppliers and are dominated by SRF, with a market share of over 40%.
The end-usage of these segments is mainly in B2B. Hence, it has strong linkage to
business performances in Indias economy, though the base requirement for
replacement demand continues to remain.

Rupee depreciation to benefit SRF across business segments

Pricing of goods sold by SRF in India is linked to import pricing, while its new
investments are in export-oriented products. Depreciation of the rupee has a positive
impact on both these segments, wherein its Indian sales obtain higher pricing, while
export-oriented specialty chemicals become price attractive. Although raw materials
required for the businesses are also linked to the currency, the rise in pricing will still be
higher than the increase in costs.

Capex of over Rs 20bn should reap yields FY15 onwards

SRF has incurred a capex of Rs14bn over last 2 years, of which Rs7bn is capitalized. It
has planned a capex of Rs6bn for FY14E. The capex was incurred towards building
packaging capacities in Thailand and South Africa, besides a chemical complex in India.
These capital expenditures would start accruing cashflows beginning FY15, considering
that completion and initial lag towards smooth operations.

Valuations at lower end of the investment cycle,

At P/BV of 0.45x & P/E of 3.6x on FY13 financials, we believe, SRF is trading at the
lower end of the valuations cycle. The return ratios are in single-digit post adjusting the
non-recurring income from CERs monetizing. We believe the high capex incurred would
help the company to reap full benefits in FY15, which should revive return ratios and
also valuation multiples.

YEMar

Tejas Sheth
tejas.sheth@emkayglobal.com
+91-22-66242482

Emkay Global Financial Services Ltd.

(Rsmn)

Financial Snapshot (Consolidated)

Net
Sales

EBITDA
(Core)

(%)

EPS
APAT

EPS

(Rs) % chg

RoE

EV/

(%)

P/E

EBITDA

P/BV

0.0

32.4

2.6

2.5

0.7

83.6

48.7

35.9

1.8

1.7

0.6

66.1

-20.9

23.3

2.2

2.2

0.5

41.1

-37.9

12.9

3.6

3.4

0.4

FY10A

25,725

7,067

27.5

3,259

56.2

FY11A

35,077

9,351

26.7

4,846

FY12A

40,044

8,348

20.8

3,832

FY13A

37,851

6,164

16.3

2,381

Visit Note

Emkay

SRF Ltd

Visit Note

Strong Legacy, High Industry Dominance

SRF, the erstwhile Shri Ram Fibres, was incorporated in 1970 as a tyre-cord manufacturing
company, with its first plant in Manali, near Chennai. In late 1980s, the company began to
manufacture refrigerants, which is currently its second-largest business segment. It also
ventured into manufacturing of packaging films, commonly known as BOPET and BOPP.
Recently, it has ventured into research and development of fluorine-based specialty
chemicals, which have usage in pharmaceuticals and agro chemicals.
At present, SRF has operations in India, wherein its manufactures technical fabrics, fluorine
-based chemicals and packaging films. Recently, it has set up shops in South Africa and
Thailand to manufacture BOPP and BOPET, respectively. The company is also setting up a
huge chemical complex in Dahej, which will have a plant for manufacturing R134A (a
refrigerant) and fluorine-based specialty chemical.
Exhibit 1: SRF Business Structure

SRF

Packaging Films

Chemicals

Technical Fabrics
Tyre Cord

Flourochemicals
(Refrigerants)

BOPP

Belting Fabrics

BOPET
Flouro Specialities

Laminated & Coated

Films
Source: Company, Emkay Research

Exhibit 2: SRF Business Segments

PRODUCT

APPLICATION

MKT. STAND

KEY COMPETITORS

CAPACITY

ENTRY BARRIER

38% Domestic

Century Enka

40,000 MT

High

1,15,000 MT

High

Technical Fabrics
Nylon Tyre Cord

M&HCV Tyre

2nd Largest Globally

Belting Fabic

Mining, Cement

60% Domestic Mkt. Share

Coated & Laminated Fabrics

Hoardings

NA

2nd Largest Globally

NA

Industrial Yarn Business

Chemicals
Fluorochemicals

Refrigeration

40% Domestic Mkt. Share

Gujarat Fluorochemicals

Fluorospecialities

Agro & Pharma

NA

NA

Engineering Plastics

Automobiles parts

Supreme Industries

Packaging Films

FMCG Packaging

Jindal Polyfilms, Polyplex

High
Medium
Low

Source: Company, Emkay Research

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Technical Textiles Steady Cash Generator

SRF started its business as a manufacturer of Nylon Tyre Cord Fabrics (NTCF), now part
of the Technical Textiles segment. The company is the oldest and the largest manufacturer
of NTCF in India, with the segment contributing nearly 40% of its topline. Over the years,
SRF also added more product lines to this segment, viz., belting fabrics, laminated and
coated fabrics.

Nylon Tyre Cord Fabric (NTFC)

NTCF are synthetic fabrics used in the manufacture of tyres, which provide strength and
reinforce the tyres shape in motion. Without this a tyre would be weak and flexible.
Indias current market size is 110,000 tons, of which 25% is imported, mainly from China.
The balance 75% is supplied from Indian manufacturers, of whom 42% (~44,000 tons) is
supplied by SRF and the rest by its competitor Century Enka. Pricing of the product is on
import parity of landed goods, though the billing is in INR.
Demand for NTFC is directly linked to production and demand of commercial vehicle tyres
in India, considering that more than 95% NTFC produced in the country is used in tyre
manufacturing. Demand for Medium & Heavy Commercial Vehicles (M&HCV) has a direct
linkage to the performance of the economy, leading to more trade, increased transport,
higher demand for new M&HCVs and more wear and tear of tyres, which result in
replacement demand.
Exhibit 3: Tyre Production Trend in India (000s)

Exhibit 4: SRFs Tyre Cord Sales Trend (in Mts)

20000

60000
45000

15000
30000
10000
15000

Source: Company, Emkay Research

FY13

FY12

FY11

FY10

FY09

FY08

FY07

FY06

FY05

FY04

FY03

FY02

FY12

FY11

FY10

FY09

FY08

FY07

FY06

FY05

FY04

FY03

0
FY02

5000

Source: Company, Emkay Research

The major raw material for NTCF is caprolactum, a derivative of benzene, which, in turn, is
a derivative of crude oil. Hence, the price of caprolactum is dependent on oil price
movements, though the same is passed on to buyers (industry norm). However, despite the
increase in oil prices, the price of caprolactum has remained stable due to huge
oversupply.
Exhibit 5: Caprolactum CIF China (USD / Ton)
4000
3000
2000
1000

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Oct-09

Jan-10

Jul-09

Apr-09

Oct-08

Jan-09

Jul-08

Apr-08

Jan-08

Source: Industry, Company

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Radialisation is a threat, but still far from being a concern

Globally, India is the largest market for NTFC considering most countries have moved to
newer technology of Polyester Tyre Cord Fabric or Steel Tyre Cord Fabric. No new plants
are set up for NTFC globally due to a technological shift. Indias passenger vehicle tyres
have already shifted to PTFC, unlike M&HCV tyres, which still use NTCF due to bad roads.
Exhibit 6: Cross Ply Tyre Vs Radial Tyre
Factors
Cross-Ply Tyres

Radial Tyres

Tyre Cord Fabric

Nylon

Polyester / Steel

Pricing

Cheaper

Costlier

Load Factor

Overload

Stated

Fuel Efficiency

Lower

Higher

Durability

Lower

Higher

Tubeless

Not Possible

Possible

Source: Industry, Emkay Research

To have long-term sustainability in its tyre cord business, SRF has invested in polyester
tyre cord fabric manufacturing. PTCF will replace NTCF with the increase in radialization
over the long term. SRF has invested Rs1.8bn towards capacity of 14,400 tons.
Exhibit 7: CVs Radialisation Trend in India (%)
20
15
10
5

LCVs

FY13

FY12

FY11

FY10

FY09

FY08

FY07

FY06

FY05

FY04

FY03

FY02

M&HCVs

Source: Company, Emkay Research

Competing imports keep a check on pricing; Rupee depreciation helps

Nearly 25% of the Indias NTFC demand is through imports, mainly from China.. Two
reasons keeps away the Indian tyre manufacturers from sourcing more through imports;
one, the lead time for the inventory management is high leading to higher working capital
and two, over dependency on China may stall their production if any geo-political issues
arise. The price of the NTFC in India is linked to the import parity prices and hence rupee
depreciation should help the Indian manufacturers in higher realisations.

Belting Fabrics
SRF is the largest manufacturer of belting fabrics in India and the second-largest in world,
considering its plant in South Africa. Belting fabrics have their usage in industries, mainly in
mining, cement and steel and are used for re-enforcement of conveyor belts. SRFs 50%
production is sold domestically and the rest 50% is supplied to nearly 30 countries across
the globe. Its manufacturing facility is located in Tamil Nadu. Owing to the industrial
slowdown in India and globally, the segment is also facing a slowdown, though there are
not many competitors in this business segment. The segment contributed 6% to the
companys total revenues in FY13, with a 0% YoY growth.

Laminated and Coated Fabrics

SRF manufactures coated fabrics using polyester as fabric. These fabrics find applications
in tarpaulins, agriculture, airport shades, stadium shades, etc. Laminated fabrics are a
cheaper cousin of coated fabrics. The usage of laminated fabrics is in bill boards (outdoor
advertising), car-covers, agriculture and roofing. SRF has invested Rs1.8bn towards
manufacturing of these fabrics and has a plant in Tamil Nadu. This business segment
contributed 5% to total revenues in FY13. Due to slower growth in outdoor advertising, this
segment is not expected to show any meaningful growth in the medium term.

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Chemicals High Investment, High Expected Growth

SRFs chemicals division has been a prominent contributor to growth, with huge cash
generation from the monetization of Certified Emission Reduction (CERs) under Kyoto
Protocol. We believe the Chemicals business segment is the star in the pack considering
that the future delta growth would come from this segment, and that is where the company
has incurred and is incurring a huge capex.
SRFs chemical segment is broadly categorized into: the old Refrigerants and the new
Specialty Chemicals. Both categories are the fluorine-based side of the broad chemical
pack.

Refrigerants
SRF is one of the largest manufacturers of refrigerant in India, which has application in the
industrial refrigeration, home and commercial premises, air-conditioning and automobile
cooling. The company manufactures chloroflouro carbons (CFCs) and hydro-chloroflouro
carbons (HFCFs) at Bhiwadi in Rajasthan, which meets 40% of Indias demand.
Due to the slowdown in the economy, this segment is not witnessing much growth in
demand. Refrigerants imports are regulated in India, but we believe a lot of the same is
imported through wrong representation of contents. Depreciation of the rupee would help
the company indirectly considering higher costs of imports. The company expects the next
wave of growth to come from growth in temperature-controlled logistics, wherein the need
for cold storages and reefer vehicles would lead to greater requirement of refrigerants.
Due to the Kyoto Protocol and Montreal Treaty, manufacturing of these chemicals were to
be phased out, as they affect the ozone layer. SRF was the first company in India to adhere
to the protocol, and has earned handsome cashflows by monetizing Certified Emission
Reductions (CERs) / carbon credits by phasing out over the 2006-12 period. Since 2013
the market for CERs has ceased as European Union disallowed use of CERs for
compliance purposes with effect from January 2013. In FY13, revenues from CERs stood
at Rs 2.6bn (7% of total) as against Rs4.4bn in FY12 (11% of total).

Specialty Chemicals
SRF has entered a specialty chemicals business, wherein it intends to develop
organofluorine compounds customized to customers requirements, which entails a strong
R&D base. The developed chemicals will cater to agro and pharma chemicals. The biggest
concern with this sub-segment is the predictability of the business trajectory, though the
segment has grown 100% in FY14.
Exhibit 8: Revenue Trend of Specialty Chemicals Sub-Segment (Rs mn)
3000
2250
1500
750
0
FY10

FY11

FY12

FY13

Source: Company, Emkay Research

The organofluorine compounds or carbon-fluorine bond is commonly found in

pharmaceuticals and agrochemicals. An estimated one-fifth of the pharmaceuticals contain
fluorine, including several top drugs.

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Large Chemical Complex

SRF is setting up a large chemical complex in Dahej, Gujarat, which is the hub of chemical
manufacturing in India. The company has entailed 300 acres of land from the Gujarat
government, of which it plans to utilise 100 acres for its Phase-1 development, which will
involve a capex of Rs11bn.
Phase-1 of this new complex will have plants to manufacture HCFCs, multi-purpose
specialty chemicals and generate power of 17.5MW for capital consumptions. The Rs4.0bn
of investment will add capacity of 12,500 tons to HCFCs, which will have revenue
generating capability of around Rs4.0bn. The company expects an asset turnover of 2.5x
on the capital employed towards the specialty chemicals manufacturing complex, with
operating margins of 30-35%. This leads to a payback period of 1.5 years for the
investments made in this business.
Exhibit 9: CapEx break-up at Dahej plant (Rs bn)
Particulars

Amount

HCFCs

4.0

Specialty Chemicals

5.0

17.5 MW Power Plant

1.1

Infrastructure Development

0.7

Total

10.8

Source: Company, Emkay Research

Of these planned investments, SRF has already expended and capitalized Rs2.5bn, which
involves a 4MW power plant, some infrastructure development and a plant of specialty
chemicals. The company intends to spend additional Rs6bn in FY14, which will involve a
13.5MW power plant,

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Packaging Films Tough Times, New Destinations

SRF entered the packaging films business in 1995, with an investment in a plant to
manufacture Bi-axially Oriented Poly-Ethylene Terephthalate (BOPET) films, which have
applications in small flexible packaging of FMCG products in sachets. The company has a
plant with a total capacity of 60,000 tons.
The BOPET and BOPP films market is going a through rough patch due to the curb in
manufacturing and selling of chewing tobacco and mouth-fresheners in several states. This
has led to a fall in demand, while several new plants in this segment led to huge capacities
built-up, leading to huge pressure on pricing. During the 2008-09 period when demand
outnumbered supply, the price was Rs 200/kg, which has since fallen to Rs100/kg
currently. In FY13, the packaging films business segment contributed Rs6.7bn (19%) to
total revenues with EBIT margins of 1%.
SRF has set up a BOPET plant in Thailand at an outlay of $65mn, which became
operational in Q2FY14, with a total capacity of 25600 tons. The company is also setting up
a BOPP plant in South Africa at a cost of $62mn, which will commence operations in
Q3FY14. The Thailand plant will have a total capacity of 25600 tons and an A/TO ratio of
1.2x, while South African plant will have total capacity of 27000 tons. Currently, South
Africa has a total capacity of 10,000 tons of BOPP, while the market size is 30000 tons,
which SRF intends to capture
Of the total investment of $127mn, IFC has agreed to provide finance for $85mn (LIBOR +
2.8% rate).
Exhibit 10: Packaging Segment Capacity
Capacity
MTs

Investment
USD Mn

Operational

BOPET

60000

NA

1995

Thailand

BOPET

25600

65

2013

South Africa

BOPP

26000

62

2013

Country

Product

India

Source: Company, Emkay Research

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Key Financials
Planned Capex to peak debt to Rs 18bn in FY14E
As stated above, SRF is into a capex spree in the chemicals segment in India and the
packaging segment overseas. The capex is funded through a mix of operating cashflows
and borrowings. Gross debt has increased from Rs9.7bn in FY11 to Rs15.9bn in FY13.
Debt is expected to rise by additional Rs2bn in FY14E on the back of a capex of Rs6bn. As
these investments start yielding returns, management expects debt to taper off beginning
FY15.
Exhibit 11: CapEx Trend

Exhibit 12: Gross Debt Expected to Peak in FY14E

10000

20000
17500

7500

15000
5000
12500
2500

10000

7500
FY10

FY11

FY12

FY13

FY14E

Source: Company, Emkay Research

FY10

FY11

FY12

FY13

FY14E

Source: Company, Emkay Research

RoCEs in single digits owing to high capex and lower income from CERs
SRF has incurred a capex of Rs17.1bn over the last 3 years, of which Rs6.1bn got
capitalized in FY13 and Rs 5.7bn is in CWIP. Hence, a large portion of the capex is still not
yielding returns, which have affected the companys return ratios. Also, due to lower
monetization of CERs in FY13, revenue and profitability have also taken a hit YoY. In
FY14, we understand that return ratios would be in single-digits on account of continued
capex in FY14 and steep fall in profitability due to lack of revenues from CERs. However,
FY15 should see return ratios in double-digits, as the capex starts yielding returns.
Exhibit 13: RoCEs Trend

40%
30%
20%
10%
0%
FY11
Reported RoCEs

FY12

FY13
Adj. RoCEs

Source: Company, Emkay Research, Adj. RoCEs is adjusted for CERs Income & CWIP

Emkay Research

September 11, 2013

SRF Ltd

Visit Note

Valuations Compelling and at Bottom of the Cycle

SRF is trading at compelling valuations considering that its investments in the business will
reap growth in FY15. At the CMP of Rs150, the stock is trading at P/BV of 0.45x, P/E of
3.7x and adjusted P/E of 15x (adjusting CERs Income net of tax) on FY13.
Going forward, we understand the gap in revenues due to nil CER monetization would be
filled in by growth in the high-margin specialty chemical business. Both core businesses of
SRF are at the bottom of the investment curve with higher sustainability considering the
replacement demand for its products, dominant position in the industry and rising costs of
competing imports.
We believe FY15 would be the year when all capital expenditures of the company would
begin to accrue cashflows, and hence would report better cashflows and profitability.

Emkay Research

September 11, 2013

SRF Ltd

Exhibit 14: Standalone Quarterly Summary

Rs mn
Q1FY13

Visit Note

Q2FY13

Q3FY13

Q4FY13

Q1FY14

YoY (%)

QoQ (%)

Revenue

8,122

8,037

8,889

8,182

8,249

1.6

0.8

Expenditure

6,776

6,924

6,735

6,850

6,973

2.9

1.8

83.4%

86.1%

75.8%

83.7%

84.5%

5,731

5,753

5,377

5,506

5,780

0.8

5.0

as % of sales

70.6%

71.6%

60.5%

67.3%

70.1%

Employee Cost

442

525

515

543

544

23.2

0.2

as % of sales

5.4%

6.5%

5.8%

6.6%

6.6%

603

646

843

800

649

7.6

(18.9)

7.4%

8.0%

9.5%

9.8%

7.9%

1,346

1,114

2,155

1,332

1,276

(5.2)

(4.2)

Depreciation

422

463

478

480

484

14.7

0.9

EBIT

924

651

1,676

852

792

(14.2)

(7.0)

73

40

28

292

87

19.3

(70.1)

Interest

239

247

208

152

203

(15.2)

33.4

PBT

758

443

1,496

992

677

(10.7)

(31.8)

81

105

400

355

76

677

338

1,096

637

601

(11.2)

(5.6)

(11.2)

(5.6)

98.7

(39.1)

(bps)

(bps)
(81)

as % of sales
Cost of Operations

Other expenditure
as % of sales
EBITDA

Other Income

Total Tax
Adjusted PAT
(Profit)/loss from JV's/Ass/MI

677

338

1,096

637

601

-457

415

-203

82

-164

Reported PAT

220

754

893

719

438

Reported EPS

11.7

5.8

18.9

11.0

10.4

APAT after MI
Extra ordinary items

Margins (%)
EBIDTA

16.6

13.9

24.2

16.3

15.5

(110)

EBIT

11.4

8.1

18.9

10.4

9.6

(177)

(81)

PBT

9.3

5.5

16.8

12.1

8.2

(113)

(392)

PAT
Effective Tax rate
Revenue - Segment Wise

8.3

4.2

12.3

7.8

7.3

(105)

(50)

10.6

23.7

26.7

35.8

11.2

54

(2,462)
QoQ (%)

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

YoY (%)

Technical Textiles Business

4291

4345

3972

4100

4362

1.6

6.4

Chemicals & Polymers Business

2135

2063

3516

2640

2297

7.6

(13.0)

Packaging Films Business

1699

1637

1410

1463

1600

(5.8)

9.4

-3

-9

-8

-21

-9

8122

8037

8889

8182

8249

1.6

0.8
QoQ (%)

Inter-Segment
Total
EBIT- Segment Wise

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

YoY (%)

Technical Textiles Business

347

326

255

195

383

10.5

96.3

Chemicals & Polymers Business

645

421

1563

836

526

(18.5)

(37.1)

Packaging Films Business

Total
EBIT Margin (%)

44

57

-49

-20

48

8.6

(342.4)

1036

804

1770

1012

957

(7.6)

(5.4)

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

YoY (%)

QoQ (%)

8.1

7.5

6.4

4.8

8.8

70

403

30.2

20.4

44.5

31.7

22.9

(733)

(879)

2.6

3.5

(3.5)

(1.4)

3.0

40

435

12.8

10.0

19.9

12.4

11.6

(116)

(76)

Technical Textiles Business

Chemicals & Polymers Business
Packaging Films Business
Total
Source: Company, Emkay Research

Emkay Research

September 11, 2013

10

SRF Ltd

Visit Note

Key Financials (Consolidated)

Income Statement

Balance Sheet

Y/E Mar (Rsmn)

FY10A

FY11A

FY12A

FY13A

Y/E Mar (Rsmn)

FY10A

FY11A

FY12A

Net Sales

24,987

33,914

39,809

37,689

Equity share capital

615

615

584

584

0.0

35.7

17.4

-5.3

Reserves & surplus

12,123

16,365

17,931

19,105

18,658

25,726

31,696

31,687

Net worth

12,739

16,980

18,515

19,689

1,624

2,045

2,211

2,664

SG&A

4,115

5,376

6,364

7,460

Unsecured Loans

EBITDA

7,067

9,351

8,348

6,164

Loan Funds
Net deferred tax liability

Growth (%)
Expenditure
Employee Cost
Other Exp

Growth (%)

0.0

32.3

-10.7

-26.2

27.5

26.7

20.8

16.3

Depreciation

1,590

1,701

1,837

EBIT

5,477

7,650

6,511

21.3

21.8

16.3

EBITDA margin (%)

EBIT margin (%)

Other Income

Minority Interest
Secured Loans

FY13A

8,385

7,716

7,179

7,179

1,933

2,016

5,117

8,708

10,318

9,731

12,296

15,887

1,911

2,007

2,128

2,503

Total Liabilities

24,967

28,718

32,939

38,079

2,089

Gross Block

34,824

37,912

41,493

47,595

4,076

Less: Depreciation

15,389

17,554

20,713

24,197

10.8

Net block

19,435

20,358

20,780

23,398

1,325

1,131

4,175

5,654

71

1,162

1,405

1,512

68

111

277

398

Capital work in progress

777

897

1,172

998

Investment

PBT

4,768

6,864

5,616

3,476

Current Assets

9,403

12,835

13,321

15,181

Tax

1,509

2,018

1,784

1,094

Inventories

3,073

5,041

4,877

5,632

31.7

29.4

31.8

31.5

Sundry debtors

3,610

4,918

4,837

5,087

3,259

4,846

3,832

2,381

Cash & bank balance

902

903

1,401

1,910

0.0

48.7

-20.9

-37.9

Loans & advances

1,818

1,938

2,159

2,447

12.7

13.8

9.6

6.3

35

47

105

(Profit)/loss from JVs/Ass/MI

Current lia & Prov

5,267

6,766

6,741

7,666

Adj. PAT After JVs/Ass/MI

3,259

4,846

3,832

2,381

Current liabilities

4,966

6,554

6,488

7,393

-15

-10

-45

148

302

213

253

273

Reported PAT

3,244

4,836

3,787

2,529

Net current assets

4,135

6,068

6,580

7,515

PAT after MI

3,259

4,846

3,832

2,381

Misc. exp

0.0

48.7

-20.9

-37.9

Total Assets

FY10A

FY11A

FY12A

FY13A

PBT (Ex-Other income)

3,947

5,580

5,060

3,064

Profitability (%)

Depreciation

1,590

1,701

1,837

2,089

777

897

1,172

998

Interest expenses

Effective tax rate (%)

Adjusted PAT
Growth (%)
Net Margin (%)

E/O items

Growth (%)

Other current assets

Provisions

24,967

28,718

32,939

38,079

FY10A

FY11A

FY12A

FY13A

EBITDA Margin

27.5

26.7

20.8

16.3

Net Margin

12.7

13.8

9.6

6.3

ROCE

25.0

30.4

23.0

12.8

Key Ratios

Cash Flow
Y/E Mar (Rsmn)

Interest Provided
Other Non-Cash items
Chg in working cap
Tax paid
Operating Cashflow
Capital expenditure

Y/E Mar

-132

-1,836

108

-51

ROE

32.4

35.9

23.3

12.9

-1,509

-2,018

-1,784

-1,094

RoIC

28.2

33.6

26.6

15.2

4,673

4,325

6,391

5,005

41.1

Per Share Data (Rs)

-3,904

-1,950

-5,870

-6,908

EPS

56.2

83.6

66.1

Free Cash Flow

770

2,374

521

-1,903

CEPS

83.6

112.9

97.7

77.1

Other income

806

1,274

512

560

BVPS

200.6

265.4

301.7

334.4

Investments

354

-1,091

-244

-107

14.6

14.6

14.0

10.1

-2,744

-1,767

-5,602

-6,455

875

-86

-740

43

PER

2.6

1.8

2.2

3.6

Loans Taken / (Repaid)

-224

-587

2,565

3,591

P/CEPS

1.8

1.3

1.5

1.9

Interest Paid

-777

-897

-1,172

-998

P/BV

0.7

0.6

0.5

0.4

Dividend paid (incl tax)

-991

-988

-944

-678

EV / Sales

0.7

0.5

0.5

0.6

Income from investments

EV / EBITDA

2.5

1.7

2.2

3.4

Others

Dividend Yield (%)

9.9

9.9

9.5

6.8

-1,117

-2,558

-291

1,959

Gearing Ratio (x)

812

499

509

0.8

0.5

0.5

0.6

Opening cash position

90

902

903

1,401

Net Debt/EBIDTA

Closing cash position

902

902

1,401

1,910

Working Cap Cycle (days)

Investing Cashflow
Equity Capital Raised

Financing Cashflow
Net chg in cash

Emkay Research

September 11, 2013

DPS
Valuations (x)

Net Debt/ Equity

1.3

0.8

1.1

2.0

45.9

53.8

47.2

54.0

11

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Emkay Research

September 11, 2013

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12