Minda Industries Absolute : Relative Benchmark …bsmedia.business-standard.com/_media/bs/data/market...Minda Industries Absolute – ADD Relative – Benchmark 8% ATR in 14 Months

November 14, 2017 Analyst:AshutoshTiwari [email protected] (+91-8128694112) Page 1 of 1

Before reading this report, you must refer to the disclaimer on the last page.

Minda Industries Absolute : ADD

Relative Benchmark

2QFY18 Result: Estimate (), TP (), Rating () Regular Coverage 8% ATR in 14 Months

Futuristic product portfolio to drive strong growth – maintain ADD Auto Parts

© 2017 Equirus All rights reserved

Rating Information

Price (Rs) 1,032

Target Price (Rs) 1,116

Target Date 30th Dec'18

Target Set On 14th Nov '17

Implied yrs of growth (DCF) 17

Fair Value (DCF) 829

Fair Value (DDM) 122

Ind Benchmark BSEAUTO

Model Portfolio Position LONG

Stock Information

Market Cap (Rs Mn) 89,132

Free Float (%) 25.98 %

52 Wk H/L (Rs) 1044.4/262.1

Avg Daily Volume (1yr) 139,444

Avg Daily Value (Rs Mn) 80

Equity Cap (Rs Mn) 173

Face Value (Rs) 2

Bloomberg Code MNDA IN

Ownership Recent 3M 12M

Promoters 71.0 % 1.2 % -3.1 %

DII 7.4 % 0.1 % 5.0 %

FII 7.8 % 0.7 % 3.7 %

Public 13.9 % -1.9 % -5.6 %

Price % 1M 3M 12M

Absolute 24.8 % 31.9 % 204.5 %

Vs Industry 24.3 % 26.5 % 183.6 %

GABRIEL -2.4 % 12.6 % 67.5 %

SUPRAJIT 0.6 % -0.5 % 42.8 %

Standalone Quarterly EPS forecast

Rs/Share 1Q 2Q 3Q 4Q

EPS (17A) 2.6 3.8 2.2 2.3

EPS (18E) 2.1 4.9 2.5 2.5

Minda Industries (MNDA) continued to outdo our estimates, with 2QFY18 sales/EBITDA

beating EE by 9%/22% led by strong growth in Minda Kosei (alloy wheel subsidiary), MJ

Casting and Rinder. Consolidated EBITDA margins at 12.4% improved 161bps

yoy/171bps qoq on a better product mix and operating leverage. The alloy wheel plant

at Bawal reached its full capacity due to strong demand from MSIL. Accordingly, we

increase our sales estimates over FY18-FY20. The company announced the acquisition

of stakes in Minda F-Ten and F-Ten Minda. Due to strong traction across businesses, we

raise our FY18/FY19E EPS by 6%/7% and maintain ADD with a Mar’18 TP of Rs 1,116 set

at 32x FY19E EPS (vs. a Dec’18 TP of Rs 881 at 28x earlier); the increase in P/E

multiple is justified given the strong growth visibility.

Portfolio of new-age products to find increasing application in vehicles: Alloy

wheel penetration in 4Ws in India is around 25%, which is set to increase as it

reduces vehicle weight and is more aesthetically appealing. Infotainment system,

which has come through F-Ten Minda, is becoming another differentiating feature

for cars with GPS and a reverse camera view clubbed in the same offering.

Promoters own an 8% stake in TG Minda (top-3 in air bags in India) with an option to

increase the stake to 45%, which will eventually be transferred to MNDA. Lighting

subsidiary Rinder would also be big beneficiary of a shift to LED lights in 2Ws, which

is gaining traction in the industry. MNDA had formed a JV with TTE, which is the

third largest player globally in driver assistance systems.

All-round growth leads to 23% yoy/16% qoq sales growth, 9% ahead of EE: The

alloy wheel plant ramped up to full capacity in August with sales up 25%+ qoq. MJ

Casting sales also saw robust sales qoq due to strong volumes of HMSI during the

quarter. Standalone sales were impacted due to hiving off of the battery business to

a separate subsidiary (adj. for which sales would have grown 11% vs. 9% reported);

removal of the headlamp switch from most 2Ws post AHO regulations also impacted

standalone sales.

EBITDA up 41% yoy/35% qoq on improved product mix, operating leverage: MNDA

witnessed strong growth in some double-digit margin businesses like alloy wheel,

Minda Kyoraku and MJ Casting, leading to an improved product mix during the

quarter. Standalone performance benefitted from tooling income, costs for which

were booked in 1Q. However, 1H margins were normal; an improvement in lighting

margins was driven by tooling income booked only during 2Q.

Change in Estimates

Current Change (%)

Rs Mn FY18E FY19E FY18E FY19E

Sales 41,270 55,043 3.0% 3.1%

EBITDA 4,639 6,460 4.4% 5.2%

PAT 2,325 3,013 5.8% 6.5%

EPS 26.9 34.9 5.8% 6.5%

Consolidated Financials Rs. Mn YE Mar FY17A FY18E FY19E FY20E

Sales 35,047 41,270 55,043 62,277

EBITDA 3,835 4,639 6,460 7,331

Depreciation 1,360 1,551 1,930 2,187

Interest Expense 394 330 430 340

Other Income 142 271 127 164

Reported PAT 1,679 2,325 3,013 3,506

Recurring PAT 1,679 2,325 3,013 3,506

Total Equity 10,273 12,162 14,433 17,005

Gross Debt 5,324 4,779 4,779 3,279

Cash 3,766 96 460 2,173

Rs Per Share FY17A FY18E FY19E FY20E

Earnings 19.4 26.9 34.9 40.6

Book Value 119 141 167 197

Dividends 2.2 2.5 3.0 4.0

FCFF 1.9 -33.8 7.2 40.0

P/E (x) 53.1 38.4 29.6 25.4

P/B (x) 8.7 7.3 6.2 5.2

EV/EBITDA (x) 23.9 20.7 14.9 12.8

ROE (%) 22 % 21 % 23 % 22 %

Core ROIC (%) 16 % 14 % 17 % 17 %

EBITDA Margin (%) 11 % 11 % 12 % 12 %

Net Margin (%) 5 % 6 % 5 % 6 %

Minda Industries Absolute – ADD Relative – Benchmark 8% ATR in 14 Months

November 14, 2017 Analyst: AshutoshTiwari [email protected] (+91-8128694112) Page 2 of 11

Earnings call takeaways

Industry performance

The auto industry registered significant improvement in 2QFY18 after a muted

performance driven by pre-GST uncertainty.

Demand improved for PV and 2W segments on the back of a satisfactory monsoon,

cheaper financing and festive season sales.

Demand is expected to sustain in 2HFY18, which augurs well for well-diversified

players in the ancillary universe.

Financial performance

Revenues grew 23% yoy to Rs 10.98bn (2QFY17: Rs 8.96bn) driven by improved

performances from Minda Kosei, MJ Casting and Rinder India.

EBITDA margins expanded 161bps yoy to 12.43% driven by higher operating leverage

and improving efficiency.

EBITDA grew by 41% yoy to Rs 1.37bn.

PAT stood at Rs 0.67bn with 75% yoy growth.

Domestic market constituted 81% of the topline and exports 19%.

Management believes margins of 11.5-12% are sustainable in the longer run.

Segment performance

Switching systems contributed 32% to the consolidated turnover. Overall, EBIDTA

margins for the segment stood at ~12% during the quarter.

Lighting business contributed 27% to overall revenue with about 11% margins at the

EBITDA level.

The acoustic division contributed 15% to the overall turnover.

Other products like alloy wheels, aluminium die casting and blow molding hoses

formed about 26% of the consolidated top line with robust margins of 19%.

Consolidation update

The board has approved the purchase of a 49% stake in Fujitsu Ten Minda Pvt. Ltd.

(F-Ten Minda) and a 51% stake in Minda F Ten Pvt. ltd. (Minda F-Ten). The total

purchase consideration for both companies will be Rs. 0.26bn. The sale & purchase

agreement is expected to be completed by 1 Jan’18.

F-Ten Minda is engaged in business development and manufacturing of car

infotainment systems, with revenues of Rs 3.08bn, EBITDA margins of about 10% and

PAT of Rs 0.26bn. Minda F-Ten is the marketing arm for infotainment systems

manufactured by F-Ten Minda with revenues of Rs 3.15bn.

F Ten’s key customers are MSIL and Toyota Kirloskar; it also caters to Innova Crysta

and Baleno, and has about 20-21% market share.

Other highlights

Mindarika is expected to be consolidated by the end of Jan’18.

The battery business has been hived off and transferred to a wholly-owned

subsidiary.

Mindarika’s revenue is about Rs. 6.35bn while Minda Torika’s about Rs. 2.3bn.

Margins for car horns were diluted due to Mexico plant’s initial ramp-up cost.

The total wheel capacity is 120,000 wheels per month, with orders mainly from MSIL

and M&M and the entire capacity fully booked. Sales from Gujarat are expected to

start from Apr’18 and the planned capacity is at 60,000.

The alloy wheels business posted a topline of Rs 1.1bn.

TTE is expected to be commissioned by 1QFY19. Management expects peak revenues

from one line to be about Rs 3.5bn.

For the Mexico plant, one line is operational and the second should be operational by

Apr’18.

The consolidation plan is on schedule and there is no challenge on this front; barring a

couple of entitles, all other entities should be consolidated by Mar’18. These two

entities are in the business of seat belts and airbags, adding Rs 7bn-8bn to the topline.

Top-3 customers expected on a consolidated basis for future are MSIL, Bajaj and

HMSI. These three will contribute ~40% of sales with maximum contribution from

MSIL.

Management expects Torika to be consolidated by 3QFY17 and F-Ten Minda

consolidation to be effective from 4QFY18.

Rinder is primarily for 2W and CV lighting, and about 17% is export business. It has

about 11.5% of margins, slightly higher than the standalone lighting business.

Realizations for LED are about 2-2.5x of conventional lights.

Management expects about 15% growth in the lighting business.

Total capex stands at Rs 3bn for the Gujarat plant, around 0.65bn for the Chennai

lighting expansion, 0.65bn for Minda Kurako, Rs 1.4bn for group consolidation with

other capex of ~0.4bn over the next 18 months.



Quarterly performance, standalone

(Rs mn) 2QFY18 2QFY18E 1QFY18 2QFY17 % Change

Comments 2QFY18E 1QFY18 2QFY17

Net Sales 4,777 4,699 4,230 4,388 2% 13% 9%

Cost of raw material 3,039 3,059 2,671 2,863 -1% 14% 6%

Employee Cost 617 620 605 535 -1% 2% 15%

Other Expenditure 624 569 607 548 10% 3% 14%

Total Expenditures 4,279 4,248 3,882 3,947 1% 10% 8%

EBITDA 498 451 348 441 10% 43% 13%

Depreciation 131 135 119 129 -3% 10% 1%

EBIT 367 316 229 312 16% 60% 18%

Interest 11 19 17 35 -43% -39% -70%

Other Income 182 60 48 124 206% 279% 47%

PBT 538 357 260 400 51% 107% 34%

Tax 113 86 77 81 32% 47% 38%

Recurring PAT 426 271 183 319 57% 132% 33%

Extraordinaries 7 0 -55 -1

Reported PAT 419 271 238 320 55% 76% 31%

EPS (Rs) 4.9 3.1 2.1 3.7 57% 132% 33%

EBITDA Margin 10.4% 9.5% 8.2% 10.1% 87 bps 220 bps 37 bps

EBIT Margin 7.7% 5.8% 5.4% 7.1% 190 bps 226 bps 57 bps

PBT Margin 11.3% 5.9% 6.1% 9.1% 539 bps 513 bps 215 bps

PAT Margin 8.8% 4.5% 5.6% 7.3% 430 bps 314 bps 148 bps

Tax Rate 20.9% 24.0% 29.5% 20.3% -306 bps -853 bps 60 bps

Raw Material 63.6% 65.1% 63.2% 65.3% -148 bps 47 bps -164 bps

Employee cost 12.9% 13.2% 14.3% 12.2% -29 bps -139 bps 71 bps

Other expenses 13.1% 12.1% 14.3% 12.5% 96 bps -128 bps 56 bps



Quarterly performance, consolidated

Rs mn 2QFY18 2QFY18E 1QFY18 2QFY17 % Change

Comments 2QFY18E 1QFY18 2QFY17

Net Sales 10,984 10,056 9,452 8,963 9% 16% 23%

Raw materials consumed 6,863 6,273 5,843 5,685 9% 17% 21%

Employee Cost 1,385 1,359 1,304 1,137 2% 6% 22%

Other Expenditure 1,370 1,301 1,291 1,172 5% 6% 17%

Total Expenditures 9,618 8,933 8,438 7,993 8% 14% 20%

EBITDA 1,366 1,122 1,014 970 22% 35% 41%

Depreciation 383 425 357 360 -10% 7% 6%

EBIT 983 697 657 609 41% 50% 61%

Interest 63 85 79 102 -26% -21% -39%

Other Income 45 79 88 7 -44% -50% 545%

PBT 965 691 666 514 40% 45% 88%

Tax 297 186 212 138 60% 40% 116%

PAT before MI & Associates 668 505 454 376 32% 47% 78%

Minority Interest -59 -35 -36 -40 69% 63% 50%

Profit from Assoc. 65 70 61 48

Recurring PAT 674 540 479 385 25% 41% 75%

Extraordinaries 0 0 0 0

Reported PAT 674 540 479 385 25% 41% 75%

EPS (Rs) 7.8 6.2 5.5 4.8 25% 41% 61%

EBITDA Margin 12.4% 11.2% 10.7% 10.8% 127 bps 171 bps 161 bps

EBIT Margin 8.9% 6.9% 6.9% 6.8% 201 bps 200 bps 215 bps

PBT Margin 8.8% 6.9% 7.0% 5.7% 191 bps 174 bps 305 bps

PAT Margin 6.1% 5.4% 5.1% 4.3% 77 bps 107 bps 185 bps

Tax Rate 30.7% 26.9% 31.9% 26.8% 384 bps -112 bps 397 bps

Raw Material 62.5% 62.4% 61.8% 63.4% 10 bps 67 bps -94 bps

Employee cost 12.6% 13.5% 13.8% 12.7% -91 bps -118 bps -7 bps

Other expenses 12.5% 12.9% 13.7% 13.1% -46 bps -119 bps -60 bps



Company Snapshot

How we differ from Consensus

- Equirus Consensus % Diff Comment

EPS FY18E 26.9 26.0 3 % Marginally below consensus

FY19E 34.9 35.1 -1 %

Sales FY18E 41,270 42,727 -3 %

FY19E 55,043 52,139 6 %

PAT FY18E 2,325 2,247 3 %

FY19E 3,013 3,024 0 %

Key Investment arguments:

MNDA’s dominance expected to continue in switch segment on the account of strong

in-house R &D.

Using Indian low-cost base & high technology products range, MNDA to strengthen its

leadership position in acoustics with a 13% CAGR over FY17-FY19E.

Lighting division sales to grow at a 15% CAGR over FY17-19E through ramping up

utilization levels led by a revival in the 4W industry.

Key Estimates:

Sales (Rs. mn) FY17 FY18E FY19E FY20E

Switches 9,905 10,803 11,783 12,857

yoy growth (%) 7% 9% 9% 9%

Lighting 5,156 5,983 6,817 7,770

yoy growth (%) 14% 16% 14% 14%

Horns 2,799 3,143 3,552 4,019

yoy growth (%) 9% 12% 13% 13%

Key Risk:

Delay in group restructuring, lower capacity utilization

Delay in 2W/4W industry revival

Key Triggers

2W sector growth revival

Better capacity utilization across segments

Sensitivity to Key Variables % Change % Impact on EPS

EBITDA Margins -1 % -11 %

- - -

- - -

DCF Valuations & Assumptions

Rf Beta Ke Term. Growth Debt/IC in Term. Yr

6.8 % 0.9 12.2 % 4.0 % 40.0 %

- FY18E FY19E FY20-22E FY23-27E FY28-32E

Sales Growth 18 % 33 % 14 % 15 % 15 %

NOPAT Margin 5 % 6 % 6 % 6 % 6 %

IC Turnover 2.31 2.62 2.96 3.20 3.20

RoIC 14.1 % 16.9 % 18.4 % 20.5 % 20.5 %

Years of strong growth 1 2 5 10 15

Valuation as on date (Rs) 219 294 405 532 669

Valuation as on Sep’18 249 334 460 606 761

Based on DCF, assuming 17 years of 12% CAGR growth and 20% average ROIC, we derive

Mar’19 fair value of Rs. 829.

Company Description:

Minda Industries Ltd is the flagship company of the Uno Minda Group. From just one

product in 1958 to more than 20 products in 2017, MNDA has emerged as one of the

leading suppliers of proprietary automotive solutions to OEMs over more than six

decades. MNDA had consolidated sales of Rs 35bn in FY17. The company has 12 direct

subsidiaries and 7 step-down subsidiaries, 3 joint venture companies and 5 associate

entities with headquarters in Manesar, Gurgaon (Haryana), India.

Comparable valuation Mkt Cap

Rs. Mn.

Price

Target

Target

Date

EPS P/E BPS P/B RoE Div Yield

Company Reco. CMP FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E

Minda Industries ADD 1,032 89,132 1,116 30th Dec'18 19.4 26.9 34.9 53.1 38.4 29.6 118.9 7.3 22 % 21 % 23 % 0.2 % 0.2 %

Gabriel Ind NR 197 28,276 NR NR 0.0 6.7 8.1 - 29.5 24.4 - 15.4 - 16 % - 0.3 % -

Suprajit Engg. NR 280 39,094 NR NR 7.8 10.2 12.9 36.0 27.5 21.7 75.2 35.2 36 % 37 % 34 % 0.2 % 0.2 %



Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E

Revenue 4,005 4,388 4,002 3,996 4,226 4,777 4,344 4,385 4,955 5,265 4,917 4,684 16,392 17,732 19,821 22,198

EBITDA 394 410 384 371 344 498 387 386 471 500 467 445 1,559 1,614 1,883 2,109

Depreciation 112 117 124 131 119 131 131 134 138 141 145 147 483 515 571 616

EBIT 283 293 260 240 225 367 256 252 333 359 322 298 1,076 1,099 1,312 1,493

Interest 45 35 37 23 17 11 17 7 0 0 0 0 139 52 0 0

Other Income 47 157 38 10 52 182 50 45 26 27 30 24 251 328 108 124

PBT 285 415 261 227 260 538 288 289 359 386 352 322 1,188 1,375 1,420 1,617

Tax 60 85 72 25 77 113 69 69 86 93 85 77 242 328 341 388

Recurring PAT 224 331 190 202 183 426 219 220 273 294 268 245 946 1,047 1,079 1,229

Extraordinary 0 0 0 0 -55 7 0 0 0 0 0 0 0 -48 0 0

Reported PAT 224 331 190 202 238 419 219 220 273 294 268 245 946 1,096 1,079 1,229

EPS (Rs) 2.60 3.83 2.19 2.34 2.12 4.92 2.53 2.54 3.16 3.40 3.10 2.83 10.95 12.12 12.49 14.22

Key Drivers

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Sequential Growth (%)

Revenue 5 % 10 % -9 % 0 % 6 % 13 % -9 % 1 % 13 % 6 % -7 % -5 % - - - -

EBITDA 7 % 4 % -6 % -3 % -7 % 45 % -22 % 0 % 22 % 6 % -7 % -5 % - - - -

EBIT 30 % 4 % -11 % -8 % -6 % 63 % -30 % -2 % 32 % 8 % -10 % -8 % - - - -

Recurring PAT 1 % 47 % -43 % 6 % -9 % 132 % -49 % 0 % 24 % 8 % -9 % -9 % - - - -

EPS 1 % 47 % -43 % 6 % -9 % 132 % -49 % 0 % 24 % 8 % -9 % -9 % - - - -

Yearly Growth (%)

Revenue 17 % 16 % 8 % 5 % 6 % 9 % 9 % 10 % 17 % 10 % 13 % 7 % 12 % 8 % 12 % 12 %

EBITDA 47 % 2 % 9 % 0 % -13 % 21 % 1 % 4 % 37 % 1 % 21 % 15 % 12 % 4 % 17 % 12 %

EBIT 85 % 7 % 17 % 11 % -20 % 25 % -2 % 5 % 48 % -2 % 26 % 18 % 24 % 2 % 19 % 14 %

Recurring PAT 65 % 43 % -7 % -9 % -18 % 29 % 15 % 9 % 49 % -31 % 22 % 11 % 19 % 11 % 3 % 14 %

EPS 65 % 43 % -7 % -9 % -18 % 29 % 15 % 9 % 49 % -31 % 22 % 11 % 19 % 11 % 3 % 14 %

Margin (%)

EBITDA 10 % 9 % 10 % 9 % 8 % 10 % 9 % 9 % 10 % 9 % 10 % 10 % 10 % 9 % 9 % 9 %

EBIT 7 % 7 % 7 % 6 % 5 % 8 % 6 % 6 % 7 % 7 % 7 % 6 % 7 % 6 % 7 % 7 %

PBT 7 % 9 % 7 % 6 % 6 % 11 % 7 % 7 % 7 % 7 % 7 % 7 % 7 % 8 % 7 % 7 %

PAT 6 % 8 % 5 % 5 % 4 % 9 % 5 % 5 % 6 % 6 % 5 % 5 % 6 % 6 % 5 % 6 %



Consolidated Financials

P&L (Rs Mn) FY17A FY18E FY19E FY20E

Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E

Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E

Revenue 35,047 41,270 55,043 62,277 Equity Capital 173 173 173 173 PBT 2,223 3,030 4,228 4,968

Op. Expenditure 31,213 36,631 48,582 54,946 Reserve 10,101 11,989 14,260 16,832 Depreciation 1,360 1,551 1,930 2,187

EBITDA 3,835 4,639 6,460 7,331 Networth 10,273 12,162 14,433 17,005 Others 309 0 0 0

Depreciation 1,360 1,551 1,930 2,187 Long Term Debt 5,324 4,779 4,779 3,279 Taxes Paid 508 808 1,155 1,360

EBIT 2,475 3,089 4,531 5,144 Def Tax Liability 768 2,350 2,780 3,298 Change in WC 177 -581 -1,126 -566

Interest Expense 394 330 430 340 Minority Interest 1,390 1,566 1,996 2,513 Operating C/F 3,561 3,192 3,877 5,229

Other Income 142 271 127 164 Account Payables 5,151 6,223 8,143 9,259 Capex -4,657 -5,300 -3,570 -2,015

PBT 2,223 3,030 4,228 4,968 Other Curr Liabi 1,206 1,429 1,846 2,099 Change in Invest -2,837 -1,054 0 0

Tax 488 808 1,155 1,360 Total Liabilities & Equity 24,111 28,509 33,976 37,453 Others 3,774 0 0 0

PAT bef. MI & Assoc. 1,734 2,222 3,073 3,608 Net Fixed Assets 8,955 12,456 13,726 13,140 Investing C/F -3,720 -6,353 -3,570 -2,015

Minority Interest 200 176 430 517 Capital WIP 1,373 1,373 1,373 1,373 Change in Debt 372 -545 0 -1,500

Profit from Assoc. 145 279 370 415 Others 1,250 2,551 2,921 3,336 Change in Equity 2,965 -176 -430 -517

Recurring PAT 1,679 2,325 3,013 3,506

Inventory 2,513 3,052 4,145 4,714 Others -669 1,602 488 517

Extraordinaires 0 0 0 0 Account Receivables 5,235 6,445 8,393 9,543 Financing C/F 2,669 880 58 -1,501

Reported PAT 1,679 2,325 3,013 3,506 Other Current Assets 1,020 1,147 1,569 1,784 Net change in cash 2,510 -2,281 365 1,713

FDEPS (Rs) 19.4 26.9 34.9 40.6 Cash 3,766 96 460 2,173 RoE (%) 22 % 21 % 23 % 22 %

DPS (Rs) 2.2 2.5 3.0 4.0 Total Assets 24,111 27,120 32,586 36,063

RoIC (%) 14 % 13 % 15 % 15 %

CEPS (Rs) 38.3 44.8 57.2 65.9 Non-cash Working Capital 2,411 2,992 4,118 4,684

Core RoIC (%) 16 % 14 % 17 % 17 %

FCFPS (Rs) 1.9 -33.8 7.2 40.0 Cash Conv Cycle 25.1 26.5 27.3 27.5 Div Payout (%) 13 % 11 % 10 % 12 %

BVPS (Rs) 118.9 140.7 167.0 196.8 WC Turnover 14.5 13.8 13.4 13.3 P/E 53.1 38.4 29.6 25.4

EBITDAM (%) 11 % 11 % 12 % 12 % FA Turnover 3.4 3.0 3.6 4.3 P/B 8.7 7.3 6.2 5.2

PATM (%) 5 % 6 % 5 % 6 % Net D/E 0.2 0.4 0.3 0.1 P/FCFF 550.5 -30.5 144.0 25.8

Tax Rate (%) 22 % 27 % 27 % 27 % Revenue/Capital Employed 2.5 2.1 2.5 2.5 EV/EBITDA 23.9 20.7 14.9 12.8

Sales Growth (%) 39 % 18 % 33 % 13 %

Capital Employed/Equity 1.9 1.7 1.7 1.6

EV/Sales 2.6 2.3 1.7 1.5

FDEPS Growth (%) 58 % 38 % 30 % 16 %

Dividend Yield (%) 0.2 % 0.2 % 0.3 % 0.4 %

TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE

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Historical Consolidated Financials

P&L (Rs Mn) FY14A FY15A FY16A FY17A

Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A

Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A

Revenue 17,061 22,266 25,273 35,047 Equity Capital 159 159 159 173 PBT 129 688 1,335 2,223

Op. Expenditure 16,283 20,723 22,895 31,213 Reserve 2,955 3,494 4,593 10,101 Depreciation 591 835 926 1,360

EBITDA 778 1,543 2,378 3,835 Networth 3,113 3,653 4,752 10,273 Others 395 104 277 309

Depreciation 591 835 926 1,360 Long Term Debt 2,779 2,088 3,927 5,324 Taxes Paid 87 168 253 508

EBIT 187 708 1,452 2,475 Def Tax Liability 265 294 427 768 Change in WC -611 -104 -822 177

Interest Expense 242 250 257 394 Minority Interest 138 213 1,096 1,390 Operating C/F 416 1,354 1,463 3,561

Other Income 184 229 140 142 Account Payables 2,473 2,670 3,215 5,151 Capex -1,143 -646 -3,425 -4,657

PBT 129 688 1,335 2,223 Other Curr Liabi 1,046 1,049 1,487 1,206 Change in Invest -248 195 -2,133 -2,837

Tax 76 194 277 488 Total Liabilities & Equity 9,814 9,966 14,903 24,111 Others 23 59 2,989 3,774

PAT bef. MI & Assoc. 53 494 1,058 1,734 Net Fixed Assets 4,005 3,987 5,664 8,955 Investing C/F -1,368 -391 -2,569 -3,720

Minority Interest -10 -3 115 200 Capital WIP 219 219 1,301 1,373 Change in Debt 1,058 -674 1,602 372

Profit from Assoc. 8 24 117 145 Others 551 570 903 1,250 Change in Equity 0 53 0 2,965

Recurring PAT 72 520 1,059 1,679 Inventory 1,247 1,406 1,838 2,513 Others -256 -362 -368 -669

Extraordinaires 0 -160 -52 0 Account Receivables 2,610 2,895 3,639 5,235 Financing C/F 802 -984 1,234 2,669

Reported PAT 72 680 1,111 1,679 Other Current Assets 673 589 957 1,020 Net change in cash -150 -21 127 2,510

EPS (Rs) 0.8 6.0 12.3 19.4 Cash 508 301 567 3,766

RoE (%) 2 % 15 % 25 % 22 %

DPS (Rs) 0.6 1.2 1.4 2.2

Total Assets 9,814 9,966 14,869 24,111

RoIC (%) 3 % 11 % 15 % 14 %

CEPS (Rs) 8.4 17.1 25.0 38.3 Non-cash Working Capital 1,011 1,171 1,732 2,411 Core RoIC (%) 1 % 9 % 15 % 16 %

FCFPS (Rs) -10.7 14.4 -11.4 1.9 Cash Conv Cycle 21.6 19.2 25.0 25.1 Div Payout (%) 78 % 82 % 73 % 13 %

BVPS (Rs) 39.2 46.0 59.5 118.9 WC Turnover 16.9 19.0 14.6 14.5

P/E 1,243.8 171.5 84.2 53.1

EBITDAM (%) 5 % 7 % 9 % 11 % FA Turnover 4.0 5.3 3.6 3.4 P/B 26.3 22.4 17.4 8.7

PATM (%) 0 % 2 % 4 % 5 % Net D/E 0.7 0.5 0.7 0.2 P/FCFF -96.1 71.7 -90.6 550.5

Tax Rate (%) 59 % 28 % 21 % 22 % Revenue/Capital Employed 3.0 3.6 3.1 2.5 EV/EBITDA 118.1 59.3 39.2 23.9

Sales growth (%) 27 % 31 % 14 % 39 %

Capital Employed/Equity 1.8 1.9 2.0 1.9

EV/Sales 5.4 4.1 3.7 2.6

FDEPS growth (%) -75 % 625 % 104 % 58 %

Dividend Yield (%) 0.1 % 0.1 % 0.1 % 0.2 %



Equirus Securities

Research Analysts Sector/Industry Email

Equity Sales E-mail

Abhishek Shindadkar IT Services [email protected] 91-22-43320643 Vishad Turakhia [email protected] 91-22-43320633

Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 SubhamSinha [email protected] 91-22-43320631

Depesh Kashyap Mid-Caps [email protected] 91-79-61909528 SwetaSheth [email protected] 91-22-43320634

Devam Modi Power & Infrastructure [email protected] 91-79-61909516 Viral Desai [email protected] 91-22-43320635

Dhaval Dama FMCG, Mid-Caps [email protected] 91-79-61909518 Dealing Room E-mail

Manoj Gori Consumer Durables [email protected] 91-79-61909523 Ashish Shah [email protected] 91-22-43320662

Maulik Patel Oil and Gas [email protected] 91-79-61909519 IleshSavla [email protected] 91-22-43320666

PrafulBohra Pharmaceuticals [email protected] 91-79-61909532 Manoj Kejriwal [email protected] 91-22-43320663

Rohan Mandora Banking & Financial Services [email protected] 91-79-61909529 Dharmesh Mehta [email protected] 91-22-43320661

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Bharat Celly [email protected] 91-79-61909524 Jay Soni [email protected] 91-79-61909561

Harshit Patel [email protected] 91-79-61909522 Corporate Communications E-mail

Meet Chande [email protected] 91-79-61909513 Mahdokht Bharda [email protected] 91-22-43320647 Parva Soni [email protected] 91-79-61909521

Pranav Mehta [email protected] 91-79-61909514

Ronak Soni [email protected] 91-79-61909525

Samkit Shah [email protected] 91-79-61909520

Shreepal Doshi [email protected] 91-79-61909541

Varun Baxi [email protected] 91-79-61909527

Vikas Jain [email protected] 91-79-61909531

Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap > Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.

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