Music Broadcast Ltd Absolute : ADD ) Regular Coverage 6% ...bsmedia.business-standard.com/_media/bs/data/market-reports/equi… · 2017. Advertising growth in November and December

January 25, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 1 of 11

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

Music Broadcast Ltd Absolute : ADD

Relative : Overweight

3QFY18 Result: Estimate(), TP (), Rating () Regular Coverage 6% ATR in 14 Months

3Q weak but growth rate continues to top peers – reiterate ADD Media & Entertainment

© 2017 Equirus All rights reserved

Rating Information

Price (Rs) 393

Target Price (Rs) 420

Target Date 30th June'19

Target Set On 25th Jan'18

Implied yrs of growth (DCF) 12

Fair Value (DCF) 419

Fair Value (DDM) 241

Ind Benchmark SPBSMIP

Model Portfolio Position NA

Stock Information

Market Cap (Rs Mn) 22,397

Free Float (%) 28.60 %

52 Wk H/L (Rs) 459/332.9

Avg Daily Volume (1yr) 2,08,994

Avg Daily Value (Rs Mn) 77

Equity Cap (Rs Mn) 571

Face Value (Rs) 10

Bloomberg Code RADIOCIT IN

Ownership Recent 3M 12M

Promoters 71.4 % 0.0 % -

DII 8.0 % -0.3 % -

FII 5.3 % 0.1 % -

Public 15.4 % 0.2 % -

Price % 1M 3M 12M

Absolute 3.4 % 2.8 % -

Vs Industry 1.9 % -7.0 % -

ENIL 2.2 % -2.5 % -0.3 %

- - - -

Consolidated Quarterly EPS forecast

Rs/Share 1Q 2Q 3Q 4Q

EPS (17A) 1.8 3.2 2.3 1.0

EPS (18E) 1.9 2.2 2.1 2.3

Music Broadcast Limited’s (MBL) 3QFY18 revenues grew 5% yoy to Rs 762mn, coming in

6% below EE. However, according to the company, growth was better than the

industry’s 2% yoy for the quarter. Revenue growth was mainly driven by volume growth

in new stations even as legacy stations posted a flattish performance. EBITDA margins

contracted 596bps yoy on costs related to new stations and higher marketing expenses.

Advertising spends picked up in the months of Nov/Dec across categories and 4QFY18 is

likely to see double-digit growth, partly helped by soft comps. We pare our FY18/FY19

EPS estimates by 8%/7% and roll over to DCF-based June’19 TP of Rs 420 (from Mar’19

TP of Rs. 425) and reiterate our ADD rating on the stock.

Advertising growth remains weak, but outperforms industry: MBL’s 3Q revenues grew

5% yoy and were mainly driven by growth in newly-launched stations even as legacy

stations posted flattish growth. While weak, growth was better than the industry (HT

Media’s radio business up 5% yoy, DB Corp’s down 7% yoy). For the media industry as a

whole, 3QFY18 has been a difficult quarter as the festive season partly shifted to 2Q in

2017. Advertising growth in November and December was strong at 20% yoy each, mainly

helped by soft comps, and management expects growth recovery to continue going ahead.

From Nov’17 onwards, real estate - the second largest category - has been again gaining

traction. BFSI, consumer durables, auto and e-commerce sectors are also showing good

traction now. We build in 14% yoy advertising growth for 4QFY18e (partly helped by soft

comps).

EBITDAM hit by higher marketing spends, losses in new stations: EBITDA margins

disappointed at 31% (-229bps vs. EE and -596bps yoy). Marketing spends stood at

~Rs 68mn vs. ~Rs 54mn in 3QFY17 but were flat qoq. The company did not incur any

additional marketing costs for new stations in 3Q, but only towards marquee properties.

EBITDA margins for legacy stations were at 35% and new stations remain on track to break

even in 18 months of operationalizing. We estimate that new stations are running at ~30%

utilization; note that new stations typically break even on attaining 40-45% utilization.

Maintain ADD and rollover to June’19 TP of Rs 420: Post MBL’s 3QFY18 results, we

have updated our numbers and pared our FY18/FY19 EPS estimates by 8%/7%. We roll

over to DCF-based June’19 TP of Rs 420 (from Mar’19 TP of Rs. 425 earlier). In our view,

the radio industry shall grow the fastest among traditional media, and MBL, being one of

the bigger players, will be a key beneficiary in this scenario. However, currently all

good things seem to be priced in, leading us to reiterate our ADD rating on the stock.

Change in Estimates

Rs. Mn FY18E Chg (%) FY19E Chg (%)

Sales 2,982 -2% 3,385 -3%

EBITDA 937 -4% 1,156 -6%

EPS 8.5 -8% 12.1 -7%

Consolidated Financials

Rs. Mn YE Mar FY17A FY18E FY19E FY20E

Sales 2,714 2,982 3,385 3,861

EBITDA 913 937 1,156 1,408

Depreciation 197 262 268 272

Interest Expense 190 155 49 24

Other Income 44 196 211 243

Reported PAT 367 483 693 894

Recurring PAT 367 483 693 894

Total Equity 5,481 5,964 6,414 6,994

Gross Debt 1,553 553 553 54

Cash 2,946 2,652 3,366 3,569

Rs Per Share FY17A FY18E FY19E FY20E

Earnings 6.4 8.5 12.1 15.7

Book Value 96 105 112 123

Dividends 0.0 0.0 4.3 5.5

FCFF 12.0 11.7 13.9 14.0

P/E (x) 61.1 46.3 32.3 25.1

P/B (x) 4.1 3.8 3.5 3.2

EV/EBITDA (x) 23.0 21.7 16.9 13.4

ROE (%) 9 % 8 % 11 % 13 %

Core ROIC (%) 15 % 12 % 14 % 19 %

EBITDA Margin (%) 34 % 31 % 34 % 36 %

Net Margin (%) 14 % 16 % 20 % 23 %

Music Broadcast Limited Absolute – ADD Relative – Overweight 6% ATR in 14 Months


Earnings call highlights

Industry updates

For YTD FY18, MBL’s volume growth has been at ~5% in 15 AirCheck markets vs.

industry volume growth of just ~2%. The 2% industry growth is on the back of new

stations added in these 15 markets; original stations have declined by ~5%.

Management believes that TV advertisement growth has been good in 3QFY18 as the

FMCG segment (~50-60% of TV ad revenues) has recovered well post the GST impact.

Also, due to demonetization in 3QFY17, the industry benefitted from a very low

base.

As per management, most advertisers are willing to pay more for the market breadth

rather than increased depth in a single market. Therefore, investment into multiple

frequencies in the same city is not panning out well for some players.

While government contribution in the overall revenue mix has reduced, it is still the

No. 1 category for MBL. From Nov’17 onwards, real estate – the second largest

category – has been again gaining traction. BFSI, consumer durables, auto,

and e-commerce sectors are also showing good traction now. In Nov-Dec’17, the

company’s all major categories have grown by ~20%.

Management believes that radio penetration in metro and mini-metro cities would be

~70%.

Business updates

Revenue grew by ~5% yoy in 3QFY18 (vs. 2QFY18 growth of ~10%). Revenue in

Nov/Dec’17 grew by ~20% each partly helped by last year’s low base. Growth during

these two months was equally driven by a low base and advertisement recovery.

Oct’17 was very good for all radio players.

Management indicated that double-digit growth of Nov-Dec would continue well in

4QFY18.

In 3QFY18, growth was entirely driven by new stations and was volume-led. Legacy

stations posted flat revenues yoy (~3-4% volume decline, ~5% price growth).

For YTD FY18, pricing for legacy stations and radio mantra stations has grown by

~5-6%.

MBL has consistently managed to post an EBITDAM north of ~30% for the past three

quarters despite continued investment in phase-3 stations.

EBITDA margins for the legacy stations were ~35% in 3QFY18.

Marketing spends in 3QFY18 increased to ~Rs 68mn vs. ~Rs 54mn in 3QFY17, but were

flat on qoq basis. There wasn’t any additional marketing cost for new stations in 3Q;

rather it was towards marquee properties.

As of now, utilization levels for new stations are ~35%, and they would break-even at

~40-45% levels.

On a 15mins/hour and an 18 hours/day basis, blended utilization for MBL is ~60-65%.

Going ahead, MBL is looking at growth in mid-teens; a little more than half would

come from volumes and the rest from pricing.

Radio City’s Bengaluru/Mumbai listenership share stands at 25%/14%.

FMCG sector accounts for ~6-7% of the company’s revenues.



Quarterly performance, standalone

Rs Mn 3QFY18 3QFY18E 2QFY18 3QFY17 % Change

Comments 3QFY18E 2QFY18 3QFY17

Net Sales 762 810 758 728 -6% 0% 5%

License Fess 54 56 54 50 -4% 0% 8%

Employees Cost 176 172 171 168 2% 3% 5%

Other Expenditure 299 316 291 190 -5% 3% 57%

Total Expenditures 529 544 516 408 -3% 2% 30%

EBITDA 233 267 242 266 -13% -4% -12%

Depreciation 65 66 67 50 0% -2% 30%

EBIT 168 201 176 216 -16% -4% -22%

Interest 39 40 38 50 -2% 2% -21%

Other Income 43 60 50 9 -28% -13% 403%

PBT 172 221 187 175 -22% -8% -2%

Tax 53 75 60 73 -29% -11% -27%

Recurring PAT 119 146 127 102 -19% -7% 16%

Extraordinaries 0 0 0 0

Reported PAT 119 146 127 102 -19% -7% 16%

EPS (Rs) 2.1 2.6 2.2 1.8 -19% -7% 16%

EBITDA Margin 30.6% 32.9% 31.9% 36.6% -229 bps -133 bps -596 bps

EBIT Margin 22.0% 24.8% 23.1% 29.6% -276 bps -111 bps -761 bps

PBT Margin 22.6% 27.3% 24.7% 24.0% -469 bps -210 bps -144 bps

PAT Margin 15.6% 18.0% 16.8% 14.0% -240 bps -120 bps 157 bps

Tax Rate 30.9% 34.0% 32.0% 41.6% -307 bps -103 bps -1066 bps



Company Snapshot

How we differ from Consensus

- Equirus Consensus % Diff Comment

EPS FY18E 8.5 9.2 -8 % Our grow and margin expectations are

slightly lower than consensus FY19E 12.1 12.6 -4 %

Sales FY18E 2,982 3,118 -4 %

FY19E 3,385 3,529 -4 %

PAT FY18E 483 514 -6 %

FY19E 693 720 -4 %

Key Estimates:

Particulars FY17 FY18E FY19E FY20E

Volumes (mn sec) 123 139 155 169

Realisations (Rs/10 sec) 221 215 219 229

Risk to Our View:

1. Slowdown in the economy

2. Above-expected rise in newsprint prices

Key Triggers

Revival in advertisement growth

DCF Valuations & Assumptions

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

6.7 % 0.7 10.6 % 5.0 % 0.0 %

- FY18E FY19E FY20E FY21-22E FY23-30E

Sales Growth 10 % 14 % 14 % 13 % 9 %

NOPAT Margin 15 % 17 % 19 % 22 % 23 %

IC Turnover 0.71 0.86 1.01 1.27 2.25

RoIC 10.6 % 14.4 % 19.3 % 27.6 % 50.5 %

Years of strong growth 1 2 3 5 13

Valuation as on date (Rs) 152 185 218 281 363

Valuation as of June'19 176 213 252 324 419

Based on DCF, we derive 30st June, 2019 fair value of Rs. 419.

Company Description:

Radio City was the first private FM radio broadcaster in India. It has grown its presence

from 4 cities in 2001 to 39 cities as on Jun’17 and is present in 12 out of the top 15

cities in India by population. As on 30 Jun’17, its radio stations reached out to over

90mn listeners in 39 cities. MBL also operates an online web radio Fun Ka Antenna on

web portal www.radiocity.in, which was launched in 2010. It operates 43 web radio

stations through Planet Radio City in 8 languages, which has a listenership of 35mn as of

June’17.

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

Music Broadcast Ltd ADD 393 22,397 420 30th June'19 6.4 8.5 12.1 61.1 46.3 32.3 96.0 3.8 9 % 8 % 11 % 0.0 % 0.0 %

ENIL NA 775 36,940 NA NA 11.6 11.3 21.6 67.0 68.8 35.9 179.9 4.1 7 % 6 % 11 % 0.1 % 0.1 %

- - - - - - - - - - - - - - - - - - -

Particulars FY11 FY12 FY13 FY14E FY15E FY16E

ADHO Revenue (Rs Mn) 3,432 4,443 5,771 6,381 7,270 8,397

Nomark (Rs Mn) - - - 148 400 600

EBITDA (Rs Mn) 1,089 1,166 1,729 1,848 2,102 2,460

EBITDA Margin (%) 30.3% 24.6% 28.5% 27.2% 26.2% 26.3%

PAT (Rs Mn) 1,031 1,201 1,674 1,473 1,439 1,752

PAT Margin (%) 28.7% 25.4% 27.6% 21.7% 18.0% 18.7%

http://www.radiocity./



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

Revenue 628 692 728 666 703 758 762 759 799 853 890 842 2,714 2,982 3,385 3,861 Production Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

License Fess 47 47 50 48 52 54 54 54 55 59 61 58 192 213 234 266

Employees Cost 155 157 168 170 171 171 176 175 186 185 187 190 651 693 748 816

Marketing Expenses 0 0 54 64 0 0 0 0 0 0 0 0 240 279 302 332

Other Expenditure 235 199 190 217 258 291 299 291 296 312 325 315 719 859 945 1,040 EBITDA 192 289 266 166 222 242 233 240 262 298 317 279 913 937 1,156 1,408 Depreciation 45 45 50 56 64 67 65 66 67 67 67 67 197 262 268 272 EBIT 147 244 216 110 158 176 168 174 195 231 250 212 716 675 888 1,136 Interest 41 41 50 59 39 38 39 39 12 12 12 12 190 155 49 24 Other Income 11 8 9 17 47 50 43 56 53 53 53 53 44 196 211 243 PBT 116 211 175 68 166 187 172 191 236 271 290 253 570 716 1,050 1,354 Tax 40 68 73 23 57 60 53 62 80 92 99 86 203 233 357 460 PAT bef. MI & Assoc. 76 143 102 45 108 127 119 129 156 179 192 167 367 483 693 894 Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Profit from Assoc. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Recurring PAT 76 143 102 45 108 127 119 129 156 179 192 167 367 483 693 894 Extraordinaries 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Reported PAT 76 143 102 45 108 127 119 129 156 179 192 167 367 483 693 894

EPS (Rs) 1.81 3.18 2.27 0.96 1.90 2.23 2.08 2.26 2.73 3.14 3.36 2.92 6.43 8.47 12.15 15.66

Key Drivers

Volumes ( mn sec) - - - - - - - - - - - - 123 139 155 169 Realisations ( Rs/10 sec) - - - - - - - - - - - - 221 215 219 229 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

Sequential Growth (%)

Revenue -2 % 10 % 5 % -9 % 6 % 8 % 0 % 0 % 5 % 7 % 4 % -5 % - - - - - - - - - - - - - - - - - - - - - EBITDA -15 % 51 % -8 % -38 % 34 % 9 % -4 % 3 % 9 % 14 % 6 % -12 % - - - - EBIT -25 % 66 % -11 % -49 % 44 % 11 % -4 % 4 % 12 % 18 % 8 % -15 % - - - - Recurring PAT -35 % 88 % -29 % -56 % 141 % 17 % -7 % 8 % 21 % 15 % 7 % -13 % - - - -

EPS -12 % 76 % -29 % -58 % 98 % 17 % -7 % 8 % 21 % 15 % 7 % -13 % - - - -

Yearly Growth (%)

Revenue - - - 4 % 12 % 10 % 5 % 14 % 14 % 13 % 17 % 11 % 20 % 10 % 14 % 14 % EBITDA - - - -27 % 16 % -16 % -12 % 45 % 18 % 23 % 36 % 16 % 17 % 3 % 23 % 22 % EBIT - - - -44 % 8 % -28 % -22 % 59 % 24 % 32 % 49 % 22 % 17 % -6 % 32 % 28 % Recurring PAT - - - -62 % 42 % -11 % 16 % 186 % 44 % 41 % 61 % 30 % -11 % 32 % 43 % 29 %

EPS - - - -53 % 5 % -30 % -8 % 135 % 44 % 41 % 61 % 30 % -11 % 32 % 43 % 29 %

Margin (%)

EBITDA 30 % 42 % 37 % 25 % 32 % 32 % 31 % 32 % 33 % 35 % 36 % 33 % 34 % 31 % 34 % 36 % EBIT 23 % 35 % 30 % 16 % 22 % 23 % 22 % 23 % 24 % 27 % 28 % 25 % 26 % 23 % 26 % 29 % PBT 19 % 31 % 24 % 10 % 24 % 25 % 23 % 25 % 29 % 32 % 33 % 30 % 21 % 24 % 31 % 35 %

PAT 12 % 21 % 14 % 7 % 15 % 17 % 16 % 17 % 19 % 21 % 22 % 20 % 14 % 16 % 20 % 23 %



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 2,714 2,982 3,385 3,861 Equity Capital 571 571 571 571 PBT 367 716 1,050 1,354

Op. Expenditure 1,802 2,045 2,229 2,454 Reserve 4,911 5,394 5,844 6,423 Depreciation 197 262 268 272

EBITDA 913 937 1,156 1,408 Networth 5,481 5,964 6,414 6,994 Others 378 -41 -162 -218

Depreciation 197 262 268 272 Long Term Debt 1,499 499 499 0 Taxes Paid -85 -158 -231 -460

EBIT 716 675 888 1,136 Def Tax Liability 54 54 54 54 Change in WC -68 -59 -74 -87

Interest Expense 190 155 49 24 Minority Interest 0 0 0 0 Operating C/F 788 721 851 860

Other Income 44 196 211 243 Account Payables 329 319 362 413 Capex -274 -56 -56 -63

PBT 570 716 1,050 1,354 Other Curr Liabi 248 248 248 248 Change in Invest -1,852 0 0 0

Tax 203 233 357 460 Total Liabilities & Equity 7,611 7,085 7,577 7,709 Others 18 196 211 243

PAT bef. MI & Assoc. 367 483 693 894 Net Fixed Assets 3,116 2,909 2,697 2,488 Investing C/F -2,108 140 155 180

Minority Interest 0 0 0 0 Capital WIP 0 0 0 0 Change in Debt -1,529 -1,000 0 -499

Profit from Assoc. 0 0 0 0 Others 503 428 302 302 Change in Equity 4,000 0 0 0

Recurring PAT 367 483 693 894

Inventory 0 0 0 0 Others -421 -155 -292 -338

Extraordinaires 0 0 0 0 Account Receivables 817 866 983 1,121 Financing C/F 2,050 -1,155 -292 -837

Reported PAT 367 483 693 894 Other Current Assets 229 229 229 229 Net change in cash 730 -294 714 203

FDEPS (Rs) 6.4 8.5 12.1 15.7 Cash 2,946 2,652 3,366 3,569 RoE (%) 9 % 8 % 11 % 13 %

DPS (Rs) 0.0 0.0 4.3 5.5 Total Assets 7,611 7,085 7,577 7,709

RoIC (%) 9 % 9 % 11 % 13 %

CEPS (Rs) 12.9 13.1 16.8 20.4 Non-cash Working Capital 469 528 602 690

Core RoIC (%) 15 % 12 % 14 % 19 %

FCFPS (Rs) 12.0 11.7 13.9 14.0 Cash Conv Cycle 63.1 64.7 64.9 65.2 Div Payout (%) 0 % 0 % 35 % 35 %

BVPS (Rs) 96.0 104.5 112.4 122.6 WC Turnover 5.8 5.6 5.6 5.6 P/E 61.1 46.3 32.3 25.1

EBITDAM (%) 34 % 31 % 34 % 36 % FA Turnover 0.9 1.0 1.3 1.6 P/B 4.1 3.8 3.5 3.2

PATM (%) 14 % 16 % 20 % 23 % Net D/E -0.3 -0.4 -0.4 -0.5 P/FCFF 32.6 33.7 28.2 28.1

Tax Rate (%) 36 % 33 % 34 % 34 % Revenue/Capital Employed 0.5 0.5 0.5 0.6 EV/EBITDA 23.0 21.7 16.9 13.4

Sales Growth (%) 20 % 10 % 14 % 14 %

Capital Employed/Equity 1.3 1.1 1.1 1.0

EV/Sales 7.7 6.8 5.8 4.9

FDEPS Growth (%) -11 % 32 % 43 % 29 %

Dividend Yield (%) 0.0 % 0.0 % 1.1 % 1.4 %

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

25x

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35x

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0%

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200

250

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Aug/18

Sep/18

Oct/18

Nov/18

Dec/18

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May/19

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EPS Growth

0%5%10%15%20%25%30%35%40%

12000

16000

20000

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28000

32000

36000

Mar/17

Apr/17

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Dec/18

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12x

15x

18x

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25x

EBITDA Growth

0%

5%

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15%

20%

25%

30%

250

300

350

400

450

500

Mar/17

Apr/17

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RoE

2.5x

3x

3.5x

4x

4.5x



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 1,542 2,008 2,255 2,714 Equity Capital 389 389 420 571 PBT 243 471 276 367

Op. Expenditure 1,118 1,385 1,473 1,802 Reserve -283 187 1,680 4,911 Depreciation 155 157 167 197

EBITDA 424 623 781 913 Networth 106 576 2,100 5,481 Others 47 69 258 378

Depreciation 155 157 167 197 Long Term Debt 1,032 2,848 1,728 1,499 Taxes Paid -4 7 -104 -85

EBIT 269 466 614 716 Def Tax Liability 18 29 41 54 Change in WC -77 -54 8 -68

Interest Expense 57 62 207 190 Minority Interest 0 0 0 0 Operating C/F 364 650 606 788

Other Income 31 67 147 44 Account Payables 231 339 223 329 Capex -37 -27 -2,830 -274

PBT 243 471 555 570 Other Curr Liabi 313 185 805 248 Change in Invest 0 0 2,080 -1,852

Tax 0 0 143 203 Total Liabilities & Equity 1,700 3,977 4,897 7,611 Others -8 -1,983 153 18

PAT bef. MI & Assoc. 243 471 412 367 Net Fixed Assets 317 187 2,304 3,116 Investing C/F -46 -2,010 -597 -2,108

Minority Interest 0 0 0 0 Capital WIP 3 3 657 0 Change in Debt -203 1,649 -88 -1,529

Profit from Assoc. 0 0 0 0 Others 281 322 662 503 Change in Equity 0 0 0 4,000

Recurring PAT 243 471 412 367 Inventory 0 0 0 0 Others -56 -51 -227 -421

Extraordinaires 0 0 -136 0 Account Receivables 628 772 763 817 Financing C/F -259 1,599 -316 2,050

Reported PAT 243 471 548 367 Other Current Assets 132 2,151 207 229 Net change in cash 59 239 -307 730

EPS (Rs) 4.3 8.2 7.2 6.4 Cash 339 543 305 2,946

RoE (%) 229 % 138 % 20 % 9 %

DPS (Rs) 0.0 0.0 0.0 0.0

Total Assets 1,700 3,978 4,897 7,611

RoIC (%) 27 % 23 % 12 % 9 %

CEPS (Rs) 9.5 15.0 10.3 12.9 Non-cash Working Capital 216 2,399 -58 469 Core RoIC (%) 31 % 24 % 14 % 15 %

FCFPS (Rs) 7.8 14.9 -52.1 12.0 Cash Conv Cycle 51.0 435.9 - 63.1 Div Payout (%) 0 % 0 % 0 % 0 %

BVPS (Rs) 2.5 13.7 46.6 96.0 WC Turnover 7.2 0.8 -38.7 5.8

P/E 92.1 47.6 54.4 61.1

EBITDAM (%) 27 % 31 % 35 % 34 % FA Turnover 4.8 10.6 0.8 0.9 P/B 154.9 28.6 8.4 4.1

PATM (%) 16 % 23 % 18 % 14 % Net D/E 6.5 4.0 0.7 -0.3 P/FCFF 50.4 26.4 -7.5 32.6

Tax Rate (%) 0 % 0 % 26 % 36 % Revenue/Capital Employed 1.4 0.9 0.6 0.5 EV/EBITDA 54.5 39.7 30.5 23.0

Sales growth (%) 12 % 30 % 12 % 20 %

Capital Employed/Equity -71.9 6.8 2.7 1.3

EV/Sales 15.0 12.3 10.6 7.7

FDEPS growth (%) 109 % 93 % -12 % -11 %

Dividend Yield (%) 0.0 % 0.0 % 0.0 % 0.0 %



Equirus Securities

Research Analysts Sector/Industry Email

Equity Sales E-mail

Abhishek Shindadkar IT Services [email protected] 91-22-43320643 VishadTurakhia [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

Praful Bohra 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

Associates E-mail SandipAmrutiya [email protected] 91-22-43320660

Ankit Choudhary [email protected] 91-79-61909533 Compliance Officer E-mail

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

ParvaSoni [email protected] 91-79-61909521

Pranav Mehta [email protected] 91-79-61909514

RonakSoni [email protected] 91-79-61909525

Samkit Shah [email protected] 91-79-61909520

ShreepalDoshi [email protected] 91-79-61909541

VarunBaxi [email protected] 91-79-61909595

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.

Registered Office: Equirus Securities Private Limited Unit No. 1201, 12th Floor, C Wing, Marathon Futurex, N M Joshi Marg, Lower Parel, Mumbai-400013. Tel. No: +91 – (0)22 – 4332 0600 Fax No:+91-(0)22 – 4332 0601

Corporate Office: 3rd floor, House No. 9, Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge, S.G. Highway Ahmedabad-380054 Gujarat Tel. No: +91 (0)79 - 6190 9550 Fax No:+91 (0)79 – 6190 9560

mailto:[email protected]




























© 2017 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not

be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited

Analyst Certification

I, Depesh Kashyap/Harshit Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their

securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures

Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the

Capital Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock

Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH000001154), as a Portfolio Manager under SEBI (Portfolio Managers

Regulations, 1993 (Reg. No.INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP-324-2017). There are no disciplinary actions taken by any regulatory

authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to

merchant banking services, private equity, mergers & acquisitions and structured finance.

As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for

investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have

received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their

directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in

their proprietary position) 1% or more of the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or

Associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor

Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or

brokerage service transactions. ESPL has not been engaged in market making activity for the subject company.

The Research Analyst engaged in preparation of this Report:-

(a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c)

has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or

services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject

company or third party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject

company.

This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,

publication, availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein

may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession of this document are required to inform themselves of, and to observe, such applicable

restrictions. Please delete this document if you are not authorized to view the same. By reading this document you represent and warrant that you have full authority and all rights necessary to view and read this

document without subjecting ESPL and affiliates to any registration or licensing requirement within such jurisdiction.

This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based on

this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to

its accuracy or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant information

contained herein. While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, 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 ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the

securities of companies referred to in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific investment objectives,

financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or

anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its

research report. Thus, investors should be aware that the firm may have conflict of interest.



A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and www.bseindia.com (Choose a company from the list on the browser and select the

“three years” period in the price chart).

Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest

Research Analyst’ or Relatives’ financial interest No

Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No

Research Analyst’ or Relatives’ material conflict of interest No

Disclaimer for U.S. Persons

ESPL/its affiliates are not a registered broker–dealer under the U.S. Securities Exchange Act of 1934, as amended (the“1934 act”) and under applicable state laws in the United States. In addition Equirus is not a

registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the “Acts”), and under applicable state laws in the United States.

Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Equirus, including the products and services described herein are not available to or intended

for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition on

soliciting the securities business in that jurisdiction without going through the registration requirements and/ or prohibit the use of any information contained in this report. This Report and its respective contents

do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons"

are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under

certain rules.

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