Dalmia Bharat Enterprises Ltd.

Transcription

1 July 12, 2012 Dalmia Bharat Enterprises Ltd. Poised for Growth CMP INR Target INR Initiating Coverage - BUY Key Share Data Face Value (INR) 2.0 Equity Capital (INR Mn) Week High/Low (INR) / months Avg. Daily Volume (NSE) 49,424 BSE Code NSE Code Reuters Code Bloomberg Code Shareholding Pattern (as on 31st Mar. 2012) FII's, 11.50% Others, 26.09% DII's, 3.41% DALMIABEL DALA.BO DBEL IN Company Background Dalmia Bharat Enterprises Ltd (DBEL) is a diversified group having interests in cement, power and refractories. It has cement plants in southern states of Tamil Nadu (Dalmiapuram and Ariyalur) and Andhra Pradesh (Kadpa) with a total capacity of 8.2 million tonnes per annum (mtpa) along with 72 MW captive power plants. It is a pioneer in super specialty cements used for oil wells, railway sleepers and air strips. Investment Rationale One of the largest players in Southern India DBEL is among the top six cement manufacturing groups by capacity in Southern India, with an installed capacity of 8.2 mtpa. It also holds percent stake in OCL India Ltd (dominant player in Eastern India), having an installed capacity of 5.4 mtpa along with 54 MW of captive power plants. Source: Company Promoter 59.0% Cement demand in South India to pick up Key Financials (INR Million) Particulars FY11 FY12 FY13E FY14E Net Sales 17, , , ,457.7 Growth (%) % 12.9% 15.7% EBITDA 3, , , ,018.6 Adj. PAT , , ,556.3 Growth (%) % 80.5% 33.5% EPS (INR) BVPS (INR) Key Financials Ratios Particulars FY11 FY12 FY13E FY14E P/E (x) P/BVPS (x) Mcap/Sales (x) EV/EBITDA (x) ROCE (%) 3.7% 7.2% 8.7% 10.8% Adj. ROE (%) 1.8% 5.1% 8.6% 10.5% EBITDA Mar (%) 20.9% 23.8% 24.7% 26.3% Adj.PAT Mar (%) 2.9% 6.2% 9.8% 11.3% Debt - Equity (x) Yr price performance DBEL vis-à-vis BSE Mid Cap 0% -15% -30% -45% -60% Jul-11 Sep-11 Dec-11 Feb-12 Apr-12 Jun-12 DBEL BSE Mid Cap A Analyst: Nikhil Saboo Ph: , M: nikhil.saboo@skpmoneywise.com Over the last few years, Southern India has witnessed an over capacity scenario owing to commissioning of ~70 mtpa (CAGR of ~20 percent) of new capacity during FY07-12, while demand has remain subdued in the range of ~4 percent. Going ahead, we believe that Southern India would add effective capacity of ~21 mtpa over FY12-15E at a slower CAGR of ~5 percent while incremental demand is expected to increase at a CAGR of ~6 percent. Capacity expansion plan to aid volumes The company is implementing a Greenfield expansion of 2.5 mtpa cement plant at Karnataka along with 45 MW captive power plant at a total cost of approx. INR 13.0 billion (excluding cost of captive power plant) which is expected to be completed towards the end of Q4FY14E. OCL India is setting up 1.5 mtpa grinding unit at Medinipur, West Bengal for a total cost of INR 5.0 billion which is expected to get commissioned by November Strong balance sheet to drive growth The company is likely to fund most of its expansion through internal accruals. During FY12-14E, DBEL is expected to generate cash flow from operations of ~11.15 billion, which would be utilized as capex and towards repayment of debt. Valuation We rate a BUY rating on DBEL with a price target of INR 158.6/share, implying an upside potential of 36.2 percent from current levels. Our target price is based on SOTP valuation of DBEL s FY14E EV/EBITDA multiple of 3.75x and DBEL s OCL India stake at FY14E EBITDA multiple of 4x. SKP Securities Ltd Page 1 of 14

2 Industry Overview Cement Industry India is among the fastest growing cement markets in the world with consumption CAGR of 8.2 percent (FY02-12) During FY02-12, the effective installed capacity of the cement industry increased at a CAGR of 9.0 percent from MT to ~308 MT. During the same period, while there was significant decline in capacity utilization, production growth also underperformed capacity growth by growing at a CAGR of 8.2 percent. Actual cement production in FY12 was ~224 MT as against ~211 MT in FY11, registering a growth rate of 6.4 percent. Cement utilization during the same period stands at ~73.0 percent as compared to ~75.2 percent reported in FY11. Exhibit: Effective Capacity Utilization Figs. In MT FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Effective Capacity Production Capacity Utilization (%) Source: CMA, SKP Research Even though, India is the second largest cement producer in the world after China, its per capita cement consumption is very low In 2010, global cement industry stood at ~3,100 MT, with China accounting for nearly half of the total output. India is the second largest producer with approximately 308 MT of cement (as on March 31st, 2012). India s per capita consumption is at 176 kg against the world average of 433 kg or China s 1,210 kg. India is way behind the global average per capita consumption and this process of catching up with International average would drive the growth of Indian cement industry. Exhibit: Per Capita Cement Consumption 1, Figs. In Kg 1, Source: Industry, SKP Research India World Average China SKP Securities Ltd Page 2 of 14

3 In India, demand from infrastructure has increased but supply has remained the same. Moreover, in the 12th five year plan, Government has planned the spending of over INR 40,992 billion on infrastructure against INR 20,542 billion in 11th five year plan. Hence, massive investment in infrastructure would provide boost to the Indian cement industry. Recent growth in the global cement consumption is primarily driven by the emerging markets, generating ~70 percent of the demand Exhibit: Infrastructure Spending Figs. in INR Billion FY12E FY13E FY14E FY15E FY16E FY17E 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% Infrastructure Sepnding As a %age og GDP Source: Planning Commission, SKP Research Refractory Industry Presently, capacity utilization in the refractory industry has been moderate as a number of capacity expansion programmes in the steel industry has been deferred The growth of the refractory industry is dependent on the growth of steel industry which consumes ~75 percent of the total refractories produced. It is expected that world steel production will grow at a CAGR of 2.6 percent by 2015 resulting in strong demand of refractories going forward. Increase in capacity additions by major steel producers around the world will further increase demand for refractories. In India, refractory industry is fragmented with very few organized players. Production capacity of refractories in India is currently around 2.5 million tonnes. Presently, capacity utilization in the refractory industry has been moderate as a number of capacity expansion programmes in the steel industry has been deferred. However, with the thrust of the government on developing infrastructure, we expect steel industry will grow at a robust pace going forward. Growth in steel industry is likely to translate into healthy demand for refractories in the future. SKP Securities Ltd Page 3 of 14

4 Company Profile DBEL is currently having a capacity of 8.2 mtpa cement plant while OCL India is having a capacity of 5.4 mtpa Dalmia Bharat Enterprises Ltd (DBEL) is a diversified group having interests in cement, power and refractories. It has cement plants in southern states of Tamil Nadu (Dalmiapuram and Ariyalur) and Andhra Pradesh (Kadpa) with a total capacity of 8.2 mtpa. DBEL holds 100 percent stake in Dalmia Power Ltd, which holds 74 percent stake in DCB Power Ventures Ltd, having a thermal power generation capacity of 72 MW. DBEL also holds percent stake in OCL India Ltd, which is engaged in the manufacturing of cement with installed capacity of 5.4 mtpa and 54 MW of captive power plant (CPP). Exhibit: Corporate Structure Dalmia Bharat Enterprises Ltd. (DBEL) 100% Dalmia Refractories 100% Dalmia Power Ltd. 74% DCB Power Ventures Ltd. > Thernal Power 26% 85% Dalmia Cement BharatLtd. 100% 45.4% 15% Dalmia Cement Ventures Ltd. * OCLIndia Ltd. (Listed) Kholberg Kravis Roberts (KKR) Note: * Plans for Greenfield cement projects > Operating Cement capacity > Refractories DBEL s presence is spread across Tamil Nadu, Kerala, Karnataka, Andhra Pradesh while OCL India Ltd. presence is spread across Orissa, West Bengal, Bihar, Jharkhand etc, primary catering to Southern and Eastern India. Exhibit: Geographic Mix 12.0% DBEL 3.0% OCL India Ltd 8.0% 2.0% 13.0% Primarily caters to the markets of Southern and Eastern India 13.0% 50.0% 20.0% 58.0% 22.0% Tamil Nadu Kerala Karnataka AP Others Orissa Bihar Others West Bengal Jharkhand SKP Securities Ltd Page 4 of 14

5 Investment Rationale One of the largest players in Southern India DBEL is among the top six cement manufacturing groups by capacity in Southern India, with an installed capacity of 8.2 mtpa. Its plants are strategically located in Andhra Pradesh and Tamil Nadu, near lime stone reserves from where it can cater to the entire southern markets (Andhra Pradesh, Karnataka, Tamil Nadu & Kerala), thus giving it a competitive edge over its competitors. DBEL has strong brands like Superoof, Dalmia 43 Grade, Vajram and Dalmia SRPC, which enables it to command significant market share. Exhibit: Top 6 Cement Players in South Its plants are strategically located in Andhra Pradesh and Tamil Nadu, near lime stone reserves from where it can cater to the entire southern markets Figs. in MTPA India Cement Ultra Tech Cement Madras Cement 9.70 ACC Chettinad Cement Dalmia Cement Source: CMA, SKP Research Apart from the above, DBEL holds percent stake in OCL India Ltd, having an installed capacity of 5.4 mtpa along with 54 MW of captive power plants. OCL India enjoys dominant position in Eastern India, having a market share of ~30 percent in Orissa. DBEL also holds 100 percent stake in Dalmia Power which holds 74 percent stake in DCB Power Ventures Ltd, having thermal power capacity of 72 MW. Over the next two to three years, many of DBEL s key cement consuming states are scheduled for elections Exhibit: Top 6 Cement Players in East Figs. in MTPA Lafarge OCL India Ambuja Cement ACC Ultratech Jaypee Cement Source: CMA, SKP Research In-order to de-risk its geographical concentration from Southern and Eastern India, Dalmia Cement Bharat Ltd (DCBL) a subsidiary of DBEL has acquired 50 percent stake in Assam based (North Eastern India) Calcom Cement Ltd. for a consideration of INR 2,380 million. The move is in line with the group s objective to create and enhance its foothold into multiple regions and be a pan SKP Securities Ltd Page 5 of 14

6 India cement player. Calcom Cement Ltd. is a manufacturer of OPC and PPC cement, currently having a 1.7 mtpa grinding unit at Lanka in Naogaon District and is in the process of expanding it to 2.1 mtpa. Cement demand in South India to pick up Despite mid-year volatility, prices in Southern & Eastern markets recovered and outstripped all India prices by March 2012 Over the last few years, Southern India has witnessed an over capacity scenario owing to commissioning of ~70 mtpa (CAGR of ~20 percent) of new capacity during FY07-12, while demand has remain subdued in the range of ~4 percent (negative growth during FY11 and FY12). The slowdown in cement offtake was on account of slowdown in Andhra Pradesh post political crisis. Recently, despite oversupply scenario prices have remained firm as the rate of capacity growth is slowing since it is getting increasingly difficult to acquire good-quality limestone coupled with longer gestation periods (acquiring land has become time consuming & expensive). Thus, demand supply situation is moving in favor of producers as new plants are more difficult to set up. With increase in affordable housing schemes, pick-up in construction activity in Andhra Pradesh and benefits accruing from a further fall in interest rates, we expect demand-supply scenario to improve. Going ahead, we believe that Southern India would add effective capacity of ~21 mtpa over FY12-15E at a slower CAGR of ~5 percent while incremental demand is expected to increase at a CAGR of ~6 percent. Exhibit: Expected Capacity Addition During FY13-15 (Figs in MTPA) State FY11 Capacity FY12 FY13E-15E Addition Capacity Addition Capacity Tamil Nadu Karnataka Andhra Pradesh * 70 Total South East Source: Company Estimates, SKP Research Note: * Out of 6 MTPA upcoming capacity in Andhra Pradesh, 4.5 MTPA of JP Cement Capacity already commissioned in April 2012 It is getting increasingly difficult to acquire good-quality limestone coupled with longer gestation periods Apart from the above, demand for cement also picks up during the election time, as incumbent Government tries to meet some of the infrastructure related commitments. Over the next two years, besides general election at the Centre, many of DBEL s and OCL s key cement consuming states like Karnataka, Andhra Pradesh, Orissa etc. are scheduled for elections. These electoral developments will keep demand buoyant till FY15. SKP Securities Ltd Page 6 of 14

7 Exhibit: Forthcoming Elections in DBEL's & OCL's Key Markets Year Expected Month State %age of Sales mix 2013 June Karnataka 12% 2014 June Centre (Lok Shaba) 100% 2014 June Andhra Pradesh 12% 2014 June Orissa * 57% 2015 January Jharkhand * 12% 2015 December Bihar * 10% Source: Election Commission of India, Company, SKP Research Note: OCL's Key Markets Capacity expansion plan to aid volumes After the completion of the expansion plan, DBEL s total cement capacity would stand at 10.7 mtpa The company is implementing a Greenfield expansion of 2.5 mtpa cement plant at Karnataka along with 45 MW captive power plant at a total cost of approx. INR 13.0 billion (excluding cost of captive power plant) which is expected to be completed towards the end of Q4FY14E. The funding for the same will be done through a mix of internal accruals and debt. After the completion of the expansion plan, DBEL s total cement capacity would stand at 10.7 mtpa. Translation of these capacities into volume growth would help the company to increase its top line growth, even in a softening realization situation. To improve its efficiency DBEL has setup railway siding at Kadapa, Andhra Pradesh which going forward, would result in deeper market reach and lower logistic costs. To improve its efficiency DBEL has setup railway siding at Kadapa, Andhra Pradesh which going forward, would result in deeper market reach and lower logistic costs Its associate company, OCL India is setting up 1.5 mtpa grinding unit at Medinipur, West Bengal for a total cost of INR 5.0 billion which is expected to get commissioned by November OCL India has recently commissioned a 10 km cross country belt conveyor for transportation of limestone from mines to plant. The company has also commissioned one CPP of 27 MW in September 2011 and another CPP of 27 MW is expected to get commissioned by end of H1FY13E at Rajgangpur plant, Orissa. Post commissioning, the plant will improve the cost efficiencies and after meeting the requirement, surplus power will be available for sale. Strong balance sheet to drive growth Post restructuring in April 2010, a combination of robust earnings and judicious investments have resulted in DBEL enjoying good returns relative to the industry. For the year ended FY12 its sales have grown at 33.5 percent y-o-y to INR 23.3 billion while adjusted PAT increased by 6.3 percent y-o-y to INR 1.43 billion. SKP Securities Ltd Page 7 of 14

8 Going forward, we expect the sales to grow at CAGR of 14.3 percent over FY12-FY14E to INR billion while net profit is expected to grow at CAGR of 55.0 percent to INR 3.44 billion during the same period. During FY12-14E, DBEL is expected to generate cash flow from operations of ~INR 11.5 billion, which would be utilized as capex and towards repayment of debt During FY11, DBEL sold 15 percent stake in its subsidiary company DCBL, having a cement capacity of 8.2 mtpa to PE firm Kohlberg Kravis Roberts (KKR) for a total consideration of INR 5.0 billion. DBEL has an option to raise another INR 2.5 billion by selling further stake to KKR. Thus, DBEL is well placed to meet its additional capital requirement enabling it to consolidate its existing market position and pursue attractive organic and inorganic growth options as and when opportunities arise. DCBL also holds 26 percent stake in DCB Power Ventures Ltd, having an installed thermal power capacity of 72 MW. During FY12-14E, DBEL is expected to generate cash flow from operations of ~INR billion, which would be utilized as capex. Its low leverage balance sheet (Debt/Equity ratio of 0.63 in FY12) should also enable DBEL to capitalize on organic growth opportunities. Recent Developments OCL India Lanjiberna Mines OCL India has received provisional approval to mine limestone from its mines for one year and mining has resumed In December 2011, the Deputy Director of Mines, Orissa banned OCL India (associate company) to mine limestone from its Lanjiberna Mines, which impacted Q4FY12 performance. However, in April 2012, OCL India has received provisional approval to mine limestone from its mines for one year and mining has resumed. The company expects the final mining approval in next few months. Not penalised in CCI investigation DBEL & OCL India were not penalised by CCI for cartelisation DBEL and its associate company OCL India Ltd was not penalised by the Competition Commission of India (CCI) for cartelisation. In June 2012, CCI levied a penalty of ~INR 63 billion on 11 cement companies due to violation of the provisions of the Competition Act, 2002, which deals with anti-competitive agreements including cartels. Thus, we believe DBEL to be re-rated going forward. SKP Securities Ltd Page 8 of 14

9 Key Concerns Soaring raw material prices The price of South African coal (which is the major input for the domestic cement companies) corrected by around 12 percent q-o-q during Q1FY13 and by around 23 percent y-o-y Rising raw material prices (lime stone and gypsum) and increasing power and fuel cost poses a major threat. Limestone and gypsum are on the increasing trends over the past few quarters. While prices of limestone have increased due to increase in royalty payments to Government of India, its impact is limited as DBEL has captive limestone reserves. Over the last couple of months, international coal price has softened by ~23 percent and is expected to fall further. Though, the depreciating rupee has limited its gains. Ongoing Telangana agitation Ongoing Telangana agitation in Andhra Pradesh has impacted demand for the second year running. The problem may continue going forward and may exert further pressure on demand and operating rates where DBEL has major presence. Comparative Valuation On valuation front, DBEL is relatively trading at par compared to its peers Exhibit: Comparative Valuation Figs in INR Million Particulars Chettinad Cem Madras Cem DBEL Total Income 20, , ,303.6 EBITDA 6, , ,555.8 EBITDA Margin (%) 33.10% 28.83% 23.8% PAT 1, , ,434.5 PAT Margin (%) 9.13% 11.83% 6.3% Diluted EPS Book Value Per Share CMP (12-July-12) P/E (x) P/BV (x) Debt/Equity (x) ROE (%) 18.7% 18.8% 5.1% EV/EBITDA (x) EV/Total Income (x) FY12 Capacity (mtpa) SKP Securities Ltd Page 9 of 14

10 Valuations Cement being a commodity is exposed to vagaries of business cyclicality, feeling the heat of high commodity prices, slowdown in infrastructure spending, higher interest rates etc. Thus, valuing the company on P/E and DCF won t be the right methodology, as earnings are very volatile and there will be lot of subjectivity involved in the assumptions, which may prove to be wrong looking at the abrupt change in the cycle. Thus, we have valued the company on the basis of EV/EBITDA multiple. EV/EBITDA Multiple DBEL is trading at an EV/EBITDA of 4.66 and 3.61x FY13E and FY14E EBITDA respectively. We valued DBEL s business at FY14E EV/EBITDA multiple of 3.75x and DBEL s OCL India stake at FY14E EBITDA multiple of 4x. Thus, we arrived at a price target of INR 158.6/share, implying an upside potential of ~36.2 percent in 18 months. We initiate coverage on DBEL with BUY rating. Exhibit: Value based on FY14E EV/EBITDA DBEL's Valuation Figs in INR Million OCL India Valuation Target EV/EBITDA 3.75x Target EV/EBITDA 4x FY14E EBITDA 8,018.6 FY14E EBITDA 3,100.6 Target EV 30,069.9 Target EV 12,402.4 We maintain a BUY rating with a price target of INR 158.6/share, reflecting an upside potential of 30.2 percent from current levels Less: FY14E Debt 16,865.3 Less: FY14E Debt 7,318.5 Less: FY14E Minority Int. 5,221.0 Less: FY14E Minority Int. - Add: FY14E Cash 2,436.1 Add: FY14E Cash 2,657.3 Target Market Cap 10,419.7 Target Market Cap 7,741.2 SOTP Valuation OCL India's Target Market Cap Market Cap Adjusted for DBEL's 45.4% Holding Less: Holding Company Discount (30%) Expected Adjusted Market Cap for OCL India Stake (1) DBEL Target Market Cap (2) Total Target Market Cap (1+2) 7, , , , , ,878.2 No of Shares 81.2 Target Price Per Share Source: SKP Research SKP Securities Ltd Page 10 of 14

11 One Year Forward EV/EBITDA Band Exhibit: One Year Forward EV/EBITDA Band DBEL historically traded in a narrow band of 6x to 4x on the one year forward EV/EBITDA basis, despite high volatility in earnings on account of cyclical nature of cement industry Figs. In INR Billion Mar-11 May-11 Jul-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 7x 6x 5x 4x 3x One Year Forward EV/Tonne Band Exhibit: One Year Forward EV/tonne Band 80 On an EV/tonne basis, DBEL is trading at range of USD 60-75/tonne while the replacement cost is ~USD 110/tonne (INR55/USD) Mar-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Figs. In USD/Tonne Apr-12 May-12 Jun-12 Jul-12 One Year Forward P/Bv Band Exhibit: One Year Forward P/BV Band At CMP, the DBEL is trading at 0.3x and 0.27x its FY13E and FY14E book value, respectively Mar-11 May-11 Jul-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb x 0.5x 0.4x 0.3x 0.2x SKP Securities Ltd Page 11 of 14

12 One Year Forward P/E Band Exhibit: One Year Forward P/E Band At CMP, the stock is trading at 3.7x and 2.7x its FY13E and FY14E earnings, respectively Mar-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 7x 6x 5x 4x 3x Financial Outlook Net Profit to grow at a CAGR of percent over FY12-14E Net profit is expected to grow at a CAGR of percent to INR 3.45 billion over FY12-14E Exhibit: Net Sales & PAT Figs. in INR Billion FY11 FY12 FY13E FY14E Net Sales Adjusted PAT PAT margins to improve by 534 basis over FY12-14E PAT Margin to improve by 534 basis points over FY12-14E mainly due to higher sales realization and better OCL performance going forward Exhibit: EBITDA & PAT Margins 29.0% 26.0% 23.0% 20.0% 17.0% 14.0% 11.0% 8.0% 5.0% 2.0% -1.0% FY11 FY12 FY13E FY14E EBITDA Margins Adj. PAT Margins SKP Securities Ltd Page 12 of 14

13 Exhibit: Income Statement Figures in INR Million Exhibit: Balance Sheet Figures in INR Million Particulars FY11 FY12 FY13E FY14E Particulars FY11 FY12E FY13E FY14E Net Sales 17, , , ,457.7 Share Capital Growth (%) % 12.9% 15.7% Reserve & Surplus 27, , , ,428.9 Expenditure 13, , , ,439.0 Preference Capital Material Consumed 1, , , ,189.8 Shareholders Funds 27, , , ,591.2 Power & Fuel Cost 5, , , ,375.9 Total Debt 19, , , ,865.3 Employee Cost 1, , , ,903.6 Minority Interest 4, , , ,221.0 Freight & Selling Exp. 2, , , ,264.1 Deferred Tax Liability Admin & Other Exp. 3, , , ,705.7 Total Liabilities 51, , , ,604.7 EBITDA 3, , , ,018.6 Depreciation 1, , , ,949.3 Net Block inc Capital WIP 37, , , ,898.3 EBIT 1, , , ,069.3 Investments 6, , , ,736.3 Other Income Current Assets 11, , , ,802.1 Interest Expense 1, , , ,412.0 Inventories 3, , , ,710.8 PBT , , ,334.2 Sundry Debtors 1, , , ,020.5 Exceptional Items Cash & Bank Balance 4, , ,436.1 Income Tax , , ,777.9 Other Current Asset Reported PAT , , ,556.3 Loans & Advances 2, , , ,482.4 (+) Share in Asso. Profits Current Liabilities & Prov 3, , , ,832.1 (-) Minority Interest Current Liabilities 3, , , ,299.1 Adjusted PAT , , ,447.8 Provisions Diluted EPS Total Assets 51, , , ,604.7 Exhibit: Cash Flow Statement Figures in INR Million Exhibit: Ratio Analysis Particulars FY11 FY12E FY13E FY14E Particulars FY11 FY12E FY13E FY14E PBT , , ,334.2 Earning Ratios (%) Share in Asso. Profits EBITDA Margin (%) 20.9% 23.8% 24.7% 26.3% Depreciation 1, , , ,949.3 Reported PAT Margn (%) 0.6% 6.3% 10.1% 11.7% Interest Provided 1, , , ,412.0 Adjusted PAT Margn (%) 2.9% 6.2% 9.8% 11.3% Chg. in Working Capital (1,981.2) (536.4) (1,664.2) (903.4) ROCE (%) 3.7% 7.2% 8.7% 10.8% Direct Taxes Paid (182.9) (1,228.5) (1,331.8) (1,777.9) Adjusted ROE (%) 1.8% 5.1% 8.6% 10.5% Other Non Cash Charges (103.5) (395.4) - - Per Share Data (INR) Operating Cash Flows 2, , , ,443.8 Diluted EPS Capital Expenditure (179.1) (2.8) (4,000.0) (5,000.0) Cash EPS (CEPS) Investments & Others (5,344.2) 2, ,000.0 BVPS Investing Cash Flows (5,347.1) (1,800.0) (3,000.0) Valuation Ratios (x) Equity Capital Raised 4, P/E Inc / (Dec) in Debt (2,172.7) (1,130.7) (800.0) (500.0) Price/BVPS Dividend Paid (inc tax) - (142.5) (166.2) (190.0) EV/Sales Interest Paid (1,631.5) (1,512.8) (1,510.1) (1,412.0) EV/EBITDA Financing Cash Flows 1,162.0 (2,786.0) (2,476.3) (2,102.0) Dividend Yield (%) 1.1% 1.3% 1.5% 1.7% Chg. in Cash & Cash Eqv 3,602.5 (3,719.5) ,341.9 Balance Sheet Ratios Opening Cash Balance 0.6 4, ,094.2 Debt - Equity Cash Additions* Current Ratio Closing Cash Balance 4, , ,436.1 Fixed Asset Turn. Ratios Source: Company Data, SKP Research Note: * Pursuant to Scheme of Arrangement SKP Securities Ltd Page 13 of 14

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SKP Securities Ltd Contacts Research Sales Mumbai Kolkata Mumbai Kolkata Phone Fax researchmum@skpmoneywise.com research@skpmoneywise.com Skp.sec@bloomberg.net Member: NSE BSE NSDL CDSL NCDEX* MCX* MCX-SX FPSB *Group Entities INB/INF: , BSE INB: , CDSL IN-DP-CDSL , DPID: , NSDL IN-DP-NSDL: , DP ID: IN302646, ARN: 0006, NCDEX: 00715, MCX: 31705, MCX-SX: INE SKP Securities Ltd Page 14 of 14