Sadbhav Engineering Ltd - BUY

Transcription

1 COMPANY RESEARCH September 21, 217 Sadbhav Engineering Ltd - BUY Set to Accelerate Sadbhav Engineering Ltd (SEL), an established infrastructure player, has presence across Roads, Mining and Irrigation segments. The Company has witnessed order inflows of Rs.47 bn during last three quarters and is currently sitting on an order book of Rs.84 bn (~2.x FY17 revenues), providing strong revenue visibility. During last few years, SEL refrained from bidding for orders during industry slowdown as it was unwilling to compromise on margins. However, with industry order flows picking up since the start of FY17, it s now comfortable bidding for orders. For FY18, SEL is targeting overall order inflows to the tune of Rs.6 bn which would further enhance its order book. Its listed subsidiary Sadbhav Infra Projects Ltd (SIPL), which holds Build Operate Transfer (BOT) assets, now commands stable cash flows from BOT projects and hence won t need further support from SEL to fund new projects. This would improve SEL s execution capacity significantly. SEL s Mining and Irrigation segments faced working capital constraints during last couple of years from certain stuck projects pending closure. However, the said issues have been largely resolved and overall working capital is now expected to improve going forward. The recent jump in order inflows, self sufficiency of BOT subsidiary, easing of working capital and improving industry outlook place SEL on a very strong growth trajectory. Based on the strong order book and robust order pipeline, we expect topline and earnings to grow at CAGR of 17% and 2% respectively during FY17 19E. With no significant capex and no further equity infusion towards SIPL, the return ratios are likely to be strong. At CMP of Rs.288, SEL trades at attractive valuations. We recommend a BUY on SEL with a target price of Rs.381 (based on SOTP valuation). The Standalone business has been valued at 18x FY19E EPS and SIPL has been valued at ~1.x Price/Invested Equity (pre holding company discount). Analyst: Alok Deora, Lokesh Kashikar CMP (Rs) mts Target (Rs) 381 Upside 32.1% Stock data (As on September 2, 217) Sector: Infrastructure Sensex: 32,4 Bloomberg code: SADE IN 2 Week h/l (Rs): 31 / 22 BSE code: 3271 Market cap (Rs mn) : 49,412 NSE code: SADBHAV Enterprise value (Rs mn): 64,366 Shareholding pattern (%) 6m Avg t/o (Rs mn): 4. Promoter 46.8 FV (Rs): 1 FII+DII 43. Div yield (%):.3 Others 9.7 Company rating grid Earnings Growth Cash Flow B/S Strength Valuation appeal Risk Low High Stock performance 12 SADBHAV SENSEX Sep 16 Jan 17 May 17 Sep 17 1M 3M 1Y Absolute return (%) 8.2 (.3) 1. Figure 1: Financial summary (Standalone) Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Revenues 31,863 33,23 38,294 4,643 yoy growth (%) Operating profit 3,348 3,6 4,16,12 OPM (%) Adjusted PAT 1,1 1,878 2,132 2,77 yoy growth (%) EPS (Rs) P/E (x) EV/EBITDA (x) Debt/Equity (x) RoE (%)

2 What s changing for SEL Order flow jumps in recent quarters; strong growth now visible SEL witnessed strong order inflows of Rs.47 bn (excluding L1) in last three quarters ending June 217, which is a sharp pickup compared to tepid inflows of Rs.22 bn and Rs.24 bn in FY1 and FY16 respectively. The order inflows are driven by the Roads segment which forms ~69% of the current order book. With a pumped up order book, SEL is well poised to deliver 17% topline CAGR during FY17 19E. SIPL to fund new BOT projects from own resources hereafter; SEL EPC execution capacity to improve SIPL would not be required additional support from parent SEL to fund its BOT projects. This would be due to improving cash flows from SIPL s BOT projects and recently won Hybrid Annuity (HAM) projects requiring low equity commitment. Owing to this, SEL s EPC execution capacity would improve. Working capital issues largely resolved and no major capex required; return ratios to be stronger SEL s working capital was stuck in Irrigation and Mining segment. This is expected to be ease off during FY18. Also, SEL would not require any major capex during the next two years. With improved working capital position and low capex, return ratios are likely to improve going forward. SEL s ROE is expected to improve from 11.9% in FY17 to 13% in FY19. Adjusted for SEL s equity investment in SIPL, SEL s ROE for FY19E would be at ~17.%. SEL s slow moving Mining & Irrigation orders to end soon; SEL now comfortable bidding actively for road projects Slow moving projects have adversely affected the profitability of the Mining and Irrigation segments. They collectively comprised more than % of the overall order pie a few years back but now form only ~3%. The share would decline further as the SEL is now comfortable in bidding for road projects. As the margins in segments like irrigation are lower than in roads, the shift would benefit SEL. Valuation Attractive at Current levels We assign a BUY rating on SEL for target of Rs.381 based on SOTP valuation as detailed below. SEL EPC business valuation SEL s EPC segment is currently trading at 19x FY19E EPS. The valuations don t seem rich considering the high growth expected during next few years based on existing order book and strong order pipeline. We assign a target P/E of 18x to EPC business. SIPL BOT Valuation SIPL is valued using Price to Invested Equity. At CMP, SIPL is trading at 1.x invested equity in BOT projects. Adjusted for Holding Company discount, the valuation stands at 1.2x. This is akin to the valuation of IRB s recent transfer of projects to InvIT. For a largely funded and stable portfolio, we believe 1.x (pre holding company discount) is appropriate. Figure 2: SOTP Valuation for SEL Valuation A) SEL Standalone EPC business Basis Valuation (per share) Price/ Earnings 18x Rs.271 B) SIPL BOT business (SEL share of 68%) SIPL s Price to Invested Equity 1.x SEL s stake in SIPL 69% Holding Co Discount 2% SIPL valuation (SEL s share) Rs.11 C) SEL Target Price (A+B) Rs.381 Source: IIFL Research CMP Rs.288 Upside 32.1% 2

3 Investment Rationale Presence across multiple verticals; well placed to capitalize on improving industry orders SEL has presence across multiple segments like Transportation, Irrigation and Mining which has allowed it to maintain its order book despite challenging market conditions. SEL had witnessed a visible shift in its portfolio with Transport segment falling below % when orders in roads segment at industry level were weak. SEL refrained itself from aggressive bidding as it did not want to compromise on margins. However now when transport orders have witnessed a sharp uptick, SEL has become an active bidder. Amassing a sizable chunk of orders in this space, it s now bidding for Irrigation and Mining projects opportunistically. We believe the presence and expertise in multiple segments would go a long way in delivering superior growth and keep SEL relatively immune in times of industry slowdown. Strong order flows in roads segment to drive overall order book for SEL during next few years SEL is currently sitting on a strong order book of Rs.84 bn, excluding recently declared L1 in two EPC projects of worth Rs.9 bn. Of the total order book, transportation comprises 69% with balance coming from Mining and Irrigation. The awarding in the roads segments has improved drastically off late and SEL is now actively participating in road tenders. The contribution from the Road segment is likely to increase during FY17 19 as order inflows pick up. Consequently, SEL expects order inflows to the tune of Rs.6 bn during FY18 out of which more than 8% are expected to come from Road segment. SEL has already won Rs.16 bn worth of projects in FY18 and we do not see significant challenges in achieving the FY18 target of Rs.6 bn of order inflows. We expect SEL s order book to grow at a CAGR of 18.% during FY Figure 3: Transport segment now dominates the order book (%) Transportation Irrigation Mining FY13 FY14 FY1 FY16 FY17 Q1 FY18 Figure 4: Order flows witness strong improvement in Roads segment 1 Transportation Order book (LHS) OB/Sales (RHS) (Rs. bn) (x) FY14 FY1 FY16 FY17 FY18E FY19E 3

4 Legacy orders in Irrigation segment to end soon; SEL to selectively bid going forward Within the Irrigation segment, SEL is into construction of Earthen Dams, Canals, Remodeling and improvement of Canals. Till date, SEL has completed over 3kms of canals. The share of Irrigation segment in overall revenue mix has been declining and currently stands at ~14%. In some projects, SEL has faced working capital blockage and are generating lower margins for SEL. However, these projects are about to be completed soon which should improve the overall margins. SEL expects to witness normalized margins of ~7% in the Irrigation segment once the legacy orders are done with. SEL has highlighted a cautious approach in bidding for irrigation projects. It has, therefore, guided an order inflow of ~Rs. bn during FY18 (less than 1% of the total FY18 order inflows target). We expect contribution from Irrigation to be weak during FY Execution-related issues in BCC coal project cleared; Mining contribution to topline likely subdued during FY17-19 Within the Mining segment, SEL is into excavation of overburden and mining of minerals. Like Irrigation, the share of the Mining segment has been declining and currently contributes ~1% to its total revenue. SEL faced issues related to funds getting stuck in Bharat Coking Coal (BCC) project owing to CENVAT credit issue. Also, SEL has opted to foreclose a BCC project in Katras areas worth Rs.1.7 bn as Director General of Mine Safety (DGMS) directed to replace the tire mounted equipment with chain mounted equipment. For rest of the BCC projects worth Rs..2bn, work would be expedited as CENVAT credit issues have been sorted out and SEL expects the complete the project in 1. 2 years. Going forward, SEL intends to go slow on Mining segment as it focuses on opportunities in Road segment. SEL expects negligible order inflows of ~Rs. bn from the Mining segment during FY18. We expect subdued topline and earnings growth during the next few years from the Mining segment. Figure : Irrigation segment to witness stable order flows 2 Irrigation Order book OB/Sales (RHS) (Rs. bn) (x) FY14 FY1 FY16 FY17 FY18E FY19E Figure 6: Mining segment to remain subdued in next few years 3 Mining Order book OB/Sales (RHS) (Rs. bn) (x) FY14 FY1 FY16 FY17 FY18E FY19E

5 Listed BOT subsidiary SIPL houses stable BOT assets, commands strong order flows SEL listed its BOT subsidiary in 21 and it now holds 68.6% stake in the same. SIPL has a well funded portfolio of 19 road assets, of which 11 are fully operational, 7 are under development and 1 is under construction. The projects are encompassing 4,22 lane kms and SIPL has invested equity to the tune of ~Rs22 bn till date (excluding the recently won toll road projects). The toll revenue from the BOT projects has grown at a healthy pace during FY Future growth in toll collection is expected to be ~12%. Figure 7: Presence in high growth states Figure 8: SIPL Toll collection trend (In Rs.mn) Q1 Q2 Q3 Q4 Q1 Projects FY16 FY16 FY16 FY16 FY17 Ahmedabad Ring road Q2 FY17 Q3* FY17 Q4 FY17 Q1 FY Aurangabad Jalna Bijapur Hungund Hyderabad Yadgiri Maharashtra Border Post Dhule Palesner Rohtak Panipat Sreenathji Udaipur Rajsamand Bhilwara Rohtak Hisar Total YoY growth 27% 33% % 19% 17% *Note: Q3 FY17 toll revenues were impacted due to ban on toll collection for 23 days Note: Figures below each state represent the average annual GDP growth between FY94 FY14.

6 SEL support to SIPL reducing as SIPL cash flows improve SEL which holds 68.6% stake in SIPL currently holds 11 operational and 8 under construction projects. These assets have stabilized and SIPL has now started paying back the loan support taken from SEL. The Loans and Advances given by SEL to SIPL which crossed Rs.6 bn at end of FY16, has been declining and currently stands at ~Rs4.4 bn. The Company expects the loans and advances to remain at current levels and use SIPLs improving free cash for growth purposes. This would allow SIPL to bid for more projects and would eventually benefit SEL in terms of EPC business opportunity from SIPL. No further funding required in near to medium term SIPL would require equity funding to the tune of ~Rs.7 bn (at gross level) during the next couple of years to fund the recently won HAM projects. Based on improving cash flows, SIPL would be in a comfortable position to fund from its own resources. Figure 9: SIPL debt from SEL has declined from the peak 7, 6, (Rs.mn),444 6,16, 4, 3,747 4,3 4,4 3, 2, 1, 44 FY13 FY14 FY1 FY16 FY17 Q1 FY18 6

7 Figure 1: SIPL project portfolio Projects Project Type State Client Status SIPL Lane Kms COD Total Equity + Concession Project Cost sub debt from period (yrs) (Rs bn) SIPL (Rs. bn) ARRIL Toll Gujarat AUDA Operational 1% 3 May AJTL Toll Maharashtra Maharashtra Govt. Operational 1% 263 Jul NSEL Annuity Maharashtra / MP NHAI Operational 1% 111 May HYTPL Toll Telangana NHAI Operational 1% 143 Dec BHTPL Toll Karnataka NHAI Operational 77% 389 Apr RPTPL Toll Haryana NHAI Operational 1% 323 Jan Maharashtra 22 Border Different for all MBCPNL Service Fee Maharashtra Operational 84% Govt. CPs CPs DPTL Toll Maharashtra NHAI Operational 1% 3 Jan SUTPL Toll Rajashthan NHAI Operational 1% 317 Oct BRTPL Toll Rajashthan NHAI Operational 1% 349 Jun RHTPL Toll Haryana NHAI Operational 1% 39 Jul SRHPL HAM Uttar Pradesh NHAI Under Development 1% 174 Mar SNHPL HAM Uttarakhand NHAI Under 73 days from 1% 199 Development Appointed date SBHPL HAM Gujarat NHAI Under Development 1% 192 Aug SUHPL HAM Gujarat NHAI Under Development 1% 164 Aug SBGHPL HAM Karnataka NHAI Under Development 1% 342 Aug SVHPL HAM Maharashtra NHAI Under 91 days from 1% 67 Development Appointed date NA 8.3 NA SUDHPL HAM Rajasthan NHAI Under 73 days from 1% 24 Development Appointed date NA 7. NA Note: ARRIL: Ahmedabad Ring Road Infrastructure Ltd., AJTL: Aurangabad Jalna Tollway Ltd., NSEL: Nagpur Seoni Expressway Ltd., HYTPL: Hyderabad Yadgiri Tollway Pvt. Ltd., BHTPL: Bijapur Hungund Tollway Pvt. Ltd., RPTPL: Rohtak Panipat Tollway Pvt. Ltd., MBCPNL: Maharashtra Border Check Post Network Ltd., DPTL: Dhule Palesner Tollway Ltd., SUTPL: Shreenathji Udaipur Tollway Pvt. Ltd., BRTPL: Bhilwara Rajsamanad Tollway Pvt. Ltd., RHTPL: Rohtak Hisar Tollway Pvt. Ltd. SRHPL: Sadbhav Rudrapur Highway Pvt. Ltd., SNHPL: Sadbhav Nainital Highway Pvt. Ltd., SBHPL: Sadbhav Bhavnagar Highway Pvt. Ltd, SUHPL: Sadbhav Una Highway Pvt. Ltd., SBGHPL: Sadbhav Bangalore Highway Pvt. Ltd. 7

8 Industry Overview Roads sector witness strong traction during FY17 The Road and Highways sector is cruising ahead following a sharp improvement in FY17 awarding and construction which rose ~6% and ~3% respectively. This growth can be attributed to higher budgetary support, reform measures and introduction of Hybrid Annuity Model (HAM) in Jan 216. In line with the FY17 situation, the outlook for FY18 looks equally promising, with the Government seeking to almost double the pace of construction to 41 km per day. The target is ambitious but more importantly, it s a step in the right direction. Robust tender pipeline, strong Government support and improving financial health of contractors would be key growth drivers during FY18. Besides, the Roads & Highways ministry is focused on easing the process of land acquisition. We believe meaningful progress on this front would provide significant support in achieving the sectoral targets. Road project awarding & construction zoom; reform measures, budgetary support and hybrid model work wonders The Road sector has bounced back sharply from the lows of 214, with the pace of awarding and construction growing by ~3x. Reforms related to relevant pre project clearances have ensured minimal projects stuck in the pipeline. The Government is enhancing budgetary allocations every year, thereby enabling the ministry to award more projects. The turning point, however, was the introduction of the HAM model. Within a year of its launch, the public private partnership based HAM model has largely steered the FY17 road awarding and is expected to continue its dominance during the next few years. While these measures worked wonders for the sector, the momentum needs to sustain for achieving the government target of 41 km per day of construction in FY18. Figure 11: Growth momentum likely to continue 3, 2, 2, 1, 1,, (kms) Awarded Source: Ministry of Road Transport and Highways, IIFL Research Figure 12: Key factors supporting the sector FY13 FY14 FY1 FY16 FY17 FY18E Higher funds for capex through Budgetary allocations and external resources Awarded per day (RHS) Success of Hybrid Annuity Model improving private participation Road sector set to witness strong growth Construction Constructed per day (RHS) (kms per day) Focus on awarding projects only after majority of the Land has been acquired Source: IIFL Research 8

9 Strong participation in HAM projects; Sadbhav, Dilip Buildcon and PNC infra bag major chunk in FY17 The business model has seen widespread participation from players across EPC and BOT segment. Despite HAM being the major driver of the FY17 awarding by NHAI, no single bidder has dominated the project awarding. The primary reason for large number of contractors and developers showing strong participation in these projects include Low amount of equity investment required vis à vis BOT The toll risk is completely eliminated as annuity payments are made by authorities every six months. Increasing competition in EPC bids Players with strong balance sheets like PNC Infra which primarily focused on EPC space during last few years also grabbed 13% of the NHAI Hybrid projects. MEP, a toll collector and Operations and Maintenance player, has also actively participated in these projects and bagged 4% of the NHAI awards. Figure 13: HAM projects witness diversified participation in FY17 33% 4% 4% % Source: NHAI, IIFL Research 2,434 km 6% 17% 7% 11% 13% Dilip Buildcon PNC Infratech Sadbhav Infrastructure Montecarlo G.R.Infraprojects Ashoka Concessions MEP MBL Infrastructure s Ltd Others Financials Topline growth to pick up backed by healthy order book and strong execution capabilities SEL has registered topline CAGR of 12.1% during FY14 17, mainly led by healthy performance in the transportation and irrigation segment. Strong order book and execution pick up in the transportation segment has resulted into improved contribution to the total revenue from 73% in FY14 to 76.4% in FY17 and has delivered 13.8% CAGR over the said period. Also, the company focused higher in the irrigation and mining division during these periods in order to get diversification benefit from better opportunities. Thus, the contribution from irrigation has improved from 12% in FY14 to 13.8% in FY17 and registered CAGR of 17.8% over the same period. However, mining business has dragged overall revenue growth, as the company has faced issues in certain projects Bharat Coking Coal owing to equipment alteration and CENVAT credit issue. Figure 14: Revenue to improve at 17% CAGR over FY17-FY19E (Rs. bn) Revenue (LHS) 31.8 Growth (RHS) (%) FY14 FY1 FY16 FY17 FY18E FY19E

10 Ease in working capital and debt reduction plans to keep return ratios elevated Legacy issues in the irrigation projects, stoppage of certain project in mining segment and continued support to SIPL has elevated SEL s debtor days to 187 days in FY17. This led to SEL s working capital jumping from 8 days in FY14 to 147 days in FY17. However, with the expected resumption of the Bharat coking coal project by Q3 FY18 and expected completion of legacy irrigation projects by the end of Q2 FY19, the working capital is expected to ease going forward. Further, improving cash flows by SIPL ensures no equity infusion by parent company. In addition, receipt of mobilization advances by SIPL is expected to be paid back to SEL, which will, in turn, help SEL to reduce debt burden. Thus, we expect ROE to be strong at ~13% during FY19. Adjusted for Equity Investment in SIPL, the ROE is expected to be at ~17.% during FY19. Figure 1: Working Capital to improve going forward 2 (days) Debtor days Creditor days Inventory days Working Capital days Figure 16: Peer comparison CAGR (%) FY17 19E Mcap Company (Rs. Bn) Revenue EBITDA P/E (x) FY19E EV/EBITDA (x) ROE (%) IRB Infra KNR Constructions Ashoka Buildcon NCC Ltd Dilip Buildcon Sadbhav Engineering Risks and Concerns Delays in acquisition of right of way may result into delay in execution and might affect the company s financials. Increase in industry competitiveness may result into aggressive bidding for road projects, in turn, could suppress company s order inflows, margins and future cash flows FY14 FY1 FY16 FY17 FY18E FY19E The company is expecting easing of working capital cycle on the back of improvement in debtors collections. However, delays in collection may keep the debtor days elevated. This might affect SEL s debt reduction plans and thus, profitability. Slowdown in traffic volumes for toll based BOT projects and downward movement in WPI may affect SPVs cash flows. This might led to additional equity infusion in SIPL leading to impact on SEL execution capacity. 1

11 Company Background Incorporated in 1988, SEL has gained vast experience in executing projects across 11 Indian states. It is engaged in development of roads and highways on BOT basis through its subsidiary, SIPL and EPC business for transport, mining and irrigation sector. The company has built more than 4 lane kms of roads and worked with various marque clients such as NHAI, GIPCL, GHCL, L&T, HCC, Punj Lloyd in the past. In addition, mining segment has provided company an opportunity to work with many stalwarts like Gujarat Heavy Chemicals Ltd, Gujarat Industries Power Company Ltd, Bharat Coking Coal Ltd. and Singareni Collieries Company Ltd. It holds the track record of executing contracts worth 3mn cu mtrs of overburden/waste and 19. mn tons of coal & lignite and 1.9 mn tons of uranium ore. In the irrigation business, SEL undertakes construction of earthen dams, canals, siphon, remodeling and improvement of canals and has completed over 3kms of canals. Figure 18: Timeline Incorporated in 1988, granted the Deemed Public Company status by RoC, Gujarat Became public limited company, crossed turnover of Rs.1bn for first time. Awarded BOT project for Vadape Gonde Section of NH 3 in Maharashtra State for the first time Won the Most Admired Developer Award at the 4th Infrastructure Today Awards, 211 Awarded 9 Irrigation, 3 Mining and 18 Transport sectors projects. Public listing of SIPL in Sept Figure 17: Corporate Structure Sadbhav Engineering Ltd. Figure 19: Key Management team Name Designation Mr. Vishnubhai M. Patel Chairman Emeritus 68.6% Mr. Shashin V. Patel Mr. Nitin R. Patel Chairman and Managing Director CFO and Whole time Director EPC business Sadbhav Infrastructure Project Ltd. (SIPL) Mr. Vikram R. Patel Source: Company Whole time Director Transport Irrigation Mining 11

12 Financials (Standalone) Figure 2: Balance sheet Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Equity capital Reserves 14,721 16,437 18,364 2,941 Net worth 14,892 16,69 18,3 21,113 Other LT Liabilities LT provision. Borrowing 1,629 1,183 13,183 12,383 Deferred tax liab (net) (9) (477) (477) (477) Total liabilities 2,462 31,414 31,3 33,14 Fixed assets,918,222,722 6,222 Intangible assets Investments,629,694,694,694 Other Non current Asset Net working capital 13,139 19,673 19,18 19,94 Current Assets Inventories 1,46 1,234 1,423 1,696 Sundry debtors 1,372 17,1 18,36 2,633 Other current assets,211 4,678,39 6,431 ST. Loans & advances,47,6 3,6 2,6 Cash Current Liabilities Sundry creditors (3,73) (4,91) (,663) (6,749) Other current liabilities (,662) (3,383) (3,92) (4,6) Provision (33) (2) (2) (2) Total assets 2,462 31,414 31,3 33,14 Figure 21: Income statement Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Revenue 31,863 33,23 38,294 4,643 Operating profit 3,348 3,6 4,16,12 Depreciation & Amortization (971) (1,) (1,4) (1,13) PBIT 2,377 2,6 3,12 3,967 Interest expense (1,7) (1,34) (1,631) (1,46) Other income Exceptional items (194) Profit before tax 1,646 1,897 2,369 3,436 Taxes (32) (18) (237) (89) Reported profit 1,32 1,878 2,132 2,77 Adj. Net profit 1,1 1,878 2,132 2,77 Figure 22: Cash flow statement Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Cash flow from operation Profit before tax 1,646 1,897 2,369 3,436 Depreciation 971 1, 1,4 1,13 Tax paid (32) (18) (237) (89) Working capital (1,846) (6,3) 1 (746) Operating cash flow 44 (3,66) 3,687 2,966 Cash flow from Investing Activities Capital expenditure (1,297) (299) (1,4) (1,63) Change in other non current assets (9) (13) Free cash flow (743) (3,944) 2,7 1,21 Cash flow from Financing activities Equity raised (187) (7) Investments 3 (6) Debt financing/disposal 1,131 4, (2,) (8) Dividends paid (14) (14) (26) (27) Other items (22) (32) Net in cash 7 64 (134)

13 Figure 23: Ratio analysis Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Growth matrix (%) Revenue growth Op profit growth EBIT growth PBT growth EPS growth Profitability ratios (%) OPM EBIT margin Net profit margin RoCE RoNW RoA Per share ratios (Rs) EPS Dividend per share Cash EPS Book value per share Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Valuation ratios (x) P/E P/BV EV/EBITDA Dividend Yield MCAP/Sales (x) Figure 24: Du-Pont analysis Y/e 31 Mar (Rs m) FY16 FY17 FY18E FY19E Tax burden (x) Interest burden (x) EBIT margin (x) Asset turnover (x) Financial leverage (x) RoE (%) Payout (%) Dividend payout Tax payout Liquidity ratios Debtor days Inventory days Creditor days Leverage ratios (x) Interest coverage Net debt / equity Net debt / op. profit

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Accordingly, IIFLW and its associates do not have any material conflict of interest at the time of publication of this Report. h) As IIFLW and its associates are engaged in various financial services business, it might have: (a) received any compensation (except in connection with the preparation of this Report) from the subject company in the past twelve months; (b) managed or co managed public offering of securities for the subject company in the past twelve months; (c) received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) 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) engaged in market making activity for the subject company ; IIFLW and its associates collectively do not own (in their proprietary position) 1% or more of the equity securities of the subject company/ies mentioned in the report as of the last day of the month preceding the publication of the research report and does not have material conflict of interest at time of publication of the research report; i) The Research Analyst/s engaged in preparation of this Report or his/her dependent relative; (a) does not have any financial interests in the subject company/ies mentioned in this report; (b) does not own 1% or more of the equity securities of the subject company mentioned in the report as of the last day of the month preceding the publication of the research report; (c) does not have any other material conflict of interest at the time of publication of the research report. j) The Research Analyst/s 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) has not served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company. We submit that no material disciplinary action has been taken on IIFLW by any regulatory authority impacting Equity Research Analysis. A graph of daily closing prices of securities is available at and quotes. (Choose a company from the list on the browser and select the three years period in the price chart). For Research related queries, write to: Amar Ambani, Head of Research at amar.ambani@iiflw.com. 1