Bayer Cropscience Ltd Bloomberg Code: BYRCS IN

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1 Sep 24, 215 Materials - Chemicals - Agricultural Chemicals Sep 24, 215 Bloomberg Code: BYRCS IN India Research - Stock Broking Return of Capital to Shareholders the Major Trigger, Till Then Increasing Share of Manufactured Goods to Cushion Margins, while Traded Goods Provide Cushion to Top-line yincreasing proportion of manufactured goods in the overall revenue from 43% in FY15 to 44% in FY17E is expected to lead to a 2 basis points jump in gross margins from 64.8% in FY15 to 65.% in FY16E & FY17E. It could have been higher, if not for the weak macro-industry environment. This increase is expected to act as a cushion for the EBITDA margins going forward. But, significant dependence on traded goods will continue to act as a ceiling for margins. We expect EBITDA margins to remain stable at lower levels of 11.9% & 12.3% in FY16E & FY17E respectively. yno significant capex in Himatnagar plant to make up for plant & machinery sale in Ankleshwar plant, might lead to an increase in other expenses beyond the expected levels. Based on the expectations of capex, we expect other expenses to normalize to the levels of 16.8% in FY16E & 16.4% in FY17E, as compared to 15.2% in FY15. yroe and RoCE of the company are expected to come down to 17.9%/2.4% and 15.4%/17.3% in FY16E/FY17E respectively. The gap between RoE and RoCE is expected to go back to earlier levels because of an increase in cash on books in FY17E. Valuation and Outlook Based on present valuations, BYRCS IN, looks over valued. BYRCS IN has not been bale to generate sufficient returns on a higher capital base reached post the sale of land & buildings in Thane & Powai. This can be corrected, by a further significant reduction in capital post the present buyback. Based on the present return ratios, we think a P/B of 5.9x is relatively more cushioned for FY17E book value generation per share. We initiate the coverage on BYRCS IN with a SELL and a price target of Rs Key Risks yrainfall significantly below expectations. ysignificantly below dividend pay outs. SELL Recommendation (Rs.) CMP 3723 Target Price 3322 Downside (%) 11 Stock Information Mkt Cap (Rs.mn/US$ mn) / wk High/Low (Rs.) 4236 / 222 3M Avg. daily volume (mn).2 Beta (x).9 Sensex/Nifty / 7869 O/S Shares(mn) 36.6 Face Value (Rs.) 1. Shareholding Pattern (%) Promoters 69. FIIs 5.1 DIIs 14.3 Others 11.6 Stock Performance (%) 1M 3M 6M 12M Absolute (5) (6) Relative to Sensex (5) Source: Bloomberg Relative Performance* Sep-14 Jan-15 May-15 Sep-15 BYRCS IN Sensex Source: Bloomberg; *Index 1 Exhibit 1: Valuation Summary (Rs. Mn) YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Net Sales EBITDA EBITDA Margin (%) Adj. Net Profit EPS (Rs.) RoE (%) PE (x) ; *Represents multiples for FY13, FY14 & FY15 are based on historic market price For private circulation only. For important information about Karvy s rating system and other disclosures refer to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>, Thomson Publishers & Reuters Analyst Contact Prashant Kanuru prashant.kanuru@karvy.com 1

2 Sep 24, 215 Company Financial Snapshot (Y/E Mar) Profit & Loss (Rs. Mn) FY15 FY16E FY17E Net sales Optg. Exp (Adj for OI) EBITDA Depreciation Interest Other Income PBT Tax Adj. PAT Profit & Loss Ratios EBITDA margin (%) Net margin (%) P/E (x) EV/EBITDA (x) Dividend yield (%) Company Background Bayer Crop Science is a part of Bayer AG, Germany. It has a manufacturing unit at Himatnagar, Gujarat. The company earns more than 4% of its revenues from Insecticides, with increasing concentration on Fungicides followed by Herbicides. BYRCS IN derives more than 15% of its revenues from exports, which are mainly done to Bayer Crop Science AG. The company derives around 6% of its revenues (almost equally from Manufactured and Traded) from formulations sales, around 14% of sales from Seeds (purchased from Bayer Bio Science and Seedworks products portfolio starting from FY16E) and around 24% from Active Ingredients (AIs) / Technicals (equally from Manufactured & Traded). In case of seeds, BYRCS IN has more than 4% market share in Hybrid Rice Seeds market (volume terms) and in case of pesticides has around 1% to 12% of the domestic industry market share. The company s recent acquisition of Seedworks India Pvt. Ltd is expected to provide strength in the field of vegetable seeds like Tomato, Hot Pepper, Okra and Gourds. Balance sheet (Rs. Mn) FY15 FY16E FY17E Total Assets Net Fixed assets Current assets Other assets Total Liabilities Networth Debt Current Liabilities Deferred Tax Balance Sheet Ratios RoE (%) RoCE (%) Net Debt/Equity... Equity/Total Assets P/BV (x) Exhibit 2: Shareholding Pattern (%) Cash Flow (Rs. Mn) FY15 FY16E FY17E PBT Depreciation Interest (expense) Tax (195) (1658) (1869) Changes in WC (1668) (827) (142) Others (457) (325) (434) CF from Operations Capex (516) (1735) (88) Investment (254) Others CF from Investing 4852 (1517) 118 Change in Equity (511) Dividends (46) (959) (1272) CF from Financing (415) (684) (1287) Change in Cash 6441 (4885) 1818 Exhibit 3: Revenue Break-up (%) FIIs 5.1% DIIs 14.3% Others 11.6% Promoters 69.% Traded AIs 12.% Traded Formulations 31.1% Traded & Own Seeds 13.1% Manufactured Formulations 28.2% Manufactured AIs 14.9% Others.7% Source: BSE, Karvy Research 2

3 Sep 24, 215 Expected continuation of increasing proportion of Manufactured/Finished goods in the total revenues of the company to cushion the margin: Increasing proportion of manufactured/finished goods over the last 4 years is expected to continue going forward. This is expected to help the company cap the gross margin drop to 2 bps in both FY16E and FY17E. Normalization of Advertisement & Promotion expenses as a percentage of revenues is expected to increase other expenses as a percentage of total revenues. Finished goods cushion for gross margins is expected to cap the reduction in EBITDA Margins to 19 bps in FY16E and 15 bps (over FY15) in FY17E. Formulations sales (both finished & traded) are expected to be the biggest contributors to the overall revenue growth (in absolute terms). Exhibit 4: Gross Margins (%) Exhibit 5: Manufactured Products Revenue Contribution (%) 3.% 2.% 28.1% 26.7% 29.3% 28.2% 3% 31% Gross Margins(%) 1.%.% 9.% 12.7% 1.4% Manufactured AIs Manufactured Formulations 14.9% 12% 13%, AIs: Active Ingredients Exhibit 6: Revenue break-up segment wise (Rs. Mn) 15 Strong Parent Backing: BYRCS IN s revenue growth is expected to moderate to 11.8% in FY16E and 1.% in FY17E. These expectations are based on below average monsoons, weaknening pricing strength and drop in pricing power of some of the older blockbusters. The charts below show the rainfall deviation in important cotton and rice growing areas (two of the most important crops for the company) in FY16E. Even the stated revenue growth and future acceleration are expected to be driven by a strong innovation driven parent which helps the company sustain its revenue growth pace through manufactured products - by importing novel and patented AIs and making formulations for domestic market as well as for exports. The recent registrations indicate increasing concentration towards Fungicides portfolio going forward and also export of Patented Formulations from the Indian plant. Increasing concentration Fungicides registrations (Nativo especially) is expected to smoothen out the H2 vs. H1 volatility even more going forward. Exhibit 7: Rainfall in Cotton Growing Areas (%age deviation from Long Period Average) Manufactured AIs Manufactured Formulations Traded AIs Traded Formulations Traded & Manufactured Seeds Others Vidharbha Saurashtra & Kutch Telangana A.P. Rayalaseema N.I. Karnataka Source: IMD, Karvy Research 3

4 Exhibit 8: Rainfall in Rice Growing Areas (%age deviation from Long Period Average) Source: IMD, Karvy Research Sep 24, Gangetic West Bengal Jharkhand Bihar East U.P. West U.P. Haryana & Chandigarh Punjab Odisha Coastal Andhra Pradesh Telangana Rayalaseema Tamil Nadu Exhibit 9: Pesticides registrations for Bayer Crop Science Formulation/Active Ingredient For Crop/Domestic Use/Export Tebuconazole 5%w/w + Trifloxystrobin 25% WG Expansion of bio-efficacy into Grapes & Chillies, Wheat, Mango (all under Sec 9(3)) Tebuconazole 25.9% EC Expansion of bio-efficacy claim to Soybean (u/s 9(3)) Flubendiamide 8.33% + Deltamethrin 5.56% SC Grant of registration u/s 9(3) for export only Flubendiamide 19.92% w/w + Thiacloprid 19.92% w/w SC Application for indigenous manufacturing Tembotrione (Patented Herbicide) Application for grant of registration for import of Tembotrione Technical u/s 9(3). Tembotrione 34.4% SC Application for grant of registration of indigenous manufacturing u/s 9(3) Tebuconazole 25.9% w/w EC Expansion of bio-efficacy label to Onion u/s 9(3); Expansion of bio-efficacy claim to Soybean u/s 9(3) Tebuconazole 5.36% FS Application for grant of indigenous manufacture u/s 9(3); Label expansion to Onion crop u/s 9(3) Penflufen 22.43% FS (novel fungicide) Application of Bayer Crop Science for grant of registration for indigenous manufacture u/s 9(3) for export only. Penflufen Technical 95% min. Application of M/s Bayer Crop Science Ltd., for grant of registration for import of Penflufen Technical u/s 9(3) Spirotetramet 15.31% OD Application for grant of registration for indigenous manufacture of Spirotetramat 15.31% OD u/s 9(3) for export only Spirotetramet 96% min. Application for registration of import of Spirotetramet 96% min. u/s 9(3) Fluopicolide Technical Application of M/s Bayer Crop Science Ltd for grant of registration of Fluopicolide Technical u/s 9(3) Fluopicolide 4.44% + Fosetyl Aluminium 66.67% WG (w/w) Application for grant of registration for indigenous manufacture u/s 9(3) Flupyradifurone 17.9% SL Application of M/s Bayer Crop Science for grant of registration for indigenous manufacturing of Flupyradifuron 17.9% SL u/s 9(3) for export only Flupyradifurone Technical Application of M/s Bayer Crop Science for grant of registration for import of Flupyradifurone Technical 96% min. u/s 9(3) for export only Fenoxaprop-p-ethyl 7.77% + Metribuzin 13.6% (w/w) EC Application for grant of permission for indigenous manufacture u/s 9(3) Spiromesifen 22.9% SC Expansion of bio-efficacy claim of Spiromesifen 22.9% SC in Tomato u/s 9(3) Fenoxaprop-p-ethyl 6.7% EC Application for grant of expansion of label expansion on the crop of cotton u/s 9(3) 4

5 Sep 24, 215 Exhibit 1: Quarterly Margin Performance 25 3.% % 1.%.% -1.% -5 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15-2.% EBIDTA EBITDA (Rs. Mn) EBIDTA EBITDA Margins (%) Seeds: Seeds of field crops are purchased from Bayer Bio Science and traded. Out of the total seeds sales, more than 85% of the sales come from Rice Hybrid seeds and Cotton Hybrid seeds taken together. In a weak macro environment for both the seeds volume drop indicated in Rice Hybrid seeds total market volume by seed companies and a price drop in cotton hybrid seeds (compulsory Maximum Retail Price (MRP) drop by Maharashtra) we expect the seeds revenue growth to be led by the recent acquisition of seedworks (strong in Tomato, Hot pepper and Okra seeds). This acquisition is also expected to help enhance the margin profile of this business segment but expected to increase the receivable days as fruits & vegetable seeds are usually 2 days plus cycle business. What will also support Bayer Crop Science is the facilities of R&D and seed processing that this company has in Bengaluru and Hyderabad. Also, seedworks has registered Hybrid rice seeds. Exhibit 11: Rice Hybrid Seeds registered for Seed Works International Name of the Seed Variety Year Duration Yield (Tonnes/Hectare) Area US A.P., Bihar, Karnataka, T.N, U.P, W.B US Tripura, M.P., Karnataka US Not Available Not Available A.P., T.N., Maharashtra US Not Available A.P., Bihar, W.B., Uttarakhand Source: Directorate of Rice Development, Karvy Research 5

6 Sep 24, 215 Expected increase in Other Expenses to impact the EBITDA Margins in FY16E but, any capex in Himatnagar (to make up for sale of Ankleshwar plant) can normalize this impact going forward: Exhibit 12: Formulations Sales & Ad Expenses Exhibit 13: EBITDA Margins (%) FY13 FY14 FY15 FY16E FY17E Purchased Formulations Revenue Increase (Rs.Mn) Manufactured Formulations Revenue Increase (Rs. Mn) Advertising Expense (Rs. Mn) The company is expected to increase spending on advertising but, since we have assumed a capex in Himatnagar, to make up for the plant & machinery sale in Ankleshwar outgo on job work expenses is expected to come down. Even if this this capex is not incurred, it is expected to reflect in other income and make up for increase in job work expenses on a net basis, but can reduce the EBITDA Margins by close to 7 to 8 bps. AD spend: There seems to be a correlation between the increase in AD & promotion expenses and sales growth of purchased formulations. As we expect the formulations to be the biggest absolute contributors to the revenue growth, we have assumed an overall normalization in Ad expenses and thus other expenses as a percentage of revenues. Exhibit 14: Other Expenses (Rs. mn) EBIDTA EBITDA Margins (%) Other Expenses (Rs. Mn) Buyback of Shares along with Higher Dividends to reduce the free cash flows but provide a cushion to RoE: BYRCS IN s buyback of million shares is expected to provide cushion to the company s return ratios like RoE. This will counter the Earnings per Share drop to a certain extent and will restore back RoE to 2.4% in FY17E. This along with higher expected dividend payout ratios will also help cushion the returns profile. Exhibit 15: Cash Outgo (Rs. Mn) Exhibit 16: Dividend Outgo Cash from Investing Activities Cash from Financing Activities Dividend Outgo (Rs./Share) 6

7 Sep 24, 215 Higher RoEs as compared to RoCEs are because of high other income contribution to the bottom-line: BYRCS IN s RoE and RoCE saw a steep downward correction because of the big shoot up in reserves & surplus post the sale of Thane land & buildings. This has also led to a structural change in the company, which shows up in terms of significant gap in RoE & RoCE. BYRCS IN s significant Other Income levels, helps the company shore up its bottom-line. This also shows up in RoE and RoCE ratios, wherein RoE has been and is expected to be significantly more than RoCE. This gap though reduces in FY16E and goes up again in FY17E, as the company is expected to see an increase in cash pile up. This is expected to continue even going forward unless otherwise there is a significant jump in dividend outgo and another round of big buybacks are carried out. Exhibit 17: RoE (%), RoCE (%) & RoE-RoCE Gap (bps) % 27.7% 35.4% 15.8% 2.3% 17.9% 2.4% 15.4% 12.6% 16.9% 15.4% 17.3% Gap betn between RoE RoE & RoCE & RoCE (bps) (bps) RoE (%) RoCE (%) 4% 3% 2% 1% % Exhibit 18: Cash on Books & Other Income (Rs. Mn) Cash on Books Other Income

8 Sep 24, 215 Exhibit 19: Business Assumptions Y/E Mar (Rs. Mn) FY14 FY15E FY16E FY17E Comments India Business (Standalone) Revenue Revenue Growth rates are expected to moderate, because of weak monsoons and pricing Revenue Growth (%) environment (esp. for some blockbuster products). EBITDA EBITDA Margins are expected to shrink in FY16E because of increase in other expenses, before EBITDA Margins (%) recovering to some extent in FY17E. PAT (normalized) Fully Diluted EPS (Rs.) Fully Diluted EPS Growth (%) (8.9) 12.7 Capex (ex. Acquisition) - cash capex Net CFO Free Cash Flow High capex outgo for expected Himatnagar capacity expansion to make up for sale in Ankleshwar in FY16E. However, FY17E capex to come down to more normalized levels. Exhibit 2: Karvy vs Consensus Revenues (Rs. Mn) Karvy Consensus Divergence (%) Comments FY16E (4.6) FY17E (1.) EBITDA (Rs. Mn) FY16E (21.7) FY17E (25.8) EPS (Rs.) FY16E (25.6) FY17E (29.8) Source: Bloomberg, Karvy Research Have assumed a lower growth rate because of weaker monsoons & pricing environment and thus a more volume driven growth. Have assumed a lower growth rate because of weak commodity price environment and thus more of a volume driven growth. Have assumed a normalization in other expenses because of expectedly higher advertisement expenses. Also because of lower expected revenue growth rate in FY16E & FY17E. Have assumed a normalization in other expenses because of expectedly higher Advertisement expenses. Also because of lower expected revenue growth rate in FY16E & FY17E. 8

9 Sep 24, 215 Exhibit 21: Revenue Growth (%) FY13 FY14 FY15 FY16E FY17E Revenue Growth (%) Revenue growth of BYRCS IN is expected to moderate down to levels of 11.8% in FY16E and 1.% in FY17E. This is on the back of expected significant drop in pricing power in some of the insecticide products of the company. Also, weak monsoons in FY16E on the back of drought and untimely rainfall hit on farmers in FY15 is expected to have an impact starting from Q2 FY16E. FY17E, lacking any pricing strength will be mainly driven by volume growth. Exhibit 22: EBITDA Growth & EBITDA Margins (%) FY13 FY14 FY15 FY16E FY17E EBIDTA EBITDA Growth (Rs. Mn) EBIDTA EBITDA Margins (%) 11 1 EBITDA margins are expected to see a contraction in FY16E as compared to FY15, because of an expected jump in advertisement in promotion expenses. The drop in margins is expected to be cushioned to some extent by increasing percentage of manufactured and finished goods, thus reducing the pie of traded goods. Exhibit 23: PAT Margins (%) 1.% 7.5% 5.% 2.5%.% 8.9% 8.7% 1.% 8.% 8.2% FY13 FY14 FY15 FY16E FY17E PAT Margins (%) Net profit margins of the company are expected to come down by 2bps in FY16E and expand by 2 bps on a YoY basis. The contraction in operating margins are also expected to lead to a profit de-growth in FY16E, with recovery expected in FY17E, considering the lower base of previous year. Exhibit 24: Dividend Outgo per Share FY13 FY14 FY15 FY16E FY17E Dividend Outgo (Rs./Share) Dividend Payout ratio for the year is expected to increase to above 3% in FY16E and FY17E. This is expected on the basis of higher dividend outgo for FY15 and the requirement of high dividend outgo to sustain RoEs above 2% in FY17E. 9

10 Sep 24, 215 Exhibit 25: Company Snapshot (Ratings) Low High Quality of Earnings 33 Domestic Sales 33 Exports 33 Net Debt/Equity 33 Working Capital Requirement 33 Quality of Management 33 Depth of Management 33 Promoter 33 Corporate Governance 33 1

11 Sep 24, 215 Valuation & Outlook BYRCS IN s capital structure has seen a big structural change post the sale of Thane land & buildings. This can be seen from the steep and significant drop in RoE & RoCE post FY12 (starting from FY13). This shows that company s retention of cash is not fully justified considering the returns that the company is able to generate on its total capital base as such. We feel, the recent spike in EV/EBITDA and Price to Book Multiples are more driven by the high buyback prices. This ability of the company is being exercised even now, as the company is in the process of buying back Mn shares at Rs. 4 per share. We see a significant downside in the valuation from the present levels, considering the business dynamics and a profit de-growth in FY16E. Also, the profit growth of FY17E does not justify high Price to Book Multiples and EV/EBITDA multiples thus, the return multiples do not support high valuations multiples. P/B Mutliples: RoE sustenance at the levels expected in FY16E and FY17E is significantly dependent upon higher dividend outgo. The recent expansion in Average 1 Yr Fwd P/B Multiples does not look justified, going by the overall weakness in RoEs going forward. The present Average 1 Fwd P/B Multiples of 6.9x has to be brought down to 5.9x for reaching a fair valuation based on FY17E RoEs. This brings the valuation to Rs Exhibit 26: P/B Multiples & RoE progression Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 4% 3% 2% 1% % 1 Yr Fwd. P/B Avg 1 Yr. Fwd. P/B 1 Yr. Fwd. RoE EV/EBITDA Multiples: RoCE is expected to reach 17.3%, thus making the present Average One Year Forward EV/EBITDA Multiples way beyond the levels justified by the fundamentals. But, this multiple is not the right multiple to look at, as low EBITDA expansion by FY17E (over FY15) and disproportionate price jump do not justify considering EV/EBITDA as the right multiple to reach a fair valuation. Exhibit 27: EV/EBITDA Multiples & RoCE progression Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 4% 3% 2% 1% % 1Yr Fwd. EV/EBIDTA Avg. 1 Yr. Fwd EV/EBIDTA 1 Yr. Fwd. RoCE (RHS) Conclusion: Going by the capital structure of the company, and its build up over the years, Price to Book Multiple looks to be more justified for valuing this company. 11

12 Sep 24, 215 PE Band Looking at the price movements, BYRCS IN price got into the 25x band starting from Q3 of FY15 but the operational results post this upmove and even the expected fundamental performance of the company going forward does not justify sustenace of the price in the high PE bands. Based on the analysis done using the Price to Book Multiples (a methodology preferred, owing to the capital structure of the company) and mapping the same to PEx, we think fair valuation for the next 9-12 months is around 31x FY17E EPS of Rs Exhibit 28: PE Band Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 CMP 2x 25x 3x 35x 4x Exhibit 29(a): Comparative Valuation Summary CMP (Rs.) Mcap EV/EBITDA (x) P/E (x) EPS (Rs.) (Rs. Mn) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E BYRCS IN DAGRI IN EXCC IN Source: Bloomberg, Karvy Research, DAGRI IN: Dhanuka Agritech, EXCC IN: Excel Crop Care Exhibit 29(b): Comparative Operational Metrics Summary CAGR % (FY15-17E) RoE (%) Price Perf (%) Net Sales (Rs. Mn) Sales EBITDA EPS FY15 FY16E FY17E 3m 6m 12m FY15 FY16E FY17E BYRCS IN (6.5) DAGRI IN (3.7) (31.9) (13.6) EXCC IN (17.2) (11.5) (3.6) Source: Bloomberg, Karvy Research, DAGRI IN: Dhanuka Agritech, EXCC IN: Excel Crop Care Based on the comparative valuation summary, BYRCS IN s return ratios are on par with the other two companies, but the Price to Earnings multiples are way above the other two. Though the PEx premium does not look fully justified, but considering the weakness in DAGRI s portfolio in generating revenue growth going forward (as indicated in our ICR) and EXCC s high dependence on Glyphosate till the capex in Gajod is not over, a premium looks justified, but not as high as it is now. Key Risks yrainfall significantly below expectations. ysignificantly below dividend pay outs. 12

13 Sep 24, 215 Financials Exhibit 3: Income Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Revenues Growth (%) Operating Expenses EBITDA Growth (%) (4.2) 13.5 Depreciation & Amortization Other Income EBIT Interest Expenses PBT Tax Adjusted PAT Growth (%) (75.1) 32.3 (12.1) 12.7 Exhibit 31: Balance Sheet YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Cash & Investments Sundry Debtors Inventory Loans & Advances Investments Gross Block Net Block CWIP Miscellaneous Total Assets Current Liabilities & Provisions Debt Other Liabilities Total Liabilities Shareholders Equity Reserves & Surplus Total Networth Total Networth & Liabilities

14 Sep 24, 215 Exhibit 32: Cash Flow Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E PBT Depreciation Interest Tax Paid (1226) (164) (195) (1658) (1869) Inc/dec in Net WC (1197) 33 (1668) (827) (142) Other Income (483) (767) (682) (448) (556) Other non cash items (11842) Cash flow from operating activities Inc/dec in capital expenditure (1662) (1592) (496) (1715) (788) Inc/dec in investments (254) Others 5933 (135) Cash flow from investing activities 4271 (2897) 4852 (1517) 118 Issuance of equity (455) (511) Dividend paid (193) (231) (46) (959) (1272) Interest paid (2) (15) (9) (15) (15) Cash flow from financing activities (213) (4796) (415) (684) (1287) Net change in cash 5441 (4878) 6441 (4885) 1818 Exhibit 33: Key Ratios YE Mar FY13 FY14 FY15 FY16E FY17E EBITDA Margin (%) EBIT Margin (%) Net Profit Margin (%) Dividend Payout ratio (%) Net Debt/Equity..... RoE (%) RoCE (%) Exhibit 34: Valuation Parameters YE Mar FY13 FY14 FY15 FY16E FY17E EPS (Rs.) DPS (Rs.) BV (Rs.) PE (x) P/BV (x) EV/EBITDA (x) EV/Sales (x) ; *Represents multiples for FY13, FY14 & FY15 are based on historic market price 14

15 Sep 24, 215 Stock Ratings Absolute Returns Buy : > 15% Hold : 5-15% Sell : <5% Connect & Discuss More at (Toll Free) research@karvy.com Live Chat f in You Tube Disclaimer Analyst certification: The following analyst(s), Prashant Kanuru, who is (are) primarily responsible for this report and whose name(s) is/are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report. Disclaimer: Karvy Stock Broking Limited [KSBL] is a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. 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