Cochin Shipyard Ltd (COCSHI) 525

Transcription

1 Result Update Rating matrix Rating Matrix Rating : Buy Target : 725 Target Period : months Potential Upside : 38% What s changed? Target Unchanged EPS FY19E Changed from 26.2 to 29.7 EPS FY2E Changed from 29.9 to 31.2 Rating Unchanged Quarterly performance Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%) Revenue EBITDA EBITDA (%) bps bps PAT EPS ( ) Key financials Crore FY17 FY18E FY19E FY2E Revenue 2,222 2,522 2,869 3,344 EBITDA EBITDA (%) Net Profit EPS ( ) Valuation summary (x) FY17 FY18E FY19E FY2E P/E Target P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Average Volumes (shares).34 lakh Market Capitalization 7137 Crore Total Debt (FY18E) 123 Crore Cash and Investments (FY18E) 2938 crore EV (FY18E) 4321 Crore 52 week H/L ( ) 598 / 435 Equity capital Crore Face value 1 MF Holding (%) 1. FII Holding (%) 3.5 Promoter Holding (%) 75. Price performance Return (%) 1M 3M 6M 12M Cochin Shipyard Ltd (4.1) (9.1) - - Bharat Electronics Ltd (17.7) (18.) (7.8) 6.8 Reliance Naval and Enginee (33.6) (28.9) (34.7) (35.1) ABG Shipyard Ltd (17.6) (22.8) (11.8) (59.6) Strong performance February 7, 218 Cochin Shipyard Ltd (COCSHI) 525 Cochin Shipyard Ltd reported strong Q3FY18 numbers. Shipbuilding and shiprepair segment contributed 66.3% and 33.7% respectively to the topline of the company. For the quarter, shipbuilding segment reported abnormally high EBIT margins of 32.4% (normal margins 8-15%) whereas the shiprepair segment reported muted EBIT margins of 13.9% (normal margins 25-35%). Higher margin in shipbuilding segment was due to execution of fixed part portion in the IAC. Revenue increased 5.7% YoY to 615 crore. We expected revenues of 62 crore for the quarter. The company reported EBITDA margins of 22.3% vs. 19.4% in Q3FY17. This was due to 53 bps expansion in gross margins for the quarter. However, employee expenses increased from 9.7% of sales in Q3FY17 to 11.1% in Q3FY18. Accordingly, absolute EBITDA grew 21.6% YoY. PAT grew 25.9% YoY at crore due to better operational performance and jump in other income by 36.1% YoY to 51 crore. Strong shiprepair performance, new initiatives CSL has reported strong performance in shiprepair segment as it clocked revenues of 526 crore for 9MFY18 vs. 543 crore in full year FY17. To augment revenues from this segment, CSL has taken number of steps like signing MOUs with Mumbai Port Trust, Andaman & Nicobar administration and Kolkata port trust for management and operation of their shiprepair facilities. We believe such a move will help CSL to clock revenues of over 1 crore by FY2-21. To leverage on other upcoming opportunities like inland water transportation and coastal shipping vessels, CSL has entered formed a JV with Hooghly Dock & Port Engineers (HDPEL) and planned a capex of 1 crore at two of its shipyards at Salkia and Nazirgunge in Howrah, West Bengal. Healthy balance sheet, strong capacity additions and order book CSL has a strong balance sheet with debt of 123 crore and cash of over 25 crore. To capture the upcoming opportunities, CSL has planned a huge capex of ~ 3 crore over FY18-21E ( 2768 crore for the new larger size dry dock and repair facility, 1 crore for Hooghly Cochin Shipyard Ltd and 15 crore for developing docks at Mumbai, Andaman & Nicobar and Kolkata). CSL also has a healthy order book of 2,337 crore plus L1 status for ASW vessels ( 54 crore) and 56 boats ( 38 crore). It is also likely to receive order for phase III of IAC, which is likely to be ~ 1,27 crore ( 3 crore as fixed price contract and 727 crore as cost-plus contract). This takes the total order backlog to 18,737 crore (adding shiprepair orders of 35 crore). We believe these orders give strong revenue visibility to CSL till FY21. With healthy balance sheet, significant capacity additions, healthy order pipeline and strong execution capabilities, we believe CSL will clock revenue, EBITDA and PAT CAGR of 15.3%, 11.1% and 9.6%, respectively, in FY17-2E. We value CSL at 21x FY2E earnings for existing business ( 655/share) plus.2x ( 26/share) and.6x ( 44/share) for its planned capex in shipbuilding and ship repair segment, respectively, to arrive at SOTP value of 725/ share. We have BUY recommendation on the company. Research Analyst Chirag J Shah shah.chirag@icicisecurities.com Sagar K Gandhi sagar.gandhi@icicisecurities.com ICICI Securities Ltd Retail Equity Research

2 Variance analysis Q3FY18 Q3FY18E Q3FY17 YoY (%) Q2FY18 QoQ (%) Revenue Shipbuilding and shiprepair segment contributed 66.3% and 33.7% respectively. Other Income Strong other income due to interest income on IPO proceeds Total Revenue Total Raw Material Costs Employee Expenses Other expenses employee expenses increased from 9.7% of sales in Q3FY17 to 11.1% in Q3FY18 due to seventh pay commission revisions Provision for losses & exp Operating Profit (EBITDA) Higher EBITDA margins due to 53 bps expansion in gross margins for the 45.3 quarter EBITDA margin (%) bps bps Interest Depreciation Total Tax PAT PAT grew 25.9% YoY at crore due to better operational performance and jump in other income by 36.1% YoY to 51 crore. Key Metrics Q3FY18 Q3FY18E Q3FY17 YoY (%) Q2FY18 QoQ (%) Revenue (Segment-wise) Shipbuilding As a % of Sales 66.3% 72.4% Shiprepair As a % of Sales 33.7% 27.6% EBIT (Segment-wise) Shipbuilding EBIT Margins(%) 32.4% 11.8% Higher margin in shipbuilding segment was due to execution of fixed part portion in the IAC As a % of EBIT 73.7% 48.4% Shiprepair EBIT Margins (%) 13.9% 33.% As a % of EBIT 16.% 51.6% Lower margins in the shiprepair segment due to the lumpy order booking in this segment. Revenues are booked only after 75% completion in this segment Change in estimates FY17 FY18E FY19E FY2E ( Crore) Old New % Change Old New % Change Old New % Change Revenue 2, , , , , ,65.8 3, EBITDA EBITDA Margin (%) bps bps bps PAT EPS ( ) ICICI Securities Ltd Retail Equity Research Page 2

3 Conference call takeaways Q3FY18 CSL order backlog stands at 18,737 crore. Exhibit 1: CSL's order book Sr.No. Current order book Nos Client Pending execution Shipbuilding 1 Phase II of the IAC - Vikrant 1 Indian Navy 887 A & N 2 5 passenger cum 15 ton cargo vessels 2 Admin ,2 passenger cum 1, ton cargo vessels 2 Admin 76 4 Research Vessel 1 GoI IAC Phase III (Fixed price contract) Indian Navy 3 6 IAC Phase III (Cost plus contract) Indian Navy 727 Home 7 Small boats 56 Affairs 38 8 ASW Corvettes 8 of 16 Indian Navy 54 Shiprepair Shiprepair 35 Total Order for ASW corvettes was won after strong competitive bidding. Accordingly, PAT margins for the order are likely to be 5-6%. However, as per management commentary, CSL will try to squeeze and improve margins as much as possible in this order. This will be possible because of the learning curve that CSL will develop during the production of initial few corvettes. This is likely as similar kind of eight ASW corvettes are on order. CSL is planning to augment its shiprepair capacity by partnering with Mumbai Port Trust, Andaman & Nicobar administration and Kolkata Port Trust. The memorandum of understanding (MoU) envisages for management and operation of the existing ship-repair facilities at Indira Dock for commercial and defence ship repairs. For Mumbai Port Trust (MPT), CSL intends to spend 8-1 crore in the next one year. This is to be utilized for expansion of the shiprepair capacity within the Indira Dock, and may include the setting up of a floating dry dock (FDD) and upgrading the existing facility at Hughes dry dock. CSL expects ~ 1 crore of revenue from the MPT by FY19E. For the Andaman & Nicobar docks, management intends to spend 1-15 crore by FY19E. Currently the opportunity is to repair 8 vessels of A & N administration. ICICI Securities Ltd Retail Equity Research Page 3

4 Company Analysis Revenues to grow at 15.3% CAGR in FY17-2E We expect revenues to increase from 259 crore in FY17 to 3156 crore in FY2E at a CAGR of 15.3% in FY17-2E, mainly on the back of accelerated growth in the shipbuilding segment. Over FY13-17, CSL registered muted revenue CAGR of 7.3% on the back of growing higher share of revenues in the ship repair segment. Contribution to revenue from the ship repair segment increased from 13.8% in FY14 to 26.4% in FY17. Accordingly, revenues from the ship repair segment grew 17.4% CAGR in FY13-17 whereas it grew only 4.5% during the same period in the shipbuilding segment. However, going ahead, we expect revenues from shipbuilding to grow at an accelerated rate of 17.9% in FY17-2E. In the ship repair segment, we expect muted growth of 6.1% in FY17-2E due to current ship repair capacity running at almost full utilisations. Accordingly, we expect revenue contribution from the shipbuilding segment to increase from 73.5% in FY17 to 78.6% in FY2. Exhibit 2: Revenue trend 3,5 3, 2,5 2, 1,5 1, 5-3,156 2,653 2,38 2,59 FY17 FY18E FY19E FY2E Revenues Exhibit 3: Shipbuilding revenue trend Exhibit 4: Ship repair revenue trend % 17.9% FY14 FY15 FY16 FY17 FY18E FY19E FY2E % 33.6% FY14 FY15 FY16 FY17 FY18E FY19E FY2E Shipbuilding Shiprepair Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research ICICI Securities Ltd Retail Equity Research Page 4

5 Exhibit 5: Revenue segmentation (%) 12% 1% 8% 6% 4% 2% 13.8% 1.5% 18.4% 85.3% 88.4% 81.4% 26.4% 26.4% 21.9% 2.6% 73.5% 73.6% 77.3% 78.6% % FY14 FY15 FY16 FY17 FY18E FY19E FY2E Shipbuilding Shiprepair EBITDA to grow at 11.1% CAGR in FY17-2E; margins to decline The operating income grew at 13.2% CAGR over FY This was despite subdued growth of 7.9% in revenue over the same period. This was mainly due to accelerated growth of 17.4% in the ship repair segment. As stated earlier, contribution to revenue from the ship repair segment increased from 13.8% in FY14 to 26.4% in FY17. Ship repair business, depending on the vessel mix, can earn EBITDA margins up to 4%. The shipbuilding segment, on the other hand, earns 5-15% EBITDA margins. Higher growth in the ship repair segment helped CSL post better margins of 18.4% in FY17 vs. 14.8% in FY13. Going forward, we expect this trend to reverse primarily due to increasing contribution of the shipbuilding segment. We expect the shipbuilding segment to grow at 17.9% CAGR in FY17-2E and contribute 78.6% to the total topline by FY2E. This is likely to lead to a decline in the operating margin from 18.4% in FY17 to 16.5% in FY2E. Higher employee expenses due to implementation of the Seventh Pay Commission are also likely to put pressure on margins, going forward. We estimate a 16.3% increase in employee expenses in FY17-2E. However, despite a decline in EBITDA margins, we expect absolute EBITDA to grow at 11.1% CAGR in FY17-2E vs. 13.4% in FY Thus, we expect CSL to report absolute EBITDA of 52 crore in FY2E. Exhibit 6: EBITDA and EBITDA margin trend 4, 3,5 3, 2,5 2, 1,5 1, , , , ,869 3, FY16 FY17 FY18E FY19E FY2E % Revenues EBITDA EBITDA margin (%) ICICI Securities Ltd Retail Equity Research Page 5

6 PAT to grow at 9.6% CAGR over FY17-2E We expect PAT to grow at a CAGR of 8.1% from 322 crore in FY17 to 424 crore in FY2E Net profit grew at 14.9% CAGR in FY This was higher than revenue growth during the same period (7.9% CAGR in FY13-17) due to operating leverage (ship repair business) and accelerated growth in other income of the company. Other income of the company grew at 17.1% contributing to higher PAT growth of 14.8% CAGR in FY Higher interest income was due to growing cash balance on the books of the company. Cash balance grew from 573 crore in FY14 to 1927 crore in FY17. Post the receipts of IPO proceeds, cash balance is likely to further grow from 1927 crore to 2938 core. However, going forward, we expect this trend to reverse due to depletion in cash reserves on account of capex expenditure of 27 crore, 45 crore and 75 crore in FY18E, FY19E and FY2E, respectively. Accordingly, we expect the cash balance to decline from 2938 crore to 2556 crore in FY2E. CSL s management intends to keep cash levels of 4-5% of the topline to meet any delays/cost overruns in new and existing projects. Thus, in a reducing cash balance scenario, other income is likely to reduce. Accordingly, we expect PAT to grow at a CAGR of 9.6% from 322 crore in FY17 to 424 crore in FY2E. Exhibit 7: Interest income trend Exhibit 8: Cash balance trend FY15 FY16 FY17 FY18E FY19E FY2E FY17 FY18E FY19E FY2E Interest Income Cash Balance Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research Exhibit 9: PAT and PAT margin trend % FY16 FY17 FY18E FY19E FY2E Net Profit Margins (%) ICICI Securities Ltd Retail Equity Research Page 6

7 Return ratios to remain stable CSL is one of those few public sector companies that have a consistent history of delivering superior returns on capital employed. We believe that despite huge capex plans in FY18E-2E, CSL will report double digit return ratios in FY18E, FY19E and FY2E, respectively In the last few years (FY13-17), the RoE, RoCE have improved from 15.3%, 15.8% in FY13 to 16.5%, 18.7%, respectively, in FY17. This was due to an improving operating performance due to higher contribution from the high margin ship repair business of the company. The company also incurred marginal capex spending of less than 5 crore per year over the same period. However, going forward, we expect return ratios (RoEs & RoCEs) to moderate to 11.4% and 13.6%, respectively, in FY2E due to declining operating margins and heavy capex spending of ~ 3 crore in FY18E- 21E. Post completion of the capex, we expect CSL to deliver its historical return ratios of 15-2%. We reiterate that over the past 1 years, the company has delivered average RoEs of 18.5%. Exhibit 1: Return ratios to improve % FY16 FY17 FY18E FY19E FY2E RoCE (%) RoE (%) RoIC (%) ICICI Securities Ltd Retail Equity Research Page 7

8 We expect CSL to report healthy CFO/EBITDA of ~1.1x in FY2E Cash flows set to improve; CFO/EBITDA healthy at 1x The company is expected to generate healthy cash flows with cash flow from operations (CFO) increasing from 374 crore in FY17 to 558 crore in FY2E. The CFO/EBITDA ratio is likely to be healthy at 1.1x in FY2E. Exhibit 11: CFO/EBITDA trend FY16 FY17 FY18E FY19E FY2E (x) 1 1 CFO EBITDA CFO:EBITDA The free cash flow (FCF) generation is likely to be impacted by capex expenditure over FY18E-2E. Thus, we expect CSL to report cash flows of 146 crore, 54 crore and negative 192 crore in FY18E, FY19E and FY2E, respectively. Net cash as a percentage of net worth is also likely to reduce from ~1% in FY17 to 69% in FY2E. Exhibit 12: Strong FCF generation, FCF yield Exhibit 13: Net cash as percentage of net worth (47% in FY2E) FY15 FY16 FY17 FY18E FY19E FY2E -192 FCF FCF Yield % FY15 FY16 FY17 FY18E FY19E FY2E Networth As %age of Networth % Our interaction with the management suggests CSL s working capital is likely to remain stable at 45-5 days in FY17-2E. This is mostly on account of defence orders where the company sometimes receives advance payments for its orders (15% of the total contract value). On the commercial side, to mitigate any strain on the balance sheet of the company for delays/cost overruns, CSL prefers to have a cash balance which is 4-5% of the contract value. Going forward, CSL is also likely to pay healthy dividends of ~3% of earnings in line with the government policy on dividends for profitable PSUs. Thus, we expect healthy dividends payouts over FY17-2E. ICICI Securities Ltd Retail Equity Research Page 8

9 Exhibit 14: Dividend payout to be 3%, going forward Exhibit 15: Working capital, best-in-class despite large and lumpy orders per share FY16 FY17 FY18E FY19E FY2E EPS DPS Dividend Payout % Days NWC days FY16 FY17 FY18E FY19E FY2E Inventory Days Debtor Days Creditor Days Net Working Capital Days Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research ICICI Securities Ltd Retail Equity Research Page 9

10 Outlook and valuation CSL is the prime large shipbuilder of Government of India. The company enjoys a near-monopoly in shipbuilding and ship repair of large vessels. CSL also possesses a wide moat in the form of its infrastructure capabilities. It has two large dry docks and India s largest hull fabrication shop that can process 2, tonnes of steel every month CSL is the prime large shipbuilder of Government of India. The company enjoys a near monopoly in shipbuilding and ship repair of large vessels. A case in point is the shipbuilding order of IAC I Vikrant, which was awarded to CSL on a nomination basis. Similarly, the company has the only commercial shipyard to have undertaken repair work of Indian Navy's aircraft carriers, the INS Viraat and INS Vikramaditya. In any such large projects where national security coupled with strong experience is required, CSL is likely to emerge as the frontrunner. Being a government company, it receives a number of orders on a nomination basis. Of the domestic order book of ~ 2856 crore, the company has received substantial orders on a nomination basis. We believe this trend is likely to continue, going forward, also. CSL also possesses a wide moat in the form of its infrastructure capabilities. It currently has two large dry docks, three quays and a steel stockyard that can hold 6, tonnes of steel. It also has India s largest hull fabrication shop that can process 2, tonnes of steel every month. It has two gallantry cranes 15 tonnes & 3 tonnes and is in the process of adding one more of 6 tonnes in its new facility. Strong infrastructure capabilities coupled diverse competencies in the defence segment (both shipbuilding and ship repair) gives the company a significant edge over any upcoming competition. CSL is one of the few companies among large Indian public sector enterprises that have delivered consistent business performance. The company delivered a topline, bottomline CAGR of 11.1%, 18.7%, respectively, in the past 1 years (FY7-17). It has also clocked average RoEs, RoCEs of 15.5%, 16.5%, respectively, over FY This is despite turbulent times in the global shipbuilding industry and slow pace of decision making in the Indian defence industry. CSL also has a healthy order book of 2,337 crore plus L1 status for ASW vessels ( 54 crore) and 56 boats ( 38 crore). It is also likely to receive order for phase III of IAC, which is likely to be ~ 1,27 crore ( 3 crore as fixed price contract and 727 crore as cost-plus contract). This takes the total order backlog to 18,737 crore (adding shiprepair orders of 35 crore). We believe these orders give strong revenue visibility to CSL till FY23. With healthy balance sheet, significant capacity additions, healthy order pipeline and strong execution capabilities, we believe CSL will clock revenue, EBITDA and PAT CAGR of 15.3%, 11.1% and 9.6%, respectively, in FY17-2E. We value CSL at 21x FY2E earnings for existing business ( 655/share) plus.2x ( 26/share) and.6x ( 44/share) for its planned capex in shipbuilding and ship repair segment, respectively, to arrive at SOTP value of 725/ share. We have BUY recommendation on the company. Exhibit 16: SOTP Value of CSL Sr.No. SOTP Valuation Multiplication factor Value ( per share) 1 Base business FY2E EPS of For new dry dock For new ISRF ICICI Securities Ltd Retail Equity Research Page 1

11 [ ( ) (%) Recommendation history vs. consensus Sep-17 Nov-17 Feb-18 Series1 Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research, Initiated coverage on 1 th October 217 Key events Year Event 1969 Cochin Shipyard was chosen for the launch of the first greenfield shipbuilding yard in the country. Yard was designed and constructed under technical collaboration with M/s Mitsubishi Heavy Industries (MHI), Japan Shipbuilding operations commenced in 1978 and shiprepair in Company receives Miniratna Category I status 29 Keel laying of first indigenous aircraft carrier for Indian Navy in February Receives order for building 2 fast patrol vessels for Indian Coast Guard 215 Obtains license from GTT to build LNG Ships using the containment system, Mark-III Technology in Dec CSL lists on stock exchanges, receives order for building eight ASW SWC for the Indian Navy via competitive bidding Top 1 Shareholders Rank Name Latest Filing Date O/S Position Position Change 1 Government of India % 11.95M 2 Reliance Nippon Life Asset Management Lim % 5.24M -1.65M 3 PineBridge Investments Asset Management % 2.24M +2.24M 4 HDFC Asset Management Co., Ltd % 1.78M -.4M 5 Mirae Asset Global Investments (India) Pvt % 1.12M -.5M 6 BNP Paribas Asset Management Asia Limite %.87M +.5M 7 Invesco Asset Management (India) Private L %.61M 8 BNP Paribas Asset Management India Pvt. L %.56M 9 IDFC Asset Management Company Private L %.41M +.11M 1 Sundaram Asset Management Company Lim %.22M -.13M Shareholding Pattern (in %) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Promoter FII DII Others Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares PineBridge Investments Asset Management Company (India) P +17.8M +2.24M Reliance Nippon Life Asset Management Limited M -1.65M BNP Paribas Asset Management Asia Limited +4.45M +.5M Canara Robeco Asset Management Company Ltd M -.42M Franklin Templeton Investments (Asia) Ltd. +.87M +.11M Sundaram Asset Management Company Limited -1.12M -.13M IDFC Asset Management Company Private Limited +.93M +.11M Mirae Asset Global Investments (India) Pvt. Ltd. -.44M -.5M FIL Investment Management (Singapore) Ltd. +.32M +.4M ICICI Prudential Asset Management Co. Ltd. -.35M -.4M Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 11

12 Financial summary Profit and loss statement Crore ( Crore) FY17 FY18E FY19E FY2E Net Sales 2,62 2,38 2,632 3,131 Operating income Revenue 2,59 2,38 2,653 3,156 % Growth Other income Total 2,226 2,534 2,869 3,344 % Growth Raw Mtl costs 1,314 1,489 1,734 2,98 Employee Expenses other expenses Total Operating Exp. 1,679 1,897 2,25 2,636 Operating Profit (EBITDA) % Growth Interest PBDT Depreciation PBT & Except. items Total Tax PAT before MI Minority Interest PAT % Growth EPS EPS (Post IPO dilution) Cash flow statement Crore ( Crore) FY17 FY18E FY19E FY2E Profit after Tax Depreciation Interest Cash Flow before WC chan Changes in inventory 45 (35) (33) (48) Changes in debtors 168 (66) (71) (13) Changes in loans & Advanc 52 4 (34) (5) Changes in other CA (59) (2) (18) (27) Net Increase in Current Ass 26 (99) (157) (228) Changes in creditors (119) Changes in provisions Net Inc in Current Liabilities (24) Net CF from Operating activ Changes in deferred tax ass (Purchase)/Sale of FA (73) (27) (45) (75) Net CF from Inv.activities (56) (27) (45) (75) Dividend and Dividend Tax (118) (136) (146) (153) Net CF from Financing Activ (128) 866 (166) (78) Net Cash flow 189 1,11 (112) (271) Opening Cash/Cash Equival 1,737 1,927 2,938 2,826 Closing Cash/ Cash Equivale 1,927 2,938 2,826 2,556 Balance sheet. Crore ( Crore) FY17 FY18E FY19E FY2E Equity Capital Reserve and Surplus 1,837 3,68 3,319 3,582 Total Shareholders funds 1,951 3,24 3,455 3,719 Minority Interest Total Debt Total Liabilities 2,76 3,33 3,58 3,944 Gross Block ,511 Acc: Depreciation Net Block ,37 Capital WIP Total Fixed Assets ,59 1,752 Non Current Assets Inventory Debtors Loans and Advances Other Current Assets Cash 1,927 2,938 2,826 2,556 Total Current Assets 2,781 3,892 3,937 3,894 Current Liabilities Provisions Net Current Assets 1,595 2,562 2,41 2,81 Total Assets 2,76 3,33 3,58 3,944 Key ratios (Year-end March) FY17 FY18E FY19E FY2E Per Share Data EPS Cash per Share BV Dividend per share Dividend payout ratio Operating Ratios EBITDA Margin PAT Margin Return Ratios RoE RoCE RoIC Valuation Ratios EV / EBITDA P/E EV / Net Sales Sales / Equity Market Cap / Sales P/BV Turnover Ratios Asset Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Solvency Ratios Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 12

13 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/15% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 13

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Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report 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 ICICI Securities 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 certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. 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