Reliance Industries Ltd

Transcription

1 216 Equirus All rights reserved Rating Information Price (Rs) 1,39 Target Price (Rs) 1,138 Target Date Target Set On Implied yrs of growth (DCF) 15 Fair Value (DCF) 1,18 Fair Value (DDM) 138 Ind Benchmark Model Portfolio Position Stock Information 31st Mar'17 24th Apr'16 BSE OIL NA Market Cap (Rs bn) 3,366 Free Float (%) 54.8 % 52 Wk H/L (Rs) /818 Avg Daily Volume (1yr) 4,52,667 Avg Daily Value (Rs Mn) 3,835 Equity Cap (Rs Mn) 32,44 Face Value (Rs) 1 Bloomberg Code RIL IN Ownership Recent 3M 12M Promoters 45.2 % -1.5 % -.1 % DII 12.6 % -.8 %.3 % FII 19.6 %.2 %.8 % Public 22.6 % 2.1 % -1. % Price % 1M 3M 12M Absolute -.8 % 3.5 % 18.1 % Vs Industry -4.1 % -.8 % 18.3 % ONGC. % -.1 % -3.8 % IOC 8.8 % 5.4 % 17.9 % Consolidated Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (16A) EPS (17E) Reliance Industries Ltd Absolute : LONG Relative : Overweight 4QFY16 Result: Estimate ( ), TP ( ), Rating ( ) Regular Coverage 12% ATR in 11 Months Strong result, Near term GRM outlook is Weak, Maintain LONG on core-earnings growth RIL delivered results above Equirus/consensus estimates driven by strong refining and Petchem segment performance. Consolidated EBITDA improved 22% yoy driven by better GRM, INR depreciation and higher Petchem volumes. Full year GRM at $1.8/bbl were at 7 years high, driven by lower sourcing cost and favourable gasoline/naphtha spread but has corrected lot in last few months on weakening spread. Though near term outlook has deteriorated due to few quarters delay in key projects Petcoke Gasifiers, Jio launch and lower GRM to put pressure on near term earnings. We maintain our LONG rating with a Mar 17 TP of Rs. 1,138. In-line GRM & better operating performance: GRM came at $1.8/bbl, highest in last 7 years, led by higher throughput, strong Gasoline and naphtha cracks offset by decline light-heavy spread. Refining EBIT were flat qoq at Rs. 64bn despite qoq decline in GRM due to lower opex cost driven by decline in spot LNG price. Strong polymer margin coupled with higher volume resulted in Petchem EBIT growth of 5% qoq to Rs. 27bn. O&G segment barely managed to breakeven due to decline in KG D6 production and lower realization. Retail EBIT was up 26% yoy driven by 21% yoy revenue growth. EBITDA at Rs. 12bn, up 22% yoy was better than estimate. However, higher depreciation, lower other income and lower interest expense led to in-line recurring PAT at Rs. 72bn. Moderation in GRM, Minor delay in commissioning of key projects: Product spreads particularly gasoline/naphtha has moderated in last few weeks on higher capacity addition and seasonal demand related changes. We expect GRM to be significantly lower in 1QFY17 and expect recovery thereafter. There are minor delays in execution of the core projects - Petcoke gasifier is now scheduled to be completed during 2QFY17-4QFY17, PX plants are expected to be commissioned during 2HFY17. Though, ROGC is expected to be commissioned on time in 3QFY17. Telecom Jio business has been under intense testing phase but commercial launch will take few months. Maintain LONG on growth in core earnings: We reduce our FY17 EPS by 4% to factor lower refining margins, lower oil & gas EBIT and other minor changes. Core earnings growth is likely to accelerate on commissioning of petcoke gasifier, ROGC and expansion in Petchem. Investors have muted expectations from Jio and successful scale up could lead to significant upside. We maintain our LONG rating, roll over target date to Mar 17 and reduce TP to Rs. 1,138 (vs. earlier Sep 16 TP of Rs. 1,16) based on SoTP valuation. Change in Estimate Rs.bn Oil & Gas FY17E % Change FY18E % Change EBITDA 486-2% 547 1% Interest Expense 44 9% 44 1% Depreciation 161 3% 186 3% PAT 276-4% 31 1% Consolidated Financials Rs. Bn YE Mar FY16A FY17E FY18E FY19E Sales 2,765 2,443 2,777 2,842 EBITDA Depreciation Interest Expense Other Income Reported PAT Recurring PAT Total Equity 2,437 2,666 2,915 3,172 Gross Debt 1,66 1,554 1,44 1,255 Cash Rs. Bn YE Mar FY16A FY17E FY18E FY19E Earnings Book Value ,65 Dividends FCFF P/E (x) P/B (x) EV/EBITDA (x) ROE (%) 12 % 11 % 11 % 1 % Core ROIC (%) 7 % 7 % 7 % 7 % EBITDA Margin (%) 16 % 2 % 2 % 2 % Net Margin (%) 1 % 11 % 11 % 11 % Per share calculation exclude treasury shares April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 1 of 13 Before reading this report, you must refer to the disclaimer on the last page.

2 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Reliance Industries Absolute LONG Relative Overweight 12% ATR in 11 months Exhibit 1: Improving GRM aided by higher delta in gasoline and naphtha Exhibit3: RIL GRM premium declined qoq as RIL has higher exposure to gasoil compared to benchmark and gasoil is under pressure Refining EBIT (Rs bn) EBIT $/bbl-rhs Light-Heavy (LHS) RIL GRM Premium over Sing Exhibit 2: Light-Heavy spread decline Exhibit 4: Barely break-even in upstream due to decline in KG D6 volume and lower crude oil and gas prices RIL GRM Premium over Sing E&P EBIT (Rs bn) E&P Vol (In mboe) RHS April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 2 of 13

3 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 EBITDA (Rs. Bn) FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 GRMs ($/bbl) Reliance Industries Absolute LONG Relative Overweight 12% ATR in 11 months Exhibit 5: Petchem EBIT improved on polymer crack with slight improvement in volumes. Jump in volume growth is expected in FY17 after phase-wise commissioning of multi-year multi-billion Petchem capex Exhibit 7: GRMs still in mid-cycle and 7 year high, can sustain if crude oil price remain demand sustain ($/bbl) Petchem EBIT (Rs bn) Exhibit6: Net interest income as % of PBT was at 1% % 25% 2% 15% 1% 5% % -5% Exhibit 8: Expect strong improvement in Petchem EBITDA driven by volume growth in FY17E (Rs.bn) Net Interest Income (Rs Bn) PAT (Rs Bn) Net Int Income as % of PBT (RHS) FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 3 of 13

4 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Reliance Industries Absolute LONG Relative Overweight 12% ATR in 11 months Exhibit 9: 8% EBITDA CAGR expected from FY16-19E driven by Petchem volume growth Exhibit 1: High capex in long gestation telecom unit to keep return ratios muted 19% 17% 14% 15% 13% 11% 9% 8% 9% 7% 5% 12% 8% 7% 14% 1% 9% 12% Net Profit 9% 9% 7% 12% 12% 6% EBITDA 11% % 486 8% 7% 7% 7% 6% 6% 5% % 11% 1% 7% 7% 6% 6% Exhibit 11: SoTP Valuations implies 11% Upside Rs Bn $/bn Rs/share Refinery 1, At 6.5x FY17 EV/EBITDA Petrochem 1, At 6x FY17 EV/EBITDA Upstream KG D PMT x EV/EBITDA Other Domestic Shale JV Investments 1, DCF (incl. Satellite fields); total recoverable reserves of 2.6bn boe till FY25 At $3/boe for 1.bn boe (5tcf) reserves for NEC-25, GS-1, KG -OSN, CYD5 and $1bn for shale gas valuations 6x EV/EBITDA of $226mn of EBITDA in CY16 Rs 55bn in telecom, Retail - 1bn, SEZ - 43bn, EIH- 1bn, Media - 3bn and others Enterprise Value 4, ,53 Implies 8x FY16EV/EBITDA Net Cash -1, Equity Value 3, ,138 Source: Equirus Securities Ex-treasury shares; Based on 2.93bn shares RoE RoCE Core RoIC April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 4 of 13

5 Quarterly Results Table(Consolidated) % Change Rs Bn Q4FY16 Q4FY16E Q3FY16 Q4FY15 Q4FY16E Q3FY16 Q4FY15 Net Sales % -12% -11% Comments (Inc)/Dec Stock in Trade & WIP % -5% -373% Consumption of Raw Materials % -23% -28% Purchases % 9% 8% Staff Cost % -4% 17% Other Expenditure % 5% -3% Total Expenditures % -15% -16% EBITDA % 6% 22% Depreciation % 14% 28% EBIT % 2% 19% Interest % -12% 2% Other Income % -28% -19% Higher depreciation on commissioning of new plants Decline in interest cost due to favorable exchange rate PBT % -4% 9% Tax % -9% 4% PAT before Extra ordinaries Extra ordinaries % -2% 11% Minority Interest 2 Reversal of Impairment in shale gas assets Profit & Loss from Associates % 1% 16% Reported PAT % -2% 11% EPS (Rs) EBITDA Margin 19.9% 17.8% 16.7% 14.6% 213 bps 328 bps 53 bps EBIT Margin 14.% 13.4% 12.1% 1.5% 6 bps 194 bps 351 bps PBT Margin 15.6% 15.4% 14.3% 12.7% 14 bps 13 bps 286 bps PAT Margin 12.3% 11.6% 1.7% 9.5% 7 bps 16 bps 282 bps Tax Rate 23.1% 25.% 24.5% 24.3% -189 bps -136 bps -115 bps Refining Vol (In MT) % -1% 1% Refining Margin ($/bbl) % -6% 7% Petchem Vol (In MT) 3, ,456 2,735-7% 2% 28% Petchem EBITDA/tn % % -3% Oil & Gas Volume (In mboe) % -5% -13% April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 5 of 13

6 Refining Revenue % -16% -15% Refining EBIT % -1% 3% Refining Margin (%) 13.3% 15% 11.3% 8.7% -217 bps 199 bps 462 bps Petchem Revenue % 8% -4% Petchem EBIT % 3% 35% Petchem Margin (%) 13.% 15% 13.6% 9.2% -165 bps -63 bps 376 bps E&P Revenue % -7% -35% E&P EBIT % -79% -96% E&P Margin (%) 1% -16% 6% 19% 1,766 bps -439 bps -1,817 bps Retail Revenue % -4% 21% Retail EBIT % -11% 26% Retail Margin (%) 2.3% 3% 2.4% 2.2% -23 bps -17 bps 9 bps April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 6 of 13

7 Company Snapshot How we differ from Consensus EPS Sales PAT Reliance Industries Absolute LONG Relative Overweight 12% ATR in 11 months - Equirus Consensus % Diff Comment FY17E % We expect weak GRM outlook for FY18E % the near future but strong core FY17E 2,443 2, % earnings growth. FY18E 2,777 3, % FY17E % FY18E % Our Key Investment arguments: GRM has been strong, highest in last 7 years, due to lower oil prices and strong gasoline cracks Earnings growth still remains back ended with 8% EBITDA CAGR expected from FY16-19E driven by Petchem volume growth E&P Portfolio holds significant value; as news flow in E&P become positive, value may emerge through higher volume and drilling of new wells Successful launch of Reliance Jio may alleviate some concerns of capital allocation Maintain LONG on favorable risk-reward and multiple triggers ahead. Key estimates - FY16 FY17E FY18E FY19E Refining Volume (In MTPA) GRM ($/bbl) Petchem EBITDA ($/tn) O&G Volume (In mboe) Brent Price ($/bbl) Exchange Rate (Rs/USD) Risk to Our View Downturn in core margin, Higher losses from Reliance Jio launch Key Triggers Margin improvement in core business, E&P news flow Sensitivity to Key Variables % Change % Impact on EPS GRM 1 % 9 % Exchange Rate 5 % 8 % KG D6 volume 1 % 3 % DCF Valuations & Assumptions Rf Beta Ke Term. Growth Debt/IC in Term. Yr 7.5 % % 2.5 % 33.2 % - FY17E FY18E FY19-21E FY22-26E FY27-31E Sales Growth -12 % 14 % 2 % 2 % 2 % NOPAT Margin 1 % 1 % 1 % 1 % 1 % IC Turnover RoIC 6.6 % 7.2 % 7.8 % 1.5 % 12.8 % Years of strong growth Valuation as on date (Rs) Valuation as of Mar' ,7 1,18 Based on DCF, assuming 15 years of 2% CAGR growth and 13% average ROIC, we derive current fair value of Rs. 879 and Mar 17 fair value of Rs. 1,18. Company Description: In last 3 decade of its journey, RIL did backward integration from textile to upstream and has emerged as largest conglomerate in the country. Over last decade it has started entering into new economy sectors Retail, SEZ, telecom, media, etc. to reduce dependence on cyclical business. Comparable valuation EPS P/E BPS P/B RoE Div Yield Mkt Cap Price Target Company Reco. CMP Rs. Bn. Target Date FY16A FY17E FY18E FY16A FY17E FY18E FY16A FY17E FY16A FY17E FY18E FY16A FY17E Reliance Industries LONG 1,39 3,367 1,138 31st Mar' % 11 % 11 % 1. % 1.2 % ONGC NR 216 1,849 NR NR % 9 % 9 % 4.4 % 3.6 % Essar Oil NR 429 1,4 NR NR % 16 % 16 % 1.5 % 3.2 % April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 7 of 13

8 Consolidated Quarterly Earnings Forecast and Key Drivers Rs in Bn 1Q16A 2Q16A 3Q16A 4Q16A 1Q17E 2Q17E 3Q17E 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E FY16A FY17E FY18E FY19E Revenue ,765 2,443 2,777 2,842 (Increase)/Decrease Stock in Trade & WIP Consumption of Raw Materials ,582 1,378 1,722 1,722 Purchases Staff Cost Other Expenditure EBITDA Depreciation EBIT Interest Other Income PBT Tax PAT bef. MI & Assoc Minority Interest 1 1 Profit from Assoc Recurring PAT Extraordinaries Reported PAT EPS (Rs) Key Drivers Refining Vol Refining GRM ($/bbl) KG D6 Volume (mmscmd) Petchem Margin ($/tn) Sequential Growth (%) Revenue 14 % -8 % -4 % -12 % 6 % -6 % 1 % 1 % 19 % -6 % 1 % 1 % (Increase)/Decrease Stock in Trade 37 % -182 % 41 % -5 % -183 % % % % % % % % & WIP EBITDA 3 % 5 % 6 % 6 % -5 % 6 % 3 % 2 % 7 % 1 % 1 % % EBIT 1 % 6 % 9 % 2 % -8 % 5 % 3 % 1 % 1 % -3 % % -2 % Recurring PAT -4 % 4 % 13 % -1 % -1 % 4 % 3 % 1 % 9 % -2 % % -2 % EPS -3 % 7 % 8 % 1 % -12 % 4 % 3 % 1 % 9 % -2 % % -2 % Yearly Growth (%) Revenue -26 % -35 % -27 % -11 % -17 % -16 % -12 % 1 % 13 % 14 % 14 % 14 % -26 % -12 % 14 % 2 % EBITDA 13 % 9 % 31 % 22 % 12 % 13 % 9 % 5 % 19 % 13 % 11 % 9 % 18 % 1 % 13 % 3 % EBIT 15 % 11 % 44 % 19 % 8 % 7 % 1 % % 2 % 11 % 8 % 5 % 21 % 4 % 11 % 1 % Recurring PAT 4 % 8 % 38 % 12 % 5 % 5 % -4 % -2 % 17 % 1 % 7 % 4 % 15 % 1 % 9 % 2 % EPS 5 % 13 % 39 % 15 % 4 % 1 % -4 % -5 % 17 % 1 % 7 % 4 % 376 % 1 % 9 % 2 % Margin (%) EBITDA 13 % 15 % 17 % 2 % 18 % 2 % 21 % 21 % 19 % 2 % 2 % 2 % 16 % 2 % 2 % 2 % EBIT 9 % 11 % 12 % 14 % 12 % 13 % 14 % 14 % 13 % 13 % 13 % 13 % 11 % 13 % 13 % 13 % PBT 1 % 12 % 14 % 16 % 13 % 15 % 15 % 15 % 14 % 14 % 14 % 14 % 13 % 15 % 14 % 14 % PAT 8 % 9 % 11 % 12 % 1 % 11 % 12 % 12 % 11 % 11 % 11 % 11 % 1 % 11 % 11 % 11 % April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 8 of 13

9 Mar/1 Sep/1 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Mar/1 Sep/1 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Mar/1 Sep/1 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Consolidated Financials Reliance Industries Absolute LONG Relative Overweight 12% ATR in 11 months P&L (Rs Mn) FY16A FY17E FY18E FY19E Balance Sheet (Rs Mn) FY16A FY17E FY18E FY19E Cash Flow (Rs Mn) FY16A FY17E FY18E FY19E Revenue 2,765 2,443 2,777 2,842 Equity Capital PBT Op. Expenditure 2,323 1,957 2,23 2,279 Reserve 2,47 2,469 2,819 3,76 Depreciation EBITDA Networth 2,437 2,666 2,915 3,172 Others -93 Depreciation Long Term Debt 1,66 1,554 1,44 1,255 Taxes Paid EBIT Def Tax Liability Change in WC Interest Expense Minority Interest Operating C/F Other Income Account Payables Capex PBT Other Curr Liabi 1, Change in Invest -119 Tax Total Liabilities & Equity 6,62 5,722 5,893 5,996 Others 231 PAT bef. MI & Assoc Net Fixed Assets 2,533 2,872 3,35 3,185 Investing C/F Minority Interest 1 Capital WIP 1,665 1,36 1,212 1,65 Change in Debt Profit from Assoc Others Change in Equity 4 Recurring PAT Inventory Others Extraordinaires -4 Account Receivables Financing C/F Reported PAT Other Current Assets Net change in cash FDEPS (Rs) Cash RoE (%) 12 % 11 % 11 % 1 % DPS (Rs) Total Assets 6,62 5,722 5,893 5,996 RoIC (%) 7 % 7 % 7 % 7 % CEPS (Rs) Non-cash Working Capital Core RoIC (%) 7 % 7 % 7 % 7 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 13 % 17 % 17 % 16 % BVPS (Rs) ,64.9 WC Turnover P/E EBITDAM (%) 16 % 2 % 2 % 2 % FA Turnover P/B PATM (%) 1 % 11 % 11 % 11 % Net D/E P/FCFF Tax Rate (%) 23 % 24 % 24 % 24 % Revenue/Capital Employed EV/EBITDA Sales Growth (%) -26 % -12 % 14 % 2 % Capital Employed/Equity EV/Sales FDEPS Growth (%) 15 % 1 % 9 % 2 % Dividend Yield (%) 1. % 1.2 % 1.3 % 1.3 % TTM P/E vs. 2 yrs. forward EPS growth TTM P/B vs. 2 yrs. forward RoE TTM EV/EBITDA vs. 2 yrs. forward EBITDA growth EPS Growth 5% 4% 3% 2% 1% % -1% -2% 16x 12x 8x 1x 6x 2,6 2,2 1,8 1,4 1, 6 2 RoE 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % 2.5x 2x 1.5x 1x.5x 6, 5, 4, 3, 2, 1, - EBITDA Growth 5% 4% 3% 2% 1% % -1% 12x 1x 8x 6x 4x April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 9 of 13

10 Historical Consolidated Financials P&L (Rs Mn) FY13A FY14A FY15A FY16A Balance Sheet (Rs Mn) FY13A FY14A FY15A FY16A Cash Flow (Rs Mn) FY13A FY14A FY15A FY16A Revenue 3,971 4,345 3,754 2,765 Equity Capital PBT Op. Expenditure 3,64 3,997 3,381 2,323 Reserve 1,791 1,957 2,155 2,47 Depreciation EBITDA Networth 1,821 1,987 2,185 2,437 Others Depreciation Long Term Debt 893 1,338 1,487 1,66 Taxes Paid EBIT Def Tax Liability Change in WC Interest Expense Minority Interest Operating C/F Other Income Account Payables Capex PBT Other Curr Liabi ,7 Change in Invest Tax Total Liabilities & Equity 3,624 4,288 5,45 6,62 Others PAT bef. MI & Assoc Net Fixed Assets 1,335 1,414 1,521 2,533 Investing C/F Minority Interest Capital WIP ,665 1,665 Change in Debt Profit from Assoc Others Change in Equity Recurring PAT Inventory Others Extraordinaires -4 Account Receivables Financing C/F Reported PAT Other Current Assets Net change in cash EPS (Rs) Cash RoE (%) 12 % 12 % 11 % 12 % DPS (Rs) Total Assets 3,624 4,288 5,45 6,62 RoIC (%) 9 % 8 % 7 % 7 % CEPS (Rs) Non-cash Working Capital Core RoIC (%) 9 % 8 % 7 % 7 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 16 % 16 % 16 % 13 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 8 % 8 % 1 % 16 % FA Turnover P/B PATM (%) 5 % 5 % 6 % 1 % Net D/E P/FCFF Tax Rate (%) 2 % 22 % 24 % 23 % Revenue/Capital Employed EV/EBITDA Sales growth (%) 11 % 9 % -14 % -26 % Capital Employed/Equity EV/Sales FDEPS growth (%) 4 % 8 % 5 % 15 % Dividend Yield (%).9 %.9 % 1. % 1. % April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 1 of 13

11 Equirus Securities Pankaj Sharma Executive Director /41 Research Analysts Sector/Industry Equity Sales Anirvan Sarkar Banking & Financial Services Vishad Turakhia Ashutosh Tiwari Auto, Metals & Mining Vibhor Rastogi Devam Modi Power & Infrastructure Sweta Sheth Dhaval Dama FMCG, Mid-Caps Dealing Room Maulik Patel Oil and Gas Ashish Shah Nimish Mehta Pharma Ilesh Savla Umesh Raut Industrials Jigar Chokshi Associates Nirav Prajapati Manoj Gori Sandip Amrutiya Meet Chande Compliance Officer Parva Soni Smita Sharma Pranav Mehta Raj Kantawala Ram Varun Saylee Warade Vikas Jain Rating & Coverage Definitions: Absolute Rating LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap > Rs 5 billion and ATR >= 2% for rest of the companies SHORT: ATR <= negative 5% over investment horizon TRADE: Stocks that do not meet the criteria for either LONG or SHORT Relative Rating OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon BENCHMARK: likely to perform in line with the benchmark UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Target Price and Investment Horizon Target Price is a point value for stocks with Absolute rating of LONG or SHORT and a range value for stocks rated TRADE. Investment Horizon is set at a minimum 3 months to maximum 15 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion. Registered Office: Equirus Securities Private Limited Unit No. 121, 12th Floor, C Wing, Marathon Futurex, N M Joshi Marg, Lower Parel, Mumbai-413. Tel. No: +91 () Fax No: +91- () Corporate Office: 3rd floor, House No. 9, Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge, S.G. Highway Ahmedabad-3854 Gujarat Tel. No: +91 () Fax No: +91 () April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 11 of 13

12 216 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited Analyst Certification I, Maulik Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclaimers Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH27PTC17644 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital Market (Reg. No. INB ), Futures & Options Segment (Reg. No.INF ) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB ) of Bombay Stock Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 214 (Reg. No. INH1154). There are no disciplinary actions that have been taken by any regulatory authority. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker. ESPL/its affiliates provide investment banking services including but not limited to Private Equity, Mergers & Acquisitions, Structured Finance and Institutional Equities. ESPL/its affiliates might have, managed or co-managed public offering of securities of the subject company or have received a mandate from the subject company or might have received compensation from the subject company for investment banking or brokerage services in the past twelve months. 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Thus, investors should be aware that the firm may have conflict of interest. Additional Disclaimer for U.S. Persons ESPL/its affiliates are not a registered broker dealer under the U.S. Securities Exchange Act of 1934, as amended (the 1934 act ) and under applicable state laws in the United States. In addition Equirus is not a registered investment adviser under the U.S. Investment Advisers Act of 194, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Equirus, including the products and services described herein are not available to or intended for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition on soliciting the securities business in that jurisdiction without going through the registration requirements and/or prohibit the use of any information contained in this website. This Report and its respective contents does not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under certain rules. April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 12 of 13

13 Disclosures Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Analyst/ESPL/Associate/Relatives financial interest No Analyst/ESPL/Associate/Relatives actual/beneficial ownership of 1% or more No Analyst/ESPL/Associate/Relatives material conflict of interest No Whether ECPL managed any public offering in past 12 months No * Associate means individual who assist Analyst April 24, 216 Analyst:Maulik Patel (maulik@equirus.com) ( ) Page 13 of 13