Gujarat Ambuja Exports

Transcription

1 Gujarat Ambuja Exports Absolute : LONG Relative : Overweight 4QFY18 Result: Estimate ( ), TP ( ), Rating ( ) Regular Coverage 31% ATR in 13 Months Focus shifts to profitable growth maintain LONG Agricultural Products 218 Equirus All rights reserved Rating Information Price (Rs) 24 Target Price (Rs) 32 Target Date Target Set On Implied yrs of growth (DCF) 1 Fair Value (DCF) 369 Fair Value (DDM) 23 Ind Benchmark Model Portfolio Position Stock Information 3th June'19 21st May'18 SPBSMIP Yes Market Cap (Rs Mn) 27,515 Free Float (%) % 52 Wk H/L (Rs) 39.85/1.5 Avg Daily Volume (1yr) 1,94,825 Avg Daily Value (Rs Mn) 36 Equity Cap (Rs Mn) 229 Face Value (Rs) 2 Bloomberg Code GAEX IN Ownership Recent 3M 12M Promoters 63.8 % -2.2 % -2.4 % DII.6 %.5 %.4 % FII.6 %.2 %. % Public 35. % 1.5 % 2. % Price % 1M 3M 12M Absolute % 2.7 % 81.7 % Vs Industry -6.2 % 7.4 % 74.9 % Sukhjit Starch -1.3 % -2.6 % 52.6 % Gulshan Polyols -9.3 % % % Consolidated Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (18A) EPS (19E) Gujarat Ambuja Exports (GAEX) reported 4QFY18 revenues of Rs 8.8bn (-17% yoy, -3 vs. EE). The maize segment continued to show consistent growth (+12% yoy in 4QFY18) even as the agro processing segment posted a decline (-36% yoy). EBITM jumped 617bps yoy to 11%, beating EE by 346bps, on better profitability in both maize and other agro-processing segments. PAT stood at Rs 789mn, up 134% yoy/25% qoq and 26% above EE led by better operating margins and a below-expected tax rate. With the commissioning of GAEX s new maize plant in Mar 18, revenue growth should accelerate in FY19. We update our FY19/FY2 EBITDA estimates by -4%/+1% and roll over to SOTP-based Jun 19 TP to Rs 32 (Mar 19 TP of Rs 33 earlier). Maintain LONG. Maize segment growth to accelerate on new plant commissioning: Maize division revenues grew 12% yoy in 4Q18. Growth was largely driven by volumes as realizations remained stable. Segment EBIT margins improved to 18.5% in 4Q (12.1% in 4QFY17, 16% in 3QFY18) on the back of lower RM prices with almost no change in product mix. As per management, the segment is operating at 9+ utilization and meaningful growth would be seen from 1QFY19 with the new 1, MTPD plant commencing operations in Mar 18. As highlighted in our Apr 18 update note, post commissioning of this plant, GAEX has become the largest maize processor in India with an installed capacity of 3, MTPD and a market share of ~21%. We expect a 23%/29% CAGR in maize processing revenues/ebitda over FY18-FY2E. Decline in agro revenues compensated by improved profitability: Agro processing revenues spiraled down 36% yoy in 4Q18 mainly as the company cut down on its oilrelated trading activities. Earlier GAEX used to import crude soybean oil and sell the refined oil in the domestic market but the recent increase in import duties and company focus shift towards manufacturing has led to fall in such trading related activities. EBITM expansion of 785bps yoy was driven by a drop in lower-margin trading activities (EBITDA for trading is ~4-5% vs. 7-8% for crushing operations). We have argued that the recent import duty hike on crude and refined edible oils will provide a levelplaying field to domestic crushing companies and help increase their utilization levels. Currently, GAEL is operating at 3 capacity utilization levels in the agro segment. Maintain LONG with a revised SoTP - based Jun 19 TP of Rs 32: We have updated our numbers and revised our FY19/FY2 EBITDA estimates by -4%/+1%. We roll over to a SoTP-based Jun 19 TP of Rs 32 (from a Mar 19 TP of Rs 33) and maintain LONG on the stock (Exhibit 9). Change in Estimates Rs. Mn FY19E Chg (%) FY2E Chg (%) Sales 43,86-5% 52,27-5% EBITDA 4,168-4% 5,21 1% EPS % % Consolidated Financials Rs. Mn YE Mar FY18A FY19E FY2E FY21E Sales 33,644 43,86 52,27 58,196 EBITDA 3,173 4,168 5,21 5,873 Depreciation ,87 Interest Expense Other Income Reported PAT 1,799 2,26 2,934 3,377 Recurring PAT 1,799 2,26 2,934 3,377 Total Equity 1,224 12,27 14,992 18,126 Gross Debt 6,913 6,67 5,517 4,17 Cash ,537 Rs Per Share FY18A FY19E FY2E FY21E Earnings Book Value Dividends FCFF P/E (x) P/B (x) EV/EBITDA (x) ROE (%) 19 % 2 % 22 % 2 % Core ROIC (%) 12 % 13 % 16 % 18 % EBITDA Margin (%) 9 % 1 % 1 % 1 % Net Margin (%) 5 % 5 % 6 % 6 % May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 1 of 11 Before reading this report, you must refer to the disclaimer on the last page.

2 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 3,88 3,776 4,41 2,849 4,45 5,12 6,641 3,645 3,628 6,82 2,661 2,765 3,18 3,291 3,175 3,255 3,198 3,426 3,36 3,417 3,852 2,676 4,232 2,841 Gujarat Ambuja Exports Absolute LONG Relative Overweight 31% ATR in 13 Months Exhibit 1: Quarterly revenue trends in the agro processing segment Exhibit 3: Commissioning of new plant to drive growth in maize division % Agro Processing Revenue (Rs. mn) 62% 31% -14% -13% -29% 16% Growth (yoy%)(rhs) 133% 36% 19% -1-36% % Maize Processing Revenue (Rs mn) 31% 27% 19% 18% 16% 3% 4% Growth (yoy%)(rhs) 12% 7% 3% -11% 35% 3 25% 2 15% 1 5% -5% -1-15% Source: Company, Equirus Securities Source: Company, Equirus Securities Exhibit 2: EBITM has improved with a sharp fall in oil trading activities Exhibit 4: Maize EBITM has recovered in 2HFY18 after sharp drop in 1HFY % 145 Agro Processing EBIT (Rs mn) EBITM (%)(RHS) 11% 8% 7% 7% 8% 3% 2% -1% 297-1% % 1 8% 6% 4% 2% -2% % 12% Maize Processing EBIT (Rs mn) 12% 13% 13% 11% 11% 12% EBITM (%)(RHS) 16% 7% 5% 18% 2 18% 16% 14% 12% 1 8% 6% 4% 2% Source: Company, Equirus Securities Source: Company, Equirus Securities May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 2 of 12

3 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Gujarat Ambuja Exports Absolute LONG Relative Overweight 31% ATR in 13 Months Exhibit 5: After a sharp rise in FY17, corn prices have corrected in FY18 Corn Prices (Rs/qtl) Growth (Yoy%) 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, Exhibit 7: Soymeal exports (MT) declined in FY18 due to closure of some bigger players 3,, 2,5, 2,, 1,5, 1,, 5, FY16 FY17 FY18 Source: Bloomberg, Equirus Securities Exhibit 6: Soybean and Soymeal prices are on an uptrend Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Source: SOPA, Equirus Securities Soyameal (Rs/tonne) Soya refined oil (RHS) (Rs/1kg) Source: NCDEX, Equirus Securities May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 3 of 12

4 Valuation and risks GAEX currently trades at 12x/9x/8x P/E and an EV/EBITDA of 8x/6x/5x on our FY19/FY2/FY21 estimates. The company has historically traded in the range of 5-15x P/E on TTM EPS and an EV/EBITDA of 5-7x on TTM EBITDA. We use the SOTP methodology to value GAEX as follows: Maize processing: Indian rice and shrimp processing companies are currently trading at a FY19 median EV/EBITDA multiple of ~14x and 18x respectively. We assign a TTM EV/EBITDA multiple of 11x (a ~2 and ~4 discount to rice and shrimp processing firms respectively) to our TTM June 19 maize processing EBITDA estimates as, unlike rice processing firms, GAEX does not have its own branded business and lags behind aqua processing firms in terms of asset turns and return ratios (RoE/RoIC). Agro processing: Global agro processing firms are currently trading at a CY18 median EV/EBITDA multiple of 11x. Ascribing a ~25% discount, we value GAEX s agro (soya) processing business at a June 19 TTM EV/EBITDA multiple of 8x as segment margins and return ratios have historically been very volatile. Cotton/Textile (others): We assign a TTM June 19 EV/EBITDA multiple of 4x to other segments. Overall, we arrive at a June 19 SOTP-based TP of Rs 32, implying a P/E multiple of 17x/13x/11x and an EV/EBITDA multiple of 1x/8x/7x on our FY19/FY2/FY21 estimates. Exhibit 9: We arrive at a SOTP-based June 19 TP of Rs 32 Investment risks Downside risks: 1. Commodity price risk: Factors like political and regulatory changes, seasonal variations, weather, technology and market conditions can significantly affect commodity prices. An unexpected movement in commodity prices can have a bearing on the company s profitability. GAEX tries to mitigate the risk by covering positions through hedging at commodity exchanges like CBOT, REFCO, NCDEX, NMCEX and others. 2. Foreign currency risk: GAEX manages foreign currency exposures through forward exchange contracts. Forex risks are partly mitigated by purchase of goods/ commodities in respective currencies. 3. Capital misallocation: GAEX has a good business (maize), an average business (oil) and a bad business (textile). In the last decade, the company has mainly invested in its maize business and has no intention of investing further in the oil and textile business. Any major investments in the oil and textile business will be against our investment thesis. 4. Increased competition: While many players have entered and exited the industry over the last few years, more number of entrants ahead should not be surprising given the industry s growth potential. This would put pressure on pricing and utilization levels of existing players. TTM June 19E (Rs mn) EBITDA Multiple EV Agro processing 1,54 8x 12,29 Maize processing 2,684 11x 29,523 Others 225 4x 91 Group's EV 42,452 Total debt 6,67 Total cash 592 Equity value 36,977 No. of shares outstanding(mn) 115 June 19 Target price (Rs) 32 Source: Equirus Securities May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 4 of 12

5 Quarterly performance, consolidated % Change Rs Mn Q4FY18 Q4FY18E Q3FY18 Q4FY17 Q4FY18E Q3FY18 Q4FY17 Net Sales 8,88 12,656 1,173 1, % -17% Comments Revenue decline was mainly due to decrease in oil related trading activities Raw Materials Consumed 6,155 9,745 7,73 8,689-37% -2-29% Employee benefits expense % -1% 26% Other expenses 1,199 1,522 1,78 1,17-21% 11% 18% Fuel cost and freight expenses have gone up Total Expenditures 7,639 11,518 9,68 9,932-34% -16% -23% EBITDA 1,169 1,138 1, % 6% 66% Depreciation % 3% 5% EBIT % 6% 88% Interest % 48% -59% Other Income % -4-68% PBT % 2% 118% Tax % -5 55% Reversal of excess provision of ~Rs. 13mn was made earlier Recurring PAT % 25% 134% Extra ordinaries Reported PAT % 25% 134% EBITDA Margin 13.3% % 6.6% 428 bps 241 bps 665 bps Margin improvement was mainly due to lower RM prices EBIT Margin % % 378 bps 25 bps 617 bps PBT Margin 1.5% 7.1% 8.9% bps 161 bps 652 bps PAT Margin % 6.2% 3.2% 42 bps 274 bps 579 bps Tax Rate 14.8% % 2.8% bps bps -6 bps May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 5 of 12

6 Company Snapshot How we differ from Consensus - Equirus Consensus % Diff Comment EPS FY19E There are no other estimates available. FY2E Sales FY19E 43, FY2E 52, PAT FY19E 2, FY2E 2, Segmental Drivers: Revenue growth (%) FY18 FY19e FY2e FY21e Agro processing -5% 33% 23% 13% Cotton 19% 5% 2% 2% Maize processing 3% 3 16% 12% EBITDA margins (%) FY18 FY19e FY2e FY21e Agro processing 7.9% % 6. Cotton.6% Maize processing 15.5% Key downside risks: a) Volatility in corn and soya prices. b) Increase in competition which may put pressure on prices and utilization levels DCF Valuations & Assumptions Rf Beta Ke Term. Growth Debt/IC in Term. Yr 6.8 % % 6. % 31. % FY18E FY19E FY2E FY21-27E Sales Growth 3 % 19 % 15 % 11 % NOPAT Margin 5 % 6 % 6 % 6 % IC Turnover RoIC 13.3 % 15.8 % 18. % 25.8 % Years of strong growth Valuation as on date (Rs) Valuation as of June' Based on DCF, we derive 3 th June, 219 fair value of Rs Company Description: Gujarat Ambuja Exports Limited (GAEX) is a leading manufacturer of starch derivatives, soy derivatives and cotton yarn. It has the second highest crushing capacity in India with six solvent extraction plants across India with a total capacity of 4,6 MTPD. Currently, the company s refining capacity stands at 1,2 MTPD. GAEX s main focus area has been wet-milling of corn and it has set up three operational processing plants. With commencement of operations of its new Chalisgaon plant, the company has become the largest maize processor in India in terms of installed capacity. Comparable valuation EPS P/E BPS P/B RoE Div Yield Mkt Cap Price Target Company Reco. CMP Rs. Mn. Target Date FY18A FY19E FY2E FY18A FY19E FY2E FY18A FY19E FY18A FY19E FY2E FY18A FY19E Gujarat Ambuja Exports LONG 24 27, th June' % 2 % 22 %.4 %.5 % Sukhjit Starch NA 56 3,738 NA NA % % - Gulshan Polyols NA 66 3,11 NA NA % % - May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 6 of 12

7 Consolidated Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q18A 2Q18A 3Q18A 4Q18A 1Q19E 2Q19E 3Q19E 4Q19E 1Q2E 2Q2E 3Q2E 4Q2E FY18A FY19E FY2E FY21E Revenue 6,94 7,75 1,173 8,88 9,554 9,474 12,669 12,19 13,7 13,7 13,7 13,7 33,644 43,86 52,27 58,196 Raw Materials Consumed 4,869 5,43 7,316 6,234 7,7 7,295 9,819 9,384 1,8 1,8 1,8 1,8 23,492 33,568 4,321 45,12 Increase/Decrease in Stock Purchase of stock-in-trade ,974 Employee benefits expense ,131 1,21 1,295 Other expenses ,78 1,199 1, ,47 1,28 1,321 1,321 1,321 1,321 4,93 4,939 5,286 5,926 EBITDA ,15 1, ,161 1,162 1,32 1,32 1,32 1,32 3,173 4,168 5,21 5,873 Depreciation ,87 EBIT ,55 1,55 1,55 1,55 2,41 3,237 4,222 4,786 Interest Other Income PBT ,33 1,33 1,33 1,33 2,322 3,17 4,133 4,756 Tax ,198 1,379 PAT bef. MI & Assoc ,799 2,26 2,934 3,377 Minority Interest Profit from Assoc. Recurring PAT ,799 2,26 2,934 3,377 Extraordinaries Reported PAT ,799 2,26 2,934 3,377 EPS (Rs) Key Drivers Agro processing revenue (Rs. mn) ,597 23,421 28,726 32,346 Cotton revenue (Rs. mn) ,585 2,722 2,776 2,832 Maize processing (Rs. mn) ,496 17,575 2,436 22, Sequential Growth (%) Revenue -35 % 12 % 32 % -13 % 8 % -1 % 34 % -4 % 7 % % % % Raw Materials Consumed -32 % 4 % 45 % -15 % 13 % 3 % 35 % -4 % 7 % % % % EBITDA -44 % 2 % 132 % 6 % -21 % 1 % 25 % % 12 % % % % EBIT -58 % 34 % 216 % 6 % -29 % 1 % 34 % % 14 % % % % Recurring PAT -5 % 24 % 22 % 25 % -41 % 1 % 36 % % 22 % % -9 % -3 % EPS -5 % 24 % 22 % 25 % -41 % 1 % 36 % % % 1 % 25 % 6 % Yearly Growth (%) Revenue -1 % 22 % 17 % -17 % 38 % 23 % 25 % 37 % 36 % 37 % 3 % 7 % 1 % 3 % 19 % 12 % EBITDA -51 % -4 % 49 % 66 % 131 % 94 % 5 % -1 % 42 % 41 % 12 % 12 % 17 % 31 % 25 % 13 % EBIT -66 % -1 % 61 % 88 % 219 % 14 % 2 % -4 % 54 % 52 % 14 % 14 % 21 % 34 % 3 % 13 % Recurring PAT -66 % -3 % 39 % 134 % 176 % 124 % 1 % -19 % 66 % 64 % 11 % 8 % 13 % 23 % 33 % 15 % EPS -66 % -3 % 39 % 134 % 176 % 124 % 1 % -19 % 37 % 37 % 26 % 34 % 13 % 23 % 33 % 15 % Margin (%) EBITDA 6 % 6 % 11 % 13 % 1 % 1 % 9 % 1 % 1 % 1 % 1 % 1 % 9 % 1 % 1 % 1 % EBIT 3 % 4 % 9 % 11 % 7 % 7 % 7 % 8 % 8 % 8 % 8 % 8 % 7 % 7 % 8 % 8 % PBT 3 % 4 % 9 % 11 % 7 % 7 % 7 % 7 % 8 % 8 % 8 % 8 % 7 % 7 % 8 % 8 % PAT 2 % 3 % 6 % 9 % 5 % 5 % 5 % 5 % 6 % 6 % 5 % 5 % 5 % 5 % 6 % 6 % May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 7 of 12

8 Jun/11 Dec/11 Jun/12 Dec/12 Jun/13 Dec/13 Jun/14 Dec/14 Jun/15 Dec/15 Jun/16 Dec/16 Jun/17 Dec/17 Jun/18 Dec/18 Jun/19 Jun/1 Dec/1 Jun/11 Dec/11 Jun/12 Dec/12 Jun/13 Dec/13 Jun/14 Dec/14 Jun/15 Dec/15 Jun/16 Dec/16 Jun/17 Dec/17 Jun/18 Dec/18 Jun/19 Jun/11 Dec/11 Jun/12 Dec/12 Jun/13 Dec/13 Jun/14 Dec/14 Jun/15 Dec/15 Jun/16 Dec/16 Jun/17 Dec/17 Jun/18 Dec/18 Jun/19 Consolidated Financials Gujarat Ambuja Exports Absolute LONG Relative Overweight 31% ATR in 13 Months P&L (Rs Mn) FY18A FY19E FY2E FY21E Balance Sheet (Rs Mn) FY18A FY19E FY2E FY21E Cash Flow (Rs Mn) FY18A FY19E FY2E FY21E Revenue 33,644 43,86 52,27 58,196 Equity Capital PBT 2,322 3,17 4,133 4,756 Op. Expenditure 3,472 39,638 46,817 52,323 Reserve 9,994 12,41 14,763 17,896 Depreciation ,87 EBITDA 3,173 4,168 5,21 5,873 Networth 1,224 12,27 14,992 18,126 Others Depreciation ,87 Long Term Debt 6,396 5,55 5, 3,5 Taxes Paid ,198 1,379 EBIT 2,41 3,237 4,222 4,786 Def Tax Liability Change in WC -1,266-1,264-1,745-1,341 Interest Expense Minority Interest Operating C/F 1,384 2,3 2,267 3,153 Other Income Account Payables 1,228 1,471 1,767 1,977 Capex -1, ,6-364 PBT 2,322 3,17 4,133 4,756 Other Curr Liabi Change in Invest Tax ,198 1,379 Total Liabilities & Equity 18,948 2,391 22,86 24,72 Others PAT bef. MI & Assoc. 1,799 2,26 2,934 3,377 Net Fixed Assets 7,718 8,11 7,373 7,449 Investing C/F -1, Minority Interest Capital WIP Change in Debt ,5 Profit from Assoc. Others Change in Equity Recurring PAT 1,799 2,26 2,934 3,377 Inventory 7,237 8,277 9,942 11,121 Others Extraordinaires Account Receivables 2,293 2,76 3,136 3,58 Financing C/F , ,871 Reported PAT 1,799 2,26 2,934 3,377 Other Current Assets Net change in cash ,15 FDEPS (Rs) Cash ,537 RoE (%) 19 % 2 % 22 % 2 % DPS (Rs) Total Assets 18,948 2,391 22,86 24,72 RoIC (%) 12 % 13 % 16 % 16 % CEPS (Rs) Non-cash Working Capital 8,234 9,498 11,243 12,584 Core RoIC (%) 12 % 13 % 16 % 18 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 7 % 7 % 7 % 7 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 9 % 1 % 1 % 1 % FA Turnover P/B PATM (%) 5 % 5 % 6 % 6 % Net D/E P/FCFF Tax Rate (%) 23 % 29 % 29 % 29 % Revenue/Capital Employed EV/EBITDA Sales Growth (%) 1 % 3 % 19 % 12 % Capital Employed/Equity EV/Sales FDEPS Growth (%) 13 % 23 % 33 % 15 % Dividend Yield (%).4 %.5 %.6 %.7 % 8 4 TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE EPS Growth x 2x 15x 1x 5x EBITDA Growth 5 18x 4 15x 3 12x 2 1 1x 5x RoE 3 8x 2 1 6x 4x 2x 1x May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 8 of 12

9 Historical Consolidated Financials P&L (Rs Mn) FY15A FY16A FY17A FY18A Balance Sheet (Rs Mn) FY15A FY16A FY17A FY18A Cash Flow (Rs Mn) FY15A FY16A FY17A FY18A Revenue 25,313 27,365 33,336 33,644 Equity Capital PBT 977 1,194 1,994 2,322 Op. Expenditure 23,668 25,512 3,628 3,472 Reserve 7,996 8,929 8,32 9,994 Depreciation EBITDA 1,645 1,852 2,78 3,173 Networth 8,273 9,26 8,531 1,224 Others Depreciation Long Term Debt 3,31 3,285 6,356 6,396 Taxes Paid EBIT 1,35 1,191 1,994 2,41 Def Tax Liability Change in WC 1, ,782-1,266 Interest Expense Minority Interest Operating C/F 2,534 1, ,384 Other Income Account Payables ,15 1,228 Capex -1,234-1,187-1,76-1,288 PBT 977 1,194 1,994 2,322 Other Curr Liabi Change in Invest Tax Total Liabilities & Equity 12,844 14,17 17,88 18,948 Others PAT bef. MI & Assoc ,4 1,586 1,799 Net Fixed Assets 5,428 5,681 6,71 7,718 Investing C/F -1,295-1,324-1,173-1,193 Minority Interest Capital WIP 629 1,27 1, Change in Debt ,71 4 Profit from Assoc. Others Change in Equity -2,266 Recurring PAT 841 1,4 1,586 1,799 Inventory 4,437 4,38 6,244 7,237 Others Extraordinaires Account Receivables 1,81 1,737 2,78 2,293 Financing C/F -1, Reported PAT 841 1,4 1,586 1,799 Other Current Assets Net change in cash EPS (Rs) Cash RoE (%) 11 % 12 % 18 % 19 % DPS (Rs) Total Assets 12,844 14,17 17,88 18,948 RoIC (%) 8 % 9 % 12 % 12 % CEPS (Rs) Non-cash Working Capital 4,886 5,222 6,968 8,234 Core RoIC (%) 8 % 8 % 12 % 12 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 16 % 13 % 7 % 7 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 6 % 7 % 8 % 9 % FA Turnover P/B PATM (%) 3 % 4 % 5 % 5 % Net D/E P/FCFF Tax Rate (%) 14 % 16 % 2 % 23 % Revenue/Capital Employed EV/EBITDA Sales growth (%) -18 % 8 % 22 % 1 % Capital Employed/Equity EV/Sales FDEPS growth (%) -25 % 19 % 58 % 13 % Dividend Yield (%).4 %.3 %.3 %.4 % May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 9 of 12

10 Equirus Securities Research Analysts Sector/Industry Equity Sales Abhishek Shindadkar IT Services Vishad Turakhia Ashutosh Tiwari Auto, Metals & Mining Subham Sinha Depesh Kashyap Mid-Caps Viral Desai Dhaval Dama FMCG, Mid-Caps Viraj Mehta Manoj Gori Consumer Durables Dealing Room Maulik Patel Oil and Gas Ashish Shah Pranav Mehta Building Materials Ilesh Savla Praful Bohra Pharmaceuticals Manoj Kejriwal Rohan Mandora Banking & Financial Services Dharmesh Mehta Associates Compliance Officer Ankit Choudhary Jay Soni Bharat Celly Corporate Communications Harshit Patel Mahdokht Bharda Hetal Bhatia Meet Chande Nishant Bagrecha Ronak Soni Samkit Shah Shreepal Doshi Varun Baxi 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 ADD: ATR >= 5% but less than Ke over investment horizon REDUCE: ATR >= negative 1 but <5% over investment horizon SHORT: ATR < negative 1 over investment horizon 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 Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 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 () May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 1 of 12

11 218 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, Depesh Kashyap/Harshit 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. Disclosures 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), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993 (Reg. No.INP5216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP ). There are no disciplinary actions taken by any regulatory authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private equity, mergers & acquisitions and structured finance. As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ESPL has not been engaged in market making activity for the subject company. The Research Analyst 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) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company. This document 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 ESPL 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 a certain category of investors. Persons in whose possession of this document are required to inform themselves of, and to observe, such applicable restrictions. Please delete this document if you are not authorized to view the same. By reading this document you represent and warrant that you have full authority and all rights necessary to view and read this document without subjecting ESPL and affiliates to any registration or licensing requirement within such jurisdiction. This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to its accuracy or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant information contained herein. While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the information current. Also there may be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 11 of 12

12 research report. Thus, investors should be aware that the firm may have conflict of interest. A graph of daily closing prices of securities is available at and (Choose a company from the list on the browser and select the three years period in the price chart). Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Research Analyst or Relatives financial interest Research Analyst or Relatives actual/beneficial ownership of 1% or more Research Analyst or Relatives material conflict of interest No No No 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 report. This Report and its respective contents do 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 May 21, 218 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 12 of 12