PEER GROUPS CMP MARKET CAP. EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

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1 BUY CMP Target Price MANDHANA INDUSTRIES LTD. Result Update: Q1 FY14 SEP. 20 th, 2013 ISIN: INE087J01010 Stock Data Sector Textiles BSE Code Face Value wk. High / Low (Rs.) / Volume (2wk. Avg ) Market Cap ( Rs in mn ) Annual Estimated Results (A*: Actual / E*: Estimated) Years FY13A FY14E FY15E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) 1 Year Comparative Graph BSE SENSEX MANDHANA INDUSTRIES LTD. SYNOPSIS Mandhana Industries Ltd (MIL) is a multidivisional Textile Company which engaged in manufacturing of textiles and garments over multiple geographical locations. MIL s net sales registered a 35.81% increase and stood at a record Rs million from Rs million over the corresponding quarter last year. EBITDA was seen at Rs mn for Q1 FY13-14 as against Rs mn for Q1 FY12-13, an increase of 20.11%. The Company planned to augment BEING HUMAN brand operations by increasing the number of EBO s to 40, SIS to 100 & distribution selling points to 250. The Company has approved & declared Final Dividend of Rs per Equity Share (i.e.20%), on total paid Share Capital of 3,31,23,913 Equity Shares of Rs.10/- each, amounting to Rs. 6,62,47,826/- for the FY Net Sales and PAT of the company are expected to grow at a CAGR of 24% & 10% over 2012 to 2015E respectively. India s total textile and apparel industry size is projected to grow at a CAGR of 9.5% to reach USD 223 Bn by 2021 from USD 89 Bn in PEER GROUPS CMP MARKET CAP. EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Mandhana Industries Ltd Sutlej Textiles and Industries Ltd Sumeet Industries Ltd Siyaram Silk Mills Ltd

2 Quarterly Highlights (STANDALONE) Results updates- Q1 FY14, Mandhana Industries Ltd is a diversified textile company which engaged in manufacturing of textiles and garments, reported its financial results for the quarter ended 30 JUNE, Months JUNE-13 JUNE-12 % Change Net Sales % PAT % EPS % EBITDA % Mandhana Industries Ltd achieved a turnover of Rs million for the 1 st quarter of the current year as against Rs millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs millions and a net profit of Rs million against Rs million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs for the 1 st quarter as against an EPS of Rs in the corresponding quarter of the previous year. Expenditure : Break up of Expenditure Rs. Millions Q1 FY14 Q1 FY13 Cost of Material Consumed Purchase of Stock in Trade Employee Benefit Expenses Manufacturing Cost Depreciation & Amortization Expenses Other Expenses Segment Revenue

3 Latest Updates The Company planned to augment BEING HUMAN brand operations by increasing the number of Exclusive Brand Outlets (EBO) s to 40, Store in Stores (SIS) to 100 & distribution selling points to 250. Company Profile Mandhana Industries was incorporated on July 25, 1984 at Mumbai in the State Of Maharashtra as Mandhana Textile Mills Private Limited. It is one of India s leading textiles and garment manufacturing company with state of the art infrastructure. The scope of the company includes designing, yarn dyeing, weaving, Processing, printing and garment manufacturing. The company is a multi divisional textile company spread over multiple geographical locations. Mandhana Industries Ltd. has entered into retail segment with the brand Being Human. The company has also entered into an exclusive global license agreement with Being Human- The Salman Khan Foundation for designing, marketing and distributing Being Human Clothing Line. Launched the commercial operations for Being Human products in October, 2012 in India. The flagship store was, however, launched in January, 2013 in Bandra, Mumbai. Four more stores were launched in the same quarter. Globally, the sale of products began in April, MIL is now planning to sell Being Human products through EBOs (Exclusive Brand Outlets), franchisees, SIS (Store in Stores) formats, including the overseas distribution selling outlets. Being Human recently tied up with Myntra.com, a leading online fashion store that has a vast reach, spanning 480 cities and towns in India. MIL exports fabrics as well As much as 95% garments are exported to over 25 countries. The Manufacturing plants are located in Tarapur, Maharashtra and Bangalore, Karnataka. Four state-of-the-art manufacturing facilities at MIDC, Tarapur, for yarn dyeing, weaving and fabric processing and ive garment manufacturing facilities at Bengaluru. Another garment unit at Baramati, known as the Hitech Textile Park, is nearing completion. Products 1. Greige and finished fabrics including Cotton textiles, yarn dyed fabrics, embroidered and embellished. 2. Blended cotton fabrics including cotton blends with nylon, lycra, viscose, melange and others. 3. Readymade woven garments, including shirts, ladies tops, dresses, skirts, kids wear and sportswear, both for third-party brands as well as the Company s flagship brand Being Human

4 Certifications Mandhana has been accredited with the following certifications: ISO 9001 (Management ET System) Oeko Tex (Using Environment-Friendly Chemicals) Flo Cert (Fair Trade) Gots (Organic Cotton Production) Control Union (Eco-friendly Products) Clientele DOMESTIC CLIENTELE Allen Solly Indian Terrain Shoppers Stop Louis Phillipe Pepe Jeans Raymonds Van Heusen Wills Pantaloons Lilliput INTERNATIONAL CLIENTELE Jeans and high-street wear J.C. Rags River Island Desigual Colin s Hiliger Denim Mango Pepe Jeans Denim Rile Superdry Scotch & Soda Bonobo Calvin Klein FCUK Cache Cache Sports and surf wear Quicksilver Kappa Rip Curl Roxy Oxbow Catalogue Bonprix LA-Redoute Otto Retailers New Yorker Auchan ORSAY Corporate brands Switcher

5 Financial Highlight (STANDALONE) (A*- Actual, E* -Estimations & Rs. In Millions) Balance sheet as at March 31 st, 2013 FY13 FY14E FY15E EQUITY AND LIABILITIES: Shareholders Funds: Share Capital Reserves and Surplus a) Net worth Non-Current Liabilities: Long-term borrowings Deferred Tax Liabilities [Net] Other Long Term Liabilities Long Term Provisions b) Long term liabilities Current Liabilities: Short-term borrowings Trade Payables Other Current Liabilities Short Term Provisions c) Current Liabilities Total (a+b+c) ASSETS: Non-Current Assets: Tangible Assets Intangible Assets Capital work-in-progress Long Term Loans and Advances d) Non-Current Assets Current Assets: Current Investments Inventories Trade Receivables Cash and Bank Balances Short Term Loans and Advances Other Current Assets e) Current Assets Total (d+e)

6 Annual Profit & Loss Statement for the period of 2012 to 2015E Value(Rs.in.mn) FY12 FY13 FY14E FY15E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 31 DEC, 2012 to 30SEP, 2013E Value(Rs.in.mn) 31-Dec Mar Jun Sep-13E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

7 Ratio Analysis Particulars FY12 FY13 FY14E FY15E EPS (Rs.) EBITDA Margin (%) 18.93% 14.16% 13.47% 13.29% PBT Margin (%) 10.53% 7.05% 6.23% 5.64% PAT Margin (%) 7.46% 4.79% 4.25% 3.80% P/E Ratio (x) ROE (%) 17.35% 13.84% 12.69% 11.64% ROCE (%) 19.71% 17.33% 16.54% 16.37% Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

8 Outlook and Conclusion At the current market price of Rs , the stock P/E ratio is at x FY14E and x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs and Rs respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 24% and 10% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 7.83 x for FY14E and 7.46 x for FY15E. Price to Book Value of the stock is expected to be at 1.44 x and 1.27 x respectively for FY14E and FY15E. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. Industry Overview Indian textile industry is 2 nd largest manufacturer after China in the world. It contributes significantly to the Indian economy in terms of output, foreign exchange earnings and employment generation. It contributes around 4% to the country s GDP, 14% to the Industrial Production and 17% to Exports Earnings (Source: IBEF February 2013). It is 2 nd largest employer providing employment to approximately 35 Mn people. India s total textile and apparel industry size is projected to grow at a CAGR of 9.5% to reach USD 223 Bn by 2021 from USD 89 Bn in 2011 (Source: White paper by FICCI & Technopak). India captures 4.5% market share in global pie and is constantly growing at a CAGR of 10% since Key Growth Drivers Low per capita ibre consumption: As per FICCI estimates, current per capita fibre consumption is at 5-6 kg in India as compared to the global average of 10.8 kg. India s per capita consumption of man made fibers is also low at 2 kg against 12 kg in China and 11 kg in European Union, implying that there is not well developed fibre consumption as compared to average. Thus, there lies huge untapped potential. India is among the lowest cost producer fabric on per meter production cost in USD. It has an advantage of almost 50% when compared to Italy (Europe). Favorable socio-economic factors: India s earning population is steadily growing. Growth in disposable income, along with rising urban population can contribute significantly to the textile industry growth

9 trajectory. The United Nation estimates that India s urban population is expected to increase by 171 Mn over next 15 years and the earning population would increase by 170 Mn. It would generate high demand and the next phase of growth can come from rural areas. Increase in FDI limit in single-brand retail as well multi-brand retail: The government has allowed 100% from 51% FDI in single-brand retail and 51% in multi-brand retail. Liberalisation is expected to increase organised retail from 8% in 2012 to 25% by India s retail industry is pegged at USD 435 Bn and can reach USD 1.3 Tn by 2020 according to A T Kearney. The apparel segment accounts for around 33% of the total organised retail and its contribution is expected to increase further. Textiles companies are exploring new horizons by venturing into new markets like Africa, Korea, Japan, Russia to combat dependence on the US and Europe for export earnings. China s export revenue from textiles is facing turbulent times. This is likely to boost India s prospects, the 2 nd largest textile manufacturer globally. India s total textile and apparel industry size is projected to grow at a CAGR of 9.5% to reach USD 223 Bn by 2021 from USD 89 Bn in Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

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