Steel City Securities Limited

Steel City Securities Limited Essel Propack: Expects a double digit growth in FY 19 with better margins Aims to grow with strong double digit growth in FY 19 with better margin outlook. Mission 2020 is intact in terms of sales, margin and ROCE front. Tax rate will be around 33-34% for FY 19 Key Highlights ------------------Conference Call Consolidated net sales for FY 18, grew by around 5.3% in FY 18. Excluding India, the rest of the world net sales grew by around 7.2%. India suffered from early transit to GST and later changes made in GST in Nov 18. However GST issues are now stabilizing and should see the benefits in coming quarters. Mar 18 quarter saw lower offtake due to Indian beauty and cosmetics and Pharma categories that are linked to GST which show some inventory corrections. Ebidta margin in Mar 18 quarter was affected due to product mix and inventory corrections in US and India. Expects a double digit growth in Indian operations driven by good demand in FMCG and a steady flow of operations post GST disruptions in the previous year. Strong traction is already visible in non oral category demand in FMCG space.

In FY 18, EU performed well with net sales growth of around 18% driven by German operations. Confident of a continued double digit growth in EU operations going forward. The company secured new businesses in US. Colombia operations clearly showing signs of recovery. Overall US should also do well in FY 19. The company is not worried on global trade war. If at all the company will benefit, as it has operations in US and Mexico and any increase in manufacturing activities in US and lower Chinese imports in US, will help the company. Also the company is not worried on currency depreciation as its net exporter from India. However a sudden and sharp forex fluctuations across the globe will affect the company. What worries the company is the pace of changes that are brought into clients own business planning due to Ecommerce and digitalization. The client itself sometimes gets surprised on its lower sales (below its expectations and targets) which in turn affect the company. In FY 19, Essel aims to work further closely with its customers and monitor events to the extent possible. Not worried on higher crude prices, as all the contracts have a pass through clause. But like forex, any sharp increase in crude oil price in short term can lead to some short-term impact. The company also highlighted the fact that as long as there is across the globe shift from consumption of plastic to laminated tubes, the company is not worried. So even if the globe may not grow, the shift per se will drive the growth for the company. FY 18 saw debt reduction of Rs 140 crore after incurring capex of around Rs 120 crore. Aims to continue to reduce debt every year.

Year EPS-Unit Curr 2007 2.18 2008 1.69 2010 1.71 2011 2.72 2012 3.03 2013 3.05 2014 3.26 2015 3.28 2016 7.16 2017 4.14 2018 4.41 2019 4.74 2020 5.11 Year Book Value-Unit Curr(Adjusted) 2007 35.94 2008 37.33 2010 39.03 2011 41.15 2012 42.50 2013 44.54 2014 46.55 2015 30.46 2016 38.09 2017 39.59 2018 39.03 2019 38.02 2020 36.51 12.00 Cash Flow per Share 10.00 8.00 6.00 4.00 Cash Flow per Share 2.00 0.00 1 2 3 4 5 6 7 8 9 10 11 12 13

Essel Propack Ltd: Price realted Informations Price Date 27-04-2018 P/E 52.33 Retn 1mth 52 W High 317 57.19 Market Price 270 P/BV 6.48 Retn 3 mth 52 W Low 233.25 16.05 Market Capitalization 4245.45 Yield% 0.89 Retn 6 mth 3.58 EnterPrise Value FV 2 Retn 12 mth 10.27 ANNUAL Rs. Crore (Non-Annualised) 201703 201603 201503 201403 Year end Mkt Cap 3725.45 2530.1 1959.04 908.04 Year end P/E 57.26 22.49 38.02 17.73 Price High 300 317 264.3 172 Price Low 235.1 226 132.5 114.1 PE at High 77.29 79.15 54.13 48.55 PE at Low 54.12 45.03 26.82 31.13 PSR at High 34.05 38.78 32.66 24.09 PSR at Low 26.68 27.65 16.37 15.98 P/Dividend at High 0 0 9.51 11.42 P/Dividend at Low 0 0 18.97 17.21 P/BV at High 7.58 8.32 8.68 3.69 P/BV at Low 5.94 5.93 4.35 2.45 EV/EBITDA at High 27.62 22.86 27.65 19.48 EV/EBITDA at Low 22.23 17.08 15.3 14.05 Mcap High 4699.87 4853.18 4090.88 2674.63 Mcap Low 3744.64 3578.31 2089.43 1820.79 No of Shares O/S 157158618 157101285 157101285 157065460 EPS 4.14 7.16 3.28 3.26 DPS 0 0 1.6 1.25 BV 39.59 38.09 30.46 46.55 SPS 56.06 52.03 51.52 45.47 FCFS 52.58 623.02 26.05 153.03 Dupont Analysis 201703 201603 201503 201403 AVERAGE EBIDT/Sales % 20.1 27 20.02 22.03 27.91 Sales / Total Assets 1.06 1.01 0.92 0.63 0.61 EBIDT/ Total Assets% 0.21 0.27 0.18 0.14 0.16 PAT/EBIDT % 36.76 50.96 34.9 34.64 33.04 Net Assets/ Net Worth 1.34 1.35 1.83 1.55 1.67 ROE% 10.67 14.46 9.35 7.62 8

Income 201703 201603 201503 201403 CAGR Sales 881.05 817.45 809.34 714.07 10.07 Other income 19.63 68.61 20.88 34.42-7.38 Change in stocks -1.4 1.72-2.76 6.92 Expenditure 201703 201603 201503 201403 Raw materials, stores, etc. 354.11 338.06 379.11 336.76 Wages & salaries 84.41 79.88 64.02 57.06 Energy (power & fuel) 39.47 33.68 32.93 30.38 Indirect taxes (excise, etc.) 85.65 74.54 54.73 48.05 Distribution expenses 16.76 14.46 16.1 13.16 Others 19.06 20.99 18.32 23.6 Profits / losses 201703 201603 201503 201403 CAGR PBDIT 177.11 220.75 161.99 157.29 4.25 Financial charges (incl. lease rent) 22.63 25.87 40.93 45.01 PBDT 154.48 194.88 121.06 112.28 7.4 Depreciation 60.21 50.63 45.75 36.65 PBT 94.27 144.25 75.31 75.63 5.43 Tax provision 29.11 34.25 17.49 20.8 PAT 65.11 112.5 56.53 54.49 5.73 Appropriation of profits 201703 201603 201503 201403 Dividends 0 0 25.13 19.64 Retained earnings 65.11 112.5 31.4 34.85 Liabilities 201703 201603 201503 201403 CAGR Paid-up Equity Capital 31.43 31.42 31.42 31.41 Reserves & Surplus 590.66 566.96 448.44 701.09 Net Worth 622.09 598.38 478.53 731.12 1.01 Total Borrowings 193.37 195.83 390.1 394.58-6.85 Long Term Borrowings 86.31 73.61 293.9 298.15 Assets 201703 201603 201503 201403 CAGR Gross Fixed Assets 466.18 371.67 858.81 793.46 0.71 Net Fixed Assets 356.01 321.11 323.13 305.79 8.86 Investments 220.6 220.38 290.79 569.96 NCA (ex. Cash) 212.39 233.27 228.16 219.85-0.4 Cash 1.18 2.99 1.49 5.5 Capital Employed 833.52 809.35 876.2 1131.85-1.36

Growth (%) 201703 201603 201503 201403 Gross sales 7.78 1 13.34 15.61 Cost of production 7.98-2.29 13.3 17.41 PBDIT -19.77 36.27 2.98 1.99 PAT -42.12 99.01 3.74 9.33 GFA 25.43-56.66 8.26 9.98 Total assets 4.34-7.67-21.09 0.66 Margins ratios (%) 201703 201603 201503 201403 PBDIT (NNRT) / sales 20.1 21.45 20.02 22.03 PBDT (NNRT) / sales 17.53 18.28 14.96 15.72 PAT (NNRT) / sales 7.39 9.52 6.98 7.63 PBDIT (NNRT) / net sales 22.27 29.71 21.47 23.62 PBDT (NNRT) / net sales 19.42 26.23 16.04 16.86 PAT (NNRT) / net sales 8.19 15.14 7.49 8.18 Returns ratios (%) 201703 201603 201503 201403 PAT (NNRT) / net worth 10.47 18.8 11.81 7.45 PAT (NNRT) / total assets 6.74 12.16 5.64 4.29 PBIT (NNRT) / capital employed 14.02 21.02 13.27 10.66 PAT (NNRT) / capital employed 7.81 13.9 6.45 4.81 Liquidity ratios (times) 201703 201603 201503 201403 Long term debt / equity 0.29 0.42 0.45 0.35 Total debt / equity 0.32 0.54 0.65 0.59 Current ratio 2.38 1.81 1.33 1.26 Interest cover 5.17 4.82 2.84 2.68 Debtors Velocity (Days) 42 44 40 42 Creditors Velocity (Days) 15 13 16 12 Assets Utilisation Ratio (times) 201703 201603 201503 201403 Value of Output/Total Assets 0.84 0.81 0.71 0.71 Value of Output/Gross Block 1.9 1.2 1.26 1.34 Inventories at year end 66.73 65.33 67.32 72.78 Inventory as a % of Sales 7.57 7.99 8.32 10.19 Receivables 103.76 100.44 109.33 89.94 Receivables as a % of Sales 11.78 12.29 13.51 12.6

Free Cash Flows 201703 201603 201503 201403 Cash Flows from Operations 126.76 159.42 94.64 139.99 Working Capital Change -26.22 13.49 4.68-91.11 Capital Expenditure 100.4-477.09 63.91 78.07 Free Cash Flows to Equity 52.58 623.02 26.05 153.03 Net Profits 65.11 112.5 56.53 54.49 Free Cash Flows/ Net Profits 0.81 5.54 0.46 2.81 EBIT(1-tax rate) 80.8 129.73 89.24 87.47 Depreciation 60.21 50.63 45.75 36.65 Working Capital Change -26.22 13.49 4.68-91.11 Capital Expenditure 100.4-477.09 63.91 78.07 Free Cash Flows to the Firm 66.83 643.96 66.4 137.16 Consolidated Financials 201703 201603 201503 201403 Sales 2302.29 2127.5 2322.96 2126.62 PBIDT 473.3 434.76 417.24 375.74 PBT 274.29 250.69 206.09 168.61 PAT 190.32 170.1 140.63 107.83 Equity 31.43 31.42 31.42 31.41 Borrowings 798.35 709.28 961.86 1024.42 Total Assets 1794.73 1626.82 1702.2 1680.81 QUARTERELY 201803 201712 201709 201706 Gross Sales 208.99 203.75 217.09 222.42 Net sales 208.99 203.75 217.09 199.88 Other income 8.01 4.09 4.13 5.81 Total Income 217 207.84 221.22 205.69

Total Expenditure 201803 201712 201709 201706 PBIDT 59.03 52.24 52.77 47.7 Interest 5.58 5.56 5.29 4.97 PBDT 53.45 46.68 47.48 42.73 Depreciation 17.17 17.67 17.28 16.54 Tax 13.25 11.95 11.47 9.93 Deferred Tax -1.15-2.47-1.33-1.15 Reported Profit After Tax 24.18 19.53 20.06 17.41 Adjusted Profit After Extra-ordinary item 24.18 19.53 20.06 17.41 EPS (Unit Curr.) 1.54 1.24 1.28 1.11 Calculated EPS (Unit Curr.) 1.54 1.24 1.28 1.11 Calculated EPS (Ann.) (Unit Curr.) 6.15 4.97 5.1 4.43 Equity 31.45 31.44 31.44 31.43 Face Value 2 2 2 2 PBIDTM(%) 28.25 25.64 24.31 23.86 PBDTM(%) 25.58 22.91 21.87 21.38 PATM(%) 11.57 9.59 9.24 8.71 Growth (%) 201803 201712 201709 201706 Sales -4.53-2.96-6.62 1.23 Total expenses 1.72-1.67-0.25 1.99 PBDIT 26.95 38.38 14.47 0.74 PBDT 32.14 45.42 18.94 1.71 PAT 43.08 64.67 18.42-10.3 Adjusted EPS 42.59 63.16 18.52-10.48

Essel Propack Ltd Financial Performance (Rs.Cr) Year End 201703 201603 201503 201403 201303 Equity 31.43 31.42 31.42 31.41 31.41 Net Worth 1038.99 964.78 782.97 705.85 944.66 Enterprise Value 4420.96 3154.96 2804.49 1790.86 1351.97 Capital Employed 1843.06 1682.2 1752.91 1737.82 1913.09 Gross Block 1577.9 1047.02 2552.72 2438.48 2510.17 Year End 201703 201603 201503 201403 201303 Sales 2302.29 2127.5 2322.96 2126.62 1831.77 Other Income 59.99 33.82 26.48 28.54 30.25 PBIDT 473.3 434.76 417.24 375.74 343.36 PBDT 415.77 373.85 337.88 294.37 252.15 PBIT 415.77 373.85 337.88 294.37 252.15 PBT 274.29 250.69 206.09 168.61 125.98 RPAT (after Minority Int) 190.32 170.1 140.63 107.83 80.96 APAT 169.27 168.84 137.25 108.75 77.33 CP 331.8 293.26 272.42 233.59 207.13 Rev. Earnings in FE 119.09 118.03 90.5 76.3 80.75 Rev. Expenses in FE 284.56 190.52 212.38 177.88 151.35 Book Value 66.11 61.41 49.76 44.85 60.06 EPS 12.11 10.83 8.2 6.31 4.71 Dividend (%) 120 110 80 62.5 37.5 Payout (%) 17.66 14.52 18.86 19.07 15.78 Ratio Analysis Year End 201703 201603 201503 201403 201303 Debt-Equity 0.75 0.96 1.34 1.2 1.03 Current Ratio 2.17 1.84 1.47 1.38 1.2 Invtry Turnover 10.74 10.25 10.49 10.15 9.31 Debtors Turnover 6.75 6.24 6.44 6.56 6.84 Interest Cover 5.25 5.12 3.6 3.07 2.38 PBIDTM (%) 18.58 19.71 17.42 17.15 18.23 PBDTM (%) 16.18 16.95 14.11 13.44 13.39 APATM (%) 7.31 7.85 6.06 5.1 4.34 ROCE (%) 17.01 18.06 16.32 13.6 11.48 RONW (%) 17.42 19.83 19.52 13.51 8.88 EV/EBIDTA 9.34 7.26 6.72 4.77 3.94

Rate of Growth (%) Year End 201703 201603 201503 201403 201303 Net Worth 7.69 23.43 10.95-25.31 6.93 Sales 8.22-8.41 9.23 16.1 15.66 PAT 12.99 19.36 29.85 36.75 58.85 M Cap 47.25 29.15 115.74 87.66 10.75 MARKET DATA (AS ON 27-Apr-2018) Price (Rs) 270 52 W H/L(Rs) 317 / 233 Lat. P/E 23.92 Lat. EPS(Rs) 11.29 Mkt. Cap.(Rs Cr) 4245.45 Lat.Eqty (Rs Cr) 31.45 Lat. BV(Rs) 79.53 Div. Yield (%) 0.89 Lat. Face Value 2 Beta-Sensex 0.96 Share Price Graph Quarterly Performance (Rs Cr) Period Ended 201803 201703 Var. (%) Sales 628.4 612.58 2.58 Other Income 8.86 6.13 44.54 PBIDT 123.11 118.3 4.07 PBDT 109.56 102.61 6.77 PBIT 109.56 102.61 6.77 PBT 66.58 64.71 2.89 RPAT 44.79 46.09-2.82 Extra-ord. Items 0-5.89-100 APAT 44.79 51.98-13.83 CP 87.77 83.99 4.5

Share Holding Pattern(AS ON 31-Mar-2018) Shares (%) Foreign 25224941 16.05 Institutions 7871046 5.01 Non Promoter Corp. Hold. 17739692 11.29 Promoters 89887993 57.19 Public & Others 16457992 10.47 Totals 157181664 100 Source: Capitaline Database Disclaimer: Capitaline Database has taken due care and caution in compilation of data.however, Capitaline Database makes no warranty that the service will meet all your requirements, the service will be uninterrupted, timely, complete, error-free, or the results that may be obtained from the use of the service will be accurate. Analyst Disclaimer: Disclaimer: Neither The Analyst nor M/S. steel city securities Ltd Accept any liability whatsoever nor do they accept responsibility for any financial consequences arising the use of the research or information provided herein.