Result Update Rating matrix Rating : Buy Target : 750 Target Period : 12-15 months Potential Upside : 39% What s changed? Target Changed from 790 to 750 EPS FY17E Changed from 113.5 to 98.5 EPS FY18E Changed from 134.1 to 107.1 Rating Unchanged Quarterly performance Q1FY17 Q1FY16 YoY (%) Q4FY16 QoQ (%) Revenue 5,583.4 5,658.5-1.3 5,686.5-1.8 EBITDA 663.1 520.3 27.4 1,053.4-37.1 EBITDA (%) 11.9 9.2 +270 bps 18.5-665 bps PAT 126.3 226.3-44.2 425.5-70.3 Key financials Crore FY15 FY16 FY17E FY18E Net Sales 20,966 22,207 22,829 23,765 EBITDA 210 2,236 2,468 2,486 Net Profit (2,097) 1,212 1,119 1,216 EPS ( ) (184.6) 106.7 98.5 107.1 Valuation summary FY15 FY16 FY17E FY18E P/E (2.9) 5.1 5.5 5.0 Target P/E (4.1) 7.0 7.6 7.0 EV/EBITDA 63.3 5.9 5.4 5.3 EV/Sales 0.6 0.6 0.6 0.6 P/BV NA NA NA NA RoNW (%) NA NA NA NA RoCE (%) 4.1 45.4 48.9 47.3 Stock data Particular Amount ( crore) Mcap 6134.4 Debt (FY16) 9134.9 Cash & Invest (FY16) 1988.1 EV 13281.3 52 week H/L ( ) 796/248 Equity cap 114 Face value ( ) 10 Price performance 1M 3M 6M 12M SpiceJet -10.3-24.8-13.5 146.0 Jet Airways -6.3-17.4-0.7 51.6 Research Analyst Rashesh Shah rashes.shah@icicisecurities.com Devang Bhatt devang.bhatt@icicisecurities.com August 17, 2016 Jet Airways (JETAIR) 540 Weak pricing environment dents margins Jet Airways performance during the quarter remained weak, mainly led by a drop in realisations (down 6.5% YoY), higher employee costs (up 16.4% YoY) & depreciation charge (up 25.4% YoY). This quarter also had an exceptional loss of 92 crore with respect to forex loss. This, in turn, led to a sharp fall in net profit in the quarter While average domestic fares dropped sharply by 10% YoY led by a rise in competition, international fares declined only 2.5% YoY. Total passenger traffic grew 4.5% YoY in line with our estimates This quarter saw an average ATF price hike of 13% on a QoQ basis. However, it was still down 17% YoY, helping the company to improve margins by 270 bps The company s focus on debt reduction has helped it to reduce the interest cost by 11% YoY. During the quarter, Jet repaid 358 crore of debt More focused on international compared to domestic segment Jet Airways is more focused on the international segment (inbound and outbound traffic) than on the domestic segment as the international segment is more stable and offers higher margins than the domestic segment. Further, it also provides a natural hedge against currency weakness vs. the dollar. During FY11-16, the international segment has outpaced the domestic segment with revenue CAGR of 9.7% vs. domestic segment (Jet + JetLite) revenue CAGR of 5.4% in FY11-16. The revenue share of the international segment as of FY16 was at ~55%. Domestic market share in falling trend, down to 19% vs. 21.9% last year Jet s domestic market share has further come down by 280 bps YoY to 19.1% led by a rise in fleet capacity by some players like SpiceJet. Barring FY12, where the KFA turmoil benefited all domestic carriers, Jet s market share has come down from a peak of 29.3% in Q4FY12 to 23.9% in Q4FY14 and further down to 19% in Q1FY17. However, with the stabilisation in fleet capacity by other players, the return of six aircraft from Etihad, we expect the company to gain the traction in market share, going forward. Margins to sustain over 10% followed by benign ATF prices, higher growth in domestic segment While FY14 and FY15 have remained challenging years, FY15 saw an improvement led by a significant reduction in ATF prices. Although we expect average ATF prices to rise ~14% in FY17E, we expect OPM margins to remain healthy assuming Brent crude at $58/barrel. Further, with the robust growth in the domestic market, we expect the company to improve the load factors through effective deployment of its capacity resulting into healthy margins over next two years. Growth potential remains intact, margins to normalise; maintain BUY While the macro factors for aviation like passenger traffic growth (up over 23% YoY) benign ATF prices (24% of revenues) continue to remain healthy, growing competition & limited capacity addition by the company would limit the margin expansion & net profitability, going forward. To factor that into account, we revise our earnings estimates downwards by 13% and 20% for FY17E and FY18E, respectively. However, the stock is still available at attractive valuations, being the largest private carrier. Hence, we maintain BUY rating with a revised target price of 750/share (i.e. valuing at 0.7x FY17E EV/sales, 6.5x EV/EBITDA, 7.0x PE). ICICI Securities Ltd Retail Equity Research
Variance analysis Q1FY17 Q1FY17E Q1FY16 YoY (%) Q4FY16 QoQ (%) Comments Total Revenue 5583.4 5567.0 5658.5-1.3 5686.5-1.8 Employee cost 688.4 698.0 591.7 16.3 702.7-2.0 Fuel 1266.8 1084.3 1568.4-19.2 1071.9 18.2 S&D Exp 647.0 532.3 601.1 7.6 572.7 13.0 Other Ope costs 1730.1 1780.3 1815.4-4.7 1700.4 1.7 Lease Rent 588.0 570.1 561.6 4.7 585.4 0.4 EBITDA 663.1 902.0 520.3 LP 1053.4-37.1 EBITDA Margin (%) 11.9 16.2 9.2 +270 bps 18.5-665 bps While passenger growth remained in line with our estimates (up 4.5% YoY to 65.7 lakh), weak realisations during the quarter (down 6.5% YoY to 6996) hurt the topline growth More pilots hiring during the quarter to optimise the asset utilisations, pay hikes led to a sharp jump in employee cost during the quarter Fuel cost declined sharply by 19.2% on account of cheaper ATF prices, which were down 16.8% YoY Depreciation 236.7 225.5 188.8 25.4 418.9-43.5 The depreciation charge for the quarter was higher due to a change in accounting policy whereby some of the costs with respect to checks and overhaul have been amortised over its useful life Interest 207.7 220.4 234.0-11.2 213.4-2.7 Exceptional items 92.4 0.0-128.8 NA -4.4 NA Exceptional loss mainly pertains to loss with respect to forex fluctuations Tax 0.0 121.1 0.0 NA 0.0 NA PAT 126.3 335.0 226.3-44.2 425.5-70.3 Key Metrics No of passengers (In mn) 6.57 6.60 6.29 4.5 6.66-1.4 Yield per passenger ( ) 8,498.3 8,434.8 8,996.0-5.5 8,538.3-0.5 Increase in the market share by other airlines led to moderate growth in the passenger traffic Lower ATF prices helped the company to lower ticket prices, which also aided robust growth in industry's passenger traffic Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 22,984.1 22,828.7-0.7 24,041.4 23,764.7-1.2 EBITDA 2,657.2 2,468.1-7.1 2,827.6 2,486.1-12.1 EBITDA Margin (%) 11.6 10.8-75 bps 11.8 10.5-130 bps PAT 1,289.3 1,119.3-13.2 1,523.3 1,216.3-20.2 We factor in lower realisation, going forward, led by lower cost advantage flowing from lower fuel prices We lower the margins by 75 bps and 130 bps for FY17E and FY18E, respectively, to factor in lower realisations EPS ( ) 113.5 98.5-13.2 134.1 107.1-20.2 ICICI Securities Ltd Retail Equity Research Page 2
Company Analysis Domestic market share on falling trend, down to 19% vs. 21.9% last year During the quarter, Jet s domestic market share has further come by 280 bps YoY to 19.1% led by a rise in fleet capacity by some players like SpiceJet. Barring FY12, where the KFA turmoil benefited all domestic carriers, Jet s market share has come down from a peak of 29.3% in Q4FY12 to 23.9% in Q4FY14 and further down to 19% in Q1FY17. However, with the stabilisation in the fleet capacity by other players and with the retuning of aircraft from Etihad, we expect the company to gain traction in market share, going forward. Exhibit 1: Domestic pax traffic grows at 5.4% CAGR in FY11-16 Exhibit 2: Q1FY17 domestic pax traffic grows 5.9% YoY In lacs 1000 800 600 400 200 0 855 706 616 605 614 543 142 165 155 147 155 185 FY11 FY12 FY13 FY14 FY15 FY16 In lacs 300 250 200 150 100 50 0 158 147 156 154 170 167 182 185 203 202 221 230 246 36 37 38 37 35 34 41 46 44 45 47 48 47 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Total Industry passeger traffic Pax carried Total Passengers Pax carried Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research Exhibit 3: Domestic market share trend (%) 31.0 29.0 27.0 25.0 23.0 21.0 19.0 17.0 15.0 25.5 26.1 26.5 29.3 28.1 24.2 25.1 25.2 22.8 24.9 24.2 23.9 20.8 20.2 22.3 24.6 21.9 22.5 21.3 20.9 19.1 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Market share (%) Exhibit 4: International passenger traffic grows faster at CAGR of 9.7% during FY11-16 Although domestic traffic growth has moderated during FY11-16, international passenger traffic has grown at a CAGR of 9.7% during the same period due to better margins and healthy demand along with benefit of strategic code share agreement with Etihad Airways (In lacs) 80 70 60 50 40 30 20 10 0 46.2 54.5 54.7 57.8 70.1 73.4 FY11 FY12 FY13 FY14 FY15 FY16 International pax growth ICICI Securities Ltd Retail Equity Research Page 3
Exhibit 5: Consolidated quarterly revenue trend 6,000 5,000 4,000 3,000 2,000 1,000-4469 4608 Q1FY14 Q2FY14 4990 4969 5040 5274 5591 5614 5702 5707 5880 5687 5583 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q1FY17 consolidated revenue growth remains subdued During Q1FY17, the company s total consolidated revenue declined 1.3% YoY to 5,583 crore. While total passenger grew 4.5% YoY 6.6 million, domestic yield saw a weakness during the quarter due to rise in the competition. 20 15 10 5 0-5 -10-15 Exhibit 6: Passenger and yield growth trend 30.0 20.0 10.0 - (10.0) (20.0) Q1FY14 0.6 Q2FY14 12.1 Q3FY14 4.6 0.1 Q4FY14 24.5 21.2 11.2 12.1 8.2 10.2 19.4 5.0 4.5 4.2 5.2 3.1 0.1 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 (0.4) (15.8) (11.2) (1.2) (12.2) (9.3) (9.3) (6.4) (6.5) Revenues ( crore)- LHS Growth (%) - RHS Passenger growth (%) Yield growth (%) Exhibit 7: Margin trend (%) Consolidated margins for the quarter declined to 11.9% on account of a sequential rise in ATF prices. Further, higher employee cost also had an impact on the margins. However, with the onset of peak season, we expect margins to improve, going forward 25.0 20.0 15.0 10.0 5.0 0.0-5.0-10.0-15.0 2.2-0.3 1.0 Q1FY14 Q2FY14 Q3FY14 Q4FY14-11.7-9.5 Q1FY15-1.6 18.5 15.8 11.9 9.2 9.2 5.1 3.1 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 EBITDA Margin (%) Exhibit 8: Trend in ATF prices 90,000 During Q1FY17, average ATF prices declined 16.8% YoY, while it increased 13.1% QoQ due to a spike in the international crude basket. 80,000 70,000 60,000 50,000 50,958/kl 40,000 30,000 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Average ATF Prices (./per kl) ICICI Securities Ltd Retail Equity Research Page 4
Expect revenue CAGR of 3.4% during FY16-18E Jet Airways has reported revenue CAGR of 8.9% in FY11-16 led by a rebound in the economy, a favourable cost environment coupled with increased supply. However, in FY12-14, domestic passenger traffic growth moderated due to higher ticket prices given the high cost environment while international passenger traffic has grown at 7-8% annually. Although we remain positive over the next two or three years with an expected recovery in the economy coupled with a fall in ATF prices, we build in moderate revenue CAGR of 3.4% in FY16-18E on a consolidated basis for Jet Airways due to limited fleet additions and lower yields led by rise in the competitions from other players. Exhibit 9: Revenue growth trend (%) 25,000 20,000 16,703.2 18,840.5 19,072.1 20,965.6 22,206.9 22,828.7 23,764.7 25.0 20.0 15.0 15,000 14,522.6 10.0 5.0 10,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E - Revenues ( crore) - LHS Growth (%) - RHS Margins to remain healthy followed by benign ATF prices While FY14 and FY15 have remained challenging years for Jet Airways due to an adverse cost environment, FY15 saw an improvement led by a significant reduction in ATF prices. Although we expect average ATF prices to increase by 12-14% during FY17E, we expect OPM margins to remain above 10% assuming average Brent crude at $58/barrel. Exhibit 10: Margin trend 15.0 10.0 5.0 - (5.0) (10.0) (15.0) (20.0) (25.0) 10.8 10.1 10.8 10.5 5.5 3.6 4.9 5.1 (0.2) 1.0 (0.6) FY11 FY12 FY13(4.1) FY14 FY15 FY16 FY17E FY18E (8.5) (9.6) (10.0) (21.5) OPM (%) NPM (%) ICICI Securities Ltd Retail Equity Research Page 5
Valuations While macro factors for aviation like passenger traffic growth (up over 23% YoY) benign ATF prices (24% of revenues) continue to remain healthy, growing competition & limited capacity addition by the company would limit the margin expansion and net profitability, going forward. To factor that into account, we revise our earnings estimates downwards by 13% and 20% for FY17E and FY18E, respectively. However, the stock is still available at attractive valuations, being the largest private carrier. Hence, we maintain BUY rating with a revised target price of 750/share (i.e. valuing at 0.7x FY17E EV/sales, 6.5x EV/EBITDA, 7.0x PE). Exhibit 11: Valuation matrix Sales Growth EPS Growth PE EV/EBITDA RoCE RoE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 20965.6 9.9-184.6 NA NA 63.3 4.1 NA FY16 22206.9 5.9 106.7 LP 5.1 5.9 45.4 NA FY17E 22828.7 2.8 98.5-7.6 5.5 5.4 48.9 NA FY18E 23764.7 4.1 107.1 8.7 5.0 5.3 47.3 NA Exhibit 12: One year forward EV/Sales graph 30000 25000 ( Crore) 20000 15000 10000 5000 0 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 EV 1.3x 1.1x 0.9x 0.7x 0.5x ICICI Securities Ltd Retail Equity Research Page 6
Recommendation History vs. consensus estimate ( ) 1,000 900 800 700 600 500 400 300 200 100 Jan-15 Mar-15 Jun-15 Aug-15 Oct-15 Jan-16 Mar-16 Jun-16 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Aug-16 (%) Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Oct-08 Jet Airways and Kingfisher Airlines announced a joint alliance, which involved code-sharing on domestic and international flights, an interline agreement, joint fuel management, common ground-handling services and cross-selling flights through the global ticketing system Oct-08 Jet takes back all sacked 1900 employees on payroll Feb-09 Jet, JetLite come up with promotional basic fares of 300 and 1. Inks code share agreement with Malaysian Airliines Mar-09 The Sahara Group, promoter of Air Sahara, which was acquired by Jet Airways in 2007, takes the latter to court over default of dues worth 1,450 crore that was part of the buyout deal May-11 Bombay High Court directs Jet Airways to pay to pay 478 crore to Sahara India Feb-13 Etihad buys Heathrow slots from Jet Airways for US$70 million Apr-13 Jet Airways sells 24% stake to Etihad for $379 million Jun-13 Air France, KLM SA and Jet Airways sign cooperation agreement Jul-13 FIPB clears Jet-Etihad deal Oct-13 Etihad Airways wins Cabinet approval for minority stake purchase in Jet Airways May-14 Acting CEO of Jet Airways Ravishankar Gopal Krishanan quits the company with effect from May 2, 2014 May-14 Sebi exempts Etihad from making open offer May-14 Reports record quarterly loss of 2153.5 crore. The company names Cramer Ball (erstwhile CEO of Air Seychelles) as new CEO of the company. Jun-14 Etihad expands codeshare agrrement with Jet Airways bringing total number of services to 71 from 43 routes Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Goyal (Naresh) 31-Mar-16 51.0 57.9 0.0 2 Etihad Airways 31-Mar-16 24.0 27.3 0.0 3 Birla Sun Life Asset Management Company Ltd. 31-Mar-16 2.8 3.1-0.5 4 BNP Paribas Asset Management India Pvt. Ltd. 31-Mar-16 2.5 2.8 2.2 5 Reliance Nippon Life Asset Management Limited 31-Mar-16 2.2 2.5-0.9 6 Life Insurance Corporation of India 31-Mar-16 2.1 2.4 0.0 7 The Vanguard Group, Inc. 30-Jun-16 0.3 0.4 0.0 8 Van Eck Associates Corporation 31-Jul-16 0.2 0.3 0.0 9 TIAA Global Asset Management 30-Jun-16 0.2 0.2 0.0 10 Tata Asset Management Limited 30-Jun-16 0.2 0.2-1.1 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Shareholding Pattern (in %) Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Promoter 51.0 51.0 51.0 51.0 51.0 FII 5.2 4.1 4.1 4.6 4.0 DII 10.3 10.1 9.8 10.0 9.3 Others 33.5 34.9 35.1 34.4 35.8 Sells Investor name Value Shares Investor name Value Shares BNP Paribas Asset Management India Pvt. Ltd. 18.37 2.22 Tata Asset Management Limited -9.41-1.14 JM Financial Asset Management Pvt. Ltd. 0.21 0.02 Reliance Nippon Life Asset Management Limited -7.23-0.87 TIAA Global Asset Management 0.03 0.00 Birla Sun Life Asset Management Company Ltd. -4.46-0.54 UTI Asset Management Co. Ltd. 0.01 0.00 SBI Funds Management Pvt. Ltd. -1.97-0.23 Edelweiss Asset Management Ltd. 0.01 0.00 Religare Invesco Asset Management Company Private Limited -0.64-0.07 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7
Financial summary Profit and loss statement Crore (Year-end March) FY15 FY16 FY17E FY18E Net Sales 20,965.6 22,206.9 22,828.7 23,764.7 Growth (%) 9.9 5.9 2.8 4.1 Fuel Expenses 7,365.6 5,403.4 6,255.1 6,535.3 Employee Expenses 2,325.2 2,532.3 2,511.2 2,637.9 Selling Expenses 2,124.4 2,360.7 2,542.8 2,647.1 Lease Rentals 2,172.5 2,285.7 2,054.6 2,138.8 Other Operating costs 6,768.2 7,388.6 6,997.0 7,319.5 Total Operating Expenditure 20,755.9 19,970.7 20,360.6 21,278.6 EBITDA 209.7 2,236.2 2,468.1 2,486.1 EBITDA Margin (%) 1.0 10.1 10.8 10.5 Depreciation 765.3 996.2 1,006.2 1,026.3 Interest 920.5 885.0 859.8 749.8 Other Income 571.5 699.1 643.0 643.0 PBT -904.6 1,054.1 1,245.0 1,352.9 Exceptionals -1,192.8 148.0 0.0 0.0 Total Tax 0.0 0.0 125.7 136.6 Reported PAT -2,097.4 1,211.8 1,119.3 1,216.3 Growth (%) NA LP -7.6 8.7 EPS ( ) -184.6 106.7 98.5 107.1 Cash flow statement Crore (Year-end March) FY15 FY16P FY17E FY18E Profit after Tax -2,097.4 1,211.8 1,119.3 1,216.3 Add: Depreciation 765.3 996.2 1,006.2 1,026.3 (Inc)/dec in Current Assets -294.9-314.6 197.6-109.0 Inc/(dec) in CL and Provisions -180.8 348.3 17.9 549.0 Others -885.2-904.2-175.8-612.3 CF from operating activities -2,693.0 1,337.5 2,165.2 2,070.3 (Inc)/dec in Investments 4.0 9.7 0.0 0.0 (Inc)/dec in Fixed Assets 374.5-1,481.2 593.8 403.7 Others 159.2 159.2 159.2 159.2 CF from investing activities 537.7-1,312.4 753.0 562.9 Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0 Inc/(dec) in loan funds 2,321.0-1,265.1-1,000.0-1,000.0 Dividend paid & dividend tax 0.0 0.0 0.0 0.0 Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0 Others 703.2 1,152.5-1,853.0-1,492.9 CF from financing activities 3,024.2-112.6-2,853.0-2,492.9 Net Cash flow 868.9-87.4 65.2 140.3 Opening Cash 1,206.6 2,075.5 1,988.1 2,053.2 Closing Cash 2,075.5 1,988.1 2,053.2 2,193.6 Balance sheet Crore (Year-end March) FY15 FY16 FY17E FY18E Liabilities Equity Capital 113.6 113.6 113.6 113.6 Reserves and Surplus -6,438.9-5,324.1-4,204.8-2,988.6 Total Shareholders funds -6,325.3-5,210.5-4,091.2-2,875.0 Total debt 11,400.0 10,134.9 9,134.9 8,134.9 Deferred Tax Liability 0.0 0.0 0.0 0.0 Total Liabilities 5,074.7 4,924.4 5,043.7 5,259.9 Assets Gross Block 17,007.2 16,767.2 18,367.2 19,797.2 Less: Acc Depreciation 7,998.4 7,956.5 8,962.7 9,989.0 Net Block 9,008.8 8,810.7 9,404.5 9,808.2 Capital WIP 245.0 0.0 0.0 0.0 Total Fixed Assets 9,253.8 8,810.7 9,404.5 9,808.2 Goodwill 0.0 0.0 0.0 0.0 Investments 669.7 679.4 679.4 679.4 Inventory 963.5 1,064.1 1,049.1 1,092.1 Debtors 1,477.9 1,691.9 1,509.2 1,575.2 Loans and Advances 2,659.4 3,063.6 2,739.4 2,851.8 Cash 2,075.5 1,988.1 2,053.2 2,193.6 Total Current Assets 7,176.3 7,807.7 7,351.1 7,712.7 Creditors & Others 11,677.1 11,961.6 12,012.4 12,545.9 Provisions 348.0 411.8 378.9 394.5 Total Current Liabilities 12,025.1 12,373.4 12,391.3 12,940.3 Net Current Assets -4,848.8-4,565.7-5,040.2-5,227.6 Application of Funds 5,074.7 4,924.4 5,043.7 5,259.9 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS -184.6 106.7 98.5 107.1 Cash EPS -11.7 19.4 18.7 19.7 BV -556.8-458.7-360.1-253.1 DPS 0.0 0.0 0.0 0.0 Cash Per Share 182.7 175.0 180.7 193.1 Operating Ratios (%) EBITDA Margin 1.0 10.1 10.8 10.5 PBT / Total Operating income -4.3 4.7 5.5 5.7 PAT Margin -10.0 5.5 4.9 5.1 Inventory days 16.8 17.5 16.8 16.8 Debtor days 25.7 27.8 24.1 24.2 Creditor days 203.3 196.6 192.1 192.7 Return Ratios (%) RoE NA NA NA NA RoCE 4.1 45.4 48.9 47.3 RoIC -78.2-80.8-78.9-76.4 Valuation Ratios (x) P/E -2.9 5.1 5.5 5.0 EV / EBITDA 63.3 5.9 5.4 5.3 EV / Net Sales 0.6 0.6 0.6 0.6 Market Cap / Sales 0.3 0.3 0.3 0.3 Price to Book Value NA NA NA NA Solvency Ratios Debt / EBITDA 54.4 4.5 3.7 3.3 Debt / Equity -1.8-1.9-2.2-2.8 Current Ratio 0.6 0.6 0.6 0.6 Quick Ratio 0.3 0.3 0.3 0.3 ICICI Securities Ltd Retail Equity Research Page 8
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%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1 st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 9
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Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts 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 ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Rashesh Shah, CA, and Devang Bhatt, PGDBM Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Rashesh Shah, CA, and Devang Bhatt, PGDBM Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. 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