1. business and industrial
2. company
3. merger and acquisition

November 17, 2014
Result Update
CMP : INR 461
Rating : Buy
Target : INR 784
Raymond Ltd.
KEY DATA
Market Cap (INR bn)
28.3
Market Cap (USD mn)
463.9
52 WK High / Low
518 / 255
Avg Daily Volume (NSE)
44877
Face Value (INR)
10
BSE Sensex
27940
Nifty
8357
BSE Code
500330
NSE Code
RAYMOND
Reuters Code
RYMD.BO
Bloomberg Code
Shareholding %
RW IN
2Q
1Q
4Q
Promoter
40.20
40.20
39.89
Indian
40.20
40.20
39.89
Public
58.48
58.46
58.77
Institutions
22.22
24.69
24.61
FII
8.91
9.98
9.15
DII
13.31
14.71
15.46
Non Institutions
36.26
33.77
34.16
Bodies Corporate
8.40
8.10
7.58
Custodians
1.32
1.34
1.34
Performance Chart
Is the tide turning around for Raymond limited (RYMD)? We believe it is! After a patchy
performance off late RYMD has come up with a decent set of numbers in Q2FY15. This alone
doesn't make us bullish, but it stems from the fact that the bookings this season are up 18-20%
Y-o-Y while the management has given a more optimistic outlook this time than a more cautious
one in the previous quarter and not to forget the price of key raw materials for RYMD, Cotton,
Wool and Poly Viscose have declined significantly in Q3FY15 (till date) and trend is expected
to continue.
The company's continued push for top line growth led RYMD to post sales of Rs 14.61bn in
Q2FY15, up 19% Y-o-Y but PAT declined 27% Y-o-Y to Rs 681mn. EBITDA margin contracted
370 bps Y-o-Y to 11.8% due to growth related investment coupled with products mix issues
and some down trading but it expanded sharply by 823 bps. On the bottom-line front, the
company came back to green in Q2FY15 after reporting a loss in Q1FY15.
Coming to the business highlights, the Textile segment which has been the cash cow for the
company performed better on the top line posting a growth of 24% Y-o-Y to Rs6.94bn driven
by volume growth in exports, combo packs and penetration of shirting fabric across the B2C
channel, while EBITDA margins which had suffered in Q1 recovered by a good 924bps
sequentially even though it contracted by 793 bps Y-o-Y owing to the high mix of shirting
business. Excluding B2C shirting the textile segment grew by 6% Y-o-Y. Exports continued to
do well as they grew by 32% Y-o-Y during the quarter and contributed to 16% of the sales
compared to 12% in the last year. Apparel segment's topline which continued to grow in
double digits over the past four quarters delivered this time as well posting sales of sales of
Rs 2.9bn, up 15% Y-o-Y in Q2FY15 while EBITDA margin was back to profitability after posting
a dismal loss in Q1FY15, however the margins were lower Y-o-Y due to higher brand building
cost & store rollouts. The company mentioned that they had been able to reduce discount sales
and average discount percentage as well. The company stepped up advertising cost considerably
which grew by 72% and impacting its margins; had the advertisement cost been maintained at
the same level as Q2FY14, EBIDTA margin would have increased to 8.6% during the quarter
compared to 7.9% in the last year. Garmenting segment continued its stellar run as it reported
a top-line growth of 28% Y-o-Y, driven by increase in volumes while EBITDA margin at 10%
was impacted by ~290 bps sequentially and Y-o-Y to due to rupee appreciation against dollar
and higher employment cost.
Management Outlook
In the recent Q2FY15's results concall the company was fairly optimistic about its businesses in
Q3 and remained confident about the strategic directions for the business. It plans to invest in
brand building, modernization and expansion of retail network and also capacity expansion in
the export driven businesses. The company mentioned that with respect to monetization of
non-core assets, the progress was slow compared to its expectation.
Our take
Mahantesh Marilinga
Senior Research Analyst
Tel. : 4000 2666
mahantesh@finquestonline.com
The company's aggressive investments (advertising and renovation of stores) and the market
sluggishness had taken a toll on the apparel business offlate but times are changing and we
could expect the bottom-line recovery to continue. The core textile business has continued to
do well while recovering from the sub-par margin performance in Q1FY15. Garmenting again
has benefitted from the increased competitiveness of the Indian garmenting sector globally.
The decline in cotton and wool prices should benefit the textile, apparel and denim businesses
of RYMD in Q3FY15 in a big way. We believe the continued traction in most of RYMD's
businesses on the back of domestic economic recovery and an expected sharp fall in raw
material costs Y-o-Y could spring a positive surprise in Q3FY15 numbers.
FINQUEST research also available on BLOOMBERG FSPL <GO> and REUTERS.
For Private Circulation Only
Valuations
On the back of good set of numbers in Q2FY15 and a visibility of better performance going ahead we value the core equity of RYMD at a P/E of 15x
FY15E earnings, which gives us a value of Rs 440/share while we value the land bank at Thane at 25% discount to the expected market value which
comes to Rs 344/share giving a combined price target of Rs 784 for FY15E. We expect a good set of results from RYMD in the current quarter i.e
Q3FY15 which could lead to a re-rating of the stock and take it new levels. Any stake sale of its non-core businesses like the Tools and hardware
business or the auto components or any new development on the land parcel development/sale could be a major positive for the stock price.
SOTP Valuation of Raymond (RYMD)
Company
Basis of
Valuation
Raymond's core equity value
No. of
acres
Valn.
Parameter
(CMP/EPS)
100
Rs 280
P/E
Land Value / Share
Total Value / Share
Value/Mcap
(Rs.mn)
RYMD's
Shares
(in mn)
Value/
RYMD's
Share (Rs.)
25%
Discount on
Land bank
61
440
440
61
459
344
784
16.0x
Rsmn/Acre
18,000
CMP
Upside
461
70%
Comparative Valuation
Company
PAGE Industries
Arvind Ltd
Trent Ltd
Shoppers Stop
Bom Fash Ray
Raymond
Kewal Kiran
Bombay Dyeing
Alok Industries
Pantaloons Fashns. & Retls.
Zodiac clothing
Siyaram silk mills
Mafatlal industries
Maxwell Industries
Skumars Nationwide
Rs
Rs
bn
Rs
bn
Sales
Rs Bn
(x)
Price
Mcap
Cash
Net D/E
FY15E
9,580
281
1,436
487
140
459
1,695
69
12
121
361
860
162
38
5
107
72
48
40
19
28
21
14
16
11
7
8
2
2
1
0.0
1.4
1.5
0.2
1.0
4.7
4.8
0.3
6.8
0.2
0.3
0.1
0.2
0.0
0.2
0.6
1.1
0.2
1.3
1.9
0.9
-4.0
1.0
5.4
1.8
0.1
0.8
0.3
0.8
0.9
15
80
24
45
30
54
4
28
98
17
4
13
9
3
50
EPS
Rs
FY16E
FY15E
P/E
(x)
P/S
(x)
EV/EBITDA
(x)
FY16E
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
19 179.2 230.5
94 16.1 19.8
28 20.3 45.8
53
2.8
8.2
NA -10.0
NA
61 27.6 48.3
5 60.4 74.5
30
2.0
1.9
202
1.1
4.4
NA -20.2
NA
NA 11.4
NA
NA 67.8
NA
NA 16.2
NA
NA
0.8
NA
NA -12.4
NA
53.5
17.5
70.7
172.0
-14.1
16.6
28.1
34.5
10.1
-6.0
31.8
12.7
10.0
45.2
-0.4
41.6
14.2
31.4
59.7
NA
9.5
22.8
36.3
2.6
NA
NA
NA
NA
NA
NA
7.0
0.9
2.0
0.9
0.6
0.5
4.8
0.5
0.2
0.7
1.8
0.6
0.2
0.9
0.0
5.6
0.8
1.7
0.8
NA
0.5
4.1
0.5
0.1
NA
NA
NA
NA
NA
NA
33.9
9.7
1.0
24.1
16.6
8.6
15.3
10.0
7.1
63.3
16.7
7.6
11.6
13.9
3.7
26.5
8.0
0.9
16.8
NA
7.7
12.6
10.4
2.5
NA
NA
NA
NA
NA
NA
EBIDTA
(%)
FY15E
20.9
13.2
1.5
4.3
13.1
10.2
24.6
10.1
24.4
2.1
10.8
11.3
3.1
9.0
18.0
Annual Annual
RoE
EPS
Sales
(%) Growth Growth
FY15E
(%)
(%)
(16E/15E) (16E/15E)
Div.
Yield
(%)
58.3
15.2
5.6
3.9
-18.1
10.3
24.0
8.4
3.3
-27.8
8.8
18.6
6.4
5.3
-13.4
0.8
1.0
NA
0.2
NA
0.3
1.4
1.2
2.6
0.0
1.2
1.2
1.8
0.7
22.0
28.7
23.0
126
188
NA
74.6
23.4
-5.0
281.6
NA
56.3
15.5
-39.4
135.2
17.8
26.7
17.4
17.9
17.1
-9.3
13.9
19.3
6.7
107.1
29.3
14.1
25.2
15.3
2.7
-21.1
NA - Not Available
November 17, 2014
For Private Circulation Only
2
Q2FY15 Highlights
Particulars (Mn. Rs)
Q2
FY15
Total Income
14,607
Q2
Y-o-Y
Q4
FY14 change FY14
%
12,267
19.1% 10,968
Q-o-Q
change
%
33.2%
6M
FY15
25,575
6M
FY14
Y-o-Y
change
%
21,006
21.8%
Less:
COGS
6,451
4,744
36.0%
4,716
36.8%
11,167
8,002
39.5%
Manufacturing & operating costs
2,328
2,118
9.9%
2,064
12.8%
4,392
3,953
11.1%
Employee benefit expenses
1,630
1474.9
10.5%
1568.1
4.0%
3,198
2913.2
9.8%
Other Expenses
Total Expenditure
EBIDTA
Less: Depreciation & Amortization
EBIT
2,479
2032.3
22.0%
2230.7
11.1%
4,709
3935.3
19.7%
12,888
10,369
24.3%
10,579
21.8%
23,467
18,804
24.8%
1,720
1,898
(9.4%)
389
342.7%
2,108
2,203
(4.3%)
396
486
(18.7%)
390
1.5%
785
961
(18.3%)
1,324
1,411
(6.2%)
1,323
1,242
6.5%
Less: Interest
521
483
7.8%
483
7.8%
1,004
939
7.0%
Add: Other income
108
150
(28.1%)
237
(54.5%)
344
267
28.9%
(1)
(11)
(95.2%)
(35)
(98.6%)
(36)
(111)
(68.1%)
Extraordinary Expense (Net)
Forex loss & Other one offs
(1) (120472.7%)
52
(54)
131
(152)
Profit Before Tax
910
1,068
(14.7%)
(283)
(422.3%)
628
459
36.8%
Profit Before Extraordinary items and Tax
859
1,132
(24.1%)
(327)
(363.2%)
533
722
(26.2%)
158
179
(11.9%)
32
391.3%
190
101
87.4%
753
889
358
22.5%
Less: Total Tax
Profit After Tax before Minority Interest
79
(15.3%)
(315)
(339.3%)
438
Minority Interest
(41)
(2) 2431.3%
(17)
144.0%
(57)
(5) 1042.0%
Profit share of associates
(31)
39 (180.7%)
3
(1259.3%)
(29)
76 (137.5%)
Profit After Tax
681
926
(26.5%)
(329)
(307.3%)
352
429
(17.9%)
Profit After Tax Excl. extra-ordinaries
639
980
(34.8%)
(377)
(269.2%)
261
656
(60.2%)
61
61
61
61
Reported EPS (Rs.)
11.09
15.08
(26.5%)
(5.35)
(307.3%)
5.76
6.99
(17.6%)
Proforma EPS (Rs.)
10.41
15.96
(34.8%)
(6.15)
(269.2%)
4.27
10.68
(60.0%)
Shares Outstanding (Diluted) (mn)
Margin Analysis
61
Change
in bps
EBIDTA Margin
Change
in bps
Change
in bps
11.8%
15.5%
-370
3.5%
823
8.2%
10.5%
-224
EBIT margin
9.1%
11.5%
-244
0.0%
907
5.2%
5.9%
-74
Proforma NPM
4.4%
8.0%
-361
-3.4%
781
1.0%
3.1%
-210
17.3%
16.8%
56
-11.4%
2,868
30.2%
22.1%
816
Effective Tax Rate
Margin Analysis
Change
in bps
Change
in bps
Cost of Material consumed/Net Sales
44.2%
38.7%
549
43.0%
116
43.7%
38.1%
557
Manufacturing & operating costs/Net Sales
15.9%
17.3%
-133
18.8%
-288
17.2%
18.8%
-164
Employee benefit expenses/Net Sales
11.2%
12.0%
-86
14.3%
-314
12.5%
13.9%
-136
Other Expenses/Net Sales
17.0%
16.6%
40
20.3%
-337
18.4%
18.7%
-32
Raymond Ltd. (RYMD) reported a decent set of numbers for Q2FY15. Sales grew by a good 19% Y-oY to Rs 14.61bn while the proforma PAT declined 35% Y-o-Y to Rs 639mn. However, there was a
very good recovery in terms of profitability sequentially. The company benefitted from the robust
performance of its textile and apparel business, both of which beat our expectations for the quarter.
The textile business's top line grew 24% Y-o-Y and 43% sequentially while the EBIDTA margins even
though contracted 793 bps Y-o-Y expanded by a massive 924 bps sequentially to 18.7%. On the
other hand Apparel business's topline grew by 15% Y-o-Y and a massive 63% sequentially while
EBITDA margins at 6.5% even though contracted 793 bps Y-o-Y and came back to profitability
compared to a loss the previous quarter.
November 17, 2014
For Private Circulation Only
3
Business wise Analysis
1 ] Textile Division (Fabric)
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
5,587
7.4%
44.4%
1,490
26.7%
67.0%
5,433
7.9%
44.2%
1,160
21.4%
62.3%
5,342
3.9%
43.1%
1,040
19.5%
67.3%
4,842
26.6%
43.1%
460
9.5%
54.1%
6,936
24.1%
46.7%
1,300
18.7%
65.3%
Revenue from the Textile division grew by a massive 24% Y-o-Y to Rs 6.94bn. The rise in sales was
led by the growth in export markets and penetration of shirting fabric across B2C channels while the
margins were impacted due to adverse product mix, higher input cost and stores renovation. Excluding
B2C shirting the textile segment grew by 6% Y-o-Y. Exports continued to do well as they grew by 32%
Y-o-Y during the quarter and contributed to 16% of the sales compared to 12% in the last year.
Combo packs continued to witness good traction and grew by 15% Y-o-Y in Q2FY15. The company
also mentioned that there were few concerns in the domestic fabric business in Q2FY15 which it
expects to ease in the next quarter. Increased B2C shirting and exports having lower margin impacted
RYMD's textile segment margin by around 2% Y-o-Y.
2 ] Branded Apparel
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
2,544
8.6%
20.2%
200
7.9%
9.0%
2,503
14.6%
20.4%
210
8.4%
11.3%
2,344
21.4%
18.9%
0
0.0%
0.0%
1,793
13.5%
16.0%
-60
-3.3%
-7.1%
2,925
15.0%
19.7%
190
6.5%
9.5%
The increase in sales led by double digit growth across all brands. Blended sales across secondary
channels i.e Exclusive Brand Outlets (EBOs) and Large Format Stores (LFS) during the quarter grew by
15% Y-o-Y on blended basis.
EBITDA margin came in lower Y-o-Y due to higher brand building cost & store rollouts. The company
also launched the e-commerce portal RaymondNext.com during the quarter. RYMD's e-commerce
sales through the online channel partners clocked in excess of 1.5 Crores per month during the
quarter. The company added 16 new stores and closed 6 stores in Q2FY15. It also completed the
renovation of 18 stores and 12 were undergoing renovation which impacted EBITDA margins by
about 1% Y-o-Y. Blended same store sales growth across formats grew by 6% Y-o-Y while total sales
growth across the exclusive network grew by 7% Y-o-Y. In addition to these there had been increase
in input cost besides higher power rates per unit which also collectively impacted EBITDA margins by
3.5%.
The company mentioned that they had been able to reduce discount sales and average discount
percentage as well. The company stepped up advertising cost considerably which grew 72% y-o-yand
impacting its margins; had the advertisement cost been maintained at the same level as Q2FY14
EBIDTA margin would have increased to 8.6% during the quarter compared to 7.9% in the last year.
The Company mentioned that they had received good response at the recently concluded SS15 season
bookings and initial booking data indicated 18-20% growth Y-o-Y.
The company's retail channel exclusive network stores stood at 964, like to like secondary sales
growth was 6% during the quarter, total secondary sales throughput across the entire exclusive network
of stores grew by 7%. Same stores sales growth for stores post renovation was in excess of 10%. The
company mentioned that it was increasing the pace of stores rollout renovation for in H2FY15 and
expects to open 100-120 stores in FY15 including those under renovation. The company had planned
to open ~50 stores during FY15; and by the end of September it had completed the renovation of 18
stores.
November 17, 2014
For Private Circulation Only
4
3 ] B2B Luxury Cotton Shirting Fabric
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
880
11.4%
7.0%
100
11.4%
4.5%
860
7.5%
7.0%
90
10.5%
4.8%
920
31.4%
7.4%
90
9.8%
5.8%
914
28.7%
8.1%
86
9.4%
10.1%
1,070
21.6%
7.2%
180
16.8%
9.0%
The sales growth was driven by increase in sales driven by combination of volumes and realizations
in domestic market. EBITDA margin improved Y-o-Y due to better realizations and one-off income of
Rs 65 mn. The one off income was related to the refund of power charge in the earlier period by MSEB
which relates to the commercial taxes that they charge on the power tariff. The company mentioned
that discussions are in progress to acquire the stake of JV partners.
4 ] Denim (Raymond Uco Denim JV)- 50% share
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
2,360
10.8%
18.7%
230
9.7%
10.3%
2,350
8.3%
19.1%
230
9.8%
12.4%
2,520
26.6%
20.3%
220
8.7%
14.2%
2,460
6.0%
21.9%
230
9.3%
27.0%
2,330
-1.3%
15.7%
230
9.9%
11.6%
Sales de-grew marginally while EBITDA margins improved 13bps Y-o-Y due to higher export mix and
lower raw material cost.
5 ] Garmenting
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
1,177
16.8%
9.3%
150
12.7%
6.7%
1,045
44.8%
8.5%
150
14.4%
8.1%
1,145
28.0%
9.2%
188
16.4%
12.2%
1,240
50.3%
11.0%
160
12.9%
18.8%
1,503
27.7%
10.1%
150
10.0%
7.5%
The company's garmenting sales growth was driven by increase in volumes while EBITDA margins
were impacted due to rupee appreciation against dollar and higher employment cost. Sales in hybrid
segment grew marginally due to subdued demand for the product in the export market.
6 ] Tools & Hardware
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
1,136
22.3%
9.0%
80
8.5%
12.3%
1,103
15.1%
9.0%
150
13.2%
6.7%
1,121
5.0%
9.0%
110
10.0%
5.9%
948
0.6%
8.4%
100
8.9%
6.5%
1,147
0.9%
7.7%
40
4.2%
4.7%
Tools and hardware segment grew marginally by 1% Y-o-Y to Rs 1,147mn while the contraction in
the EBITDA margin was mainly due to unfavorable product mix.
November 17, 2014
For Private Circulation Only
5
7 ] Auto Components
Particulars (In Rs. mn)
Q2
FY14
Q3
FY14
Q4
FY14
Q1
FY15
Q2
FY15
Net Sales
Y-o-Y growth (%)
% of total sales
EBIDTA
EBIDTA margin (%)
% of total EBITDA
506
-5.2%
4.0%
66
13.0%
3.0%
565
12.5%
4.6%
69
12.2%
3.7%
703
21.4%
5.7%
60
8.5%
3.9%
704
8.0%
6.3%
90
12.8%
10.6%
600
18.6%
4.0%
40
6.7%
2.0%
The growth in the Auto component segment was driven by domestic and export market. EBITDA
margin nearly halved owing to higher input cost and to some extent the lower exports particularly in
the European segment of the market.
Outlook
The company mentioned that with respect to monetization of non-core assets, the progress was slow
compared to their expectation. The company was fairly optimistic about its businesses in Q3 and
remained confident about the strategic directions for the business. It plans to invest in brand building,
modernization and expansion of retail network and also capacity expansion in the export driven
business.
Segment Analysis
Particulars (Mn. Rs)
Q2
FY15
Q2
FY14
Y-o-Y
change
%
Q4
FY14
Q-o-Q
change
%
6M
FY15
6M
FY14
Y-o-Y
change
%
Textiles
6,936
5,587
24.1%
4,842
43.3%
11,778
9,412
25.1%
Denim
2,234
1,782
25.4%
2,136
4.6%
4,369
3,297
32.5%
Apparel
2,925
2,544
15.0%
1,793
63.1%
4,719
4,124
14.4%
Garmenting
1,503
1,177
27.7%
1,240
21.2%
2,743
2,002
37.0%
Tools & Hardware
1,147
1,136
0.9%
948
20.9%
2,095
2,079
0.8%
Auto Components
600
506
18.6%
704
(14.8%)
1,305
1,158
12.6%
10
15
(32.0%)
18
(43.5%)
29
49
(41.1%)
816
512
59.5%
721
13.3%
1,537
1,147
34.0%
14,539
12,236
18.8%
10,961
32.6%
25,500
20,974
21.6%
Textiles
1,127
1,266
(11.0%)
298
277.8%
1,425
1,380
3.3%
Denim
202
93
117.8%
140
44.3%
342
199
71.6%
Apparel
141
136
4.1%
(109)
(230.1%)
33
(28)
(216.0%)
Garmenting
Segment Revenue
Others
Inter segment revenue
Net Sales/ Income from operation
Operating Profit
127
121
4.7%
132
(3.9%)
259
168
54.5%
Tools & Hardware
79
129
(38.7%)
17
371.9%
96
191
(50.1%)
Auto Components
13
37
(66.5%)
64
(80.3%)
76
91
(16.3%)
(55)
(62)
(11.8%)
(66)
(17.2%)
(121)
(118)
2.9%
Others
Inter segment revenue
7
-10
(166.3%)
-13
(151.6%)
-6
-24
(74.8%)
1,640
1,709
(4.1%)
463
254.3%
2,103
1,859
13.1%
521
483
7.8%
483
7.8%
1,004
939
7.0%
Add/(Less): Unallocable Income / (Exp) -248
-150
65.7%
-244
1.8%
-492
-355
38.6%
Total
Less: Finance Costs
Add/(Less): Exceptional Items
-1
-11
(95.2%)
-35
(98.6%)
-36
-111
(68.1%)
Add/(Less): Provision for taxes
-158
-179
(11.9%)
-32
391.3%
-190
-101
87.4%
Add/(Less): Share of profit in
associate companies
-31
36
(187.4%)
3 (1259.3%)
-29
73
(139.0%)
681
923
(26.2%)
353
426
(17.2%)
Net Profit
November 17, 2014
For Private Circulation Only
(329)
(307.4%)
6
Raw Material Trend
Domestic Cotton Index
Source: Company, FQ Research
Currency adjusted Australian Wool Index
Source: Company, FQ Research
* Q3FY15 data till Nov. 12, 2014
November 17, 2014
For Private Circulation Only
7
Segmental Sales Contribution (%) - Quarterly Trend
Segmental EBIT Contribution (%) - Quarterly Trend
Source: Company, FQ Research
Source: Company, FQ Research
Segmental EBIT Margin (%) - Quarterly Trend
Segmental RoCE (%) - Quarterly Trend
Source: Company, FQ Research
Source: Company, FQ Research
November 17, 2014
For Private Circulation Only
8
Consolidated Financials
Profit and Loss Statement
Balance Sheet
FY12
Total Revenues
36,424
Net Sales Growth (Y-oY)
20%
Total Expenditure
31,888
EBIDTA
4,536
EBIDTA Margin (%)
12.5%
EBIDTA Growth (Y-o-Y)
10%
Interest
1,651
Depreciation/Amortization
1,658
Other Income
817
PBT
2,044
PBT Margin (%)
5.6%
Net Profit
1,558
Net Profit Excl. extra-ordinaries
1,558
Net Profit Excl. extra-ordinaries (Y-o-Y %) -40%
FY13
40,692
12%
36,978
3,714
9.1%
-18%
1,906
1,890
739
367
0.9%
287
380
-76%
FY14
45,577
12%
40,680
4,897
10.7%
32%
1,968
1,958
629
1,600
3.5%
1,433
1,433
277%
FY15E
53,634
18%
48,145
5,489
10.2%
12.1%
2,116
1,618
589
2,344
4.4%
1,686
1,686
18%
FY16E
61,094
14%
54,145
6,949
11.4%
27%
2,366
1,740
877
3,720
6.1%
2,944
2,944
75%
Profit and Loss Statement
FY12
FY13
FY14
FY15E
FY16E
18.2
18.2
2.1
8.8
8.5
0.8
0.5%
98.5
74.5
2.0
13.0
10.0
0.7
0.2%
19.7
19.7
1.8
8.3
9.3
0.6
0.3%
16.8
16.8
1.6
8.6
8.3
0.5
0.3%
9.6
9.6
1.4
6.0
6.5
0.5
0.3%
0.8
2.7
0.7
1.9
0.8
2.5
0.8
2.6
0.7
2.9
25.4
25.4
52.4
224
4.7
6.2
35.5
227
23.3
23.3
55.2
250
27.5
27.5
53.8
283
48.0
48.0
76.3
332
Returns (%)
RoE (%)
RoE (%)- Excl. extra-ordinaries
RoCE (%)
RoCE (%)-Excl. extra-ordinaries
Dividend Payout
11.9%
11.9%
11.2%
11.2%
11.3%
2.1%
2.7%
3.7%
4.1%
24.6%
9.8%
9.8%
11.8%
11.8%
5.9%
10.3%
10.3%
11.1%
11.1%
5.9%
15.6%
15.6%
14.3%
14.3%
3.4%
Du-Pont Analysis
EBIDTA/Sales (%)
Sales/Operating assets (x)
EBIDTA/Operating Assets (%)
Operating Assets/Net Assets (x)
Net Earnings/EBIDTA (%)
Net Assets/Net Worth (x)
RoE (%)
12.5%
1.4
17.2%
1.1
34.3%
1.8
11.9%
9.1%
1.5
13.4%
1.2
10.2%
1.7
2.7%
10.7%
1.5
16.3%
1.2
29.3%
1.7
9.8%
10.2%
1.6
16.7%
1.1
30.7%
1.8
10.3%
11.4%
1.8
20.0%
1.1
42.4%
1.7
15.6%
Margins (%)
EBIDTA margin
PBT margin
PAT margin
12.5%
5.6%
4.3%
9.1%
0.9%
0.7%
10.7%
3.5%
3.1%
10.2%
4.4%
3.1%
11.4%
6.1%
4.8%
Growth (%)
Revenue
EBIDTA
PAT
APAT
20%
10%
190%
-40%
12%
-18%
-82%
-76%
12%
32%
399%
277%
18%
12%
18%
18%
14%
27%
75%
75%
64
48
105
121
66
52
94
108
68
39
98
127
60
37
90
113
60
37
90
112
Valuation Ratios
P/E (x)
P/E Excl. Extra-ordinaries (x)
P/BV (x)
P/CEPS (x)
EV/EBITDA (x)
Market Cap. / Sales (x)
Div.Yield (%)
Leverage Ratios
Debt/Equity (x)
Interest Coverage (x)
Per Share Data
Diluted EPS
Fully Diluted EPS Excl. extra-ordinaries
Diluted Cash EPS
Book Value Per share (Rs.)
Operating Cycle
Debtors
Creditors
I nventory
Cash conversion Cycle
November 17, 2014
FY12
FY13
FY14
FY15E
FY16E
Liabilities
Equity Capital
Reserves & Surplus
Equity
Minority Interest
Net Worth
Other Liabilities
Total Loans
Capital Employed
614
13,010
13,623
141
13,764
2,049
8,839
24,653
614
13,175
13,789
123
13,912
1,341
8,165
23,418
614
14,047
14,661
706
15,367
1,388
11,178
27,933
614
15,908
16,522
832
17,354
1,661
11,892
30,907
614
18,852
19,466
915
20,382
1,837
12,995
35,213
Assets
Net Block
Capital WIP
Investments
Others - Assets
13,482
1,260
962
2,716
13,067
1,743
1,114
2,934
12,564
1,740
1,106
3,038
13,289
939
1,031
3,057
13,998
886
1,031
3,193
Current Assets
Inventories
Sundry Debtors
Cash and cash equivalents
Loans and Advances
Other Current Assets
Total Current Assets
9,171
6,352
4,461
1,085
564
21,634
9,477
7,384
4,508
991
611
22,972
10,925
8,499
4,851
1,007
695
25,977
11,871
8,886
9,219
1,234
751
31,961
13,351
9,994
12,176
1,405
855
37,781
Less:Current Liabilities & Provisions
Short Term borrwing
Sundry Creditors
Provisions
Other Current Liabilities
Total Current Liabilities & Provisions
Capital Applied
5,426
4,174
4,902
899
15,401
24,653
5,680
5,246
6,773
712
18,412
23,418
5,455
5,930
4,346
760
16,491
27,933
7,077
6,515
4,911
867
19,370
30,907
7,851
7,327
5,523
975
21,676
35,213
FY12
2,878
864
2,014
1,658
3,672
128
1,947
1,853
2,756
(904)
(164)
(740)
(740)
FY13
1,824
1,240
583
1,890
2,474
170
(308)
2,951
1,959
993
152
841
(93)
748
FY14
2,939
547
2,392
1,958
4,350
131
5,139
(658)
1,451
(10)
(2,100)
(8)
(2,092)
(2,092)
FY15E
3,871
965
2,905
1,618
4,524
(74)
1,105
3,345
1,543
(55)
1,857
(75)
1,932
1,932
FY16E
5,209
1,258
3,951
1,740
5,691
123
2,292
3,522
2,396
1,126
1,126
1,126
Cash Flow Statement
EBITDA
Less: Adjusted Taxes
NOPLAT
Plus: Depreciation
Gross Cashflow
Minority Interest/ Profit share of associates
Less: Increase in Working Capital
Operating Cashflow
Less: Net Capex
Less: Increase in Net Other Assets
FCF From Operation
Less: Inc./(Dec.) in Investment
FCF after Investment
Plus: Gain/(loss) on Extraordinary Items
Total FCF
Recommendation Summary
Event
Date
Price
Rating
Target
Initiating Coverage
11-05-2012
377
Buy
506
Result Update (Q1FY13)
01-08-2012
355
Buy
480
Result Update (Q2FY13)
26-10-2012
376
Buy
480
Result Update (Q3FY13)
28-01-2013
386
Buy
460
Result Update (Q3FY14)
14-03-2014
280
Buy
515
Result Update (Q1FY15)
04-08-2014
419
Buy
500
Result Update (Q2FY15)
17-11-2014
461
Buy
784
For Private Circulation Only
9
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BUY
HOLD
SELL
More than 10% return
Between 5-10% return
Less than 5% return
November 17, 2014
For Private Circulation Only
10