INTEGRATEDGROWTH

DISHMAN PHARMA& CHEMICALS LTD.

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Recommendation BUY Integrated Growth…

Dishman Pharma & Chemicals Ltd (DPCL) is a leading CRAMS player and operates mainly under two segments – CRAMS and Marketable Molecules. CRAMS is a major contributor with 68% of revenues.

Investment Rationale Higher Asset utilization and Debt to reduce: Dishman has been in an

investment phase for the last five years. Its net assets have doubled in the last six years. With the company unlikely to undertake any large scale capex for the next two years, improvement in utilization levels will lift profits and return ratios.

CRAMS – Reviving global economy: Carbogen Amcis (CA) currently has 7-8 products in Phase III, if even any one of them gets through Phase III and commercialized, then it can change the dynamics of the company. Sales are likely to grow at a CAGR of 10% with 16-17% margins. The HI-Po facility is expected to start operations from FY15 and has orders worth $5 mn in hand. For full year we expect the facility to report sales of around $8 mn with 35-40% margins. CRAMS on a whole is expected to report revenues of Rs 1175 cr in FY15E and Rs 1400 cr in FY16E.

Marketable Molecules – Cash Cow: Phase transfer Marketable Molecule (MM) is the legacy business of the company that was started in 1987 at Naroda. Consequently the company started with Quats, together which has turned out be a steady business for the company and has been a cash cow. With USFDA, TGA approved MM facility; Dishman targets regulated markets and are working at full capacity (FY14 revenues – Rs 120 cr) with 20-25% EBITDA margins. Disinfectants facility, set up at an estimated cost of Rs25cr, would leverage Dishman’s unique position in bulk actives of disinfectants.. Management is poised for the segment and expected DPCL to register sales of $15-20 mn in next years with improvement of margins to 35-40% from 25-30% currently. DPCL has restructured and restarted its Netherlands Vitamin D facility expected to generate $40-42 mn sales with 16-17% EBITDA margins in FY15E and $50 mn sales and 20-22% EBITDA margins in FY16E. MM category is expected to report revenues of Rs 425 cr in FY15E and Rs 507 cr in FY16E.

Valuation & Recommendation

We expect stock to re-rate from here on the basis of various steps taken by the company like slowdown of investment cycle, focus on small clients to fill the capacity, restructuring at its global plants (Carbogen Amcis and Netherlands), re-start of China facility. We are hopeful of new business like Hi-po and disinfectants. Cumulatively all above factors would Improve financial health of the company and would trigger the re-rating of the stock. The stock is trading at compelling valuations of 7.4x/5.3x PE on FY15E/FY16E EPS respectively. We recommend a BUY on the stock with target price of Rs 196 (8x on FY16E – 85% discount to peers), a potential of 50% upside in 18 months

CMP (04 July 14) Rs 130

Target Price Rs 196

Sector Pharmaceuticals

Stock Details

BSE Code 532526

NSE Code DISHMAN

Bloomberg Code DISH IN

Market Cap (Rs cr) 1108.4

Free Float (%) 38.6

52- wk HI/Lo (Rs) 142/37

Avg. volume NSE (Quarterly) 12,76,241

Face Value (Rs) 2.0

Dividend (FY 14) 60%

Shares o/s (Cr) 8.1

Relative Performance 1Mth 3Mth 1Yr

DPCL 31.3% 45.5% 137.4%

Sensex 4.7% 16.1% 33.8%

Shareholding Pattern 31st

March 14

Promoters Holding 61.45

Institutional (Incl. FII) 12.77

Corporate Bodies 6.91

Public & others 18.87

Runjhun Jain –Sr. Research Analyst 022 3926 8177 runjhun.jain@nirmalbang.com Sunil Jain – Head of Research 022 3926 8196 Sunil.jain@nirmalbang.com

Year

Sales (Rs cr)

Growth (%)

EBITDA (Rs cr)

Margin (%)

PAT (Rs cr)

Margin (%)

Adj EPS (Rs) P/E (x) RoE

FY13A 1272.2 13.2% 291.8 22.9% 100.3 7.9% 12.3 10.5 9.7%

FY14A 1385.3 8.9% 332.3 24.0% 109.3 7.9% 13.4 9.6 9.3%

FY15E 1615.0 16.6% 400.2 24.8% 141.8 8.8% 17.4 7.4 10.8%

FY16E 1925.0 19.2% 490.6 25.5% 197.4 10.3% 24.3 5.3 13.3%

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Investment Rationale

Dishman Pharma & Chemicals Ltd (DPCL) is a leading CRAMS player and operates mainly under two segments – CRAMS and Marketable Molecules. CRAMS is a major contributor with 68% of revenues. It does not develop or market any final product of its own but manufactures and supplies key ingredients to front-end pharma companies who in turn formulate and market to the final consumers.

CRAMS segment can be further sub divided into 1. Dishman standalone CRAMS 2. Carbogen Amcis

CRAMS – Key growth driver

CRAMS Industry Global pharma companies are facing dual challenges. On one hand large branded drugs worth ~US$105bn in annual sales in the US are expected to go off patent by CY2020 (Of these, ~US$92bn (~88%) worth drugs are expected to go off patent by CY2016) and on the other hand they are witnessing cost escalations due to rise in salary, declining productivity, increasing cost of research etc. This situation led to pressure on margins. Hence, in order to maintain their profitability and sustainability in the long run, these companies are more likely to depend on R&D and manufacturing to the low cost countries like India and China.

India outshines among others because of cheap availability of skilled labor, low cost of production ( which is nearly 60% lower than that of the US and almost half of that of Europe) and the highest number of USFDA approved sites (546) outside the US.

Indian CRAMS industry is estimated to have reached USD 8.0 billion in 2015, up from USD 4.0 - 4.5 billion in 2012 (source: ibef), a growth of ~25%. Going Forward, we believe the industry would continue it’s up trend.

Dishman is a prominent Contract Research & Manufacturing Services (CRAMS) player in India. Due to the focused approach on CRAMS, strong execution capabilities, non-conflicting business policies and state of the art facilities, Dishman is perceived as a strong partner and not as a competitor. CRAMS has been a strong business segment for the company and which we believe is likely to continue in future.

Building a critical scale in important factor to succeed in CRAMS segment and Dishman’s global presence makes it a preferred outsourcing partner. Due to drying up of R&D pipeline globally and escalation in R&D cost, CRAMS segment is likely to post strong growth in coming period also.

Earlier DPCL had a strategy to focus on big ticket orders from large clients. For instance Solvay as a big client used to contribute to as much 20% of Dishman’s CRAMS revenues at its peak. Dishman is the sole supplier of Eprosartan Mesylate API to Solvay (Brand: Teveten, Anti-hyperactive). However, during recession, when the order pipeline dried up, the company went into retropestive mode and eventually changed its strategy. It now concentrates on a larger number of midsize contracts rather than on a few large MNCs. The idea is to de-risk the business model to the maximum extent and also fill up the available plant capacities so as to effectively improve the capacity utilization of the plants, which will result into an increase in the “Return on Capital Employed”. For example, Eprosartan contributed around Rs 90 cr in FY14 however, its sales are going down and expected to be stabilize at Rs 70 cr in FY15. But this would be more than compensated by Brilinta from Astrazeneca which is expected to start from July and is likely to contribute around $5 mn revenues in FY15.

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Carbogen Amcis – to drive the growth Dishman pharma acquired Carbogen Amcis (CA), a Swiss Research based company in August, 2006 for $75 mn. CA manufactures high potent, high value products.

CA gets engaged from pre-clinical stage for product (API) development and later manufactures till Phase 3. Through CA, dishman is trying to offer integrated services to clients where CA is used as front end facility for low volume, high value products and Dishman eventually manufacturing of high volumes.

Value Chain – Vertically integrated CRAMS play

Dishman was enjoying dream run post acquisition and Carbogen amcis recorded its highest ever sales of $120 mn in 2010. However post exit of incumbent CEO – Mark Griffith the company started facing leadership issues over and above decline in profitability due to strong Swiss franc and delayed effects of financial crisis. This led to dwindling in sales in 2011. To alleviate the situation Dishman took few restructuring steps like cut down of jobs, however an important among those steps was change in top management of the company wherein Dishman reinstated earlier CEO Mark Griffith in July’12. After reinstating the CEO, CA has started showing signs of recovery in terms of both sales and margin.

Going forward CA will continue to concentrate on contract research and custom synthesis business however currently the facility is working at full capacity and sales are likely to grow at a CAGR of 10% with 16-17% margins. It currently has 7-8 products in Phase III, if even any one of them gets through Phase III and commercialized, then it can change the dynamics of the company. The company has applied for break through status for three drugs from the above pipeline. Break through status is given to life saving drugs and are given expedite approval. (Approval usually takes 2-2.5 years however if it is break through case it just takes one year)

Other feathers in Hat:

Unit 9 – Hi-po: under the expert supervision of Mark Griffith, Dishman Pharma has set up a high potent (Hi-po) facility, also known as unit 9, at its Bavla plant. This is one of its kinds in Asia. The facility is used for class 4 toxic products, similar to use in oncology and other therapies. Dishman has invested around Rs 180 cr in the facility. It has capacity of accommodating four cells however the company currently operates only two cells. The facility is expected to start operations from FY15 and has orders worth $5 mn in hand. For full year we expect the facility to report sales of around $8 mn with 35-40% margins.

China: Dishman has invested $25 mn in its China facility which is meant for manufacturing of APIs and intermediates. Though the company started investing in the facility in 2007 and was expected to commence it in 2008. However, due to various delays it couldn’t commence it and the investment have been dragging its profits since then. The key reason for delay in operations is not able to get GMP approval for the facility. DPCL has now

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started the facility in 2HFY14 for intermediates. And to pare its mounting debts the company initiatlly decided to sell off the facility but were not able to get the correct valuations. In order to gain dual benefits of optimal utilization of China facility and free up space at its main USFDA approved Bavla plant, Dishman is transferring some of its intermediate contracts from its Bavla facility to China. This is likely to turn around the facility and better utilization of resources both at its Bavla as well as China plants. The facility made progress and losses were limited to Rs 29 cr in FY14, which is now expected to go down further, and the unit is likely to break even in FY15E and to start contributing to profits from FY16E. This would be a strong margin booster for the overall company. Considering the turn around Dishman has deferred the sale option and likely to use China facility as a backup and to reduce the geographical risk for the company.

Japan: In March 2007, Dishman formed 85:15 marketing JV with Azzurro Corporation to cater to Japanese markets. The company offered contract research, custom manufacturing of API intermediates, Vitamin D and Vitamin derivatives. However, DPCL has now acquired remaining 15% share also and now owns 100% of the subsidiary. DPCL is targeting $25 mn of revenues in next five years, from $7-8 mn currently. It enjoys 30-40% EBITDA margins on this segment.

Generic APIs: To hedge its business, the company is developing generic APIs. It has 5-6 DMFs and 20 filed already. However, learning from its past experience, DPCL is moving cautiously and tying up with customers before filing the products. In FY14, the segment contributed around $5 mn of sales which is expected to double in FY15E to $ 10 mn with 25-27% EBITDA margins. Trend in CRAMS revenue

CRAMS on a whole is expected to report revenues of Rs 1175 cr in FY15E and Rs 1400 cr in FY16E as compared to Rs 928 cr in FY14.

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Marketable Molecules (MM)

1. Quats 2. Disinfectants 3. Vitamin D3

Quats Phase transfer Marketable Molecule (MM) is the legacy business of the company that was started in 1987 at Naroda. Consequently the company started with Quats, together which has turned out be a steady business for the company and has been a cash cow. With USFDA, TGA approved MM facility; Dishman targets regulated markets and are working at full capacity (FY14 revenues – Rs 120 cr) with 20-25% EBITDA margins. Hence, there is no growth expected in the segment. We expect it to have Rs 130 cr of sales in FY15E and Rs 140 cr in FY16E with similar margins.

Disinfectants Quats business has been further evolved into Disinfectants formulations (Unit 10). The facility, set up at an estimated cost of Rs25cr, would leverage Dishman’s unique position in bulk actives of disinfectants. It would manufacture disinfectant and sanitization formulations for use in hospitals, homes and as industrial disinfectants in India. Currently the company is getting around Rs 3-4 crs of revenues however the segment is expected to grow faster on the back of low base and low competition. Management is confident of achieving Rs 10 cr of revenues in FY15E (as it is now targeting European markets as well – and has hired a senior level management in UK) with 30-35% EBITDA margins. Management is poised for the segment and believes that the segment has potential to achieve revenues of $15-20 mn in next five years with higher margins of 35-40%.

Vitamin D3 Unit 3 & Netherlands: In Oct 2007, Dishman acquired a Vitamin D and cholesterol & lanolin alcohols production facility in Netherlands, from Solvay (now Abbott). Cholesterol is used in pharmaceuticals, cosmetic and crustacean feed applications. Vitamin D3 analogues are used for food and pharmaceutical applications, and fall in the category of high potency products. Dishman has backward integrated for Vitamin D3 by making resins at its India plant. For vitamin D3, Dishman has a tough competition from one of the players in China, which is controlling the market and pricing with high volumes. This is not letting Dishman in passing on the fluctuations in price. In addition of tough market scenario, the company also faced regulatory issues at its original plant which came within the city limits and had to shift its plant to another location. During this period the company not only had to spend funds on renovation but also had to forego sales. During the transition phase it had been dependent on outsourcing to fulfill its commitments; this impacted the profitability of the company. However, all such issues are behind now and it has re-started the operations and expects to generate $40-42 mn sales with 16-17% EBITDA margins in FY15E and $50 mn sales and 20-22% EBITDA margins in FY16E.

Dishman targets regulated market, which has size of around 260,000 ton and growing at CAGR of 5-7%. The main competitor is facing problems and currently undergoing plant refurbishment. This has benefitted Dishman in dual manner. One, it has re-gained strong position in the market and second it got additional sales in terms of orders from the competitor itself which is outsourcing material from Dishman. The deal is for 18 months.

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Trend in Marketable Molecule Revenues

MM category is expected to report revenues of Rs 425 cr in FY15E and Rs 507 cr in FY16E as compared to Rs 337 cr in FY14.

Improving Financials

Higher Asset utilization and Debt to reduce Dishman had a dream run till 2007 where CRAMS segment was booming. Contract manufacturing is in general a capital intensive and highly competitive area with low bargaining power for service providers. Seeing the uptick and anticipating good business, the company has invested huge money in various facilities. However, due to recession hitting the global economies, pharma companies held their plans and the order pipeline dried up. This led to underutilization of company’s assets. However, with markets opening up now, orders are coming back and outlook is again looking better, we expect Dishman’s asset turnover to improve here onwards. To reduce dependence on few large clients and de-risk business, Dishman effected a change in strategy to focus on multiple smaller clients. This has helped the company secure new orders from small and mid-sized players in addition to continuing supplies to big pharma multinationals. Dishman has been in an investment phase for the last five years. Its net assets have doubled in the last six years. With the company unlikely to undertake any large scale capex for the next two years, improvement in utilization levels will lift profits.

In the last five years it has made total capex of Rs 1016 cr. company is currently working only at sub 60% capacity utilization.

Capex by CRAMS company

Rs cr FY10 FY11 FY12 FY13 FY14E

Divis 23.8 129.3 249.6 247.7 140.0

Jubilant Life 505.6 666.7 685.5 436.9 534.9

Dishman 253.0 198.4 239.6 103.1 222.3

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Among these, Jubilant is on the top with total capex of Rs 2830 cr from FY10 to FY14. But Dishman had higher capex as % of its sales.

Capex - % to sales

FY10 FY11 FY12 FY13 FY14

Divis 2.5% 9.9% 13.5% 11.5% 5.5%

Jubilant Life 13.3% 19.3% 15.9% 8.5% 9.2%

Dishman 26.8% 19.2% 21.3% 8.1% 16.1%

This led to lower Asset turnover to sales for Dishman

Note: Jubilant’s asset turnover has gone down in FY11 because the company restructured its business in the year and had demerged its Agri business and significant decline in Lifescience business, led to decline in sales. On the other hand, the demerged business didn’t have significant assets. Consequently, asset turnover had seen sudden decline on the back of low sales.

We do not expect any major capex in the next couple of years and this would strengthen the company’s cash flows. We are of the opinion that Dishman is done with expansion mode and now would enjoy the fruits of its past investments. We believe that incremental profits would be utilized by the company to further reduce the debts.

Debt to Equity Ratio is gradually coming down

Pre acquisitions and capex

the Dishman had Asset

turnover of more than 1x in

FY04.

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Scope for Improvement in margins Company’s employee cost is on the higher side at 29.8% than its peers (Divi’s 9.2%, Jubilant Lifescience’s 19.0%). Reason for the higher employee cost is because higher wages of Carbogen Amcis’s employees who are based in Switzerland. Rupee depreciation also affects foreign pay impacting the overall cost. However going forward, we believe that stringent cost control coupled with higher sales would help in improving the margins.

Employee Cost as % to Sales

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Company Profile Dishman was incorporated in 1983 as Dishman Pharmaceuticals and Chemicals Private Ltd. by Mr. J. R. Vyas. The company initially concentrated in fine chemicals and specialty chemicals like quaternary ammonium and phosphonium compounds or QUATS. During 1995-96, the company introduced bulk actives and Pharma intermediates with a view to graduate to a Contract Manufacturing Organization (CMO) for the Multinational Pharma majors. The company set up its facility in Bavla near Ahmedabad in 1997 for the same. Dishman listed on the bourses through an IPO in April 2004 at a price of Rs. 175 (Face Value Rs 10)

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Recent Developments: With the new government at center, Dishman has changed its strategy and has kept the sell of its SEZ land at Gujarat on hold till the further clarity about SEZ policy emerge, contrary to its earlier plans of selling the land. Dishman has invested around Rs 100 cr in Dishman SEZ, owned by promoter’s company – Dishman Infra. In 2012, the then center government imposed MAT tax on SEZ which made the whole project less attractive and economical unfavorable. However, with new government at Center, management is hopeful of change in the laws, again making the project attractive

RISKS In the past there has been large delta between the management’s guidance and

actual results. This can be a risk going forward also.

Currency Movement - Though Dishman has natural hedge in terms of debt obligations in forex currency, however any swing of rupee on either side can impact company’s financials.

Slowdown in global economy - Slowdown or recession in global economy can again create problems for the growth of the company, as order pipeline gets on hold, like it happened in the past.

High debt – DPCL is highly leveraged company which may push company towards liquidity crunch.

Further delay in commencement of HiPo facilities or in any other execution, is risk to our assumptions

PEER COMPARISON

Projections for FY15E Source: Bloomberg, Nirmal Bang Research

Particulars Sales EBITDA Margin PAT Margin EPS Price Mcap ROE PE EV/S EV/

EBITDA P/BV

(Rs Cr) (Rs Cr) (%) (Rs Cr) (%) (Rs) (Rs) (Rs Cr) (%) (x) (x) (x) (x)

Divis 3022.2 1213.9 40.2% 912.0 30.2% 68.7 1523 20217 36.5% 22.2 6.7 16.6 8.1

Jubilant Life 6461.2 1138.0 17.6% 419.3 6.5% 26.3 207 3301 16.8% 7.9 1.0 5.9 1.3

Unichem 1311.9 227.0 17.3% 143.5 10.9% 15.9 227 2054 19.7% 14.3 1.4 8.3 2.8

Dishman 1615.0 400.2 24.8% 141.8 8.8% 17.6 130 1052 9.3% 7.4 1.1 4.6 0.8

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VALUATION AND RECOMMENDATION

The stock has not performed since the time of global recession in 2008 and has been an underperformer as compared to healthcare index and to its direct peers in the industry.

Due to its poor execution in the past and over stretched balance sheet, the stock is trading at huge discounts As the company’s investment is over and all the business segments are starting contributing, we believe that Dishman is poised for re-rating

In the past few years, the company has faced many problems like turbulence in CRAMS segment, executional delays, complicated financial mess caused by a series of inorganic initiatives, huge capex. This led to slowdown in top-line and decline in profitability. All the mentioned problems led to de-rating of stock and it went to historic lows on low confidence of investor community. However, we believe CRAMS industry seems to have bottomed out and situation has started improving. We expect DPCL to report a CAGR of 18% in revenues over FY14-16 and 34.4% in PAT on the back of declining debt levels and higher efficiencies.

Divis Jubilant Dishman

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We expect stock to re-rate from here on the basis of various steps taken by the company like slowdown of investment cycle, focus on small clients to fill the capacity, restructuring at its global plants (Carbogen Amcis and Netherlands), re-start of China facility. We are hopeful of new business like Hi-po and disinfectants. Cumulatively all above factors would Improve financial health of the company and would trigger the re-rating of the stock.

The stock is trading at compelling valuations of 7.4x/5.3x PE on FY15E/FY16E EPS respectively. We believe the company is at an inflection point and entering growth phase now, post investment and long consolidation. We recommend a BUY on the stock with target price of Rs 196 (8x on FY16E – 85% discount to peers), a potential of 50% in 18 months

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Financials – Consolidated

P&L (Rs. Cr) FY13A FY14A FY15E FY16E Balance Sheet (Rs Cr) FY13A FY14E FY15E FY16E

Net Sales 1272.2 1385.3 1615.0 1925.0 Equity Sh. Capital 16.1 16.1 16.1 16.1

% change 13.2% 8.9% 16.6% 19.2% Pref. Sh. Capital 3.7 4.1 4.1 4.1

EBITDA 291.8 332.3 400.2 490.6 Reserves & Surplus 1014.7 1161.1 1288.4 1465.2

EBITDA margin (%) 22.9% 24.0% 24.8% 25.5% Net Worth 1034.5 1181.3 1308.6 1485.3

Depn & Amort 83.8 108.6 123.7 139.5 Deferred Tax Liab. 58.0 67.7 67.7 67.7

Operating income 207.9 223.8 276.6 351.1 Minority Interest 0.0 0.0 0.0 0.0

Interest 80.5 92.1 98.3 96.1 Total Borrowings 889.1 902.0 819.0 739.0

PBT 145.2 156.4 202.5 282.0 Trade Payables 105.6 97.1 109.0 129.9

Tax 45.0 47.1 60.8 84.6 Prov. & Other CL 151.7 305.5 313.7 324.2

EO & MI 0.0 0.0 0.0 0.0 Total Liabilities 2291.1 2617.4 2688.3 2828.5

Reported PAT 100.3 109.3 141.8 197.4 NFA + CWIP 1457.9 1571.7 1508.0 1428.6

Adj PAT 100.3 109.3 141.8 197.4 Total Investments 24.9 24.9 24.9 24.9

Sh o/s - Diluted 8.1 8.1 8.1 8.1 Total Loans & Advances 361.0 465.3 541.0 644.9

Adj EPS Post PS Div 12.3 13.4 17.4 24.3 Inventories 338.3 423.3 484.5 577.5

EPS growth (%) 76.5% 9.0% 29.7% 39.3% Debtors 72.9 82.2 94.2 117.6

Cash EPS 22.8 27.0 32.9 41.7 Cash & Bank 21.0 35.3 20.9 20.2

Quarterly (Rs Cr) Jun.13 Sept.13 Dec.13 Mar-14 Total Assets 2291.1 2617.4 2688.3 2828.5

Net Sales 306.2 352.9 313.4 400.7 Cash Flow (Rs. Cr) FY13A FY14E FY15E FY16E

EBITDA 85.7 100.5 61.7 87.7 Op CF bef tax & WC 291.8 381.1 400.2 490.6

Dep & Amorz 25.2 27.7 26.6 29.1 Change in WC -140.7 -41.6 -122.0 -176.9

Operating Income 60.5 72.9 35.1 58.6 Tax -45.0 -47.1 -60.8 -84.6

Interest 28.1 22.2 20.1 25.0 CF from Operation 106.1 292.4 217.5 229.1

Other Inc. 1.8 3.6 5.7 25.6 Capex -103.1 -222.3 -60.0 -60.0

PBT 33.8 52.2 19.9 50.4 Inv & Oth Income 19.2 24.6 24.2 27.0

Tax 4.6 10.0 4.7 27.9 CF from Investing -83.9 -197.7 -35.8 -33.0

EO 0.0 0.0 0.0 0.0 Div - Int'l Sub -11.3 -11.3 -14.8 -20.6

Adjusted PAT 29.2 42.3 15.2 22.5 Sh Cap & Premium 1.8 0.4 0.0 0.0

EPS (Rs.) 1.8 2.6 0.9 1.4 Interest Paid -80.5 -92.1 -98.3 -96.1

Ratios FY13A FY14E FY15E FY16E Loans & FCCB 39.5 12.9 -83.0 -80.0

EBITDA margin (%) 22.9% 24.0% 24.8% 25.5% Others 25.1 9.7 0.0 0.0

Adj PAT margin (%) 7.9% 7.9% 8.8% 10.3% CF from Financing -25.2 -80.4 -196.1 -196.7

PAT Growth (%) 76.5% 9.0% 29.7% 39.3% Net Chg. in Cash -3.0 14.3 -14.4 -0.7

Price Earnings (x) 10.5 9.6 7.4 5.3 Cash at beginning 24.0 21.0 35.3 20.9

ROE (%) 9.7% 9.3% 10.8% 13.3% Cash at end 21.0 35.3 20.9 20.2

ROCE (%) 10.4% 10.6% 12.8% 15.7% Per Share Data FY13A FY14E FY15E FY16E

Debt/Equity Ratio (x) 0.9 0.8 0.6 0.5 Adj EPS 12.4 13.5 17.6 24.5

Price/BV (x) 1.0 0.9 0.8 0.7 BV per share 128.2 146.4 162.2 184.1

EV / Sales 1.5 1.4 1.2 0.9 Cash per share 5.7 7.5 5.7 5.6

EV / EBITDA 6.6 5.8 4.6 3.6 Dividend per share 1.2 1.2 1.6 2.2

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