ramky infra ipo

Please refer to important disclosures at the end of this report 1

Rationale for our Subscribe view

Diversified player: Ramky Infra (Ramky) is currently one of the most diversifiedplayers in India in the infra space with a presence across six segments. Over theyears, the company has forayed into new segments increasing its array ofservices. On account of being a diversified player, we expect Ramky to maintainits growth trajectory even if any particular segment/region faces slow down.

Present in niche segments: Ramky is a leader in the niche segment of constructionof water and waste-water plants. The segment currently has few players owing towhich Ramky’s experience and expertise in the planning, designing andconstruction of water and waste-water infrastructure projects gives it an edgewhile bidding for new projects. Going ahead as well, we expect water andwaste-water projects to continue to bolster the company’s order book. Moreover,this high-margin segment helps the company in maintaining its margins in linewith peers in spite of high subcontracting.

Robust Order Book: Ramky’s robust order book of Rs7,432cr (3.7x FY2010revenues) ensures revenue visibility over the next few years. The company hasincreased its order book at a CAGR of 49.4% over FY2007-10. We expect thistrend to continue with the company already bagging orders worth Rs3,147cr as of1QFY2011, which is >90% of last year’s order inflow.

Outlook and Valuation: We believe that the company’s development businessincluding its BOT/BOOT project portfolio has a sustainable revenue stream –management has guided 40% revenue contribution from the developmentbusiness going ahead. On a standalone basis, over FY2010-12, we expect Ramkyto post CAGR of 31.7% and 28.9% in top-line and bottom-line respectively, owingto: 1) strong order book at 3.7x FY2010 revenues, 2) presence in growingsegments which ensures consistent order inflow, and 3) judicious choice ofprojects wherein stable margins are ensured.

We have arrived at a SOTP Target Price of Rs495 for Ramky wherein we haveassigned a P/E of 14x FY2012E EPS fetching Rs426/share for its standaloneC&EPC business in line with peers like IVRCL and NCC. We have valued Ramky’sinvestments in assets at 1.5x equity fetching Rs69/share, which is at a discount toasset owners like IRB and ITNL. However, our SOTP Target Price provides limitedupside of ~6% from the upper price band. Nonetheless, we recommend aSubscribe view on the issue, as we believe that the company is well- poised togrow over the long term with the catalysts in place, viz. the company’s uniqueassets, which would give returns in years to come. Currently, with these assets atdifferent stages it is difficult to assign a value to them.

Key risks to our recommendation include: 1) Dependence on third partycontractors, 2) Order book includes orders pending financial closure/slow movingprojects, and 3) Ramky claims Section 80IA benefits. However, we have assumedfull tax rates going ahead.

SUBSCRIBE Issue Open: September 21, 2010 Issue close: September 23, 2010

Note:*at Upper and Lowerprice band respectively

QIBs At least 60%

Non-Institutional At least 10%

Retail At least 30%

Post Issue Shareholding Pattern

Promoters Group 63.2%

MF/Banks/Indian FIs/FIIs/Public & Others 36.8%

Price Band: Rs405-468

Promoters holding Pre-Issue: 84.1%

Promoters holding Post-Issue: 60.6% - 63.2%

Book Bu ilding

Issue Detai ls

Face Value: Rs10

Present Eq. Paid up Capital: Rs49.4cr

Offer Size: 1.13cr-1.31cr Shares*

Post Eq. Paid up Capital*: Rs60.7cr - Rs62.5cr

Issue size (amount): Rs530cr

Shailesh Kanani +91 22 -4040 3800 Ext: 321

[email protected]

Nitin Arora +91 22 -4040 3800 Ext: 314

[email protected]

Ramky Infrastructure Subscribe with long term view

IPO Note | Infrastructure

Ramky Infra | IPO Note

September 20, 2010 2

Company Background

Ramky is the flagship of the Ramky Group, which is involved in services pertaining to waste management, environmental consulting, finance and accounting, data management, indirect procurement, real estate development, pharmaceuticals and emerging technologies through its other group companies.

Ramky is an integrated construction and infrastructure development company. Commencing business in 1994, it has participated in a diverse range of construction and infrastructure projects in sectors including water and waste water, transportation, irrigation, industrial parks (including SEZs), power transmission and distribution, residential, commercial and retail property. Ramky’s pan-India presence allows it to service the growing infrastructure needs throughout the country.

Ramky operates in two principal business segments: (i) Construction business - operated by Ramky, and (ii) Developer business - operated through 10 subsidiaries and four associates. A majority of development projects are public private partnerships and are operated by separate special purpose vehicles (SPV’s) promoted by Ramky and the government.

In construction, Ramky undertakes projects in the following sectors:

Water and waste water projects such as water treatment plants, water

transmission and distribution systems, elevated reservoirs and ground level

service reservoirs, sewage treatment plants, common effluent treatment plants,

tertiary treatment plants, underground drainage systems and lake restorations.

Irrigation projects such as cross-drainage works, lift irrigation projects and

dams and barrages.

Industrial construction projects such as industrial parks, SEZs and related

works.

Transportation projects such as expressways, highways, bridges, flyovers and

dedicated service corridors

Building construction, which includes commercial, residential, public,

institutional and corporate buildings, mass housing projects and related

infrastructure and facilities such as hospitals and shopping malls.

Power transmission and distribution projects such as electricity transmission

networks, substation feeder lines and low tension distribution lines.

Ramky operates in the principal business segments of construction and developer



Exhibit 1: Group Structure

Source: Company, Angel Research



Issue Details Ramky is tapping the IPO market with an issue size of Rs530cr (Rs 350cr through fresh equity issue, and balance Rs 180cr through an offer for sale) and a price band of Rs405-468 per equity share, thus resulting in a public issue of 1.1cr and 1.3cr equity shares of face value Rs10, resulting in a promoter shareholding dilution of 21% and 24% at the upper and lower price band, respectively. The company plans to use the IPO proceeds for investment in capital equipments, working capital requirements and repayment of loans. Exhibit 2: Objects of the Issue

Particulars Amount (Rs cr)

Investment in capital equipment 80.5

Working Capital requirements 175.0

Repayment of loans 25.0

General Corporate Purpose -

Total 350

Source: RHP, Angel Research

Exhibit 3: Shareholding Pattern (Pre and Post Issue) Particulars Pre-Issue Post-Issue*

No. of Shares % No. of Shares %

Promoter and Promoter Group 41,572,300 84.1 38,367,172 63.2

Total Public Holding 7,847,714 15.9 22,377,629 36.8

Total 49,420,014 100.0 60,744,800 100.0

Source: RHP, Angel Research; Note:* At Upper Price Band of Rs468/share



Investment Rationale

Diversified player

Ramky is currently one of the most diversified players in the infra space in India on account of operating in six segments and having presence in the major states of the country. Over the years, the company has diversified into new segments thereby expanding its array of services. We believe that diversification helps the company in sustaining growth in case of any particular segment/region facing slow down.

Segment-wise – Ramky provides engineering, design, procurement and

construction services across the various sectors including: a) water and waste

water (W&W), b) building construction, c) irrigation, d) industrial, e)

transportation, and f) power transmission and distribution. The

sector-wise order book break-up indicates that the company’s forte lies in the

three segments of W&W, irrigation and transportation.

Exhibit 4: Segment-wise Order Book Break up – FY2010 (Rs cr)


Region-wise – Ramky has been a predominant player in Andhra Pradesh (AP).

However, over the years, the company has ventured in newer regions thereby

reducing its dependence on AP. However, AP still accounts for a decent share

of the company’s overall order book though going ahead the exposure is set

to further recede as the company grows in size and enters into newer

segments.

2,452

1,561 1,561

1,040

595 223 W&W

Transportation

Irrigation

Buildings

Power Projects

Industrial

Ramky is currently one of the most diversified players in the infra space in India operating in six segments andhaving presence in the major states of the country



Exhibit 5: Order Book Increasing pan-India presence (%)


Present in niche segments

Ramky is a leader in the construction of water and waste-water plants. Moreover, due to the limited competition in the segment and the company’s experience and expertise in the planning, designing and construction of water and waste-water infrastructure projects, it enjoys an edge while bidding for new projects. We believe that water and waste-water projects would continue to significantly bolster its order book. Moreover, this segment enjoys higher margins and helps the company in maintaining its margins in line with peers in spite of high subcontracting.

Robust Order Book lends revenue visibility

Ramky’s robust order book of Rs7,432cr (at 3.7x FY2010 revenues) as on FY2010 ensures revenue visibility over the next few years with an average execution period of 36 months. The company has witnessed a stupendous pace of order book growth over the last few years – CAGR of 49.4% over FY2007-10. We expect the company to continue this trend and has already bagged orders worth Rs3,147cr in 1QFY2011, which is >90% of last year’s order inflow. Expertise in water and waste-water projects and irrigation projects and the increased outlay for the same from government (centre and state) had led to this growth in order backlog.

34.1

19.0 12.6

12.4

11.9 10.0

Andhra Pradesh

Western States

Northern States

Other Southern States

Eastern States

Central States

The company enjoys strong marketposition in the construction of waterand waste-water plants, which enjoyhigh margins

The company increased its order bookat a stupendous CAGR of 49.4% overFY2007-10



Exhibit 6: Order Book growth (Rs cr)


Excellent Return Ratios

Ramky has been able to deliver excellent return ratios of more than 20% over FY2007-10 vis-à-vis its peers. We believe the differentiating factors for Ramky are careful selection of projects (in-house engineering and designing skill sets) and optimum utilisation of resources (excellent working capital management).

Exhibit 7: Ramky to sustain healthy return ratios


0

500

1,000

1,500

2,000

2,500

3,000

Water Build Trans Power T&D Industrial Irrigation

FY2007 FY2008 FY2009 FY2010

19.0

22.3 23.6

27.9

19.8

17.4

21.3 21.4

20.9 22.8

21.4 21.5

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

26.0

28.0

30.0

FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

RoAE (%) RoACE (%)

Ramky has been able to deliverexcellent return ratios of more than 20% over FY2007-10 vis-à-vis peers



Financial Outlook

Top-line to sustain robust growth

Ramky posted strong CAGR of 41.2% in top-line front over FY2007-10 from Rs711.5cr to Rs2,002cr primarily on the back of robust order backlog, which recorded a CAGR of 49.4% over the period from Rs2,230cr to Rs7,432cr. Expertise in water and waste water and irrigation projects and increased outlay for the same from the government (centre and state) lent a boost to the company’s order backlog. Going ahead also, we expect the company to continue to benefit from the increasing government spend on infrastructure.

Against this backdrop, we have factored in order inflow of Rs4,500cr and Rs5,400cr in FY2011 and FY2012 respectively, which would further swell the company’s order book. It should be noted here that the company has already bagged orders worth Rs3,150cr (includes Rs2,000cr orders captive/pending financial closure) in 1QFY2011. Therefore, we are penciling in top-line CAGR of 31.7% over FY2010-12E from Rs2,002cr to Rs3,473cr factoring in average execution period of 39 months as against management’s guidance of 36 months.

Exhibit 8: Top-line to grow above industry average


EBITDA margins stable

Ramky has presence in the high-margin water and waste-water and irrigation projects. The company does a lot of subcontracting and achieves high asset-turnover ratio, but it leads to margin dilution. Hence, the company registers margins in line with peers. Over FY2007-10, the company recorded CAGR of 38.2% in EBITDA and clocked margins in the range of 9-10% during the period.

Over the years, the company has intentionally made conscious efforts to optimise its resources and efficiently utilise capital. In line with this strategy, the company has been able to enhance its average order size (as depicted in Exhibit 10). We believe that this will enable the company to maintain stable margins going ahead, as it would result in better utilisation of resources. However, we have penciled in a marginal dip in EBITDA margins to factor the rising commodity prices and not considered any operating leverage benefits. Therefore, we estimate EBITDA to record a CAGR of 31.0% to Rs334cr from Rs195cr during FY2010-12.

712 1,049 1,459 2,002 2,663

3,473 2,230

3,389

5,923 7,432

9,217

11,083

3.1 3.2

4.1 3.7

3.5 3.2

-0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

-

2,000

4,000

6,000

8,000

10,000

12,000

FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Top-line (Rs cr, LHS) Order Backlog (Rs cr, LHS) OB/TTM Revenues (x, RHS)

Ramky has grown at a strong pace overthe last few years primarily on robustorder backlog, which posted CAGR of49.4% over FY2007-10

The company registered 38.2% CAGRin EBITDA over FY2007-10 and clockedmargins in the range of 9-10% duringthe period



Exhibit 9: Order Inflow momentum to continue


Exhibit 10: Avg. order size rising operating leverage


Robust top-line, stable margins to drive bottom-line growth

Ramky has recorded robust 39.2% CAGR in bottom-line over FY2007-10 mainly aided by strong top-line and stable EBITDA margins. Going ahead, we expect bottom-line to post a healthy CAGR of 28.9% over FY2010-12. Exhibit 11: Bottom-line to post healthy growth


Exhibit 12: DuPont analysis – High asset turnover ratio, stable margins lead to healthy RoE’s

FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

EBITDA/Sales (%) 10.4 9.1 9.5 9.7 9.5 9.6

Sales/Total Assets 2.2 2.0 2.0 2.2 2.0 2.2

PBT/EBITDA 0.7 0.7 0.6 0.7 0.8 0.8

Adj. PAT/PBT 0.7 0.7 0.8 0.8 0.7 0.7

Total Assets / Net Worth 1.6 2.0 2.2 2.1 1.4 1.5

RoE (%) 19.0 22.3 23.6 27.9 19.8 17.4


1,528

2,207

3,993

3,422

4,449 5,338

10.4

9.1

9.5 9.7

9.5 9.6

8.0

8.5

9.0

9.5

10.0

10.5

-

1,000

2,000

3,000

4,000

5,000

6,000

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

Order Inflow (Rs cr, LHS) EBITDA Margins (%, RHS)

21.8 31.3

71.3

92.5 106.4

117.0

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY07 FY08 FY09 FY10 FY11 FY12

Average order size (Rs cr)

38.6 51.0 68.0 104.2

132.2 173.3

73.7 95.6

138.0

194.7

252.2

334.0 5.4

4.9

4.7

5.2

5.0 5.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

5.6

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

FY07 FY08 FY09 FY10 FY11 FY12

Bottom-line (Rs cr, LHS) EBITDA (Rs cr, LHS) PATM (%, RHS)



Concerns

Dependence on third-party contractors and execution delays

Construction constitutes a major chunk of the total project cost. But, Ramky does not have an in-house construction arm unlike its peers and is dependent on third-party contractors to execute projects. This makes its revenue profile vulnerable, as it does not have a direct control over construction. The company is also exposed to higher execution risks, which could impact profitability due to delays in execution.

Slow moving order book

As on June 30, 2010, Ramky had an order book of >10,000cr including slow moving orders to the tune of Rs3,300cr on account of pending financial closure (captive orders) and AP crisis. However, due to the robust sector outlook and orders in hand we believe this would not materially impact the company’s near-term revenues. Also, the AP projects have started picking up albeit at a slower pace and the dues from the AP government is currently at <Rs10cr as per management which we believe is decent.

Claims Section 80IA benefits

Ramky continues to claim benefits under Section 80 IA even though they were withdrawn in Budget 2008 and clarified later. According to the company, it fulfills all the required conditions under the clause of being an infrastructure developer. The matter is currently sub-judice. However, we have assumed full tax rates going ahead. It should be noted that any decision against the company would not dent its cash position as per management and would require only an adjustment in the books.



Outlook

We believe that Ramky is well-placed to leverage on the emerging opportunities in the infrastructure space on account of having one of the most diversified order books, and exposure to the growing sectors of transportation and water and power. We believe that its BOT/BOOT project portfolio would also help sustain revenues– management has guided 40% revenue contribution from the development business going ahead.

On a standalone basis, we expect Ramky to post a CAGR of 31.7% and 28.9% over FY2010-12 in top-line and bottom-line front owing to: 1) Strong order book at 3.7x FY2010 revenues; 2) Presence in growing segments, which would ensure consistent order inflows; and 3) selective mechanism of choosing projects which ensures stable margins.

The company claims Section 80IA benefits –is sub-judice– on standalone numbers, which we believe it is not eligible and hence have not factored in the same. However, management has guided that there will be no cash outflow in case the verdict is not favourable given that tax has already been paid and only requires an adjustment for the tax expense in the books resulting in reduction of reserves.

Valuation

At Rs468 (upper price band), the stock is available at a P/E 15.4x and P/B x 2.5 on FY2012 standalone numbers. Adjusting for investments, the stock is available at a premium to its peers - P/E of 13.1x and P/B of 2.1x on FY2012 estimates. We believe that the premium is justified due to its superior return ratios and higher growth prospects.

We have valued the company on SOTP basis and arrived at a Target Price of Rs495 wherein we have assigned a P/E of 14x FY2012E earnings fetching Rs426/share for its standalone C&EPC business in line with peers like IVRCL and NCC. We have valued the company’s investments in assets at 1.5x equity fetching Rs69/share, which is at a discount to asset owners like IRB and ITNL. However, our SOTP Target Price provides limited upside of ~6% from the upper price band. Nonetheless, we recommend a Subscribe view on the issue, as we believe that the company is well- poised to grow over the long term with the catalysts in place, viz. the company’s unique assets, which would give returns in years to come. Currently, with these assets at different stages it is difficult to assign a value to them.



Exhibit 13: Key Financials (Standalone) Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E

Net Sales (incl op. income) 1459 2002 2663 3473

% chg 39.1 37.2 33.0 30.4

Adj. Net Profit 68.0 104.2 132.2 173.3

% chg 33.2 53.3 26.9 31.0

FDEPS (Rs) 11.9 18.3 23.2 30.5

EBITDA Margin (%) 9.5 9.7 9.5 9.6

P/E (x) 39.2 25.5 20.1 15.4

RoAE (%) 23.6 27.9 19.8 17.4

RoACE (%) 20.9 22.8 21.4 21.5

P/BV (x) 8.3 6.2 2.9 2.5

EV/Sales (x) 2.0 1.5 1.1 0.9

EV/EBITDA (x) 21.7 15.4 11.3 9.2


Exhibit 14: Key assumptions

Particulars FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Opening Order Backlog 1,414 2,231 3,389 5,923 7,432 9,217

Add: Order Booking 1,528 2,207 3,993 3,422 4,449 5,338

Less: Execution 712 1,049 1,459 2,002 2,663 3,473

Closing Order Backlog 2,230 3,389 5,923 7,432 9,217 11,083


Exhibit 15: Comparative Valuation

Company CMP TP Rating Top-line (Rs cr) EPS (Rs) RoE (%) Adj. P/E* (x)

(Rs) (Rs)

FY10 FY11E FY12E CAGR (%) FY10 FY11E FY12E CAGR (%) FY10 FY11E FY12E FY10 FY11E FY12E

HCC 64 - Neutral 3,629 4,146 4,900 16.2 2.7 1.6 1.8 (17.4) 6.5 6.2 7.0 9.9 16.8 14.5

IVRCL Infra 160 216 Buy 5,492 6,493 8,071 21.2 7.8 8.8 10.9 18.2 11.5 12.1 13.4 12.3 11.0 8.8

NCC. 160 201 Buy 4,778 5,738 6,587 17.4 7.8 8.6 9.8 12.3 10.2 9.6 10.0 12.4 11.2 9.9

Simplex Infra 480 573 Buy 4,564 5,460 6,543 19.7 25.6 33.0 40.9 26.5 13.5 15.6 16.6 18.7 14.6 11.7

Average

4,616 5,459 6,525 18.9 11.0 13.0 15.9 20.3 10.4 10.9 11.8 13.3 13.3 11.2

Ramky 468 495 Subscribe 2,002 2,663 3,473 31.7 18.3 23.2 30.5 28.9 27.9 19.8 17.4 21.8 17.2 13.1

Source: Company, Angel Research; *Note: Adjustments in P/E made for following investments in subsidiaries – 1.HCC’s stake in subsidiaries is valued at

Rs37/share, 2. IVRCL’s stake in IVR Prime and HDOR together is valued at Rs63/share, 3.NCC’s stake in subsidiaries is valued at Rs63/share, 4.Simplex

Infra has no investments in subsidiaries, 5. Ramky’s stake in subsidiaries is valued at Rs69/share.



Profit & Loss Statement (Standalone)

Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Net Sales 712 1,049 1,459 2,002 2,663 3,473

Other operating income - - - - - -

Total operating income 712 1,049 1,459 2,002 2,663 3,473

% chg 47.5 39.1 37.2 33.0 30.4

Total Expenditure 638 954 1,321 1,808 2,411 3,139

Net Raw Materials 175 240 403 432 582 754

Sub-contractor costs 278 475 617 949 1,262 1,645

Other Mfg costs 152 186 220 324 432 563

Personnel 18 27 49 57 76 99

Other 16 25 32 45 60 78

EBITDA 73.7 95.6 138.0 194.7 252.2 334.0

% chg - 29.7 44.4 41.0 29.5 32.5

(% of Net Sales) 10.4 9.1 9.5 9.7 9.5 9.6

Depreciation 4.0 5.2 9.2 10.5 15.4 21.6

EBIT 69.7 90.4 128.8 184.2 236.7 312.4

% chg 29.8 42.4 43.0 28.5 32.0

(% of Net Sales) 9.8 8.6 8.8 9.2 8.9 9.0

Int. & other charges 19.3 28.5 53.4 61.2 53.9 67.7

Other Income 3.9 6.8 9.5 7.0 14.5 13.9

(% of PBT) 7.1 9.8 11.2 5.4 7.4 5.4

Asso. Profit share - - - - - -

Recurring PBT 54.2 68.7 84.9 130.0 197.3 258.6

% chg 26.6 23.7 53.0 51.8 31.0

Extraordinary exp/(inc.) - - - - - -

PBT (reported) 54.2 68.7 84.9 130.0 197.3 258.6

Tax 15.6 17.6 17.0 25.7 65.1 85.3

(% of PBT) 28.8 25.7 20.0 19.8 33.0 33.0

PAT (reported) 38.6 51.0 68.0 104.2 132.2 173.3

Add: Asso. earnings - - - - - -

Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 38.6 51.0 68.0 104.2 132.2 173.3

ADJ. PAT 38.6 51.0 68.0 104.2 132.2 173.3

% chg 32.2 33.2 53.3 26.9 31.0

(% of Net Sales) 5.4 4.9 4.7 5.2 5.0 5.0

Basic EPS (Rs) 8.0 10.5 13.8 21.1 23.2 30.5

Fully Diluted EPS (Rs) 6.8 9.0 11.9 18.3 23.2 30.5

% chg 32.2 33.2 53.3 26.9 31.0



Balance Sheet (Standalone) Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

SOURCES OF FUNDS Equity Share Capital 7.1 49.4 49.4 49.4 56.9 56.9

Preference Capital 1.1 - - - - -

Reserves& Surplus 194.9 204.6 272.6 376.8 851.6 1,024.9

Shareholder’s Funds 203.0 254.1 322.0 426.3 908.5 1,081.8

Total Loans 123.6 264.4 389.9 473.9 399.5 520.9

Deferred Tax Liability - - - - - -

Total Liabilities 326.6 518.5 711.9 900.2 1,308.0 1,602.7

APPLICATION OF FUNDS Gross Block 57.9 81.2 157.6 170.0 250.0 350.0

Less: Acc. Depreciation 10.1 15.2 24.4 34.8 50.3 71.8

Net Block 47.8 66.0 133.1 135.2 199.7 278.1

Capital Work-in-Progress 23.8 2.8 3.4 3.5 3.5 3.5

Goodwill - - - - - -

Investments 19.2 19.6 52.7 60.1 160.1 260.1

Deferred Tax Asset (net) 4.7 5.9 3.1 0.7 0.7 0.7

Current Assets 537.9 902.6 1,177.8 1,607.1 2,149.5 2,632.1

Inventories 50.0 91.8 179.9 330.9 440.1 573.8

Sundry Debtors 239.8 447.9 564.8 574.4 764.0 996.2

Cash 63.0 49.5 61.9 138.4 225.2 123.1

Loans & Advances 97.4 255.4 255.5 381.2 507.1 661.2

Other 87.7 58.0 115.8 182.2 213.1 277.8

Current liabilities 306.8 478.3 658.2 906.3 1,205.5 1,571.8

Net Current Assets 231.1 424.2 519.6 700.8 944.0 1,060.3

Mis. Exp. not written off - - - - - -

Total Assets 326.6 518.5 711.9 900.2 1,308.0 1,602.7



Cash Flow Statement (Standalone) Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Profit before tax 54.2 68.7 84.9 130.0 197.3 258.6

Depreciation 4.0 5.2 9.2 10.5 15.4 21.6

Change in Working Capital 167.1 198.9 53.6 82.7 156.4 218.4

Less: Other income 1.5 2.7 2.6 2.7 14.5 13.9

Direct taxes paid 6.5 28.5 42.4 46.1 65.1 85.3

Cash Flow from Operations (116.8) (156.2) (4.4) 9.0 (23.3) (37.5)

(Inc.)/ Dec. in Fixed Assets (42.4) (2.4) (77.1) (12.8) (80.0) (100.0)

(Inc.)/ Dec. in Investments (15.0) (0.4) (33.1) (7.4) (100.0) (100.0)

Other income 1.1 2.2 1.5 2.1 14.5 13.9

Cash Flow from Investing (56.4) (0.5) (108.7) (18.1) (165.5) (186.1)

Issue of Equity 123.1 - - - 350.0 -

Inc./(Dec.) in loans 81.7 140.5 125.8 84.0 (74.4) 121.4

Dividend Paid (Incl. Tax) - - - - - -

Others (0.2) 2.7 (0.3) 1.6 - -

Cash Flow from Financing 204.6 143.2 125.5 85.6 275.6 121.4

Inc./(Dec.) in Cash 31.4 (13.6) 12.4 76.5 86.8 (102.1)

Opening Cash balances 31.6 63.0 49.5 61.9 138.4 225.2

Closing Cash balances 63.0 49.5 61.9 138.4 225.2 123.1



Key Ratios

Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation Ratio (x) P/E (on FDEPS) 69.0 52.2 39.2 25.5 20.1 15.4

P/CEPS 62.5 47.4 34.5 23.2 18.0 13.7

P/BV 13.1 10.5 8.3 6.2 2.9 2.5

Dividend yield (%) - - - - - -

EV/Sales 3.8 2.7 2.0 1.5 1.1 0.9

EV/EBITDA 37.0 30.1 21.7 15.4 11.3 9.2

EV / Total Assets 8.3 5.6 4.2 3.3 2.2 1.9

Per Share Data (Rs) EPS (Basic) 8.0 10.5 13.8 21.1 23.2 30.5

EPS (fully diluted) 6.8 9.0 11.9 18.3 23.2 30.5

Cash EPS 7.5 9.9 13.6 20.2 25.9 34.2

DPS - - - - - -

Book Value 35.7 44.7 56.6 74.9 159.7 190.1

Dupont Analysis EBIT margin 9.8 8.6 8.8 9.2 8.9 9.0

Tax retention ratio 0.7 0.7 0.8 0.8 0.7 0.7

Asset turnover (x) 2.7 2.9 2.6 2.8 2.9 2.7

ROIC (Post-tax) 18.8 18.3 18.4 20.9 17.2 16.3

Cost of Debt (Post Tax) 11.1 10.9 13.1 11.4 8.3 9.9

Leverage (x) 0.3 0.6 0.9 0.9 0.4 0.3

Operating ROE 21.1 22.8 23.5 29.4 20.6 18.2

Returns (%) ROACE (Pre-tax) 21.3 21.4 20.9 22.8 21.4 21.5

Angel ROIC (Pre-tax) 26.4 24.7 23.0 26.1 25.7 24.4

ROAE 19.0 22.3 23.6 27.9 19.8 17.4

Turnover ratios (x) Asset Turnover (Gross Block) 12.3 15.1 12.2 12.2 12.7 11.6

Inventory / Sales (days) 26 25 34 47 53 53

Receivables (days) 123 120 127 104 92 93

Payables (days) 176 150 157 158 160 161

Work cap. cycle (ex-cash) (days) 86.2 94.4 104.1 93.0 87.8 87.0

Solvency ratios (x) Net debt to equity 0.3 0.8 1.0 0.8 0.2 0.4

Net debt to EBITDA 0.8 2.2 2.4 1.7 0.7 1.2

Interest Coverage (EBIT/Int.) 3.6 3.2 2.4 3.0 4.4 4.6



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Research Team

Fundamental:

Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

Vaibhav Agrawal VP-Research, Banking [email protected]

Vaishali Jajoo Automobile [email protected]

Shailesh Kanani Infrastructure, Real Estate [email protected]

Anand Shah FMCG, Media [email protected]

Deepak Pareek Oil & Gas [email protected]

Sushant Dalmia Pharmaceutical [email protected]

Rupesh Sankhe Cement, Power [email protected]

Param Desai Real Estate, Logistics, Shipping [email protected]

Sageraj Bariya Fertiliser, Mid-cap [email protected]

Viraj Nadkarni Retail, Hotels, Mid-cap [email protected]

Paresh Jain Metals & Mining [email protected]

Amit Rane Banking [email protected]

John Perinchery Capital Goods [email protected]

Srishti Anand IT, Telecom [email protected]

Jai Sharda Mid-cap [email protected]

Sharan Lillaney Mid-cap [email protected]

Amit Vora Research Associate (Oil & Gas) [email protected]

V Srinivasan Research Associate (Cement, Power) [email protected]

Mihir Salot Research Associate (Logistics, Shipping) [email protected]

Chitrangda Kapur Research Associate (FMCG, Media) [email protected]

Vibha Salvi Research Associate (IT, Telecom) [email protected]

Pooja Jain Research Associate (Metals & Mining) [email protected]

Yaresh Kothari Research Associate (Automobile) [email protected]

Shrinivas Bhutda Research Associate (Banking) [email protected]

Sreekanth P.V.S Research Associate (FMCG, Media) [email protected]

Hemang Thaker Research Associate (Capital Goods) [email protected]

Nitin Arora Research Associate (Infra, Real Estate) [email protected]

Technicals:

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Mileen Vasudeo Technical Analyst [email protected]

Derivatives:

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Jaya Agarwal Derivative Analyst [email protected]

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Abhimanyu Sofat AVP - Institutional Sales [email protected]

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