Finolex Cables, 19th February, 2013

7/29/2019 Finolex Cables, 19th February, 2013

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

Y/E March (` cr) 3QFY13 2QFY13 % chg (qoq) 3QFY12 % chg (yoy)Total operating income 534 586 (8.8) 499 7.0EBITDA 43 71 (39.1) 44 (2.4)

EBITDA Margin (%) 8.0 12.0 (400)bp 8.8 (77)bp

Adj. PAT 24 57 (58.3) 14 75.0Source: Company, Angel Research

Finolex Cables (FCL) reported a mixed set of numbers for 3QFY2013. Its top-line

reported a marginal growth of 7.0% yoy to`534cr, as compared to our estimate

of `580cr. The EBITDA dipped marginally by 2.4% yoy to `43cr while EBITDA

margin was down by 77bp on a yoy basis to 8.0%. Nevertheless the adjusted

PAT grew by a whopping 75% yoy to `24cr vis--vis our estimate of `18cr, on

the back of low interest cost (lower by 67.2% yoy) and exceptional item (lower by

42.4% yoy) of losses derived from derivative contracts. PAT margin too expanded

from 2.7% in 3QFY2012 to 4.5% in 3QFY2013.

Growth in user industries to drive growth: FCL serves varied user industries,

considering the wide usage of cables. With customers increasingly demanding

high-quality and branded wires, FCL is poised to grow. The company, with its

wide distribution reach and penetration in the market, is well poised to meet

increase in demand. Further, we expect the companys initiatives like- 1) increase

in advertisement spends 2) setting up of a solar power plant for captive

consumption, and 3) reduction in sale of copper rods to third party, to boost its

top-line and enhance profitability going forward.

Outlook and valuation:We expect the companys sales to post an 11.3% CAGR

over FY201214 to`2,559cr, and EBITDA to register a CAGR of 21.0% over the

same period with margin at 10.0% in FY2014E. However, PAT is expected to post

a higher CAGR of 25.6% over the same period owing to closure of the derivatives

contracts (included in exceptional items). With the recent correction, FCL isavailable at PE of 5.0x for FY2014E and hence the stock is upgraded to Buy with atarget price of `61 based on target PE of 6x FY2014E earnings.Key financialsY/E March (` cr) FY2011 FY2012 FY2013E FY2014ENet Sales 2,036 2,064 2,268 2,559% chg 25.8 1.4 9.9 12.8

Net Profit 87 98 137 155% chg 50.7 13.0 39.6 13.1

EBITDA Margin (%) 7.5 8.5 9.5 10.0FDEPS (`) 7.4 8.0 9.0 10.1P/E (x) 8.9 7.8 5.6 5.0

P/BV (x) 1.1 1.0 0.8 0.7

RoE (%) 12.1 12.3 14.8 14.6RoCE (%) 20.9 18.7 20.5 23.3

EV/Sales (x) 0.3 0.3 0.3 0.2

EV/EBITDA (x) 3.6 3.7 2.9 2.3

Source: Company, Angel Research

BUYCMP `50

Target Price `61

Investment Period 12 Months

Stock Info

Sector

Net Debt (155.3)

Bloomberg Code

Shareholding Pattern (%)

Promoters 35.7

MF / Banks / Indian Fls 29.3

FII / NRIs / OCBs 4.9

Indian Public / Others 30.2

Abs. (%) 3m 1yr 3yr

Sensex 5.4 7.2 20.0

Finolex (1.9) 40.3 (2.0)

Nifty 5,686

Reuters Code FNXC.BO

FNXC.IN

Avg. Daily Volume 81,501

Face Value (`) 2

BSE Sensex 19,468

52 Week High / Low 64 / 29

Cables-Power

Market Cap (`cr) 770

Beta 0.6

Twinkle Gosar+91 22 3935 7800 Ext: 6848

[email protected]

Finolex CablesPerformance Highlights

3QFY2013 Result update | Power Cables

February 15, 2013


2/15

Finolex Cables | 3QFY2013 Result update

February 15, 2013 2

Exhibit 1:2QFY2013 performance highlightsY/E March (` cr) 3QFY13 2QFY13 % chg (qoq) 3QFY12 % chg (yoy) 9MFY2013 9MFY2012 % chgTotal operating income 534.3 586.0 (8.8) 499.5 7.0 1,638.3 1,459.2 12.3Net raw material 393.2 432.2 (9.0) 384.3 2.3 1,203.3 1,115.4 7.9(% of Sales) 73.6 73.8 76.9 73.5 76.4

Employee cost 20.1 19.1 4.9 17.3 15.8 58.9 51.0 15.5

(% of Sales) 3.8 3.3 3.5 3.6 3.5

Other Expenses 78.1 64.1 21.8 53.9 45.0 213.8 174.6 22.5

(% of Sales) 14.6 10.9 10.8 13.1 12.0

Total expenditure 491.3 515.4 (4.7) 455.5 7.9 1,476.0 1,340.9 10.1EBITDA 42.9 70.5 (39.1) 44.0 (2.4) 162.3 118.3 37.2EBITDA Margin (%) 8.0 12.0 (400)bp 8.8 (77)bp 9.9 8.1 180bp

Interest 2.6 2.2 22.8 8.1 (67.2) 8.3 17.6 (53.2)

Depreciation 10.8 10.7 0.9 12.8 (16.1) 31.9 32.3 (1.2)

Other income 1.6 14.2 (88.9) 4.0 (60.3) 17.6 27.0 (35.0)

PBT (excl. exceptional items) 31.1 72.0 (56.7) 27.1 14.9 139.6 95.4 46.4Exceptional items 2.3 6.2 10.6 15.0 28.9PBT (incl. exceptional items) 28.8 65.8 (56.2) 16.5 74.6 124.6 66.4 87.7(% of Sales) 5.4 11.2 3.3 7.6 4.6

Tax 4.8 8.3 (41.8) 2.8 72.2 18.1 12.8 42.0

(% of PBT) 16.8 12.6 17.0 14.5 19.2

Adjusted PAT 24.0 57.5 (58.3) 13.7 75.0 106.5 53.7 98.5PATM (%) 4.5 9.8 2.7 6.5 3.7


Exhibit 2:Actual v/s EstimatesActual v/s Angel's Estimates Actual (` cr) Estimate (` cr) % variationTotal Income (` cr) 534 580 (7.9)EBITDA (`cr) 43 50 (13.6)

EBITDA Margin (%) 8.0 8.6 (53)bp

Adjusted PAT (` cr) 24 18 34.7Source: Company, Angel Research

FCL reported a mixed set of numbers for 3QFY2013. Its top-line reported a flatyoy growth of 7.0% to`534cr, as compared to our estimate of`580cr. The EBITDA

dipped marginally by 2.4% yoy to`43cr while EBITDA margin was down by 77bp

on a yoy basis to 8.0%. Raw material cost drop by 335bp yoy, however, was offset

by total expansion of 336bp yoy in selling & administration and other expenses.

Nevertheless the adjusted PAT grew by a whopping 75% yoy to`24cr on the back

of low interest cost (lower by 67.2% yoy) and exceptional item (lower by 42.4% yoy)

of losses derived from derivative contracts. The PAT margin too expanded from

2.7% in 3QFY2012 to 4.5% in 3QFY2013.


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February 15, 2013 3

Exhibit 3:Net sales growth trend


Exhibit 4:High Advertisement spends dent margin


Segment-wise performance

For 3QFY2013, the electrical cables segment reported a 12.3% yoy growth in

sales to`469cr. The contribution of the segment stands at 88% in 3QFY2013 vis-

-vis 84% in 2QFY2012. The EBIT for the segment came in at `49cr (`45cr in

3QFY2012), 8.5% higher yoy. However, EBIT margin fell by 37bp yoy to 10.5%.

The communication cables segment posted a growth of 13.1% yoy in its top-line,

with sales of`46cr (`41cr in 3QFY2012) and contributed 9% to the total revenue.

The margin of the segment expanded significantly by 564bp yoy to 11.8% from

6.2% in same quarter previous year.

The copper rods segment reported a decline of 11.1% in its top-line to `136cr(`153cr in 3QFY2012) during the quarter. The segments contribution has been

declining gradually since the company is reducing its exposure to third party owing

to thin margins. The EBIT for the segment came in at`0.8cr,while margin stood at

4.1%, 233bp higher yoy.

Exhibit 5:Segment-wise performanceY/E March (` cr) 3QFY13 2QFY13 3QFY12 % chg (qoq) % chg (yoy)Total RevenueA) Electrical Cables 469 514 417 (8.9) 12.3

B) Communications Cables 46 48 41 (4.1) 13.1

C) Copper Rods 136 175 153 (22.5) (11.1)

D) Others 38 44 31 (12.0) 22.3

Total 688 780 642 (11.8) 7.3

Less: Inter-Segmental Rev. 154 194 142 (20.7) 8.4

Net Sales 534 586 499 (8.8) 7.0

EBIT Margin (%) bp chg bp chgA) Electrical Cables 10.5 12.2 10.9 (169) (37)

B) Communications Cables 11.8 19.1 6.2 (732) 564

C) Copper Rods 4.1 4.1 1.8 1 233

D) Others (1.1) (1.5) (7.3) 39 613


513

539

461

499

499

605

518

586

534

21.4

16.3

(6.6)

1.7 (2.6)

12.1

12.4

17.47.0

(10)

(5)

0

5

1015

20

25

-

100

200

300

400500

600

700

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

(%)

(`cr)

Revenue ( LHS) Revenue growth yoy ( RHS)

51

40

34

40

44

58

49

71

43

9.9

7.4 7.58.0 8.8

9.69.4

12.0

8.0

0

3

6

9

12

15

0

10

20

30

40

50

60

70

80

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

(%)

(`cr)

EBIT DA (LH S) EBIT DA M argin (RH S)


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February 15, 2013 4

Recent developments in the company

Reducing third party sale of copper rods to boost margins

The copper rods segment was initially set up as backward integration for thecables segment. The excess production after the captive consumption is sold off to

third parties at market price. However, owing to thin and declining margins from

third party transactions, FCL is gradually reducing its exposure in the segment. The

contribution of the segment to the top-line has decreased from 21% in FY2010 to

~8% currently. This trend is expected to continue, thereby improving the overall

EBIT margin of the company.

Increasing ad spends to enhance brand visibility

FCL is putting in efforts to improve its brand visibility by increasing its marketing

expenses, which have risen steadily from 4.9% of the total sales in FY2009 to 6.7%

in FY2012. FCL is expected to continue with such focus, thereby incurring higher

expenses towards advertising and marketing. In 3QFY2013, S&A expenses as a

percentage of sales rose by 130bp yoy to 6.6% on back of expenditure on TV

advertisements during the airing of some recent cricket matches. These efforts are

expected to transpire into a higher top-line for the company, going forward.

New solar power plant to reduce power & fuel expenses by one-third

FCL is setting up a solar power plant at its Urse manufacturing unit with a capex of

~`40cr, scheduled to be operational in the coming six months. This power plant is

expected to reduce the power cost of the company by one-third which will add to

the EBITDA margin.


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February 15, 2013 5

Investment arguments

Capex plans to complement rising demand

FCL has its manufacturing facilities located at Pune, Goa and Roorkee. Excluding

the older plants, the new plants with updated technology have been operating

optimally at ~85-90% capacity utilisation. With customers increasingly demanding

high-quality and branded wires, FCL is poised to grow. The company, with its wide

distribution reach and penetration in the market, is well poised to meet increase in

demand. The company has planned a total capex of ~`100cr over the next 18

months (~`40-50cr in FY2013E) to expand the Roorkee plant and double its

current capacity so as to support the rising demand. The same will lead to top-line

growth for the company.

Product portfolio additions to facilitate growth & widen reach

FCL has a substantial market share of ~15-16% in both, electrical andtelecommunication cables segments. The company has a wide range of products

in its offering, ranging within 1.1kv to 66kv. Moreover, the company launched a

new range of speaker wires in the communication cables segment and latest

versions of T5 tube lights and fittings were launched in the lighting division.

Additions in the product portfolio by the company on the back of extensive

research and development are expected to facilitate growth in top-line for the

company going forward.

Strong growth in user industry to drive top-line

FCL serves varied user industries considering the wide usage of cables due to

electrification. The contribution from the construction sector is the largest whileother segments include industrial, automotive, power and agriculture.

The electrical cables segment contributes ~83% to the total revenue. Of this ~60%

revenue comes in from channel sales and 40% through institutional sales. On the

other hand, the telecommunication cables segment, which accounts for ~6-7% of

the top-line, derives its revenues majorly from institutional sales. The balanced

revenue mix in regards to user industry as well as institutional sales reduces the

concentration risk.Closure of Forex contracts in current year

FCL had entered into foreign exchange derivative contracts in FY2007, where it

incurred huge losses in FY2008 and FY2009; which since then, the company has

been writing off consistently. These contracts are to end in the current fiscal, as per

the Management. With closure of these contracts and losses thereof, the profit

margins are expected to improve.


6/15


February 15, 2013 6

Financials

Exhibit 6:Key AssumptionsParticulars (%) FY2013E FY2014ETotal Sales Growth 9.9 12.8

Finished ProductsVolume growthElectrical cables 12.7 11.0

Telephone Cables-Jelly Filled 45.0 5.0

Optical Fibre Cables 45.0 5.0

Continuous Cast Copper Rod (45.0) (10.0)

Realisation growthElectrical cables 3.0 3.0

Telephone Cables-Jelly Filled 5.0 5.0

Optical Fibre Cables 5.0 5.0Continuous Cast Copper Rod - -

Raw MaterialVolume growth 7.0 9.5

Realisation growth 1.6 3.4


Exhibit 7:Revised EstimatesY/E March Earlier estimates Revised estimates % changeFY2013E FY2014E FY2013E FY2014E FY2013E FY2014ENet Sales (`cr) 2304 2552 2268 2559 (1.6) 0.3EBITDA Margin (%) 9.9 9.1 9.5 10.0 (45)bp 90bp

EPS (`) 9 10 9 10 1.9 1.1Source: Angel Research

Net sales to grow at CAGR of 11.3% over FY2012-14E

Owing to strong growth in varied user industries, additions in the product portfolio,

and strategic alliances entered into by the company, the top-line is expected to

post a CAGR of 11.3% over FY2012-14E to`2,559cr in FY2014E.

Exhibit 8:User industry growth to drive volumes


Exhibit 9:Segmental contribution


1,6

19

2,0

36

2,0

64

2,2

68

2,5

59

20.7 25.8 1.49.9

12.8

0

5

10

15

20

25

30

-

500

1,000

1,500

2,000

2,500

3,000

FY2010 FY2011 FY2012 FY2013E FY2014E

(%)

(`cr)

Net sales (LHS) Net sales growth (RHS)

1,109

1,407

1,771

2,055

2,350

176 204 207 236260362

511

205 112 101

-

500

1,000

1,500

2,000

2,500

FY2010 FY2011 FY2012 FY2013E FY2014E

(`cr)

Electrical cable s Communication CCC rods


7/15


February 15, 2013 7

Revenue from the electrical cables segment is assumed to grow at CAGR of 15.2%

while the communication cables segment (telephone jelly cables and optic fibre

cables) is expected to post a CAGR of 12.1% over FY2012-14E. CCC rods (net of

inter segmental) contribution is however expected to dip by CAGR of 29.7% for thesame period.

EBITDA to post CAGR of 21.0% over FY2012-14E

FCLs EBITDA, on back of healthy top-line growth and improved operational

efficiency is expected to post a CAGR of 21.0% over FY2012-14E. EBITDA is to rise

from `175cr in FY2012 to `256 in FY2014E. EBITDA margins are expected to

expand from 8.5% in FY2012 to 9.5% in FY2013E and further to 10.0% in

FY2014E on account of lower contribution by copper rods segment and reduced

power & fuel cost (owing to solar power plant).

Exhibit 10:EBITDA margin to normalise


Exhibit 11:PAT and PAT growth


Closure of derivative contracts to help surge in PAT by 25.6%

A robust top-line coupled with healthy EBITDA is expected to aid PAT CAGR of

25.6% over FY2012-14E. Moreover, derivatives contract are expected to be closed

by FY2013 . However, tax rate is expected to increase from 10.1% in FY2012 to

15.0% in FY2013E and 28.0% in FY2014E owing to end of 100% tax exemption

on the Roorkee plant (30% exemption from FY2014E). As a result, the bottom-line

is believed to rise from`98cr in FY2012 to`155cr in FY2014E.

Strong balance sheet position

The company has repaid an ECB of JPY3.5 billion which had been originally

drawn in FY2007. The repayment was done out of internal accruals without

resorting to any roll-over or substitute loan.

195 173 175 214 256

5.2 7.58.5

9.510.0

0

2

4

6

8

10

12

0

50

100

150

200

250

300

FY2010 FY2011 FY2012 FY2013E FY2014E

(%)

(`cr)

EBITDA (LHS) EBITDA margin (RHS)

58 87 98 137 155

(262.4)

50.7

13.039.6 13.1

(300)

(250)

(200)

(150)

(100)

(50)

0

50

100

0

20

40

60

80

100

120

140

160

180

FY2010 FY2011 FY2012 FY2013E FY2014E

(%)

(`cr)

PAT (LHS) PAT growth (RHS)


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February 15, 2013 8

Concerns

Competition from the un-organized sector is a concern since the productsavailable from them are relatively cheaper and thus cannibalize into market

volumes.

Fluctuation in the price of copper which is the essential raw material (~86% oftotal raw material) is a key concern as it would directly impact operational

efficiency. Although prices have fallen recently, but the volatility in commodity

market persists.

Exhibit 12:Copper Prices on an uptrend; to dent margins

Source: Bloomberg

Competition

The cables industry, both electrical and tele-communication, is highly competitive,

with co-existence of both - organised and un-organised players. FCL has a market

share of ~15-20% each in the electrical and telecommunication cables segments.

Exhibit 13:Relative ValuationTTM- Dec12 Sales(` cr) OPM(%) PAT(` cr) EPS(`) ROIC(%) PE(x) PBV(x) EV/EBITDA (x) EV/Sales (x)FCL 2,243 8.7 174 11.4 21 4.4 0.9 3.2 0.3

Torrent Cables 4,104 13.0 353 28.3 48 24.6 4.9 14.9 1.9

KEI Inds 1,740 10.3 31 4.4 24 3.1 0.4 2.8 0.3

Source: Capital Line, Angel Research

360

370

380

390

400

410

420430

440

450

460

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-12

Apr-12

May-1

2

Jun-1

2

Jul-12

Aug-1

2

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

Jan-1

3

Feb-1

3

('000`/MT)


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February 15, 2013 9

Outlook and Valuation

We remain positive on the companys prospects going ahead, given the strong

growth in user industries, which shows no sign of abating. Strong growth in user

industry, additions in product portfolio, and strategic alliance are all to aid the

company in posting a CAGR of 11.3% in the top-line over FY2012-14E to

`2,559cr in FY2014E. EBITDA is expected to post a CAGR of 21.0% while margins

are to stabilize at 10.0% in FY2014E. PAT growth, owing to healthy operating

performance, coupled with closure of derivative contracts in FY2013 is expected to

post a CAGR of 25.6% over FY2012-14E. With the recent correction, FCL isavailable at PE of 5.0x for FY2014E and hence the stock is upgraded to Buy with atarget price of `61 based on target PE of 6x FY2014E earnings.Exhibit 14:One-year forward PE


0

20

40

60

80

100

120

Feb-0

9

Aug-0

9

Feb-1

0

Aug-1

0

Feb-1

1

Aug-1

1

Feb-1

2

Aug-1

2

Feb-1

3

(`)

Price 4.0x 6.5x 9.0x 11.5x


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February 15, 2013 10

About the company

FCL is Indias largest manufacturer of electrical and communication cables. The

company mainly operates through 4 divisions; 1) Electrical Cables (80%) 2)

Communication cables (6.5%) 3) Continuous Cast Copper rods (9.5%) and 4)

Others (4%)- comprising PVC sheets, switches and compact fluorescent lamps

manufactured through its facilities set up at Roorkee, Goa, and Pune (at Pimpri,

Urse).

Exhibit 15:Segments detail

Source: Company

Exhibit 16:Applications of different types of cablesCables ApplicationsElectrical CablesLDEC

Electrification in residential, commercial and industrialestablishments

Power Cables Underground usage, main power supply

Communication cablesCopper based LAN- high speed networks

Coaxial- content input to TV sets

PE Insulated to connect telephone instruments

V-Sat- Dish to base station

Optic Fibre/ glassbased

Maximum bandwidth and high speed

Trunk cables

Distribution by telecom companies

Multi service organisation and service provider

Traditional JFTC Laid underground 4 connecting land line telephone to exchanges

PVC Sheets Corrugated PVC SheetsRigid PVC Sheets


Segments

Electrical Cables

LDEC

Power Cables

Communication

Cables

Copper Based

Optic Fibre/Glass based

TraditionalJFTC's

Others

PVC

Switches

CompactFluoroscent

Lamps


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Profit and loss statement

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY1204EGross sales 1,727 2,186 2,182 2,404 2,711Less: Excise duty 108 151 118 136 152Net Sales 1,619 2,036 2,064 2,268 2,559% chg 20.7 25.8 1.4 9.9 12.8

Net Raw Materials 1,179 1,575 1,568 1,679 1,901

% chg 13.8 33.6 (0.4) 7.1 13.2

Personnel 59 65 69 82 92

% chg 11.1 9.3 7.3 17.5 12.8

Other Mfg costs 72 82 84 113 107

% chg 15.1 14.7 2.6 34.3 (5.2)

Other 114 140 167 179 202

% chg 26.5 23.2 18.8 7.4 12.8

Total Expenditure 1,424 1,862 1,889 2,053 2,303

EBITDA 195 173 175 214 256% chg 95.6 (10.9) 0.8 22.7 19.4

EBITDA Margin 5.2 7.5 8.5 9.5 10.0

Depreciation& Amort. 37.23 39 39 44 46

EBIT 157 135 135 171 210% chg 159.0 (14.5) 0.5 26.1 22.9

(% of Net Sales) 9.7 6.6 6.6 7.5 8.2

Interest & other Charges 19 19 26 12 14

Other Income 24 26 36 27 22

(% of Net Sales) 1.5 1.3 1.8 1.2 0.9Recurring PBT 139 116 109 159 196% chg 388.7 (16.8) (5.5) 45.1 23

Exceptional Expense/(Inc.) 74 34 36 22 -

PBT (reported) 89 107 109 163 217Tax 32 20 11 26 62

(% of PBT) 35.4 19.0 10.1 15.0 28.0

PAT (reported) 58 87 98 137 155ADJ. PAT 58 87 98 137 155% chg (262.4) 50.7 13.0 39.6 13.1

(% of Net Sales) 3.6 4.3 4.8 6.0 6.1

Basic EPS (`) 6.9 7.4 8.0 9.0 10.1Fully Diluted EPS ( ) 6.9 7.4 8.0 9.0 10.1% chg 169.6 7.2 8.5 12.0 13.1


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Balance sheet

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014ESOURCES OF FUNDSEquity Share Capital 31 31 31 31 31Preference Capital - - - - -

Reserves& Surplus 613 687 770 893 1,033

Shareholders Funds 643 717 800 923 1,064Total Loans 275 126 155 147 136

Other Long term liability - 54 35 45 18

Net Deferred tax liability 32 31 33 33 21

Total Liabilities 950 928 1,022 1,148 1,239APPLICATION OF FUNDSGross Block 802 826 871 915 970

Less: Acc. Depreciation 384 422 442 486 532

Net Block 419 403 429 429 438Capital Work-in-Progress 29 19 12 12 12

Goodwill - - - - -

Long term Loans & Adv. - 14 4 4 4

Investments 280 245 237 259 277

Current Assets 415 538 534 631 715

Cash 37 21 49 46 49

Loans & Advances 86 106 90 102 115

Other 292 411 395 483 551

Inventory 221 281 281 358 410

Debtors 71 130 114 125 141

Other current assets - - - - -

Current liabilities 193 291 194 187 207

Net Current Assets 222 247 340 444 508Mis. Exp. not written off - - - - -

Total Assets 950 928 1,022 1,148 1,239


13/15



Cash flow statement

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY1204EProfit before tax 89 107 109 163 219

Depreciation 37 39 39 42 44(Inc.)/ Dec. in Working Capital (24) (26) (36) (25) (22)

Less: Other income (69) (40) (65) (107) (61)

Direct taxes paid (32) (20) (11) (26) (63)

Cash Flow from Operations 2 59 36 47 118(Inc.)/ Dec. in Fixed Assets (29) (13) (39) (44) (55)

(Inc.)/ Dec. in Investments 34 21 18 (21) (18)

Other income 24 26 36 27 22

Cash Flow from Investing 29 34 16 (38) (51)Issue of Equity 0 0 0 0 0

Inc./(Dec.) in loans (11) (96) 11 3 (50)

Dividend Paid (Incl. Tax) (9) (11) (12) (14) (14)

Others (22) (109) (24) (11) (64)

Cash Flow from Financing 9 (16) 28 (3) 3Inc./(Dec.) in Cash 28 37 21 49 46

Opening Cash balances 37 21 49 46 49Closing Cash balances 89 107 109 27 22


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Key ratios

Y/E March FY2010 FY2011 FY2012 FY2013E FY1204EValuation Ratio (x)P/E (on FDEPS) 13.4 8.9 7.8 5.6 5.0P/CEPS 8.1 6.1 5.6 4.3 3.8

P/BV 1.2 1.1 1.0 0.8 0.7

Dividend yield (%) 1.2 1.4 1.6 1.8 1.8

EV/Sales 0.4 0.3 0.3 0.3 0.2

EV/EBITDA 3.7 3.6 3.7 2.9 2.3

EV / Total Assets 0.8 0.7 0.6 0.5 0.5

Per Share Data (`)EPS (Basic) 14.4 25.0 6.4 9.0 10.1

EPS (fully diluted) 14.4 25.0 6.4 9.0 10.1

Cash EPS 17.2 28.2 9.0 11.8 13.2

DPS 0.6 0.7 0.8 0.8 0.8

Book Value 42.1 46.9 52.3 60.4 69.6

Dupont AnalysisEBIT margin 9.7 6.6 6.6 7.5 8.2

Tax retention ratio 0.6 0.8 0.9 0.9 0.7

Asset turnover (x) 2.7 3.2 2.9 2.7 2.8

ROIC (Post-tax) 16.9 17.0 16.8 17.4 16.8

Cost of Debt (Post Tax) 4.4 12.3 15.2 7.0 7.5

Leverage (x) (0.1) (0.2) (0.2) (0.2) (0.2)

Operating ROE 16.0 16.0 16.5 15.7 15.1

Returns (%)ROCE (Pre-tax) 16.6 14.5 13.2 14.9 16.9

Angel ROIC (Pre-tax) 26.1 20.9 18.7 20.5 23.3

ROE 9.0 12.1 12.3 14.8 14.6

Turnover ratios (x)Asset Turnover (Gross Block) 2.0 2.5 2.4 2.5 2.6

Inventory / Sales (days) 41 45 50 49 47

Receivables (days) 15 18 16 16 16

Payables (days) 47 47 47 47 47

WC cycle (ex-cash) (days) 34 37 37 64 65

Solvency ratios (x)Net debt to equity (0.1) (0.2) (0.2) (0.2) (0.2)

Net debt to EBITDA (0.2) (0.8) (0.8) (0.7) (0.7)

Interest Coverage (EBIT/Int.) 8.4 7.0 5.2 14.1 14.8


15/15


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Disclosure of Interest Statement Finolex Cables

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2. Angel and its Group companies ownership of the stock No

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Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

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Documents

Finolex Cables, 19th February, 2013