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Stock_____

TALES

September 30, 2019

ICIC

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Retail E

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September 30, 2019

CMP: | 110 Target: | 120 (9%) Target Period: 12 months

Gabriel India (GABIND)

HOLD

Hopes of a smooth ride ahead…

Gabriel India (GIN) is the flagship company of the Anand Group. Apart from

being the market leader in the organised domestic automotive suspension

segment (key products include shock absorbers, struts & front forks), the

company is also among the top 10 shock absorber players globally. It has a

stated ambition of breaking into the global top five players by 2025. GIN’s

presence across major OEMs (traditional as well as new age) and market

segments (2-W, 3-W, PV, CV, off road, Railways) positions it uniquely against

peers. Its focus on driving innovation in its product offerings and thrust on

aftermarket and export segments is slated to improve wallet share and

mitigate OEM slowdown led pain on sales & margin front, going forward.

Product profile provides insulation against disruption shocks!

At ~| 10,000 crore, the domestic suspension products segment is a vital cog

in the overall automotive components industry. Competition in the

organised space is limited to a handful of players, of which GIN’s diversified

presence across user industries (62% 2-W, 24% PV, 14% CV) and

aftermarket makes it stand apart. Moreover suspension products are

expected to remain untouched amid ongoing & imminent disruptive forces

like electrification & tighter emission controls. Absence of business model

flux is seen benefiting this product segment, with scale effect helping market

leaders to further consolidate their dominance. In our view, players like GIN

would be prime rerating candidates once present OEM slowdown subsides.

Evolving channel mix to support profitability!

At 11% & 4% of sales, aftermarket and exports, respectively, provide some

healthy diversification from OEM’s channel fortunes. The company has a

leadership position in the aftermarket division (~35-40% market share) and

clocks higher margins there due to its B2C nature. It aims for this division to

help deliver | 500 crore to revenues by 2022-23. Furthermore, GIN’s

presence in developed markets (North America, Europe and Australia) and

focus on emerging Asian markets is also expected to lend support to

margins as channel mix evolves, going forward.

Valuation and outlook

Given muted production numbers at its key OEM clients amidst steady state

replacement market, conservatively, for GIN we estimate sales & PAT CAGR

of 1.0% & 9.7%, respectively, in FY19-21E. Earnings CAGR is also supported

by recent corporate tax rate reduction with GIN’s tax rate in FY19 at 33.6%.

While in keeping with growth challenges being faced by the entire auto

space currently, we believe the company’s unlevered B/S, steady margin

profile, double digit return ratios and healthy cash flow from operations

(~| 110 crore, ~7% CFO yield) stand it in good stead. Valuing GIN at 15x

P/E on FY21E EPS of | 8.0/share, we arrive at a target price of | 120 with a

HOLD rating on the stock.

Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

Net Sales 1,513 1,833 2,077 1,854 2,117 1.0%

EBITDA 144 171 178 148 185 2.1%

EBITDA Margins (%) 9.5 9.3 8.6 8.0 8.8

Net Profit 82 94 95 84 114 9.7%

EPS (|) 5.7 6.6 6.6 5.9 8.0

P/E 19.4 16.8 16.6 18.7 13.8

RoNW (%) 18.4 17.9 16.1 13.0 15.6

RoCE (%) 24.0 25.2 23.5 17.0 20.3

Source: Company, ICICI Direct Research

Key Financial Summary

Particulars

Particulars Amount

Market capitalisation (| crore) 1,580.4

Total Debt (FY19, | crore) 7.2

Cash & Investment (FY19, | crore) 95.4

EV (| crore) 1,492.2

52 week H/L (|) 159 / 85

Equity capital (| crore) 14.4

Face value (|) 1.0

Price Performance

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Price (R.H.S) Nifty (L.H.S)

Research Analyst

Shashank Kanodia, CFA

[email protected]

Jaimin Desai

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Stock Tales | Gabriel India

Company Background

Gabriel India (GIN) is the flagship company of the Anand Group. It was

established in 1961 by Deep C Anand in collaboration with Maremont

Corporation, with initial operations in Mumbai. Over the years, the company

has transitioned from a manufacturer of shock absorbers into a provider of

the whole gamut of ride control and suspension products including axle

dampers, front forks, strut assembly, cabin dampers, seat dampers and

dampers for EMU & LHB coaches as well as diesel locomotives. It has a well-

diversified OEM client base across 2-W/3-W, PV, CV and off highway

segments in addition to the Railways space. With FY19 consolidated

revenues of | 2,077 crore, the company ranks among the top 10 shock

absorber players globally and has ambitions to break into top-five players

over time. The company manufactures products at 11 locations in India

(including four satellite plants), with production volume of 3.9 crore units in

FY19 and implied realisation at ~| 500/unit.

Exhibit 1: Company history


While predominantly an OEM play (~85% of channel mix), GIN does have a

significant presence in the aftermarket space for (~35-40% market share for

shock absorbers and struts) and serves the 2-W, 3-W, PV, CV & Railways

segments through a network of 664 dealers and ~12,000 retail outlets. The

company exports to North America, Europe, Australia and Asia Pacific

region, although exports as a proportion of overall sales remain fairly

modest at ~4%.

GIN counts all major domestic auto OEMs at its clients. However, no

individual client forms >20% of GIN’s revenues. This uniquely positions GIN

as a market leader in the Indian shock absorber market with a diversified

presence across target segments, channels and clients.

1960s

•Commenced operations in Mumbai in 1961.

•During 1965-75, started supplies to various OEMs including Telco (Tata Motors), Bajaj Auto, M&M, Premier Auto, Ashok Leyland and Hindustan Motors

1980s

•Between 1980-85, established new business segment with Swaraj Mazda & VECV as clients

•Set up new plant in Khandsa to serve Maruti Suzuki in 1987

1990s

•Entered into technological tie up with SOQI Inc of Japan in 1991

•In 1997 signed technology assistance agreement with KYB Corporation, Japan.

•Acquired TVS Motors, Tata Motors' passenger car segment and Yamaha Motor, Japan as clients during the decade

2000s

•Won contracts from Renault India in 2006

•In 2009 ,commenced backward integration efforts on the 2-W side with its Japanese collaborators

•In 2010 received business from Honda Cars for the first time and commenced supply to Volkswagen India

2014

•Established 4 business units (BUs) - 2-W & 3-W, Passenger Cars, CV & Railways and aftermarket

•Signed technology license agreement with KONI BV of the Netherlands for manufacture of suspensions for CV, buses and industrial equipment

2016

•Started export of customised machines for manufacturing shock absorbers (built in-house with indigenous technology) to Torre Industries, South Africa

•Received approval to manufacture Linke-Hofmann-Busch dampers for high speed trains from Indian Railways

2017

•Inaugurated solar power plant at Khandsa and installed 182 kW solar park at Dewas




Exhibit 2: GIN manufacturing facilities

Location Segment served Commenced Products Comments Clients

Nashik 2/3W 1990Shock absorbers, front

forks

Technical collaboration with Yamaha

Motors Hydraulic System

Bajaj Auto, Honda Motor, Genze (M&M),

M&M, Yamaha, Piaggio

Hosur 2/3W 1997Shock absorbers, front

forks

Technical collaboration with KYB Japan

& Yamaha Motors Hydraulic System

TVS, Honda, Royal Enfield, Yamaha, Suzuki

Parwanoo2W, PV, CV,

Aftermarket

2007Shock absorbers, front

forks, struts

TVS, Tata Motors, M&M

Chakan PV, Railways 1997 Shock absorbers, struts

Bajaj Auto, Piaggio, General Motors, Renault,

Volkswagen, M&M, Hyundai, Toyota, Tata

Motors

Khandsa PV 2007 Shock absorbers, struts Technical collaboration with KYB Japan Maruti Suzuki, Honda, Tata Motors

Sanand 2W, PV 2010Shock absorbers, struts

(final assembly)

Tata Motors, Honda

Dewas CV & Railways 1992 Shox (CV)Tata Motors, M&M, Daimler, Force Motors,

Ashok Leyland, VECV, Indian Railways


Gabriel India has agreed technical collaborations with a few players – namely

KYB Corporation, Yamaha Motor Hydraulic System and Koni BV over the

years, enabling it to access necessary technical expertise for its suite of ride

control products. Its R&D spend is at 1.1% of sales, with the company having

filed 75 patents as of 2019.

Exhibit 3: Major clients and indicative product catalogue per segment


Segment Clients Products

2-W & 3-W

PV

CV & Railways

Shock absorbersFront forks Mono shox

Canister shock absorbers

Strut assembly Rear shock absorberE-assist adjustable

shock absorbers

Axle dampers Cabin dampers Seat dampers

Dampers for LHB coachesAir spring suspension

shock absorbers for EMU

coaches

Dampers for diesel

locomotives

Others - hydraulioc shock

absorbers, gas shock

absorbers

Others - cartridges, McPherson struts




Industry Overview

India

According to Crisil, the domestic auto components industry size was at

~| 3.8 lakh crore as of FY19, with OEM demand accounting for the lion’s

share of demand at ~60%. Imports served ~26% of industry needs while

replacement demand forming the rest. The domestic auto components

industry grew at a steady pace of 7.8% CAGR in FY14-19. Crisil estimates

the industry would grow at 8-10% CAGR over FY19-24E, with FY20E industry

size seen at ~| 4.1 lakh crore.

Exhibit 4: Indian auto components industry (| lakh crore)

FY15 FY16 FY17 FY18 FY19 CAGR (FY14-19)

Domestic consumption 2.6 2.8 3.0 3.4 3.8 7.8%

OEM 1.6 1.7 1.8 2.0 2.3 7.8%

Replacement 0.4 0.4 0.5 0.5 0.6 6.6%

Imports 0.7 0.7 0.7 0.9 1.0 8.5%

Exports 0.4 0.5 0.5 0.6 0.6 7.8%

Source: Crisil Research, ICICI Direct Research

As per Crisil, at 14% (i.e. ~| 53,200 crore), suspension & braking systems

formed the second largest segment of the domestic auto components

industry as of FY19.

Exhibit 5: Segment wise break-up of Indian auto components industry

26%

14%

13%

17%

10%

12%

5%3%

Engine components

Suspension & braking

Drive transmission

Body/chassis

Electricals & electronics

Interiors (non electronics)

Exhaust management

systems

Cooling systems

Source: Crisil Research, ICICI Direct Research

The domestic suspension products industry is estimated at ~| 10,000 crore.

It is dominated by a few major players, viz. Gabriel India, Munjal Showa,

Endurance Technologies, Showa Corporation and Mando Group. Gabriel is

the market leader in the space with ~20% market share as of FY19, with its

revenues having grown at 13.1% CAGR in FY16-19.

Exhibit 6: Revenues at GIN vs. its competitor

FY16 FY17 FY18 FY19

Gabriel India 2-W, PV, CV, Railways 1,430 1,521 1,833 2,076

Munjal Showa 2-W 1,502 1,460 1,581 1,669

Revenues (| crore)

Segments

Source: Capitaline, ICICI Direct Research

Global

The global shock absorber industry is part of the wider automotive

suspension products industry. Major global players in this space include ZF

Friedrichshafen, Tenneco, KYB Corporation, Showa Corporation, Magneti

Marelli, Mando Corporation, Bilstein and Gabriel India.




Investment Rationale

Product profile unencumbered by disruption

Suspension products (shock absorbers, struts, springs and linkages) are

staple components across automotive segments (2-W, 3-W, PV, CV and off

road) irrespective of powertrain, ignition technology and emission

technology. As such, they are believed to have largely withstood the wide

array of business model disruptions currently facing the auto industry, as

well as those slated to arrive in later years – transition to

electric/connected/automated mobility, light-weighting and the increasing

focus on tighter emission controls (e.g. BS-VI norms) and vehicular safety.

In case of electrification, for instance, even if the pace of transition itself is

gradual in nature, we believe the business threat would remain an overhang

on earnings multiples commanded by ancillary players engaged in

production of engine and powertrain components. On the other hand,

ancillaries producing components largely unencumbered by these

disruptive forces (e.g. suspension, interior parts, automotive lighting) stand

a chance to witness multiple expansion when growth cycle resumes. GIN as

a market leader in ride control products in India is relatively insulated from

the threat posed by these changes.

Diversified presence across segments, clients

GIN is uniquely positioned among domestic suspension products players in

terms of its varied exposure to segments (2-W, PV & CV) as well as clients

(no single client accounts for more than 20% of revenues). Over the years,

2-W, PV & CV have contributed ~57%, ~31% & ~12% of sales. The

company’s market share in 2-W, PV & CV is at ~25-30%, ~15-18% and ~75-

80%, respectively. GIN’s clientele includes major players across these

segments, (except Hero MotoCorp, which is largely on-board with Munjal

Showa). GIN is also present with newer entrants like Ather Energy & Okinawa

in the electric 2-W space, underlining both – its continued relevance even

with electrification and its client addition ability. Further, GIN’s involvement

with Indian Railways across its traditional (diesel locomotives) and emerging

technologies (EMU & LHB coaches) provides further diversification.

Exhibit 7: Segment-wise contribution to GIN revenues

58 55 5662

3132 31

24

11 13 13 14

| 1,431 crore | 1,521 crore | 1,833 crore | 2,077 crore

0

20

40

60

80

100

120

FY16 FY17 FY18 FY19

%

2-W PV CV


GIN supplies shock absorbers to the Indian Railways for the new Linke

Hofmann Busch coaches (LHB), which offer increased passenger safety and

comfort. As Indian Railways shifts from traditional coaches to these new-age

variants, the shock absorbers required per coach will increase from six to

18. These shock absorbers were earlier imported by the Indian Railways but

now would be manufactured locally, with GIN one of the key beneficiary.




Aftermarket, exports to help sustain margins

GIN has an aftermarket presence in all product segments across the 2-W,

PV, CV & Railways space (11% of sales) and commands ~35-40% market

share therein through its brand ‘Gabriel’. It has focused on expanding its

product portfolio (750+ SKU introductions in five years) to serve customers

through a distribution network of 664 dealers and 12,000 retailers. Some of

its new products include radiator coolants, oil seals, tyres & wheel rims. GIN

exports (4% of sales) to North America, Europe, Australia and the Asia

Pacific region and is looking to boost its presence in South East Asian region.

Higher margins in aftermarket (B2C business) have helped support overall

margins in the high single digit territory. We expect higher contribution from

aftermarket & exports going forward to help sustain this trajectory.

Exhibit 8: Channel mix at GIN

83 83 85 85

13 13 11 11

4 4 4 4

| 1,431 crore | 1,521 crore | 1,833 crore | 2,077 crore

0

20

40

60

80

100

120

FY16 FY17 FY18 FY19

%

OEM Aftermarket Exports





Risks & Concerns

Dependence on a single product line

GIN’s product portfolio comprises entirely of shock absorbers, front forks,

struts and dampers. While the company is among the leading players in the

suspension component industry, the lack of diversification in terms of

product lines exposes GIN to any business vagaries arising in this space.

Dependence on OEM channel

With OEMs contributing 85% of revenues, any slowdown in new vehicle

sales would have a significant knock-on impact on GIN. The company is

undertaking efforts to buffer itself against this threat by sharpening its focus

towards aftermarket and exports avenues. However, in the meantime, its

fortunes are largely tied to the performance of OEM clients.

CV slowdown to hurt, ASPs seen tapering

GIN is the market leader in the CV suspension segment, with ~75% market

share. CVs form 14% of revenues currently. We expect the current sharp

slowdown on the CV side to persist till FY21E as it coincides with a wider

down cycle in this segment. As a result, the share of CVs in total revenues

is seen declining over this period in favour of 2-Ws in particular. This would

negatively impact the blended realisations and consequent margins.

Legal & professional fee

The company paid ~| 50 crore as legal and profession fee as part of other

expenses in FY19. This is a regular expenditure line item and constitutes ~2-

2.5% of its annual sales against the back ground of ~8-9.5% EBITDA

margins profile at GIN. The quantum under this head is uncertain and may

vary going forward, thereby impacting the overall profitability.

Promoter group holds shock absorber business in other entities as well

GIN is a part of Anand group of companies. The group also has an entity viz.

Mando Automotive India Pvt Ltd, which is into manufacturing of braking

solutions as well as shock absorbers. Mando is a Korean company and in all

possibility supplies shock absorber solutions to Korean OEMs operating in

India viz. Hyundai, which is not a customer of GIN. This may cloud GIN’s

ability to directly on-board Hyundai as its key customers, going forward.




Financial story in charts

Exhibit 9: Trend in sales

1833.2

2076.5

1854.3

2117.0

1600

1800

2000

2200

FY18 FY19 FY20E FY21E

| crore

Net Sales


Exhibit 10: EBITDA & EBITDA margin trend

171.3

177.9

148.3

185.2

9.3

8.6

8.0

8.8

7.0

7.5

8.0

8.5

9.0

9.5

140

150

160

170

180

190

200


%

| crore

EBITDA EBITDA Margin (RHS)


Exhibit 11: PAT & EPS trend

94.2

95.0

84.5

114.4

6.6 6.6

5.9

8.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

0

20

40

60

80

100

120

140


|/share

| crore

PAT EPS


We expect net sales to remain broadly flattish at GIN

over FY19-21E given the broad based slowdown in

the wider OEM segment currently. Further, we build

in dilution in ASP profile over this time frame as

segment mix moves in favour of 2-W given the

sharper drop in CV volumes and new capacity

addition geared towards meeting HMSI demand.

Aftermarket and exports, however, are expected to

lend top line support.

EBITDA is seen growing at 2.1% CAGR over FY19-

21E with attendant margins first declining to 8% in

FY20E on the back of OEM channel pain and

thereafter improving back towards 8.8% in FY21E

We expect PAT to grow faster than sales at 9.7%

CAGR over FY19-21E to | 114 crore aided by

reduction in tax outgo due to cut in corporate tax rate




Exhibit 12: Trend in profitability and payout

6.6

6.6

5.9

8.0

1.4

1.5

1.5

1.8

20.621.9

25.5

22.0

0

5

10

15

20

25

30

0

1

2

3

4

5

6

7

8

9


%

|/share

EPS DPS Dividend Payout (RHS)


Exhibit 13: Return ratio profile

25.2

23.5

17.0

20.2

17.9

16.1

13.0

15.5

30.7 30.8

21.5

27.8

5

10

15

20

25

30

35


%

RoCE RoE RoIC


Exhibit 14: Trend in capex and working capital days

55

89

35

35

16

18

25 25

-

5

10

15

20

25

30

-

10

20

30

40

50

60

70

80

90

100


No o

f d

ays

| crore

Capex Net Working Capital Days (RHS)


The company’s healthy ~20% dividend payout

trajectory is seen remaining intact going forward

We anticipate return ratios would improve, going

forward, aided by margin improvement and

sweating of newly installed capacities

Heavy capex incurred in FY19 will keep the

incremental capex under check, going forward




Annual Report FY19 – Key highlights

Exhibit 15: Revenue & volume trend over the years at GIN

520

697

970

1,115

1,196 1,275

1,430 1,430

1,521

1,833

2,076

1.1 1

.5 1

.8

2.0

2.0

2.2

2.4 2.7 3.0

3.6 4

.0

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

500

1,000

1,500

2,000

2,500

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

No. c

rore

Revenues (| c

rore)

Revenue Production Volumes (RHS)


Also, 90%+ of FY19 sales were from customers on-board for at least

five years

New technology centre established at Chakan for PV, CV & Railways

Developed technologically intensive products such as mono tube

inverted gas canister shox, front forks for high-performance

motorcycles, floating piston shock absorbers & twin-tube mono shock

absorbers

The 2-W capacity in Hosur & Ambad was expanded, with Sanand

capacity expansion commenced to cater to HMSI front fork demand.

Expansion is expected to be completed during FY20E

GIN is looking at introduction of lift axles and air suspension shock

absorbers for CV segment by leveraging Koni’s technological prowess

Exhibit 16: Content per unit for LHB coaches slated to increase multi fold

4

16

6

18

0

2

4

6

8

10

12

14

16

18

20

Now Future

Num

ber p

er c

oach

Dampers Shock absorbers


GIN was able to achieve | 2,000 crore in sales in

FY19 as per vision conceived in 2014. The company

now envisions itself as a top-five shock absorber

manufacturer in the world by 2025

In FY19, GIN secured new order wins from Yahama,

Suzuki as well as Royal Enfield (650 twins) in the 2-

W category. In the 4-W category new order wins

were obtained from Maruti, M&M, VW group as well

Tata Motors. In the CV category, GIN on-boarded

DAF trucks (Netherlands) as its new customer.




Valuation and outlook

Given muted production numbers at its key OEM clients amidst steady state

replacement market, conservatively, for GIN we estimate sales & PAT CAGR

of 1.0% & 9.7%, respectively, in FY19-21E. Earnings CAGR is also supported

by recent corporate tax rate reduction with GIN’s tax rate in FY19 at 33.6%.

While in keeping with growth challenges being faced by the entire auto

space currently, we believe the company’s unlevered B/S, steady margin

profile, double digit return ratios and healthy cash flow from operations

(~| 110 crore, ~7% CFO yield) stand it in good stead. Valuing GIN at 15x

P/E on FY21E EPS of | 8.0/share, we arrive at a target price of | 120 with a

HOLD rating on the stock.

Exhibit 17: Valuation summary

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| crore) (%) (|) (%) (x) (x) (%) (%)

FY17 1,513 6.1 5.7 8.5 19.4 10.5 18.4 24.0

FY18 1,833 21.2 6.6 15.4 16.8 8.7 17.9 25.2

FY19 2,077 13.3 6.6 0.9 16.6 8.4 16.1 23.5

FY20E 1,854 (10.7) 5.9 (11.1) 18.7 9.7 13.0 17.0

FY21E 2,117 14.2 8.0 35.4 13.8 7.4 15.6 20.3


Exhibit 18: GIN currently trades at ~13.8x its FY21E EPS

0

50

100

150

200

250

300

Sep-0

9

Dec-09

Mar-10

Jun-10

Sep-1

0

Dec-10

Mar-11

Jun-11

Sep-1

1

Dec-11

Mar-12

Jun-12

Sep-1

2

Dec-12

Mar-13

Jun-13

Sep-1

3

Dec-13

Mar-14

Jun-14

Sep-1

4

Dec-14

Mar-15

Jun-15

Sep-1

5

Dec-15

Mar-16

Jun-16

Sep-1

6

Dec-16

Mar-17

Jun-17

Sep-1

7

Dec-17

Mar-18

Jun-18

Sep-1

8

Dec-18

Mar-19

Jun-19

Sep-1

9

(|)

Price 20x 18x 16x 14x 12x 8x 4x

Source: Bloomberg, ICICI Direct Research




Financial Summary

Exhibit 19: Profit & Loss statement (| crore)

(Year-end March) FY18 FY19 FY20E FY21E

Net Sales 1833.2 2076.5 1854.3 2117.0

Other Operating Income 0.0 0.0 0.0 0.0

Total Operating Income 1,833.2 2,076.5 1,854.3 2,117.0

Growth (%) 9.9 13.3 -10.7 14.2

Raw Material Expenses 1,310.6 1,507.0 1,335.1 1,524.2

Employee Expenses 137.7 154.0 157.6 169.4

Other Operating Expense 213.6 237.6 213.2 238.2

Total Operating Expenditure 1,661.9 1,898.6 1,706.0 1,931.8

EBITDA 171.3 177.9 148.3 185.2

Growth (%) 21.8 3.8 -16.6 24.9

Depreciation 38.3 41.1 44.0 47.0

Interest 2.9 2.9 2.0 1.0

Other Income 7.1 9.2 10.6 15.8

PBT 137.2 143.1 113.0 153.0

Exceptional Item 0.0 0.0 0.0 0.0

Total Tax 43.0 48.1 28.5 38.5

PAT 94.2 95.0 84.5 114.4

Growth (%) 56.2 0.9 -11.1 35.4

EPS (|) 6.6 6.6 5.9 8.0


Exhibit 20: Cash flow statement (| crore)


Profit after Tax 94.2 95.0 84.5 114.4

Add: Depreciation 38.3 41.1 44.0 47.0

(Inc)/dec in Current Assets -83.2 -9.2 22.3 -66.5

Inc/(dec) in CL and Provisions 52.4 0.1 -43.2 43.2

Others 2.9 2.9 2.0 1.0

CF from operating activities 104.6 129.9 109.5 139.2

(Inc)/dec in Investments -34.3 15.5 -40.0 -50.0

(Inc)/dec in Fixed Assets -54.5 -89.0 -35.0 -35.0

Others 3.9 4.2 0.0 0.0

CF from investing activities -84.9 -69.4 -75.0 -85.0

Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0

Inc/(dec) in loan funds 2.2 -3.2 -2.3 -2.0

Dividend paid & dividend tax -26.3 -28.0 -27.9 -31.2

Inc/(dec) in Share Cap 0.0 0.0 0.0 0.0

Others -8.5 -20.7 0.0 0.0

CF from financing activities -32.5 -51.8 -30.1 -33.2

Net Cash flow -12.9 8.6 4.4 21.0

Opening Cash 52.8 39.9 48.5 52.9

Closing Cash 39.9 48.5 52.9 73.9


Exhibit 21: Balance Sheet Statement (| crore)


Liabilities

Equity Capital 14.4 14.4 14.4 14.4

Reserve and Surplus 510.5 575.6 634.2 718.5

Total Shareholders funds 524.9 590.0 648.6 732.8

Total Debt 10.4 7.2 5.0 3.0

Deferred Tax Liability 19.8 19.1 19.1 19.1

Minority Interest / Others 0.0 4.9 4.9 4.9

Total Liabilities 555.1 621.2 677.6 759.8

Assets

Gross Block 634.2 677.3 741.1 776.1

Less: Acc Depreciation 335.5 376.6 420.5 467.6

Net Block 298.7 300.7 320.6 308.5

Capital WIP 7.8 53.8 25.0 25.0

Total Fixed Assets 306.6 354.5 345.6 333.5

Investments 62.3 46.9 86.9 136.9

Inventory 149.1 165.3 152.4 174.0

Debtors 279.2 284.3 279.4 319.0

Loans and Advances 45.6 38.6 34.5 39.4

Other Current Assets 8.3 3.2 2.9 3.3

Cash 39.9 48.5 52.9 73.9

Total Current Assets 522.1 540.0 522.1 609.5

Current Liabilities 320.0 319.1 279.4 319.0

Provisions 27.8 28.9 25.3 28.8

Current Liabilities & Prov 347.8 347.9 304.7 347.8

Net Current Assets 174.3 192.1 217.4 261.7

Others Assets 12.0 27.9 27.9 27.9

Application of Funds 555.1 621.2 677.6 759.8


Exhibit 22: Key Ratios


Per share data (|)

EPS 65.5 66.1 58.8 79.6

Cash EPS 92.2 94.7 89.4 112.4

BV 365.3 410.6 451.4 510.1

DPS 1.6 1.7 1.8 2.1

Cash Per Share (Incl Invst) 71.2 66.4 97.3 146.7

Operating Ratios (%)

EBITDA Margin 9.3 8.6 8.0 8.8

PAT Margin 5.1 4.6 4.6 5.4

Inventory days 29.7 29.1 30.0 30.0

Debtor days 55.6 50.0 55.0 55.0

Creditor days 63.7 56.1 55.0 55.0

Return Ratios (%)

RoE 17.9 16.1 13.0 15.6

RoCE 25.2 23.5 17.0 20.3

RoIC 30.7 30.8 21.5 27.8

Valuation Ratios (x)

P/E 16.8 16.6 18.7 13.8

EV / EBITDA 8.7 8.4 9.7 7.4

EV / Net Sales 0.8 0.7 0.8 0.6

Market Cap / Sales 0.9 0.8 0.9 0.7

Price to Book Value 3.0 2.7 2.4 2.2

Solvency Ratios

Debt/EBITDA 0.1 0.0 0.0 0.0

Debt / Equity 0.0 0.0 0.0 0.0

Current Ratio 1.4 1.4 1.5 1.5

Quick Ratio 1.0 0.9 1.0 1.0





RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




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