Future Supply Chain Solutions Ltd - ICICI...

December 6, 2017

IPO Review

ICICI Securities Ltd | Retail Equity Research

Established supply chain excellence…

Promoted by Future Enterprises, Future Supply Chain Solutions (FSC)

offers third-party supply chain & logistics services including warehousing,

distribution and other value added solutions. Given the logistics services

provided to other promoter-listed “Future entities”, which includes Future

Retail, Future Consumer and Future Lifestyle Fashions, FSC has

established multi-sector expertise. As on September 2017, Future entities

contribute ~70% of total revenues. FSC operates across three major

business segments viz. contract logistics (warehousing, distribution &

other value-added services), express logistics (point-to-point, less-than

truck-load, time-definite transportation services) and temperature-

controlled logistics (cold-chain warehousing, transportation and

distribution solutions of perishable goods). FSC has demonstrated faster

than industry growth rate posting revenue and EBITDA growth of 12%

and 37% CAGR, respectively, in FY13-17. For H1FY18 revenues, EBITDA

and PAT were at | 357.4 crore, | 56.2 crore and | 33.3 crore, respectively.

Key business aspects

Enhanced coverage through extensive network

FSC operates an extensive network of 46 distribution centres, including

four temperature-controlled (9529 pallets) distribution centres, 14 hubs

and 106 branches (including franchisees and 12 of which are co-located

on the same premises as FSC hubs). Moreover, coverage over 11235 pin

codes across 29 states and five union territories creates a pan-India

supply chain network for FSC. As on November 2017, FSC manages a

total warehousing space of 4.2 million square feet. Further, it operates

owned flotilla of 687 containerised vehicles, including 144 refrigerated

(reefer) trucks. The widespread coverage enables FSC to provide its

clients cost effective access to multiple destinations for booking and

delivery of goods across India.

Multi-speciality expertise enabling comprehensive supply chain solutions

Over the decade, FSC has developed comprehensive logistics solutions

for third-party logistics services through contract logistics, express

logistics and temperature-controlled logistics. The company also provides

end-to-end customised logistics and supply chain solutions that are

created based on customers’ requirements. The logistics solutions are

capable of catering to variety of customers including retail, fashion &

apparel, automotive & engineering, food & beverage, fast-moving

consumer goods (FMCG), e-commerce, healthcare, electronics &

technology, home & furniture and ATMs. The wide range of activities

enables FSC cross-selling opportunities deriving higher value proposition.

Concerns

Promoter group contributing significant portion (70%) of total revenues

Higher average receivable days (128 days - as on H1FY18)

Declining revenues in express and cold chain business

Priced at 57x (on higher band) on adjusted PAT

At the upper band of | 664, the stock is available at a P/E multiple of 57x

FY17 on EPS of | 11.7/share. Post listing, FSC would be able to capture a

larger pie of the fast-growing 3PL market. However, we believe the steep

valuations capture the benefits, which would accrue over a long gestation

period. Hence, we have an UNRATED recommendation on the issue.

Future Supply Chain Solutions Ltd

Price band |660 - |664

Rating matrix

Rating : Unrated

Issue Details

Issue Opens 6-Dec-17

Issue Closes 8-Dec-17

Issue Size (| Crore) 650

Fresh Issue 0

Offer for Sale 650

Price Band (|) | 660 - | 664

No of Shares on Offer (crore) 0.98

QIB (%) 50%

Non-Institutional (%) 15%

Retail (%) 35%

Minimum lot size (No. of shares) 22

Composition & Objects of issue (| crore)

Number of shares

offered

Future Enterprises Limited 1,956,914

Griffin Partners Limited 7,827,656

Total 9,784,570

The offer comprises an offer for sale of 0.98 crore equity

shares (~| 2600 crore @ | 664/share). The offer is entirely

through an offer for sale and the Company will not receive

any proceeds from the offer.

Shareholding Pattern

Pre-Issue Post-Issue

Promoter & promoter group 57.4% 52.4%

Public 42.6% 47.6%

Valuation Summary (at | 664 ;upper price band)

FY14 FY15 FY16 FY17

P/E NA NA 88.4 56.8

EV/EBITDA 101.1 41.1 37.5 35.3

P/B 12.9 11.9 10.5 8.9

ROCE 4.8 16.4 15.0 15.1

ROE 2.1 11.3 11.9 15.6

Research Analyst

Bharat Chhoda

[email protected]

Ankit Panchmatia

[email protected]


Company Background

Incorporated on March 8, 2006 as Future Logistic Solutions Ltd, the

company was renamed Future Supply Chain Solutions (FSC), in 2009. The

change in name was to convey the range of business solutions offered by

FSC. Since then, the company has evolved as one of India’s largest

organised third-party supply chain and logistics service providers.

Promoted by Future Enterprises Ltd, the other promoter related entities

include Future Retail Ltd, Future Consumer Ltd and Future Lifestyle

Fashion Ltd. While FSC’s operations earlier evolved around providing

supply chain and logistics solutions to its group companies, the company

has gained expertise and diversified its customer base across various

sectors outside of the group companies.

FSC offers automated and IT-enabled warehousing, distribution and other

logistics solutions to a wide range of customers. Comprehensive

warehousing infrastructure, pan-India distribution network, hub-and-

spoke transportation model and automated technology systems support

defines FSC’s competitive positioning in the third party logistics (3PL)

market. Offerings across varied sectors includes retail, fashion and

apparel, automotive & engineering, food and beverage, fast-moving

consumer goods (FMCG), e-commerce, healthcare, electronics and

technology, home and furniture and ATMs.

The scope of logistics services that FSC provides varies based on the

needs and requirements of customers, including its current supply chain

processes, its outsourcing needs, its sector practices and the size &

coverage of its distribution network across India.

It operates in three distinct business segments:

Contract logistics: warehousing, distribution and other value-added

services;

Express logistics: point-to-point, less-than truck-load, time-definite

transportation services; and

Temperature-controlled logistics: cold-chain warehousing,

transportation solutions and distribution of perishable products

Contract logistics – 70% of overall revenues

Contract logistics is the largest contributor (~70%) to overall revenues

with a topline of | 4069.3 crore. Contract logistics services create a

customised supply chain solution, which includes infrastructure along

with inventory management and distribution services. Key activities

include warehousing, distribution and other value-added services. The

distribution centres receive, store, track, manage and dispatch customer’s

inventory and provide end-to-end solutions. FSC operates 42 distribution

Exhibit 1: Key awards & achievements…

Awards & Achievements Year

Retail & F/B Supply Chain Excellence Award 2007

Retail Manufacturing Supply Chain Excellence Award 2009

Retail Supply Chain Excellence Award 2009

Masterbrand Award 2012

Award for Use of Technology for Corporate Excellence 2014

Award for Effective retail through Supply Chain 2014

ICC Supply Chain Excellence Award - Emerging Player of

the year

2014

Award for Exemplary Position in Supply Chain & Logistics

Industrial & Retail Warehousing

2015

Supply Chain Service Provider of the Year –Hi-Tech and

FMCG

2015

Award for Operational Excellence in Cold Chain

Warehousing

2016

Best Cold Chain 3PL Service Provider of the year 2017

Best 3PL Company of the year 2017

Industry Excellence in Supply Chain –FMCG 2017

The Goa State - Best 3PL Company of the year 2017

Source: RHP, ICICIdirect.com Research Exhibit 2: Integrated end to end service offerings to the customer…

Source: RHP, ICICIdirect.com Research

Exhibit 3: FY17 revenue break-up…

Contract

Logistics

70%

Express

Logistics

22%

Temperature

controlled

Logistics

6%

Other

operations

2%



centres across India, covering ~3.80 million square feet (msf) of

warehouse space. It also operates two dedicated distribution centres of

its customers, covering ~0.37 msf of warehouse space. The distribution

centre includes built-to-suit, multi-sector and multi-customer. The value-

added services include kitting and bundling, unit cartonisation and

packaging solutions and other ad-hoc client specific requirements.

Exhibit 4: Set-up under distribution centres…

Particulars Kulana, Haryana Burdwan, West Bengal Bhiwandi, Maharashtra (K4) Soukya Road, Bengaluru

Size 304,614 sq. ft. 146,464 sq. ft. 208,080 sq. ft. 175,625 sq. ft.

Storage capacity

81062 bins and

12714 pallet positions

85344 bins and


37520 bins and


83412 bins and


Technologies Used

WMS, SAP, TMS, VMS, Oracle and

Uniware

WMS, SAP, TMS, VMS WMS WMS, SAP, TMS

Other Key Features

* Built-to-suit with 12 meter height and

ample parking

* Location near major highways and the

main consumption hubs of northern India

* Built-to-suit with 8 meter

height and ample parking

* Located on National Highway-

2 and serves as main

distribution location for east

and northeast sector

* Multi-customer

facility

* Located within prime warehouse area

with ample parking

* Located in between two major highways

and easily accessible to the main

consumption hubs of southern India,

including short delivery turnaround time for

stores in Bengaluru



Key competencies of contract logistics:

Implementing supply chain solutions, involving designing and

modelling facility layouts, infrastructure and technological automation

needs;

Technology-enabled distribution centres across India

Building heights ranging from 7-12 metre for certain distribution

centres

Generally, multi-user and built-to-suit based on a customer’s supply

chain requirements and needs

Providing value added services such as kitting, bundling and

promotional packing

Supply chain system across India through distribution centres and

delivery network

For warehousing FSC charges its customers on (a) cost-plus mark-up, (b)

fixed charge for a given capacity, with variable charges if additional

capacity is utilised, (c) fixed rate per piece, carton or case with a minimum

guaranteed throughput over a defined period or (d) fixed monthly billing

based on an agreed monthly throughput and storage capacity. However,

for value-added services, FSC charges on a fixed rate per kit, per label or

per barcode, with a minimum guaranteed throughput over a defined

period.

Express logistics – 22% of overall revenues

Express logistics contributes (~22%) to overall revenues with a topline of

| 126.3 crore. The segment provides distribution services using its hub-

and-spoke network and containerised fleet of technology-enabled trucks.

The distribution network consists of 14 hubs and 106 branches across

India (including franchisees and 12 of which are co-located on the same

premises as FSC’s hubs), covering 11235 pin codes across 29 states and

five union territories of India as of September 2017. The hubs serve as

junctions where shipments from various hubs and branches arrive and

are sorted and grouped based on their ultimate destinations and shipping

routes. FSC express logistics services operated 233 containerised line-

haul and feeder trucks, including 100 GPS-enabled trucks that are leased

from third-party providers on a long-term basis. Line haul routes connect

distantly spaced hubs using long-distance trucks that transport goods

between hubs. Hubs and branches are generally geographically closer

and connected by shorter feeder routes (that also connect branches

together).

Key competencies of contract logistics:

Pan-India reach through hub-and-spoke model

Real time, online visibility of shipments right from docket generation

to point-of-delivery downloads to e-bills through transport

management system

Reduction in cost and time for customers through network design,

route planning, load optimisation and vehicle re-engineering

Hubs equipped with logistics tools, including pallets and forklifts to

allow for movement of goods without damage

Capability to set up a branch at new location based on its customers’

requirements

Deployment of GPS-enabled vehicles real time tracking

Customised packaging solutions for delivery of goods in unitised

portions

Exhibit 5: Trend in revenue per sq ft

63

73

94

0

20

40

60

80

100

FY15 FY16 FY17

(|

per s

q.f

t)



Temperature-controlled logistics – 6% of overall revenues

Temperature-controlled logistics contributes (~6%) to overall revenues

with a topline of | 36.4 crore. The segment provides product-handling

solutions for temperature-sensitive perishable products through

temperature-controlled warehousing and transportation in its reefer

trucks. FSC commenced its temperature-controlled logistics services in

2016 by entering into a long-term operating lease for operative assets,

including refrigeration equipment, of Brattle Foods Pvt Ltd. Subsequently

it acquired reefer vehicles from Laxman Logistics Pvt Ltd through a slump

sale in 2017. As on September 2017, the segment operates four

temperature-controlled distribution centres with 9289 pallets across India

and has 327 leased pallets at third party distribution centres.

Key competencies of Contract Logistics:

Maintaining consistent temperature controls, frozen temperature

range (-25 to 0 degrees Celsius), chilled temperature range (0 to +4

degrees Celsius), cold temperature range (+2 to +8 degrees Celsius)

and cool temperature range (+8 to +25 degrees Celsius)

Availability of electrical supply grids to minimise power outages

Adherence to internal storage and transportation policies; FSSAI-

compliant

Exhibit 6: Trend in revenue per pallet

45394

49013

43000

44000

45000

46000

47000

48000

49000

50000

FY16 FY17

(|

per p

allet)



Key financials: Story in charts

Exhibit 7: Revenues increased at CAGR of 12.2% over FY13-FY17…

353.6 330.2

408.0

519.9

561.2

357.4

0.0

100.0

200.0

300.0

400.0

500.0

600.0

FY13 FY14 FY15 FY16 FY17 H1FY18

| c

rore

Source: Company, ICICIdirect.com Research

Exhibit 8: Revenue bifurcation segment-wise

257.8

324.1

406.9

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

FY15 FY16 FY17

Contract Logistics Express Logistics Temperature controlled Logistics


Exhibit 9: EBITDA growth of 37% over FY13-17…

21.2

26.0

63.9

69.9

74.3

56.2

6.0

7.9

15.7

13.5 13.215.7

0

10

20

30

40

50

60

70

80


| c

rore

0

2

4

6

8

10

12

14

16

18

%

EBITDA EBITDA Margin


Exhibit 10: PAT grows more than 10x in FY13-17…

33.3

45.8

29.4

24.6

4.2-4.2

-10

0

10

20

30

40

50


| c

rore


Exhibit 11: Debt to equity ratio continues below 0.5

0.3

0.2

0.3

0.3

-

0.1

0.1

0.2

0.2

0.3

0.3

0.4

FY14 FY15 FY16 FY17

(x)


Exhibit 12: Return ratio trend

2.1

11.311.9

15.6

4.8

16.4

15.0 15.1

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

FY14 FY15 FY16 FY17

%

RoE RoCE



Key Strengths

Extensive network of facilities

FSC’s core competencies are its widespread network of distribution

centres and delivery network across India. As of September 2017, FSC

run its contract logistics operations through 42 distribution centres across

India, covering ~3.80 million square feet (msf) of warehouse space and

also operate two distribution centres of its customers, covering ~0.37 msf

of warehouse space. According to the Alvarez & Marsal India Pvt Ltd

(A&M) report, FSC’s distribution centre at the multi-modal international

hub airport at Nagpur (MIHAN) which covers ~0.37 msf of warehousing

space is one of the largest and most highly automated distribution

centres in India. The facility has housing a high-speed cross-belt sorter

system, which is the first of its kind in India, with a sorting capacity of

~2000 cases per hour. FSC also utilises a “hub-and-spoke” distribution

model comprising 14 hubs and 106 branches across India (including

franchisees and 12 of which are co-located on the same premises as FSC

hubs), covering 11235 pin codes across 29 states and five union

territories as of September 2017. Moreover, FSC operated ~687

containerised vehicles, including 257 GPS-enabled vehicles of which 144

are refrigerated (reefer) owned trucks. FSC also operate 9616 pallets as a

part of company’s temperature-controlled warehousing service.

Exhibit 13: Operating unique hub & spoke model Es



Diverse customer base across many sectors…

FSC’s customer base spans many sectors, including retail, fashion and

apparel, automotive and engineering, food and beverage, FMCG, e-

commerce, healthcare, electronics and technology, home & furniture and

ATMs. Apart from promoter and certain group companies, FSC manages

a diversified customer base in each of the sectors, which includes Indian

corporate groups and multinational companies. Some marquee names

include Pepe Jeans, Bakers Circle, Clarks, HPL Electric & Power Ltd,

Pepperfry, Surya Roshni, TTK Prestige, VERO MODA, ONLY, M/s Asandas

& Sons (HyFun Foods), Reckitt Benckiser, Amway India, Kellogg,

Mondelez and Wildcraft.

Exhibit 14: Revenue attributable to other than promoter and group companies…

Sector Percentage of revenue from operations (%)

Fashion & Apparel 23.6

Automotive & Engineering 22.3

Food & Beverage 15.3

FMCG 7.3

E-Commerce 6.7

Healthcare 6.1

Electronics & Technology 6.0

Home & Furniture 5.6

ATMs 4.3

Others 2.7

Total 100


Given its experience and infrastructure suited to serve a wide range of

sectors, FSC capitalises on multiple opportunities in the logistics industry

in India. Over the years, FSC has built strong customer relations,

demonstrating the value proposition it provides and positioning itself for

further growth. Of the top 20 customers (other than promoter and certain

group companies), which accounted for ~20.1% of its revenue from

operations in 2017, nine have been with FSC for over five years. For 2017,

10 largest customers (other than promoter and certain group companies)

accounted for 14.8% of the overall revenue from operations.

GST – A major driver for future growth…

Traditionally, logistics has been operationally challenged by complicated

transport networks, high coordination costs across supply chain,

inadequate infrastructure and multi-point taxation. As a result, logistics

players operated using hub-and-spoke in most states to avoid state VAT-

goods directly supplied to dealers attracted state VAT, whereas transfer

from warehouse is treated as stock transfer. Also, most warehouses

operated below capacity. Implementation of GST is expected to improve

performance of logistics across all sub-segments. Some of the expected

benefits are as follows:

Idle time for truck fleet is expected to reduce 20% due to

elimination/rationalisation of check post between states (more than 20

states have already removed check posts)

Resources spent on paperwork for transport companies is likely to

reduce significantly. Currently, the industry spends 50-60% of

resources on documents related to tax compliance and deposit of

interstate sales tax

Elimination of octroi is expected to reduce congestion and improve

productivity for logistics industry for distribution in large cities

Warehouse infrastructure is expected to improve – physical

infrastructure and scale of operations


Key risks and concerns

Business concentration risk

The parentage of Future group has allowed FSC to develop expertise

around key logistics vertical. Future entities (FSC is dependent on the

Future Entities (Future Retail Ltd, Future Consumer Ltd. and Future

Lifestyle Fashions Ltd) continues to remain FSC’s key customers. The

company’s Nagpur distribution centre primarily caters to services

provided to Future entities, which would be unable to easily substitute for

other customers. Following this, investments in cross-belt sorter system

would not be recovered resulting in higher losses. Further, FSC are also

reliant on various sectors in which Future entities operate. If any of those

sectors suffer a downturn, for any reason, FSC operations and its financial

performance would be adversely affected. Moreover, if the reputation of

any Future entities is significantly impaired, it could also adversely affect

FSC’s reputation, business, resulting in loss of operations and

deterioration of financial performance.

Higher competition from global, domestic third-party logistics players

Given the fragmentation in the industry, FSC is prone to competition from

certain regional logistics services providers and the unorganised sector,

some of which have market presence in their respective areas of

operation. Also, e-commerce companies are investing in their captive

arms (E-Kart, ATS, etc). Their focus has been on rapidly expanding in the

warehouses or e-fulfilment centres (EFC) around areas with high volumes

such as metros, Tier-I cities etc. and undertake deliveries to consumers.

Increased competition may reduce the growth of its customer base and

result in higher selling and promotional expenses. Increased competition

and higher private equity funding in the unlisted space could potentially

lead to a reduction in FSC market share resulting lower revenues,

reduced profit margins.

Higher credit period – Vulnerable to defaults…

FSC extends credit to certain customers for a long period of time. There is

no assurance that they will be able to recover outstanding amounts in

part, full or at all. They have and may continue to have high levels of

outstanding receivables. For FY17, the company’s trade receivables were

| 216 crore, which accounted for 38.6% of its revenue from operations.

The resultant average outstanding receivable days was at 141 days, which

is significantly higher than its competitors.

Declining performance in express, temperature-controlled businesses

Revenues from express logistics services declined 9.7% from | 155.6

crore in FY15 to | 140.5 crore in FY16, and further declined 10.1% to

| 126.3 crore in FY17. Although the decline in revenue was on account of

optimising its customer base to focus on providing high-margin services,

FSC may be unable to increase its revenues in the segments. Further, the

temperature-controlled logistics operations had a loss of | 1 crore at

gross profit level in FY17. With increase in capex in the same, the losses

in the same business could widen impacting the overall business

performance.


[

Financial summary

Profit and loss statement | Crore

(Year-end March) FY13 FY14 FY15 FY16 FY17

Net Sales 353.6 330.2 408.0 519.9 561.2

Growth (%) (6.6) 23.6 27.4 7.9

Cost of Logistic Services 247.1 222.2 261.7 338.7 375.3

Employee Expenses 45.3 44.1 43.9 54.4 56.5

Other Expenses 39.9 37.9 38.5 56.8 55.1

Total Operating Expenditure 332.4 304.2 344.1 449.9 486.9

EBITDA 21.2 26.0 63.9 69.9 74.3

EBITDA Margin 6.0 7.9 15.7 13.5 13.2

Interest 10.3 10.9 10.3 13.3 12.8

Depreciation 13.9 13.2 19.5 20.7 19.1

Other Income 0.5 3.0 2.8 8.6 15.8

PBT (2.5) 4.9 36.8 44.6 58.2

Exeptional Expense - - 0.3 - -

Total Tax 1.7 0.6 11.9 15.2 12.4

Profit After Tax (4.2) 4.2 24.6 29.4 45.8


Cash flow statement | Crore

(Year-end March) FY14 FY15 FY16 FY17

Profit/(Loss) after taxation 4.2 24.6 29.4 45.8

Add: Depreciation 13.2 19.5 20.7 19.1

Net Increase in Current Assets -5.8 -36.7 -96.9 69.1

Net Increase in Current Liabilities -13.7 16.7 35.9 -11.9

CF from operating activities -2.0 24.1 -10.9 122.1

(Inc)/dec in Investments -0.1 0.0 0.0 0.0

(Inc)/dec in Fixed Assets 4.2 -17.1 -10.7 -78.4

Others -2.3 4.5 -10.0 9.5

CF from investing activities 1.8 -12.5 -20.6 -69.0

Inc / (Dec) in Equity Capital 0.0 0.0 0.0 0.0

Inc / (Dec) in Loan -1.5 -11.1 28.3 -6.7

Others 0.9 -0.4 2.6 -1.3

CF from financing activities -0.6 -11.5 30.9 -8.0

Net Cash flow -0.8 0.1 -0.7 45.1

Opening Cash 3.3 2.4 2.5 1.9

Closing Cash 2.4 2.5 1.8 47.0


Balance sheet | Crore

(Year-end March) FY13 FY14 FY15 FY16 FY17

Equity Capital 39.1 39.1 39.1 39.1 39.1

Reserve and Surplus 157.6 161.9 178.6 208.1 253.7

Total Shareholders funds 196.8 201.0 217.8 247.2 292.8

Total Debt 64.6 63.1 52.0 80.3 73.5

Deferred Tax Liability 1.0 1.7 8.9 11.2 10.1

Non Current Liabilties 1.1 1.4 1.7 2.0 2.0

Source of Funds 263.6 267.2 280.3 340.7 378.4

Net Block (Including Intangible asset) 168.9 143.8 149.0 138.4 129.7

Capital WIP 1.3 8.9 1.3 1.8 69.8

Net Fixed Assets 170.1 152.7 150.3 140.3 199.6

Investments 0.0 0.1 0.0 0.0 0.0

Inventory 0.0 0.0 0.0 0.0 0.0

Cash 3.3 2.4 2.5 1.9 47.0

Debtors 164.7 146.0 181.9 222.1 216.7

Loans & Advances & Other CA 4.3 28.8 29.6 86.3 22.6

Total Current Assets 172.3 177.2 214.0 310.4 286.4

Creditors 72.7 69.7 81.4 108.3 97.8

Provisions & Other CL 31.5 20.7 25.7 34.8 33.3

Total Current Liabilities 104.2 90.5 107.1 143.0 131.1

Net Current Assets 68.1 86.8 106.9 167.4 155.3

LT L& A, Other Assets 25.3 27.6 23.1 33.0 23.6

Application of Funds 263.6 267.2 280.3 340.7 378.4


Key ratios

(Year-end March) FY14 FY15 FY16 FY17

Per share data (|)

EPS 1.1 6.3 7.5 11.7

Cash EPS 4.5 11.3 12.8 16.6

BV 51.4 55.6 63.2 74.8

Cash Per Share 0.6 0.6 0.5 12.0

Operating Ratios (%)

EBITDA margins 7.9 15.7 13.5 13.2

PBT margins 1.5 9.0 8.6 10.4

Net Profit margins 1.3 6.0 5.7 8.2

Inventory days 0 0 0 0

Debtor days 161 163 156 141

Creditor days 77 73 76 64

Return Ratios (%)

RoE 2.1 11.3 11.9 15.6

RoCE 4.8 16.4 15.0 15.1

Valuation Ratios (x)

P/E NA NA 88.4 56.8

EV / EBITDA 101.1 41.1 37.5 35.3

Market Cap / Revenues 7.9 6.4 5.0 4.6

Price to Book Value 12.9 11.9 10.5 8.9

Solvency Ratios

Debt / Equity 0.3 0.2 0.3 0.3

Debt/EBITDA 2.4 0.8 1.1 1.0

Current Ratio 2.0 2.0 2.2 2.2

Quick Ratio 2.0 2.0 2.2 2.2Source: RHP, ICICIdirect.com Research


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ratings to its stocks according to their notional target price vs. current market price and then categorises them

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target price is defined as the analysts' valuation for a stock.

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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

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Mumbai – 400 093

[email protected]


Disclaimer

ANALYST CERTIFICATION

We /I, Bharat Chhoda, MBA; Ankit Panchmatia, PGDBM (Finance) Research Analysts , Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in

this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific

recommendation(s) or view(s) in this report.

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ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent veri fication has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial posi tions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Bharat Chhoda, MBA; Ankit Panchmatia, PGDBM (Finance) Research Analysts; Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

It is confirmed that Bharat Chhoda, MBA; Ankit Panchmatia, PGDBM (Finance) Research Analysts; Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

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