Mid Cap Alcoholic Beverage -...
Transcript of Mid Cap Alcoholic Beverage -...
Please refer to Disclosures and Disclaimers at the end of the Research Report.
Mid Cap Alcoholic BeverageSmaller incumbents to enjoy collateral benefits
28 October 2013PhillipCapital (India) Pvt. Ltd.
The UNSP Diageo deal marks an inflection point for the Indian Alcohol beverage industry. Sector dynamics are shifting from a volume driven focus to profit orientation. This paradigm shift is expected to sharply improve industry profitability; competitive risks are to be redefined by brand saliency and not only disruptive pricing strategies. We expect gains of prudent category operation to extend to the smaller players also like Radico Khaitan (RDCK) and Tilaknagar Industries (TLNGR). RDCK and TNLGR have historically demonstrated robust operating performance in challenging operating conditions marked by strict regulation, disruptive competition and adverse commodity cycles. We believe sustenance of operating metrics and probable strategic tie ups with foreign player for RDCK and TLNGR are re‐rating opportunities.
Case Study of Kerala Rum Market: in FY13, UNSP has withdrawn volumes of 2.6 mn cases in its Masstige Rum brands. This has led to addition of 1 mn cases in UNSP’s Prestige Rum brand. RDCK and TLNGR have received volume gains of 0.4 mn (70% YoY) and 0.9 mn (109% YoY) cases respectively. We estimate the Rum category profitability to have expanded by 1.6x on account of shift in category dynamics. Benefit of UNSP’s focus on profitability has trickled down to RDCK and TLNGR with twin impact of higher volume and profits. The Kerala Rum market is an indicator of the immense value unlocking potential for the Indian liquor industry.
Next wave of consolidation can trigger value unlocking in RDCK and TLNGR: A lucrative Indian liquor industry is expected to increase market interest from multinational players. Recent market news indicates next wave of consolidation with participation from RDCK and TLNGR. We believe that a strategic tie up can improve the company fundamentals, boost economies of scale, and better investment capability. Post re‐rating in UNSP the valuation discount for RDCK and TLNGR has increased significantly. As benefits of improved category prospects are expected to extend to RDCK and TLNGR too, we believe that the sharp increase in discount is unjustified. We estimate that probable strategic tie up and depressed valuations present scope for significant re – rating by 1.5x – 2x for RDCK and TLNGR.
Peer Analysis: RDCK and TLNGR to sustain strong operating metrics, discounted valuations present re‐rating opportunity: Our peer analysis indicates that historically on key metrics represented by volume, EBITDA per case and absolute EBITDA, RDCK and TLNGR’s operating performance has been significantly ahead of UNSP. We do not expect increase in UNSP profitability to have a crowding out effect and expect RDCK and TLNGR to maintain traction. Hence strong fundamentals and discounted valuations build case for sharp re – rating.
Valuation: We value RDCK at 1 Yr forward EV/EBITDA of 14x with revised target price of Rs. 195, an upside of 33%. We value TLNGR at 1 Yr forward EV/EBITDA of 8x with revised target price of Rs. 84, an upside of 37%. We expect the mid cap Alcoholic beverage space to generate sharp absolute returns in the near term. We maintain our BUY recommendation on RDCK and TLNGR.
Companies Covered Radico Khaitan CMP Rs147Reco BUYTarget Price Rs195 Tilaknagar Industres CMP Rs61Reco BUYTarget Price Rs84 Ennette Fernandes (+ 9122 66679764) [email protected] Kapil Bagaria (+ 9122 6667 9965) [email protected]
Naveen Kulkarni, CFA, FRM (+ 9122 66679947) [email protected]
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Table of Contents Study of Kerala Rum Market demonstrates consolidation benefits with significant uptick
in volume of premium brands and category profitability ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 3
Industry consolidation triggers multiple re ‐ rating for the sector led by improved
prospects in profitability ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 9
Peer analysis signifies strong operating metrics and multiple re‐rating opportunity for
Radico and Tilakangar ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 11
Valuation Band Charts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 13
Indian Alcohol industry on strong foothold, drivers remain intact ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 15
Companies Section Radico Khaitan ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 18
Tilaknagar Industries ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 22
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Study of Kerala Rum Market demonstrates consolidation benefits with significant uptick in volume of premium brands and category profitability Consolidation in the Indian Alcoholic Beverage sector is expected to drive change in business focus to • Volume push of profitable premium brands and • Defocus from brands that have been negatively impacting business margins and
profitability. As per our industry interaction, visible signs of the positive impact of consolidation are being witnessed in the Kerala Rum market being initiated by the market leader UNSP. The Kerala Rum market is serving as a testing platform to understand the implications of intentional withdrawal of mass priced brands and the said outcome measured by change in volume offtake in premium brands and impact on profitability. We have analysed the monthly offtake for the brands of the listed players UNSP, RDCK and TLNGR as notified by the Kerala State Beverages Corporation Limited (KSBCL) for the period FY12 – H1FY14. Key findings on volume: • UNSP:
o Volume deceleration in BagPiper Rum brand (annual 1 mn cases volume in FY12) from Sep 2011 but pace of deceleration increased in May 2012. Volume offtake lowered in McDowell Old Cask rum (annual 2 mn cases volume in FY12) from May 2012.
o Withdrawal of 2.6 mn cases in the masstige segment in FY13 contributed to increase in volumes by 1 mn cases in the prestige segment under the brand McDowell Celebration
• RDCK: o Absolute increase in volumes by 0.36 mn cases with majority proportion of the
increase in volumes in the mass brand of Contessa Rum, up by 0.28 mn cases o Premium brand Contessa White Rum has reported a 63% YoY with increase in
volumes by 0.08 mn cases • TLNGR:
o Volume gains of 0.45 mn cases each in the masstige brands Madira Rock Rum and Shot Rum and the prestige brand White House Rum.
o White House Rum reports volume of 0.45 mn cases in first year of its launch itself
• Masstige: Total Masstige volume (cumulative of the 3 companies) has degrown by 40% YoY in FY13 to 2.54 mn cases with absolute loss in volumes of 1.9 mn cases
• Prestige: Total Prestige absolute volumes has increased sharply from 1 mn cases to 2.6 mn cases in FY13, an increase of 1.6 mn cases, up by 156% YoY
• H1FY14: Masstige volume sales down by 15% YoY and Premium volume up by 36% YoY. In absolute terms volume in mass brands are down by 0.2 mn cases and up by 0.4 mn cases in Prestige brands signifying sustenance of premiumisation trend.
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Monthly reported volume sales brandwise for Rum in Kerala during time period of FY12 – H1FY14 United Spirit
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MCDowell Celebration (MRP Rs 330)
Mcdowell Old Cask (MRP Rs 275)Bagpiper (MRP Rs 270)
Source: KSBCL, PhillipCapital India Research
Tilaknagar
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White House Rum (MRP Rs 310) Shot (MRP Rs 195)Madira Rock (MRP Rs 195)
Source: KSBCL, PhillipCapital India Research
Radico
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Contessa (MRP Rs 265)Contessa White (MRP Rs 290)
Source: KSBCL, PhillipCapital India Research
Tilaknagar benefited with addition of0.9 mn cases. He company added 0.45mn cases each in the Prestige rum brandWhite House Rum and the Masstigebrands Madira Rock and Shot
Radico benefited with addition of 0.4mn cases. Radico added 0.3 mn cases inthe Masstige brand Contessa Rum and0.1 mn cases in the Prestige brandContessa White
UNSP withdrew 2.6 mn of the 3 mncases of its Masstige Rum brandsBagpiper and McDowell Old Cask in FY13. The company added 1 mn cases inthe prestige brand McDowellCelebration
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
FY13 Volumes in Kerala Rum market witness structural shift from masstige to prestige brands UNSP has initiated steps to lower volume of its major Masstige rum brands McDowell Old Cask (2 mn cases) and BagPiper Rum (1 mn cases). UNSP reduced BagPiper Rum volumes from Sep 2011. However, the pace of defocus on the Masstige brands increased from May 2012, with sharp volume degrowth in both Bagpiper Rum and McDowell Old Cask Rum. UNSP’s withdrawal of 2.6 mn cases from the channel has had critical ramifications for the Kerala Rum category. Our key observations being: The resultant gap from withdrawal of UNSP masstige brands has triggered downtrading and sharp uptrading to premium brands In FY13, UNSP reported sharp volume degrowth of 82% YoY in its masstige brand portfolio with absolute volumes down by 2.6 mn cases. We observe that for the said time period, volumes in other masstige brands and prestige brands cumulatively increased by 2.32 mn cases. We observe that downtrading from UNSP’s masstige brands priced at Rs. 270 – 275 to other masstige brands priced at Rs. 195 ‐ 265 effected an addition of 0.74 mn cases, volume growth of 61% YoY. However, the key beneficiary has been the prestige category which has added ~1.6 mn cases and has reported volume growth of 156% YoY. Volume analysis of impact of UNSP’s destocking of masstige brands on overall prestige brands and other masstige brands in the Kerala Rum market Volume (mn Cases) Absolute change Growth
Category MRP FY2012 FY2013 (in Mn Cases) YoY %
UNSP Masstige 270 ‐ 275 3.19 0.58 ‐2.61 ‐82%Other Masstige 195 ‐ 265 1.22 1.96 0.74 61%Total Prestige 290 ‐ 330 1.01 2.59 1.58 156%
Source: KSBCL, PhillipCapital India Research
For the total masstige segment (aggregate of UNSP, RDCK and TLNGR) the loss in volumes is 1.87 mn cases on account of destocking by UNSP. Masstige segment volume degrowth is 42% YoY. Total volume in the prestige segment has increased by 1.6 mn cases. Volume analysis for Rum masstige and prestige brands for top 3 listed players Category MRP Volume (in Mn Cases) Absolute change Growth YoY %
FY2012 FY2013
Total Mass 195 ‐ 275 4.41 2.54 ‐1.87 ‐42%Total Prestige 290 ‐ 330 1.01 2.59 1.58 156%
Source: KSBCL, PhillipCapital India Research
Radico and Tilaknagar witness significant increase in overall volumes due to consumer migration UNSP reported overall volume degrowth of 39% YoY in FY13 with absolute loss in volumes of ~1.6 mn cases. This has resulted in sharp upsurge in volumes for RDCK and TLNGR. RDCK has reported volume increase of 0.36 mn cases with a volume growth of 71% YoY. TLNGR has reported a volume growth of 109% YoY, with significant increase in volumes by 0.92 mn cases. We observe that for RDCK the volume benefit is primarily in the masstige segment and for TLNGR the volume gains is equivalent for both masstige and prestige segments at 0.45 mn cases each.
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Kerala Rum volume analysis company wise and segment wise for the top 3 listed players Company Wise MRP Volume (in Mn Cases) Absolute Growth
FY2012 FY2013 change YoY %
UNSP 4.06 2.50 ‐1.57 ‐39% ‐ Mass 270 ‐ 275 3.19 0.58 ‐2.61 ‐82% ‐ Prestige 330 0.88 1.92 1.04 119%RDCK 0.51 0.87 0.36 71% ‐ Mass 265 0.38 0.66 0.28 73% ‐ Premium 290 0.13 0.22 0.08 63%TI 0.85 1.76 0.92 109% ‐ Mass 195 0.84 1.31 0.46 55% ‐ Premium 310 0.00 0.46 0.45
Source: KSBCL, PhillipCapital India Research
Kerala Rum volume analysis brandwise for the top 3 listed players Volume (mn Cases) Absolute change Growth
Brand Company MRP FY2012 FY2013 (mn Cases) YoY %
Mcdowell Old Cask UNSP 275 2.01 0.45 ‐1.56 ‐77.5%Bagpiper UNSP 270 1.17 0.12 ‐1.05 ‐89.4%MCDowell Celebration UNSP 330 0.88 1.92 1.04 119.1%Madira Rock TI 195 0.84 1.26 0.42 50.2%White House Rum TI 310 0.00 0.46 0.45Shot TI 195 0.01 0.05 0.04 833.1%Contessa RDCK 265 0.38 0.66 0.28 73.4%Contessa White RDCK 290 0.13 0.22 0.08 63.2%
Source: KSBCL, PhillipCapital India Research
Masstige volume rationalisation persists in H1FY14, with robust volume increase in prestige brands Volume analysis of the Rum market in H1FY14 indicates that UNSP’ focus on rationalizing volumes in the masstige segments persists. UNSP Masstige segment reported volume degrowth of 83% in H1FY14 with volume loss of 0.43 mn cases. Volume addition in other masstige brands has reduced significantly as major proportion of portfolio rationalization was realized in FY13. Other Masstige brands added 0.1 mn cases in H1FY14. Volume addition in the premium segment continues to be relatively higher than the other masstige brands. Prestige segment added ~0.4 mn cases in H1FY14, with robust volume growth of 36% YoY in spite of high base effect.
H1 volume analysis of impact of UNSP destocking of masstige brands on prestige brands and other masstige brands
Category MRP H1FY2012 H1FY2013Absolute
change YoYGrowth YoY % H1FY2014
Absolute change YoY
Growth YoY %
UNSP Masstige 270 ‐ 275 1.64 0.52 ‐1.12 ‐68% 0.09 ‐0.43 ‐83%Other Masstige 195 ‐ 265 0.50 0.88 0.38 76% 0.98 0.10 11%Total Prestige 290 ‐ 330 0.44 1.09 0.65 146% 1.48 0.39 36%
Source: KSBCL, PhillipCapital India Research
H1 volume analysis of masstige and prestige brands for the top 3 listed players
Category MRP H1FY2012 H1FY2013Absolute chne
YoY in FY13Growth YoY % H1FY2014
Absolute chng YoY in FY14
Growth YoY %
Total Mass 195 ‐ 275 2.14 1.41 ‐0.73 ‐34% 1.20 ‐0.21 ‐15%Total Prestige 290 ‐ 330 0.44 1.09 0.65 146% 1.48 0.39 36%
Source: KSBCL, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Tilaknagar’s volume gains in H1FY14 continues at the pace of H1FY13, significant positive. For Radico, its masstige segment remains key beneficiary. In H1FY13 the magnitude of destocking by UNSP was high, on account of which the quantum of volume loss is lower in H1FY14. Notwithstanding which we observe that TLNGR has been successful in adding volumes of 0.35 – 0.4 mn cases each in both H1FY13 and H1FY14, which is commendable. For RDCK, in FY13, major proportion of the volume gain was in H2FY13. In H1FY14, RDCK has added ~0.2 mn cases of which ~90% is in the masstige segment.
H1 Volume analysis of Kerala Rum market segment wise and company wise for the top 3 listed players
Company Wise MRP H1FY2012 H1FY2013Absolute chng
YoY in FY13Growth YoY % H1FY2014
Absolute chng YoY in FY14
Growth YoY %
UNSP 2.01 1.43 ‐0.58 ‐29% 1.07 ‐0.36 ‐25% ‐ Mass 270 ‐ 275 1.64 0.52 ‐1.12 ‐68% 0.09 ‐0.43 ‐83% ‐ Prestige 330 0.38 0.91 0.53 142% 0.98 0.07 7%RDCK 0.24 0.34 0.10 41% 0.54 0.19 57% ‐ Mass 265 0.17 0.27 0.09 53% 0.44 0.17 64% ‐ Premium 290 0.07 0.07 0.01 9% 0.10 0.02 30%TI 0.33 0.73 0.40 123% 1.08 0.35 48% ‐ Mass 195 0.33 0.62 0.30 90% 0.67 0.05 8% ‐ Premium 310 0.00 0.11 0.11 0.41 0.30 283%
Source: KSBCL, PhillipCapital India Research
H1 volume analysis of Kerala rum market brandwise for the top 3 listed players
Brand Company MRP H1FY2012 H1FY2013Absolute chng
YoY in FY13Growth YoY % H1FY2014
Absolute chng YoY in FY14
Growth YoY %
Mcdowell Old Cask UNSP 275 0.94 0.41 ‐0.54 ‐56.9% 0.09 ‐0.32 ‐78.7%Bagpiper UNSP 270 0.70 0.12 ‐0.58 ‐83.5% 0.00 ‐0.11 ‐97.5%MCDowell Celebration UNSP 330 0.38 0.91 0.53 142.1% 0.98 0.07 7.3%Madira Rock TI 195 0.33 0.62 0.29 88.6% 0.54 ‐0.07 ‐11.8%Shot TI 195 0.00 0.01 0.01 0.13 0.12 2339.8%White House Rum TI 310 0.00 0.11 0.11 0.41 0.30 282.6%Contessa RDCK 265 0.17 0.27 0.09 53.4% 0.44 0.17 64.3%Contessa White RDCK 290 0.07 0.07 0.01 9.3% 0.10 0.02 30.0%
Source: KSBCL, PhillipCapital India Research
Portfolio rationalization drives sharp improvement in category profitability by 1.6x, as per our estimates To understand the implication of the portfolio rationalization on profits for the Kerala Rum market we have built a base case assuming EBITDA/Case for masstige brands at Rs. 0 per case and for Prestige brands at Rs. 50 per case. As per our findings, • Sales: sales value for the sector has decreased by 3% YoY, • EBITDA: sector profitability has improved by 156% and • EBITDA Margin: recorded an improvement in EBITDA margins of 560 bps YoY.
EBITDA margin profile of the category has improved from 3.5% to 9%, led primarily by UNSP.
UNSP compromise on volume sales translates to sharp improvement in profitability UNSP’s modified strategy to focus on profits over volumes has translated to decrease in its absolute sales by 32% YoY. However we estimate that profitability would have improved sharply with EBITDA margin expansion of 830 bps YoY. The company could have achieved an improvement in margins to double digit level from the earlier estimated ~4% margin profile.
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Tilaknagar participates in the expanded profit pool We estimate that in FY12, TLNGR’s EBITDA would have been insignificant on account of category profitability being restricted by UNSP and absence of the premium brand White House Rum from its portfolio. With the launch of White House Rum in FY13, the brand has benefitted from the sharp improvement in category premiumisation triggered by UNSP’s portfolio rationalization. We estimate TLNGR to have achieved significant improvement in profitability and we estimate EBITDA margins to have improved to ~6% in FY13. Radico primarily benefits by way of expansion in business scale RDCK’s sales value growth has increased by 71% YoY in FY13 with higher proportion of sales increase from the Masstige brand Contessa. We estimate that the change in product mix with higher contribution from the Masstige brand could have led to marginal contraction in EBITDA margins. Initiatives in the Kerala Rum market can be extended to other segments and states, unlocking industry’s profit potential. Smaller players to enjoy twin benefits As the market leader UNSP maintains focus on profits, we expect similar initiatives to be undertaken in other states and other segments. With probable further industry consolidation and increased profit oriented focus we expect significant unlocking of potential profts. We expect twin benefits for relevant smaller incumbents by way of both increase in business scale led by volume gains and profitability. Analysis of impact of portfolio rationalization on profitability of Kerala rum market and top 3 listed players (Rs. Mn) FY2012 FY2013 Growth YoY %
Sector Sales 1464 1426 ‐3%EBITDA 51 130 156%EBITDA Margin % 3.5% 9.1% +560 bps UNSP Sales 1160 792 ‐32%EBITDA 43.8 96.0 119%EBITDA Margin % 3.8% 12.1% +830 bps Radico Sales 139 237 71%EBITDA 6.7 10.9 63%EBITDA Margin % 4.8% 4.6% ‐ 20 bps Tilaknagar Sales 165 396 140%EBITDA 0.1 22.8 31825%EBITDA Margin % 0.0% 5.7% +570 bps
Assumption:
EBITDA/ Case for Masstige brands at Rs. 0
EBITDA/ Case for Prestige brands at Rs. 50
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Industry consolidation triggers multiple re – rating for the sector led by improved prospects in profitability Scope of premiumisation and sector’s profit potential was restricted by UNSP’s volume focused strategy The Indian Alcoholic Beverage sector has primarily been Volume focused led by the volume oriented business strategy of the largest player United Spirits (UNSP). The other incumbents namely Pernod, RDCK and TLNGR have primarily operated on a premiumisation led strategy, to manage healthy profitability in a bid to mitigate impact of the stringent pricing regulation. However, on account of UNSP the scope of premiumisation and realization of profit potential has been restricted. UNSP Diageo deal marks structural shift in sector drivers; with profitability being key In FY13 UNSP entered into an agreement with Diageo for stake sale of 27.4% for consideration of Rs. 57.3 bn. The short term key positive is financial deleveraging. However on a long term basis with Diageo being primarily profit driven the deal is expected to mark strategic shift for UNSP from volume to higher profit objective. Improvement in scope of premiumisation and expansion in sector profitability, are expected to be the key outcomes. Improvement in UNSP profitability does not imply a crowding out effect for smaller incumbents who have been key contributors to premiumisation trends During FY11 – 13, Premium IMFL reported volume growth of 15% CAGR which is 4x of the reported volume growth for the mass IMFL brands at ~4% CAGR. In Premium IMFL category, RDCK and TLNGR have reported volume of 20% CAGR, significantly ahead of the segment and the market leader. Growth in EBITDA/case for RDCK and TLNGR has been significantly ahead of UNSP in the past 5 years. With expansion in the sector profit pool and, TLNGR and RDCK driving higher contribution from premium brands we do not expect a crowding out effect for these smaller players. Portfolio rationalization by UNSP presents twin benefits of volume gains and higher profits to smaller players like RDCK and TLNGR UNSP’s focus on profit making brands is leading to withdrawal of volume of its Masstige brands that have weak profit metrics. The consequent volume gap is causing significant volume gains for the smaller players like RDCK and TLNGR in both of their Masstige and Prestige segments. Higher volume addition in the Prestige segment is expected to improve product mix for the companies and contribute to better profitability. Lucrative Indian liquor industry to lead next wave of consolidation; Industry consolidation on account of UNSP Diageo deal is expected to favourably redefine operating parameters for the sector led by higher profitability. As the Indian liquor industry turns lucrative, there is an expected increase in market interest from foreign players, serving as the catalyst for the next wave of consolidation in the industry. Value unlocking realized in UNSP post Diageo deal Market Cap EV/ EBITDA on FY13
(Rs. Bn) Prior to Deal Current Movement % Prior to Deal Current
UNSP 180 384 113% 15 31
Source: Bloomberg, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Market is abuzz with deals in Radico and/or Tilaknagar. Implied deal valuations and robust operating performance key re – rating triggers In the past 2 months, the market has been abuzz with probable deals between RDCK and/or TLNGR with international players Pernod, Suntory etc. Currently RDCK has a tie up with Suntory to market their premium whisky brands in India. TLNGR has a bottling tie up with Pernod. Implied deal valuations at a significant premium The implied deal valuation as per newspaper reports is at a significant premium of 1.5 – 2x to the current valuations for RDCK and TLNGR. It is to be noted that we have witnessed similar magnitude of re – rating in UNSP post the Diageo deal. Significant improvement in category profitability, benefit of strategic tie ups and attractive valuations presents sharp re‐rating opportunity Historically, RDCK and TLNGR have traded at a significant discount to UNSP on account of difference in scale of business, which has increased post the re‐rating in UNSP following Diageo deal. The re‐rating in UNSP is also on account of the significant improvement expected in industry profitability, which we believe has positive implications for RDCK and TLNGR. A strategic tie up with a foreign player is expected to drive expansion in portfolio of premium brands, improve capability of investment in the business, increase economies of scale, access to research and technology and financial deleveraging. Hence considering the incremental positives that can be realized from a tie up and attractive valuations we believe there exists a significant re‐rating opportunity. On the basis of expect deal value quoted, we estimate value unlocking potential of 50% in RDCK and 110% in TLNGR. Valuation details _____Prior to deal_____ _____Post Deal_____ _____Increase (%)_____ EV/EBITDA EV/SALES EV/EBITDA EV/SALES EV/EBITDA EV/SALES
UNSP 14.4 1.8 27 3.65 88% 103%Radico 11.3 1.7 11.4 1.82 3% 9%Tilaknagar 6.7 1.6 6.8 1.8 4% 15% Relative Discount % Radico ‐22% ‐6% ‐58% ‐50% Tilaknagar ‐53% ‐11% ‐75% ‐50%
Source: Bloomberg, PhillipCapital India Research
Value unlocking opportunity in Radico and Tilaknagar (in Rs. Bn) EV EV/ EBITDA on FY13
Company Probable Tie Up with Deal
implied Current Value
Unlocking % CurrentDeal
implied
Radico Khaitan Suntory 41 27 52% 15 22Tilaknagar Industries Pernod Ricard, Suntory 30 14 115% 8 18
Source: PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Peer analysis signifies strong operating metrics and multiple re‐rating opportunity for Radico and Tilaknagar We have undertaken a peer analysis of UNSP, RDCK and TLNGR on the key operating parameters of Volume growth, EBITDA/case and EBITDA. Following are our key findings: UNSP’s volume oriented focus drives robust sector volume growth. Tilaknagar’s volume ahead of the sector on account of its nascent size During FY08 – 13 TLNGR has reported the fastest pace of volume growth, almost 2.5x of the industry enabled by the nascent size of the business. As UNSP had primarily adopted a volume oriented strategy, the company’s volume has been robust at 11% CAGR. RDCK has sizeable portion of business from Masstige non – millionaire brands. As RDCK has focused on driving volume in Prestige and Millionaire brands, the revenue contribution from non – Millionaire Masstige brands has contracted from 35% in FY08, which has to 26% in FY13. RDCK reported overall volume of 8% CAGR, however volume growth in the Prestige and Millionaire brands has been ahead of the sector at 12% CAGR. Smaller incumbents significantly outperform on parameter of EBITDA/Case UNSP reported sluggish EBITDA/Case of 1% CAGR during FY08 – 13 on account of the company’s lack of focus on profitability. In contrast to which, the smaller incumbents focused on premiumising the portfolio registering EBITDA/Case of ~10% CAGR for RDCK and ~15% CAGR for TLNGR. Premiumisation drives sharp EBITDA growth for the smaller incumbents As against UNSP’s absolute EBITDA growth of 12% CAGR, RDCK reported EBITDA of ~19% CAGR and TLNGR reported EBITDA of ~46% CAGR during FY08 – 13. Operating metrics for FY08 ‐ 13 Volumes FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 5 Year CAGR
UNSP 74 88 100 112 120 124 10.9%RDCK 13 13 15 16 18 19 8.3%TLNGR 4 6 8 11 13 14 26.8% EBITDA Per Case UNSP 81 71 77 86 79 84 0.7%RDCK 61 35 89 92 96 96 9.5%TLNGR 62 84 103 105 111 123 14.8% EBIDTA UNSP 5,974 6,277 7,740 9,635 9,492 10,334 11.6%RDCK 784 456 1,302 1,490 1,691 1,842 18.6%TLNGR 261 465 825 1,136 1,468 1,706 45.5%
Source: PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Medium Term Forecasts Volume growth for Radico and Tilaknagar to stay ahead of UNSP In the medium term consensus estimates for UNSP volume growth is 6% CAGR. We estimate RDCK and TLNGR to report strong volume growth of 8% CAGR and 22% CAGR respectively. TLNGR is expected to add 3 mn incremental volumes on account of its tie up with Mohan Breweries, adjusting for which the volume growth is still relatively higher than peers at ~13% CAGR. EBITDA per case metric to improve significantly for UNSP, Radico sustains growth rates, Tilaknagar to witness pressure on account of change in product mix EBITDA per case operating metric for UNSP is estimated to register sharp growth of ~23% CAGR over FY13 – 15E. Increase in UNSP’s profitability is not expected to have any crowding out effect for RDCK, with the company sustaining EBITDA per case growth of ~10% CAGR in the medium term. TLNGR’s EBITDA per case is expected to contract in FY14 as the company adds 3 mn cases of Masstige brand (from tie up with Mohan) which have lower EBITDA per case. As tie up with Mohan translates to higher retail of premium brands in TN, the EBITDA/case metric is expected to improve in FY15E by 10% YoY Sector operating profit growth rate estimate to improve by by 1.8x in the medium term. Radico and Tilaknagar expected to sustain robust operating performance During the period FY08 – 13, the sector reported EBITDA of ~15% CAGR due to lower EBITDA growth for UNSP. However, as UNSP shifts focus to profitability, in the medium term we estimate sector profit to grow by 27% CAGR. UNSP with estimated EBITDA of 30% CAGR is the key driver. As we estimate RDCK and TLNGR to be meaningful participants in the expanded profit pool we expect the companies to report operating profit of 19% CAGR and 20% CAGR respectively. We observe that, while profitability for UNSP is expected to improve significantly, RDCK and TLNGR have sustained strong operating profit growth notwithstanding high competitive risk of a volume focused market leader, regulatory challenges and cycles of sharp input cost escalation. Operating metrics for FY08 – FY15E Volumes FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E 2 Year CAGR
UNSP 74 88 100 112 120 124 131 139 5.8%RDCK 12.80 12.87 14.62 16.11 17.69 19.09 20.66 22.47 8.4%TLNGR 4.21 5.54 8.00 10.86 13.20 13.82 18.66 20.52 21.8%
EBITDA Per Case UNSP 81 71 77 86 79 84 94 126 22.8%RDCK 61.24 35.46 89.03 92.50 95.56 96.48 107.33 116.27 9.8%TLNGR 62.04 83.87 103.09 104.56 111.21 123.45 110.62 120.17 ‐1.3%
EBIDTA UNSP 5,974 6,277 7,740 9,635 9,492 10,334 12,350 17,500 30.1%RDCK 784 456 1,302 1,490 1,691 1,842 2,217 2,612 19.1%
TLNGR 261 465 825 1,136 1,468 1,706 2,064 2,466 20.2%
Source: Bloomberg, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Valuation Band Charts On EV/EBITDA and EV/Sales basis, RDCK and TLNGR are trading at a discount to their historical valuations. We observe significant re‐ rating in multiples for UNSP post the Diageo deal. With high probability of next wave of consolidation in the industry, and attractive valuations we believe that strategic tie ups for RDCK and TLNGR can trigger mutiple re – rating.
EV/EBITDA 1 yr forward band chart
Tilaknagar
3x
6x
9x
12x
0
5000
10000
15000
20000
25000
30000
35000
Apr‐05
Apr‐06
Apr‐07
Apr‐08
Apr‐09
Apr‐10
Apr‐11
Apr‐12
Apr‐13
Rs mn Radico
9x
12x
15x
18x
0
5000
1000015000
20000
25000
30000
3500040000
45000
50000
Apr‐05
Apr‐06
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Apr‐13
Rs mn
United Spirit
10x
15x
20x
25x
0
100000
200000
300000
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600000
Apr‐08 Apr‐09 Apr‐10 Apr‐11 Apr‐12 Apr‐13
Rs mn
Source: Bloomberg, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
EV/SALES 1 yr forward band chart
Tilaknagar
0.6x
1.2x
1.8x
2.4x
0
5000
10000
15000
20000
25000
30000
Apr‐05
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Apr‐07
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Rs mn
Radico
1x
2x
3x
4x
0
10000
20000
30000
40000
50000
60000
70000
Apr‐05
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Rs mn
United Spirit
2x
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0
100000
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300000
400000
500000
600000
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Apr‐08 Apr‐09 Apr‐10 Apr‐11 Apr‐12 Apr‐13
Rs mn
Source: Bloomberg, PhillipCapital India Research
Debt Equity Ratio
0.0
0.5
1.0
1.5
2.0
2.5
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3.5
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
UNSP TilaknagarRadico
Source: PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Indian Alcohol industry on strong foothold, drivers remain intact The Indian Alcohol industry volume growth has largely remained ahead of the Indian Real GDP growth at 11% CAGR. Sector volume growth is 1.4x of the real GDP growth for the period of CY05 – 13. Key drivers for the robust volume growth are expected to remain intact over the medium to long term. Indian Alcohol industry volume growth and Real GDP growth YoY %
3%
5%
7%
9%
11%
13%
15%
CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012
Industry Volume Growth YoY % Real GDP Growth YoY %
Source: Euromonitor, PhillipCapital India Research
Historically, volume has been the key growth driver for the industry, however we observe that sector realizations have improved in the past 2 years. Sector price growth has largely remained below inflation (represented by WPI). However in FY10 ‐ 13, it has improved on account of sharp input cost inflation and duty hikes. We believe that elevated pricing growth can sustain contributed by improving product mix on account of premiumisation and probability of higher price hikes.
Indian Alcohol industry sales value growth YoY % Indian Alcohol industry realization growth YoY %
Industry Value Growth YoY %
10%
11%
12%
13%
14%
15%
16%
17%
18%
CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012
Average price realisation YoY %
‐1%
0%
1%
2%
3%
4%
5%
6%
7%
CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012
Source: Eurmonitor, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Key Industry drivers Significant increase in India’s per capita income boosts higher disposable income driving purchasing power and demand In the last decade the trajectory in the per capita income has improved considerably in the past 6 years. Per capita income reported 14% CAGR during FY07 – 13 improving from the 10% CAGR recorded during FY01 – 07. The consequent increase in disposable income has led to higher consumption and uptrading. While near term trends for consumer demand indicate sluggishness, we believe that on a long term to medium term basis income growth is expected to register strong growth. Hence liquor industry trends of premiumisation and increase in consumption are expected to find support. India per capita income (Current terms)
0
10000
20000
30000
40000
50000
60000
70000
80000
2000‐0
1200
1‐02200
2‐03200
3‐04200
4‐05200
5‐06200
6‐07200
7‐08200
8‐09
2009‐1
0
2010‐1
1
2011‐1
2
2012‐1
3AE
Source: PhillipCapital India Research
Per capita alcohol consumption in India remains depressed Per capita alcohol consumption in India is only 0.75 litre per person significantly lower than the other BRICS nations as well as smaller neighboring economies like Nepal. India’s alcohol consumption has increased by 47% over 1980 – 2009 significantly lower than China and Brazil. We believe that prospects for improvement in alcohol consumption are higher in the next decade driven by higher income and demand
Per capita consumption (litre per person) Change in Alcohol consumption from 1980 ‐ 2009
15.8
13.4
9.5 9.5 9.4 9.2
5.9
0.8
0
2
4
6
8
10
12
14
16
18
Russia UK Nepal SouthAfrica
UnitedStates
Brazil China India45
9
17
188
159
47
‐15
‐50 0 50 100 150 200
Russia
UK
South Africa
United States
Brazil
China
India
Source: OECD, PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Consumer migration from Country liquor presents significant volume potential The country liquor’s market contribution to the overall Indian Alcohol industry is sizeable at 49%. The long term average volume growth for the country liquor market has been muted at 3 – 4% CAGR, with consumers uptrading to the IMFL segment. During FY11 – 13, volume growth in IMFL at 15% CAGR has been 2.5x of the 6% CAGR volume in the country liquor segment. On account of which country liquor contribution has decreased by 400 bps over FY11 – 13. We expect rapid pace of consumer migration to IMFL from country liquor to persist, supporting strong volume growth trends for the IMFL sector. IMFL and Country Liquor volume Volume (in Mn Cases)
Distilled Spirits 2011 2013 Volume CAGR %
IMFL 225 295 ‐ 300 15%Country Liquor 250 280 ‐ 285 6% Contribution % IMFL 47% 51% Country Liquor 53% 49%
Source: Tilaknagar Annual report, PhillipCapital India Research
Demographic dividend presents opportunity of a large target market India has ~55% of the population in the age group of 18 – 64 years, placing 660 mn individuals in the legal drinking age bracket of 18 yrs+ as the target audience. An additional 150 mn individuals are expected to be added to this target market in the next 5 years. As an increasing proportion of the youth population up spends on the alcohol beverage category, the potential volume gains by way of the demographic divided is a key driver Age wise India population break up (in %)
11
13
12
10
9
41
5
9.3
11
11
10
9
44
5
0 10 20 30 40 50
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 to 64
65 to 1002001 2011
Source: Census data, PhillipCapital India Research
– 18 of 28 –
Radico Khaitan Premiumisation = Higher profitability
ALCOHOL BEVERAGES: Company Update 28 October 2013
PhillipCapital (India) Pvt. Ltd.
Radico Khaitan (RDCK) has created 4 of the 20 successful brands in the Indian liquor industry in the last decade. The company has reported strong volume, EBITDA and PAT of 8%, 19% and 19% CAGR respectively during FY08 – 13 notwithstanding various industry challenges. As RDCK maintains focus on driving volumes in premium brands and industry profit pool expands meaningfully we expect RDCK to sustain robust growth momentum in the medium term
Effectively changes product mix with higher contribution from premium and millionaire brands: RDCK has created 4 Millionaire brands in the last decade of which Magic Moments (MGM) is the premium brand. During FY08 – 13, revenue contribution from the Millionaire brands has improved significantly from 63% to 74%. Volume contribution from premium brands (MGM and Morpheus brandy) has expanded from 5% to 16%, which is the fastest premiumisation of product mix in the listed space. RDCK reported overall volume growth of 8% CAGR but has registered significantly higher volume of 12% CAGR in the Millionaire brand portfolio. RDCK has successfully reduced the revenue contribute form other IMFL brands from 37% to 26% over FY08 – 13. We estimate RDCK to improve contribution from premium brands by 300 bps to 19% over FY13 – 15E, with premium brands volume at 18% CAGR.
Product pipeline and tie ups to thrust portfolio premiumisation: RDCK is focusing on driving premiumisation organically and inorganically. RDCK has developed strong pipeline of premium brands namely After Dark Whisky, Verve Vodka, Morpheus and Florence brandy. The company has also entered into strategic tie ups with Suntory for super premium whisky brands and Ernest & Julio Gallo for Wines.
Premiumisation drives profitability significantly ahead of the sector: RDCK has managed EBITDA/case growth of 10% CAGR, significantly ahead of sector at 3% CAGR. As RDCK maintains focus on premiumisation and industry consolidation to expand the industry profit pool, we estimate RDCK to maintain EBITDA/Case growth at 10% CAGR in the medium term.
Steps initiated to unlock potential value of IMFL business: RDCK is to transfer its IMFL assets to a separate subsidiary. As per the management, the spin off is meant to facilitate induction of a foreign partner. Strategic tie up for RDCK can contribute in financial deleveraging, expansion of portfolio of brands particularly premium, higher economies of scale and better capability to invest in business. As per market reports, the deal consideration is Rs. 8.7 bn for a 26% stake, implying EV of Rs. 26 bn, with significant value unlocking potential of ~59%. Divestment of IMFL business is expected to facilitate higher
Valuation: On account of strong premiumisation and gains from expected improvement in industry profitability we have revised our EPS estimates upwards by 2% and 5% respectively. We believe that current valuations are attractive. Sustenance of robust operating performance and high probability of business consolidation are expected to trigger re‐ rating in valuations. We value the company at its 5 Yr average valuation of 14x 1 Yr. forward EV/EBITDA with a price objective of Rs. 195. Considering the significant upside potential we reiterate our BUY rating on the stock.
BUY RDCK IN | CMP RS 147
TARGET RS 195 (+33%) Company Data
O/S SHARES (MN) : 133MARKET CAP (RSBN) : 19.5MARKET CAP (USDBN) : 0.352 ‐ WK HI/LO (RS) : 161 / 89LIQUIDITY 3M (USDMN) : 1FACE VALUE (RS) : 2
Share Holding Pattern, %
PROMOTERS : 40.5FII / NRI : 33.1FI / MF : 7.4NON PROMOTER CORP. HOLDINGS : 10.7PUBLIC & OTHERS : 8.3
Price Performance, % 1mth 3mth 1yr
ABS 20.7 56.1 24.4REL TO BSE 16.5 51.7 14.1
Price Vs. Sensex (Rebased values)
70
80
90
100
110
120
130
140
150
Apr‐10 Mar‐11 Feb‐12 Jan‐13Radico BSE Sensex
Source: Bloomberg, Phillip Capital Research
Other Key Ratios
Rs mn FY12 FY13E FY14E
Net Sales 12,584 14,188 16,122EBIDTA 1,842 2,217 2,612Net Profit 773 957 1,204EPS, Rs 5.8 7.2 9.1PER, x 25.3 20.4 16.2EV/EBIDTA, x 14.7 12.3 10.6P/BV, x 2.1 1.9 1.7ROE, % 10.2 11.8 13.1Source: Phillip Capital India Research Ennette Fernandes (+ 9122 66679764) [email protected] Kapil Bagaria (+ 9122 6667 9965) [email protected] Naveen Kulkarni, CFA, FRM (+ 9122 66679947) [email protected]
– 19 of 28 –
28 October 2013 / INDIA EQUITY RESEARCH / RADICO KHAITAN COMPANY UPDATE
Snapshot of key operating parameters FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E
IMFL Volume (in Mn cases) 12.8 12.8 12.9 14.6 16.1 17.7 19.1 20.7 22.5Volume Growth YoY % 0.0% 0.5% 13.6% 10.2% 9.8% 7.9% 8.2% 8.8%IMFL Price Growth YoY % 5% 12% 5% 19% 10% 6% 17% 10% 10% Total Net Income 5,838 8,094 6,960 8,356 9,965 11,439 12,584 14,188 16,122 Growth YoY % Total Net Income 38.6% ‐14.0% 20.0% 19.3% 14.8% 10.0% 12.8% 13.6% Contribution to Gross Sales owned units % ‐ IMFL 51.7% 44.2% 50.0% 50.7% 54.5% 52.3% 51.9% 54.7% 57.6%‐ Country Liquor 28.8% 40.7% 29.4% 31.1% 26.5% 26.1% 31.4% 29.5% 27.5%‐ Other Spirits 15.2% 11.8% 15.9% 12.3% 12.3% 15.0% 11.6% 11.1% 10.5%‐ Others 4.4% 3.3% 4.7% 5.9% 6.7% 6.7% 5.1% 4.7% 4.4% RM Cost per unit growth YoY % 1.1% ‐18.3% 36.9% 18.7% ‐7.5% 13.9% 49.2% 5.6% 8.6% % of Sales Raw Material Cost 28.8% 18.8% 30.5% 28.9% 25.5% 25.0% 26.7% 26.0% 26.3%Packaging Cost 16.9% 13.1% 16.3% 14.1% 14.9% 16.0% 14.2% 14.5% 14.7%Employee cost 7.1% 6.1% 7.9% 6.5% 6.2% 6.2% 6.3% 6.2% 6.2%Marketing cost 8.7% 5.0% 8.0% 9.5% 10.3% 9.4% 9.2% 9.0% 8.9%Other Expenses 24.6% 24.1% 29.8% 21.4% 23.5% 21.9% 23.4% 23.5% 23.1% Margin % Gross 53.2% 44.9% 52.3% 53.0% 54.9% 52.3% 53.5% 54.4% 54.4%EBITDA 12.8% 9.7% 6.6% 15.6% 15.0% 14.8% 14.6% 15.6% 16.2%EBIT 12.1% 9.1% 8.3% 14.5% 13.3% 13.8% 14.3% 15.3% 15.9%PBT 7.5% 4.8% 1.8% 6.0% 10.0% 8.7% 8.7% 9.6% 10.6%PAT 4.4% 4.1% 0.9% 5.0% 7.3% 5.6% 6.1% 6.7% 7.5% EBITDA per Case 58 61 35 89 92 96 96 107 116Growth YoY % 5.0% ‐42.1% 151.1% 3.9% 3.3% 1.0% 11.2% 8.3% Interest Rate % 5.6% 6.0% 7.3% 12.4% 7.2% 10.2% 9.9% 10.2% 10.2%Depreciation Rate % 4.6% 4.7% 4.8% 4.8% 4.8% 5.2% 4.9% 5.0% 5.0% Working Capital 77 60 91 111 117 91 84 93 91Inventory Days 92 62 102 108 102 102 113 113 114Debtor Days 69 61 81 89 102 106 114 116 113Creditor Days 84 62 92 86 86 117 143 136 136
Source: Company, PhillipCapital India Research Estimates
Change in Estimates
_____________FY14E_____________ _____________FY15E_____________(Rs Mn) Revised Earlier % Change Revised Earlier % Change
Net Sales 14183 14,188 0.0 16267 16,122 ‐0.9EBIDTA 2173 2,217 2.0 2509 2,612 4.1Margin, % 15.3 15.6 15.4 16.2 PAT 941 957 1.7 1151 1,204 4.6EPS, Rs 7.1 7.2 1.7 8.7 9.1 4.6
Source: Company, PhillipCapital India Research Estimates
– 20 of 28 –
28 October 2013 / INDIA EQUITY RESEARCH / RADICO KHAITAN COMPANY UPDATE
Financials
Income Statement Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Net sales 11,439 12,584 14,188 16,122Growth, % 15 10 13 14Total income 11,439 12,584 14,188 16,122Raw material expenses ‐5,461 ‐5,850 ‐6,476 ‐7,354Employee expenses ‐706 ‐787 ‐874 ‐992Other Operating expenses ‐3,580 ‐4,104 ‐4,621 ‐5,163EBITDA (Core) 1,691 1,842 2,217 2,612Growth, % 14.8 9.0 20.4 17.8Margin, % 14.8 14.6 15.6 16.2Depreciation ‐328 ‐353 ‐385 ‐412EBIT 1,362 1,489 1,832 2,201Growth, % 13.5 9.3 23.0 20.1Margin, % 11.9 11.8 12.9 13.6Interest paid ‐582 ‐701 ‐810 ‐861Other Non‐Operating Income 214 304 335 368Non‐recurring Items ‐125 0 0 0Pre‐tax profit 870 1,093 1,357 1,708Tax provided ‐233 ‐320 ‐400 ‐504Profit after tax 637 773 957 1,204Net Profit 637 773 957 1,204Growth, % 4.6 1.5 23.8 25.8Net Profit (adjusted) 762 773 957 1,204Unadj. shares (m) 133 133 133 133Wtd avg shares (m) 133 133 133 133
Balance Sheet Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Cash & bank 218 175 417 577Debtors 3,478 4,354 4,638 5,324Inventory 1,774 1,849 2,155 2,452Loans & advances 4,327 4,882 5,469 6,044Other current assets 342 336 457 515Total current assets 10,139 11,597 13,136 14,911Investments 1,113 1,086 1,086 1,086Gross fixed assets 6,870 7,437 8,037 8,537Less: Depreciation ‐1,847 ‐2,143 ‐2,528 ‐2,940Add: Capital WIP 48 53 53 53Net fixed assets 5,071 5,348 5,563 5,651Total assets 16,323 18,030 19,784 21,648 Current liabilities 5,139 5,278 5,640 5,947Provisions 193 253 290 296Total current liabilities 5,332 5,531 5,929 6,243Non‐current liabilities 4,289 5,217 5,717 6,217Total liabilities 9,620 10,748 11,647 12,461Paid‐up capital 265 266 266 266Reserves & surplus 6,687 7,334 7,872 8,922Shareholders’ equity 6,953 7,600 8,138 9,188Total equity & liabilities 16,573 18,348 19,785 21,648
Source: Company, PhillipCapital India Research Estimates
Cash Flow Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Pre‐tax profit 870 1,093 1,357 1,708Depreciation 328 353 385 412Chg in working capital ‐2,558 ‐1,360 ‐929 ‐1,302Total tax paid ‐161 ‐238 ‐400 ‐504Cash flow from operating activities ‐1,520 ‐151 413 315Capital expenditure ‐496 ‐631 ‐600 ‐500Chg in investments ‐405 28 0 0Cash flow from investing activities ‐901 ‐603 ‐600 ‐500Free cash flow ‐2,421 ‐755 ‐187 ‐185Debt raised/(repaid) 2,976 904 500 500Dividend (incl. tax) ‐108 ‐123 ‐124 ‐155Cash flow from financing activities 2,868 780 376 345Net chg in cash 447 26 189 160
Valuation Ratios & Per Share Data FY12 FY13 FY14E FY15E
Per Share data EPS (INR) 5.7 5.8 7.2 9.1Growth, % 4.5 1.3 23.8 25.8Book NAV/share (INR) 52.4 57.2 61.2 69.1FDEPS (INR) 5.7 5.8 7.2 9.1CEPS (INR) 9.2 8.5 10.1 12.2CFPS (INR) (2.6) (5.5) 0.6 (0.4)DPS (INR) 0.8 0.8 1.0 1.0Return ratios Return on assets (%) 6.7 7.1 7.8 8.5Return on equity (%) 11.0 10.2 11.8 13.1Return on capital employed (%) 10.3 10.1 11.0 11.9Turnover ratios Asset turnover (x) 0.9 0.9 0.9 1.0Sales/Total assets (x) 0.8 0.7 0.8 0.8Sales/Net FA (x) 2.3 2.4 2.6 2.9Working capital/Sales (x) 0.4 0.5 0.5 0.5Working capital days 148.4 172.7 176.4 184.9Liquidity ratios Current ratio (x) 1.9 2.1 2.2 2.4Quick ratio (x) 1.6 1.8 1.9 2.0Interest cover (x) 2.3 2.1 2.3 2.6Dividend cover (x) 7.2 7.3 7.2 9.1Total debt/Equity (%) 93.5 101.1 100.6 94.5Net debt/Equity (%) 90.4 98.8 95.4 88.2Valuation PER (x) 25.6 25.3 20.4 16.2Price/Book (x) 2.8 2.6 2.4 2.1EV/Net sales (x) 2.3 2.1 1.9 1.7EV/EBITDA (x) 15.3 14.7 12.3 10.6EV/EBIT (x) 18.9 18.2 14.9 12.6
– 21 of 28 –
28 October 2013 / INDIA EQUITY RESEARCH / RADICO KHAITAN COMPANY UPDATE
Recommendation History
B (TP 147)
B (TP 165)
B (TP 173)
B (TP 157)
B (TP 165)
B (TP 165)
80
90
100
110
120
130
140
150
160
170
1/2/2012 3/21/20126/11/20128/30/201211/21/20122/11/2013 5/7/2013 7/23/201310/15/2013
Source: PhillipCapital India Research
– 22 of 28 –
Tilaknagar Industries Brand(y) march to continue
ALCOHOL BEVERAGES: Company Update 28 October 2013
PhillipCapital (India) Pvt. Ltd.
Tilaknagar Industries is one of the fastest growing IMFL Company in the country with volume, EBIDTA and PAT growing at 27%, 46% and 38% respectively in the last five years. It’s strategy of positioning the brands in segments which are less competitive like premium Brandy and Rum has paid rich dividends in the past. Going ahead with expanding millionaire brand portfolio, increased focus on premiumisation and better cash flow situation we believe that company is set for good times over the next 2‐3 years.
Second largest brandy player and largest in the Brandy Prestige plus category TLNGR with 7.1 million cases brandy category sales is the second largest player in the segment in the country. The overall brandy market in the country is estimated at 74 million cases out of which ~13.5 million cases fall in the premium plus categories. All the brands of TLNGR operate in the prestige plus category of the brandy segment, which means it, commands a market share of over 50% in the prestige plus category in brandy segment.
Higher proportion of Premium brands as compared to other major competitors As at FY13, TLNGR had more than 45% of its volumes coming from premium category which is amongst the highest as compared to other major competitors like UNSP (24% in FY13) and RDCK (16% in FY13). The premium category positioning has led to better than competition EBIDTA per case for the company over the last few years. With the focus on premiumisation continuing we expect the company to report better EBIDTA margins in the future.
Aspiring to be the second largest portfolio of millionaire brands by FY14 At the end of FY13, TLNGR had two millionaire brands in its portfolio – viz. Mansion House Brandy (4.6 mn cases) and Madira Rum (1.9 mn cases). Through its organic as well as inorganic initiatives we expect the company to end FY14 with 6 millionaire brands.
On the inorganic front, it has entered into an agreement with Mohan Breweries and Distilleries (MBDL) for assignment of trademarks namely for, ‘Brigadier’s No. 1 Brandy’ and ‘Vorion No. 1’ Indian Brandy, for a period of 25 years. Both these brands together posted total volumes of 3.2 mn cases in FY13.
On the organic front the company is confident of touching the million cases mark in 2 brands in FY14, namely, White House Rum (WHR) and Courier Napolean Brandy (CNB). In the state of Kerala, from a few thousand cases in FY12, WHR reached 0.52 mn cases in FY13 whereas in H1FY14 the brand has registered sales of 0.45 mn cases in Kerala alone. We estimate WHR to clock a million cases in FY14E. CNB registered sales of 0.7 mn cases during FY13 and has exhibited a growth of over 25% YoY in some of the key states in H1FY14 giving us the confidence that it may touch million cases for FY14.
Valuation: Considering the favourable change in the business environment and accounting for the adjustments made by the company to take advantage of the aforesaid opportunities we have revised our FY14E/FY15E estimates upwards by 0.3%/ 2.3% in terms of EBIDTA and 5.4%/8.3% in terms of EPS. At CMP of Rs 67, the stock trades at 11.5x/9.2x on FY14E/FY15E EPS and 7.8x/6.7x its EV/EBIDTA. We believe that the current valuations are attractive and the stock may see upside on account of growth in profitability and re‐rating in the valuations. We reiterate our BUY rating on the stock with the price objective of 84, implying 8x FY15E EV/EBIDTA.
BUY TLGR IN | CMP RS 61
TARGET RS 84 (+37%) Company Data
O/S SHARES (MN) : 123MARKET CAP (RSBN) : 7.5MARKET CAP (USDBN) : 0.152 ‐ WK HI/LO (RS) : 87 / 16LIQUIDITY 3M (USDMN) : 0.1FACE VALUE (RS) : 10
Share Holding Pattern, %
PROMOTERS : 56.2FII / NRI : 13.3FI / MF : 8.5NON PROMOTER CORP. HOLDINGS : 5.0PUBLIC & OTHERS : 17.0
Price Performance, % 1mth 3mth 1yr
ABS 10.2 17.2 ‐4.1REL TO BSE 6.1 12.8 ‐14.4
Price Vs. Sensex (Rebased values)
0
50
100
150
200
250
300
Apr‐10Mar‐11Feb‐12 Jan‐13
Tilaknagar BSE Sensex
c
Source: Bloomberg, Phillip Capital Research
Other Key Ratios
FY12 FY13E FY14E
Net Sales 7,524 8,752 10,417EBIDTA 1,706 2,064 2,466Net Profit 606 720 881EPS, Rs 5.0 5.9 7.2PER, x 12.3 10.3 8.4EV/EBIDTA, x 8.2 7.3 6.4P/BV, x 1.9 1.7 1.5ROE, % 11.6 12.4 13.5Source: Phillip Capital India Research Ennette Fernandes (+ 9122 66679764) [email protected] Kapil Bagaria (+ 9122 6667 9965) [email protected]
Naveen Kulkarni, CFA, FRM (+ 9122 66679947) [email protected]
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28 October 2013 / INDIA EQUITY RESEARCH / TILAKNAGAR INDUSTRIES COMPANY UPDATE
Mega Project Status to accelerate cash flows The Company has been granted Mega Project status for its new facilities at Shrirampur under Package Scheme of Incentives (PSI) 2007 by the Government of Maharashtra. With its mega project status, the Company is entitled to monetary benefits which include Industrial Promotional Subsidy in the form of refunds equivalent to 100% of eligible investment of Rs 2.5bn or to the extent of VAT and CST paid in respect of sale of finished goods eligible for incentives available within a period of seven years whichever is lower. The company has entered into a strategic bottling agreement with Pernod Ricard India (PRI), whereby it will manufacture PRI’s products at its bottling facilities in Maharashtra and Andhra Pradesh (AP) respectively, under the tie up model. In Maharashtra, it will manufacture PRI products of 50,000 cases per month by end of FY14E and plans to increase it in a phased manner to 0.2 million cases per month by FY15. This arrangement will help the company to accelerate the accrual of benefits from the Mega Project status. Although we are not including these benefits in our estimates for FY15E, we believe that this could help the cash flow situation of the company over the next 2‐3 years. Change in Estimates
_____________FY14E_____________ _____________FY15E_____________(Rs Mn) Revised Earlier % Change Revised Earlier % Change
Net Sales 8,752 8,634 1.4 10,417 9,972 4.5EBIDTA 2,064 2,014 2.5 2,466 2,385 3.4Margin, % 23.6 23.3 23.7 23.9 PAT 720 675 6.6 881 814 8.2EPS, Rs 5.9 5.5 7.3 7.2 6.7 7.9Volumes, Mn Cases 18.7 18.5 0.8 20.5 20.2 1.6
Source: Company, PhillipCapital India Research Estimates
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28 October 2013 / INDIA EQUITY RESEARCH / TILAKNAGAR INDUSTRIES COMPANY UPDATE
Snapshot of key operating parameters FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E
Volume Sales (Mn Cases) 1.3 4.2 5.5 8.0 10.9 13.2 13.8 18.9 21.1Volume Growth (%) 234% 32% 44% 36% 22% 5% 37% 11%Gross Realisation per Case (Rs) 1,694 739 860 1,248 1,211 1,106 1,173 1,185 1,244YoY Change (%) ‐56% 16% 45% ‐3% ‐9% 6% 1% 5% Total Net Income 907 1,449 2,426 3,844 4,683 5,478 7,375 8,752 10,417 Total Net Income 60% 67% 58% 22% 17% 35% 19% 19% RM Cost per unit growth YoY % ‐2.9% ‐31.2% 81.8% 16.5% 0.3% 35.8% 7.3% 5.0% 7.5% % of Sales Raw Material Cost 18.6% 11.2% 23.2% 18.5% 15.4% 19.7% 19.3% 20.8% 21.5%Packaging Cost 16.6% 27.1% 23.1% 25.5% 17.8% 22.0% 25.2% 25.5% 25.3%Employee cost 7.4% 8.4% 8.2% 5.2% 4.5% 5.3% 4.0% 4.0% 4.0%Marketing cost 20.3% 15.8% 13.3% 12.6% 13.1% 8.0% 9.1% 9.0% 8.7%Other Expenses 18.8% 24.0% 20.9% 22.4% 24.0% 25.1% 18.5% 17.2% 17.0% Margin % Gross 65.0% 66.8% 60.4% 61.2% 65.8% 65.3% 54.9% 53.7% 53.3%EBITDA 18.5% 18.5% 17.9% 20.9% 24.2% 26.9% 23.4% 23.6% 23.7%EBIT 18.1% 18.1% 17.6% 20.1% 22.0% 23.0% 20.1% 20.6% 20.7%PBT 14.3% 14.6% 13.1% 13.9% 13.7% 12.6% 11.3% 12.1% 12.5%PAT 1.7% 9.5% 8.5% 8.3% 9.0% 8.5% 8.5% 8.1% 8.2% EBITDA per Case 133 63 78 100 105 111 123 109 117Growth YoY % ‐52% 23% 28% 4% 6% 11% ‐12% 7% Interest Rate % 11.3% 11.3% 11.6% 8.2% 8.7% 11.9% 10.7% 10.3% 10.5%Depreciation Rate % 3.5% 2.5% 2.4% 3.7% 3.9% 5.3% 5.9% 5.9% 5.9% Working Capital (56) (87) (10) 39 66 102 87 74 75Inventory Days 80 109 151 173 189 197 138 123 116Debtor Days 82 92 90 70 70 74 80 87 84Creditor Days 218 288 251 203 192 170 132 136 126
Source: Company, PhillipCapital India Research Estimates
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28 October 2013 / INDIA EQUITY RESEARCH / TILAKNAGAR INDUSTRIES COMPANY UPDATE
Financials
Income Statement Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Net sales 5,539 7,524 8,752 10,417Growth, % 18 36 16 19Total income 5,539 7,524 8,752 10,417Raw material expenses ‐1,963 ‐3,476 ‐4,048 ‐4,868Employee expenses ‐292 ‐298 ‐349 ‐415Other Operating expenses ‐1,815 ‐2,045 ‐2,292 ‐2,668EBITDA (Core) 1,468 1,706 2,064 2,466Growth, % 30.2 16.2 21.0 19.5Margin, % 26.5 22.7 23.6 23.7Depreciation ‐223 ‐242 ‐294 ‐351EBIT 1,245 1,464 1,770 2,115Growth, % 24.9 17.6 20.9 19.5Margin, % 22.5 19.5 20.2 20.3Interest paid ‐562 ‐635 ‐745 ‐852Other Non‐Operating Income 17 22 32 42Pre‐tax profit 700 850 1,058 1,305Tax provided ‐228 ‐244 ‐339 ‐424Profit after tax 471 606 720 881Net Profit 471 606 720 881Growth, % 18.9 28.5 18.8 22.5Net Profit (adjusted) 471 606 720 881Unadj. shares (m) 120 122 122 122Wtd avg shares (m) 120 122 122 122
Balance Sheet Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Cash & bank 198 253 214 204Debtors 1,291 2,020 2,162 2,631Inventory 1,303 1,332 1,403 1,705Loans & advances 3,395 4,702 5,668 6,502Total current assets 6,189 8,307 9,447 11,042Investments 3 17 17 17Gross fixed assets 4,464 4,415 6,165 6,365Add: Capital WIP 940 1,454 200 200Net fixed assets 5,403 5,869 6,365 6,565Total assets 11,595 14,193 15,829 17,624 Current liabilities 4,706 5,682 5,735 6,024Provisions 398 304 357 412Total current liabilities 5,104 5,986 6,092 6,437Non‐current liabilities 1,788 2,973 3,926 4,665Total liabilities 6,892 8,959 10,018 11,102Paid‐up capital 1,200 1,219 1,219 1,219Reserves & surplus 3,503 4,015 4,593 5,303Shareholders’ equity 4,703 5,234 5,812 6,522Total equity & liabilities 11,595 14,193 15,829 17,624
Source: Company, PhillipCapital India Research Estimates
Cash Flow Y/E Mar, Rs mn FY12 FY13 FY14E FY15E
Pre‐tax profit 700 850 1,058 1,305Depreciation 223 242 294 351Chg in working capital ‐197 ‐1,123 ‐1,114 ‐1,302Total tax paid ‐86 ‐254 ‐295 ‐371Cash flow from operating activities 639 ‐285 ‐57 ‐17Capital expenditure ‐942 ‐738 ‐789 ‐551Chg in investments 0 ‐14 0 0Cash flow from investing activities ‐942 ‐752 ‐789 ‐551Free cash flow ‐303 ‐1,037 ‐846 ‐568Debt raised/(repaid) 111 1,135 921 700Dividend (incl. tax) ‐108 ‐112 ‐113 ‐142Cash flow from financing activities 3 1,023 808 558Net chg in cash ‐300 ‐15 ‐38 ‐10
Valuation Ratios & Per Share Data FY12 FY13 FY14E FY15E
Per Share data EPS (INR) 3.9 5.0 5.9 7.2Growth, % 14.2 26.5 18.8 22.5Book NAV/share (INR) 39.2 42.9 47.7 53.5FDEPS (INR) 3.9 5.0 5.9 7.2CEPS (INR) 5.8 7.0 8.3 10.1CFPS (INR) (0.8) (6.8) (0.7) (0.5)DPS (INR) 0.8 0.8 1.0 1.2Return ratios Return on assets (%) 7.8 7.9 8.0 8.5Return on equity (%) 10.0 11.6 12.4 13.5Return on capital employed (%) 13.5 13.5 13.2 13.5Turnover ratios Asset turnover (x) 0.6 0.7 0.7 0.7Sales/Total assets (x) 0.5 0.6 0.6 0.6Sales/Net FA (x) 1.1 1.3 1.4 1.6Working capital/Sales (x) 0.2 0.3 0.4 0.4Working capital days 68.2 105.7 136.1 159.0Liquidity ratios Current ratio (x) 1.2 1.4 1.6 1.8Quick ratio (x) 1.0 1.2 1.3 1.5Interest cover (x) 2.2 2.3 2.4 2.5Dividend cover (x) 4.9 6.2 5.9 6.0Total debt/Equity (%) 110.3 130.7 133.6 129.8Net debt/Equity (%) 106.1 125.9 129.9 126.6Valuation PER (x) 15.5 12.3 10.3 8.4Price/Book (x) 1.6 1.4 1.3 1.1Yield (%) 1.3 1.3 1.6 2.0EV/Net sales (x) 2.2 1.9 1.7 1.5EV/EBITDA (x) 8.4 8.2 7.3 6.4EV/EBIT (x) 9.9 9.6 8.5 7.4
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28 October 2013 / INDIA EQUITY RESEARCH / TILAKNAGAR INDUSTRIES COMPANY UPDATE
Recommendation History
B (TP 81)
B (TP 81)
B (TP 90)
B (TP 90)
B (TP 75)
B (TP 75)B (TP 71)
B (TP 71)
B (TP 52)
B (TP 52)
N (TP 43)
0
10
20
30
40
50
60
70
80
90
100
1/3/2011 5/16/2011 9/22/2011 2/2/2012 6/12/201210/19/20122/28/2013 7/10/2013
Source: PhillipCapital India Research
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
Management Vineet Bhatnagar (Managing Director) (91 22) 2300 2999 Jignesh Shah (Head – Equity Derivatives) (91 22) 6667 9735
Research Automobiles Deepak Jain (9122) 6667 9758 Banking, NBFCs Manish Agarwalla (9122) 6667 9962 Sachit Motwani, CFA, FRM (9122) 6667 9953 Consumer, Media, Telecom Naveen Kulkarni, CFA, FRM (9122) 6667 9947 Ennette Fernandes (9122) 6667 9764 Vivekanand Subbaraman (9122) 6667 9766 Cement Vaibhav Agarwal (9122) 6667 9967 Economics Anjali Verma (9122) 6667 9969
Engineering, Capital Goods Ankur Sharma (9122) 6667 9759 Infrastructure & IT Services Vibhor Singhal (9122) 6667 9949 Varun Vijayan (9122) 6667 9992 Metals Dhawal Doshi (9122) 6667 9769 Dharmesh Shah (9122) 6667 9974 Mid‐caps Kapil Bagaria (9122) 6667 9965 Oil&Gas, Agri Inputs Gauri Anand (9122) 6667 9943 Deepak Pareek (9122) 6667 9950 Saurabh Rathi (9122) 6667 9951
Pharma Surya Patra (9122) 6667 9768 Retail, Real Estate Abhishek Ranganathan, CFA (9122) 6667 9952 Neha Garg (9122) 6667 9996 Quant Shikha Khurana (9122) 6667 9948 Sr. Manager – Equities Support Rosie Ferns (9122) 6667 9971
Sales & Distribution Kinshuk Tiwari (9122) 6667 9946 Ashvin Patil (9122) 6667 9991 Shubhangi Agrawal (9122) 6667 9964 Kishor Binwal (9122) 6667 9989 Sidharth Agrawal (9122) 6667 9934 Dipesh Sohani (9122) 6667 9756
Dilesh Doshi (Sales Trader) (9122) 6667 9747 Suniil Pandit (Sales Trader) (9122) 6667 9745 Rajesh Ashar (Sales Trader) (9122) 6667 9748
Mayur Shah (Execution) (9122) 6667 9945
Contact Information (Regional Member Companies)
SINGAPORE
Phillip Securities Pte Ltd 250 North Bridge Road, #06‐00 Raffles City Tower,
Singapore 179101 Tel : (65) 6533 6001 Fax: (65) 6535 3834
www.phillip.com.sg
MALAYSIA Phillip Capital Management Sdn Bhd B‐3‐6 Block B Level 3, Megan Avenue II,
No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Tel (60) 3 2162 8841 Fax (60) 3 2166 5099
www.poems.com.my
HONG KONG Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway Hong Kong Tel (852) 2277 6600 Fax: (852) 2868 5307
www.phillip.com.hk
JAPAN Phillip Securities Japan, Ltd
4‐2 Nihonbashi Kabutocho, Chuo‐ku Tokyo 103‐0026
Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141 www.phillip.co.jp
INDONESIA PT Phillip Securities Indonesia
ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A, Jakarta 10220, Indonesia
Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809 www.phillip.co.id
CHINA Phillip Financial Advisory (Shanghai) Co. Ltd.
No 550 Yan An East Road, Ocean Tower Unit 2318 Shanghai 200 001
Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940 www.phillip.com.cn
THAILAND Phillip Securities (Thailand) Public Co. Ltd.
15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak, Bangkok 10500 Thailand
Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921 www.phillip.co.th
FRANCE King & Shaxson Capital Ltd.
3rd Floor, 35 Rue de la Bienfaisance 75008 Paris France
Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017 www.kingandshaxson.com
UNITED KINGDOM King & Shaxson Ltd.
6th Floor, Candlewick House, 120 Cannon Street London, EC4N 6AS
Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835 www.kingandshaxson.com
UNITED STATES Phillip Futures Inc.
141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building
Chicago, IL 60604 USA Tel (1) 312 356 9000 Fax: (1) 312 356 9005
AUSTRALIA PhillipCapital Australia
Level 37, 530 Collins Street Melbourne, Victoria 3000, Australia
Tel: (61) 3 9629 8380 Fax: (61) 3 9614 8309 www.phillipcapital.com.au
SRI LANKA Asha Phillip Securities Limited
Level 4, Millennium House, 46/58 Navam Mawatha, Colombo 2, Sri Lanka
Tel: (94) 11 2429 100 Fax: (94) 11 2429 199 www.ashaphillip.net/home.htm
INDIA PhillipCapital (India) Private Limited
No. 1, C‐Block, 2nd Floor, Modern Center , Jacob Circle, K. K. Marg, Mahalaxmi Mumbai 400011 Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in
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28 October 2013 / INDIA EQUITY RESEARCH / ALCOHOL BEVERAGES SECTOR UPDATE
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