Sadbhav Engineering Limited Relative : Overweight Regular...

May 30, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) of 13

Before reading this report, you must refer to the disclaimer on the last page.

Sadbhav Engineering Limited Absolute : LONG

Relative : Overweight

4QFY17 Result: Estimate (), Target (), Rating () Regular Coverage 20% ATR in 13 Months

Smart Move to HAM + WC Streamlining + Debt Reduction to support multiple re-rating Construction

© 2017 Equirus All rights reserved

Rating Information

Price (Rs) 314

Target Price (Rs) 382

Target Date 30th Jun'18

Target Set On 30th May'17

Implied yrs of growth (DCF) 15

Fair Value (DCF) 299

Fair Value (DDM) 152

Ind Benchmark BSE Midcap

Model Portfolio Position NA

Stock Information

Market Cap (Rs Mn) 53,976

Free Float (%) 53.24 %

52 Wk H/L (Rs) 350.9/220

Avg Daily Volume (1yr) 147,396

Avg Daily Value (Rs Mn) 43

Equity Cap (Rs Mn) 172

Face Value (Rs) 1

Bloomberg Code SADE IN

Ownership Recent 3M 12M

Promoters 46.8 % 0.0 % -0.4 %

DII 31.3 % 5.2 % 4.4 %

FII 17.2 % 0.3 % 2.2 %

Public 4.8 % -5.5 % -6.2 %

Price % 1M 3M 12M

Absolute -5.8 % 13.4 % 13.0 %

Vs Industry -10.0 % 5.0 % -3.5 %

Ashoka -0.9 % 12.4 % 43.0 %

PNC Infra -8.4 % 42.8 % 25.8 %

Standalone Quarterly EPS forecast

Rs/Share 1Q 2Q 3Q 4Q

EPS (17A) 2.8 1.1 3.1 4.0

EPS (18E) 2.8 0.6 4.8 5.4

Sadbhav outperformed on execution and profitability front but saw a spike in WC

due to higher requirement related to EPC projects. The company has managed to

build a sizeable order book of Rs. 92.6bn with a focus on HAM in FY17. With

reducing margin and WC overhangs of legacy irrigation and NHAI EPC projects, the

sizeable share of HAM projects should enable margin expansion and WC

improvements. We maintain our LONG rating & obtain a Jun’18 SOTP based TP of

Rs. 382/share (vs. earlier Jun’18 TP of Rs. 379/share).

Recent HAM wins boost order book to Rs. 92.6bn and pave the way for steady

growth: Post the recent HAM wins, BOT/HAM share has risen to >50% of FY17 order

book. Rising acceptance of HAM model amidst lower competitive intensity could

lead to rise of BOT/HAM share to 65-70% in Sadbhav’s order books by FY20E. We

expect small order inflows across EPC, Mining and Irrigation verticals and are

confident of 3 year revenue CAGR of 19% till FY20E.

Expect shift in revenue mix away from EPC projects to enable margin

expansions along with WC improvements: We expect the share of WC intensive

EPC projects in overall execution to reduce post Jun’17. We have observed lower

competitive intensity in recently bid HAM projects and also expect a more efficient

WC cycle for these projects. We have modelled a reduction in non cash WC levels

from ~58% in FY17 to 25% by FY19E.

Value unlocking of Sadbhav Infra subsidiaries + WC improvements to enable

debt reduction at standalone level: Our channel checks suggest that the value

unlocking of Sadbhav Infra subsidiaries is in advanced stages. We expect the deal

to be announced by 1QFY18E and entire money to be received by 3QFY18E. Along

with this, the above anticipated WC improvements should support Standalone debt

reduction from Rs. 15.2bn in FY17 to Rs. 10.2bn/Rs. 3.4bn in FY18E/FY19E.

Re-rating apparent due to lined up triggers and relative price movements,

Valuations provide comfort amidst business consolidation: Smooth HAM

execution and Sale of BOT Projects are inevitable re-rating triggers from current

levels. After netting off the BOT Valuations, the EPC business is trading at

~1.3x/1.2x FY18E/FY19E P/B with RoEs of 13%/17% and 11x/8x FY17A/FY18E P/E

at 33%/29% 2/3 year EPS CAGR. Weak order inflows and lower execution are key

downside risks to our estimates.

Change in Standalone Estimates

% change over previous estimates

FY18E FY19E FY18E FY19E

Sales 39,879 44,823 1.3% 0.0%

EBITDA 4,578 5,630 1.8% 9.8%

PAT 2,338 3,321 -4.0% 16.0%

EPS 13.6 19.4 -4.0% 16.0%

Standalone Financials Rs. Mn YE Mar FY17A FY18E FY19E FY20E

Sales 33,203 39,879 44,823 56,630

EBITDA 3,556 4,578 5,630 6,321

Depreciation 1,000 995 1,035 1,077

Interest Expense 992 1,206 533 288

Other Income 333 349 367 385

Reported PAT 1,879 2,338 3,321 4,006

Recurring PAT 1,879 2,338 3,321 4,006

Total Equity 16,609 18,596 20,921 23,725

Gross Debt 15,183 10,194 3,419 3,947

Cash 230 1,077 1,383 1,713

Rs Per Share FY17A FY18E FY19E FY20E

Earnings 11.0 13.6 19.4 23.4

Book Value 97 108 122 138

Dividends 0.7 1.7 5.0 0.0

FCFF -19.8 44.9 55.9 14.9

P/E (x) 28.7 23.0 16.2 13.4

P/B (x) 3.2 2.9 2.6 2.3

EV/EBITDA (x) 19.4 13.8 9.9 8.9

ROE (%) 12% 13% 17% 18%

Core ROIC (%) 11% 13% 17% 19%

EBITDA Margin (%) 10.7% 11.5% 12.6% 11.2%

Net Margin (%) 6% 6% 7% 7%

mailto:[email protected]

Sadbhav Engineering Absolute – LONG Relative: Overweight 20% ATR in 13 months

______________________________________________________________________________________________________________________________________ May 30, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) of 13

Standalone Quarterly Result Table

Rs Mn 4QFY17 4QFY17E 3QFY17 4QFY16 % Change

Comments 4QFY17E 3QFY17 4QFY16

Net Sales 10,329 9,557 8,648 8,580 8% 19% 20%

Construction Expenses 8,106 7,742 6,986 6,900 5% 16% 17%

Employees Cost 379 325 319 315 17% 19% 20%

Other Expenses 748 474 405 456 58% 85% 64%

Total Expenditures 9,233 8,540 7,710 7,671 8% 20% 20%

EBITDA 1,096 1,017 939 909 8% 17% 21%

Depreciation 243 252 250 335 -4% -3% -28%

EBIT 854 765 689 573 12% 24% 49%

Interest 355 259 243 293 37% 46% 21%

Other Income 218 157 60 225 39% 262% -3%

PBT 716 662 506 504 8% 42% 42%

Tax 33 33 -19 64 1% -277% -47%

Recurring PAT 683 629 525 441 8% 30% 55%

Extraordinaries 0 0 0 91

Reported PAT 683 629 525 350 8% 30% 95%

EPS (Rs) 4.0 3.7 3.1 2.0 8% 30% 95%

EBITDA Margin 10.6% 10.6% 10.9% 10.6% -3 bps -24 bps 2 bps EBITDA margins slightly better than expectations

EBIT Margin 8.3% 8.0% 8.0% 6.7% 26 bps 30 bps 158 bps

PBT Margin 6.9% 6.9% 5.8% 5.9% 0 bps 108 bps 105 bps

PAT Margin 6.6% 6.6% 6.1% 4.1% 2 bps 54 bps 253 bps

Tax Rate 4.7% 5.0% -3.7% 12.6% -33 bps 840 bps -794 bps




Key Quarterly Updates Exhibit 1: Execution in Cash Contracts picked upsignificantly FY17

Revenue (Rs. Mn) Mar-

15

Jun-

15

Sep-

15

Dec-

15

Mar-

16

Jun-

16

Sep-

16

Dec-

16 Mar-17

Transport 6,593 5,066 5,926 5,596 5,618 5,607 4,577 6,902 8,237

BOT Projects 4,698 4,070 4,610 4,281 4,016 1,114 333 419.8 1,461

Cash Contracts 1,894 996 1,316 1,315 1,601 4,493 4,244 6,482 6,776

Irrigation 1,683 2,006 315 1,003 2,035 1,684 902 739.3 1,255

Mining 1,389 1,202 1,198 921 871 723 658 1001.8 785

Power Generation 10 18 20 9 46 22.2 19 5.4 42

Total Revenues 9,675 8,293 7,459 7,530 8,579 8,036 6,156 8,648 10,329

Source:Company, Equirus Securities

Exhibit 2: Toll collections hit due to demonetization in some stretches

Name of SPV Units 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17** 4Q17

Ahmedabad Ring Road Rs. Mn 213 231 246 237 227 216 240

Aurangabad Jalna* Rs. Mn 69 80 88 100 88 85 91

DhulePalasner Rs. Mn 368 384 391 418 399 383 449

Hyderabad Yadgiri Rs. Mn 119 142 153 149 125 125 153

BijapurHungund Rs. Mn 282 280 302 304 286 241 293

RohtakPanipat Rs. Mn 199 220 181 205 193 182 225

Maharashtra Border Check Post Rs. Mn 367 416 432 415 406 370 448

Shreenathji Udaipur Rs. Mn - 61 228 252 243 236 250

Bhilwara Rajsamand Rs. Mn - - - 23 94 95 105

Rohtak Hissar Rs. Mn - - - - 83 120 130

Total Toll Collections Rs. Mn 1,615 1,813 2,021 2,101 2,144 2,052 2,383

* 3Q17 numbers are calculated for some portion of the quarter due to impact of demonetization

** In MBCPNL, 13 checkposts were operational till 26th Jan'17 while 16 checkposts were

operational from 27th Jan'17. In 4Q16, 13 checkposts were operational

Source: Company BSE filings, Equirus Securities

Exhibit 3: Segment wise Details of Order Book

Order Book Segment Rs. Mn %age

Transport 49,969 65%

BOT 32,038 42%

Cash Contracts 17,931 23%

Mining 16,966 22%

Irrigation 9,899 13%

Total Order Book 76,834 100%

Source: Quarterly BSE Update, Equirus Securities Valuation

SOTP Valuation

Main changes in current and earlier SOTP Valuations:

a) EPC Business Valuation higher by Rs. 3/share: We have maintained the earlier 15x TTM FY17E P/E multiple but have factored higher EBITDA margins of 11% on Standalone basis.

Exhibit 4: Current SOTP Valuation

Valuation Snapshot Rs. Mn Rs./share

Net Sales 40,589

Net Profit Margin 6.1%

Net Profit 2,490

P/E 15

Valuation of EPC Business (A) 37,343 218

Overall Valuation of BOT Projects 49,421 288

MNEL

ARR 3,357 20

AJT 1,190 7

NSE -8 -0

MBCP 21,512 125

DPT 4,095 24

HYT 2,286 13

RPT -2,738 -16

BHT 5,443 32

MBT 1,836 11




SUTPL 4,797 28

RBT 4,948 29

RHT -856 -5

Hybrid Annuities 3,559

-RK1 640 4

-RK2 670 4

-BT 767 4

-UK 512 3

-BRT 1,016 6

-WM -95 -1

-UB 49 0

Add: Standalone SIPL 4,988 29

Less: Profit on BHT and DPT Sale 3,600 21

Valuation of SIPL 50,808 296

SEL's Holding 69%

Holding Company Discount 20%

Stake Adjusted Contribution to SEL 28,160 164

Total SEL Valuation 65,503 382

Source: Equirus Securities

Exhibit 5: Previous SOTP Valuation

Valuation Snapshot Rs. Mn Rs./share

Net Sales 40,605

Net Profit Margin 6.0%

Net Profit 2,451

P/E 15

Valuation of EPC Business (A) 36,872 215

Overall Valuation of BOT Projects 51,518 300

MNEL

ARR 2,858 17

AJT 1,651 10

NSE -32 -0

MBCP 21,253 124

DPT 3,345 20

HYT 2,053 12

RPT -972 -6

BHT 5,322 31

MBT 1,672 10

SUTPL 5,316 31

RBT 5,486 32

RHT 2,814 16

Hybrid Annuities 753

-RK1 101 1

-RK2 190 1

-BT 169 1

-UK 57 0

-BRT 280 2

-WM -95 -1

-UB 49 0

Add: Standalone SIPL 3,618 21

Less: Profit on BHT and DPT Sale 3,600 21

Valuation of SIPL 51,536 300

SEL's Holding 68%

Holding Company Discount 20%

Stake Adjusted Contribution to SEL 28,180 164

Total SEL Valuation 64,950 379

Source: Equirus Securities




Key Highlights of the Con call

Bidding activity across sectors: NHAI has gone slow on order awarding & company is

looking to bid for Metro Projects

NHAI has gone slow on awarding new projects due to the land acquisition issues

related to the already awarded projects. Till this gets resolved, the awarding

activity will be slow

Currently financial bids for 10 EPC projects having combined length of 447kms & cost

of Rs. 73.7bn are to be submitted by Jun’17

Additionally bids for 5 EPC projects by Gujarat government covering a length of

197kms & costing Rs. 23.7bn are to be submitted by Jun’17

Vadodara Expressway project worth Rs. 72bn will come under EPC segment

HAM projects worth Rs. 180-190bn are coming up for bidding over next 3 months

In Mining, 7 projects for OB removal worth Rs. 28.7bn and 3 MDO projects are coming

up for bidding by Jun’17

In Irrigation, 5 projects worth Rs. 13.4bn in states of AP, Karnataka & MP are coming

up for bidding

Company is also actively bidding for Phase I & Phase II Metro projects in cities like

Mumbai, Pune, Ahmedabad, Bangalore etc.

Order Book Update:

The order book of the company as on Mar’17 stood at Rs. 76.8bn. Following is the

breakup:

65% from Roads 22% from Mining & 13% from Irrigation

Company will be handing over Rs. 1.2bn of Mining order from BCCL over next few

months due to issues related to service tax (Rs. 350mn payment related to service

tax is yet to be received from BCCL by the company)

The irrigation OB will be fully completed by FY19 while the entire o/s OB of EPC

contracts would be executed in FY18

Company is looking to get incremental orders of Rs. 60-70bn in FY18

It is also L1 is a Rs. 1.4bn Mining contract wherein LOA is expected soon

OB intake for FY17 was Rs 47bn

Update on HA Projects:

3 HA projects have got appointed dates and the EPC work has already been started

by SEL. The revenues recognized in 4QFY17 from these 3 projects was Rs. 414mn

2 projects (Rampur Kathgodam pckg. II and BRT reserve) are expected to receive the

appointed dates in next few months and they will start contributing to the topline by

2QFY18

The 2 new HA projects (Mahagaon& Udaipur Bypass), are yet to achieve FC and they

would start contributing to the topline by 2HFY18

Company has closed Loan term sheets with lenders for all the 5 HA projects wherein

they will have to bring in only 25-30% of equity upfront while 25% of equity will be

funded via BG at time of COD. The average interest rate is around 9.25%

In Warangal-Mahagaon project, 80% land is not available but state government has

assured that land would be available within next 6 months. In Udaipur Bypass, more

than 80% land is available

Top 5 projects by execution in 4QFY17

Project Name Segment Rs. Mn

Eastern Peripheral Expressway II Road EPC 1,763

Eastern Peripheral Expressway I Road EPC 1,860

Yamunagar Panchkula Pckg II Road EPC 852

Yamunagar Panchkula Pckg I Road EPC 818

Rohtak Hissar Road BOT 559

Additional Info

Company has repaid Rs. 1.65bn to NHAI towards Mobilization advance since it would

have cost nearly 18% interest cost after 1 year of Moratorium. This was in addition to

Rs. 1.13bn repaid in 3QFY17. Due to this, finance cost & short term loans have

increased in 4QFY17

SEL did a capex of Rs. 390mn in FY17

Company has pumped in around Rs. 2.7-2.9bn of WC in the JV projects of Metro EPC

and Irrigation projects for finishing the projects. Company has received around Rs.

900mn of this due to finishing of 2 Irrigation projects

Company expects tax rate of 20% in FY18 but full tax rate to apply from FY19 due to

ending of incentives on Road EPC projects

Debt from SIPL stood at Rs. 4.3bn which has increased slightly vs. 3QFY17 due to

funding done by company in Mysore Bellary as Authority had not provided the

required Grant amount. However the company has now received the Grant and so

debt level should come down




Guidance: Expecting to clock revenues of Rs. 38bn in FY18

SEL expects WC debt to reduce by Rs. 2bn in 1HFY18 and by Rs. 2.5bn in 1HFY19 due

to finishing of milestone based EPC projects and some legacy Irrigation projects

Company expects revenues of Rs. 38bn in FY18 on current OB not considering the 2

new HA projects

- Rs. 13.5bn is expected from road projects

- Rs. 15.5bn from HA projects

- Rs. 5bn from Irrigation projects

- Rs. 4bn from Mining projects

EBITDAM expected to improve to 11% due to more contribution from HA projects

WC strain would be less in HA projects vs. EPC projects as they do not have

milestone based payments but monthly payments as per certified bills

Company would be doing a capex of Rs. 500mn in FY18




Company Snapshot

How we differ from Consensus

- Equirus Consensus % Diff Comment

EPS FY18E 13.6 12.1 13 % Expect consensus to upward revise their

guidance in line with management’s

commentary of better margins inFY18&

lower tax outgo due to MAT credit

entitlement

FY19E 19.4 13.4 45 %

Sales FY18E 39,879 39,400 1 %

FY19E 44,823 44,513 1 %

PAT FY18E 2,338 2,069 13 %

FY19E 3,321 2,299 44 %

Our Key Investment arguments: Valuations at comfortable levels after factoring base

growth scenario and assumptions for EPC and BOT business

Key Parameters Units FY16A FY17A FY18E FY19E FY20E

Standalone

Net Sales Rs. Mn 31,863 33,203 39,879 44,823 56,630

Sales Growth %age 7% 4% 20% 12% 26%

EBITDA Rs. Mn 3,348 3,556 4,578 5,630 6,321

EBITDAM% %age 11% 11% 11% 13% 11%

BOT Projects

Toll Collections Rs. Mn 8,795 12,497 15,790 18,330 18,129

EBITDA Rs. Mn 6,671 9,066 11,375 13,616 14,013

EBITDAM% %age 76% 73% 72% 74% 77%

Risk to Our View

Lower than expected order inflows in FY17, Lower EPC EBITDA Margins and fall in

Traffic/Toll incomes

Key Triggers

Order book growth, Early Completion of BOT Projects, Acquisition of BOT Projects,

Winning of a large MDO order

Sensitivity to Key Variables % Change % Impact on EPS

EBITDA Margins 1 % 12 %

Interest Rate 1 % -2 %

- - -

DCF Valuations & Assumptions

Rf Beta Ke Term. Growth Debt/IC in Term. Yr

6.8 % 1.0 12.8 % 3.0 % 36.2 %

- FY18E FY19E FY20-22E FY23-27E FY28-32E

Sales Growth 22 % 13 % 11 % 5 % 3 %

NOPAT Margin 16 % 19 % 12 % 14 % 14 %

IC Turnover 0.36 0.38 0.52 0.86 1.21

RoIC 6.6 % 7.3 % 6.2 % 12.2 % 16.8 %

Years of strong growth 1 2 5 10 15

Valuation as on date (Rs) -158 2 -81 243 262

Valuation as of Jun'18 -180 2 -93 277 299

Based on DCF, assuming 15 years of 3% CAGR growth and 17% average ROIC, we derive

current fair value of Rs. 262 and Jun’18 fair value of Rs. 299.

Company Description:

Sadbhav is in the business of EPC Contracting for Cash Contracts, Mining, Irrigation and

BOT Road Projects. It has an order book of ~Rs. 77bn and its subsidiary SIPL has a

portfolio of 16 BOT Projects.It is one of the leading road BOT companies in India that

specializes in the development, operation and maintenance of highways, roads and

related projects.

Comparable valuation Mkt Cap

Rs. Mn.

Price

Target

Target

Date

EPS P/E BPS P/B RoE Div Yield

Company Reco. CMP FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E

Sadbhav Engg LONG 314 53,976 382 30th Jun'18 11.0 13.6 19.4 28.7 23.0 16.2 96.8 2.9 12 % 13 % 17 % 0.2 % 0.6 %

Ashoka Buildcon LONG 195 36,475 268 31st Mar'18 6.2 3.7 10.3 31.6 56.9 18.9 99.9 2.1 7 % 4 % 10 % 0.8 % 0.9 %

PNC Infratech Reduce 144 37,134 134 30th Sep 18 4.6 5.6 6.0 31.3 25.6 23.9 57.0 2.3 8 % 9 % 9 % 1.7 % 0.4 %




Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18E 2Q18E 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E

Revenue 8,070 6,156 8,648 10,329 9,009 6,620 10,906 13,344 9,719 6,631 12,971 15,501 33,203 39,879 44,823 56,630

Construction Expenses 6,621 4,839 6,986 8,106 7,297 5,230 8,725 10,675 7,775 5,239 10,247 12,246 26,552 31,927 35,507 46,191

Employees Cost 315 353 319 379 353 381 358 424 395 412 400 475 1,366 1,516 1,683 1,915

Other Expenses 266 311 405 748 287 326 437 808 310 333 472 889 1,729 1,858 2,003 2,204

EBITDA 868 654 939 1,096 1,072 682 1,387 1,437 1,239 648 1,852 1,892 3,556 4,578 5,630 6,321

Depreciation 254 253 250 243 245 247 250 252 255 258 260 263 1,000 995 1,035 1,077

EBIT 614 400 689 854 827 435 1,137 1,184 984 390 1,592 1,629 2,556 3,583 4,595 5,243

Interest 172 221 243 355 350 319 285 251 202 144 108 80 992 1,206 533 288

Other Income 48 8 60 218 50 8 63 228 52 8 66 240 333 349 367 385

PBT 489 187 506 716 527 123 915 1,161 835 255 1,550 1,789 1,897 2,727 4,428 5,341

Tax 2 1 -19 33 53 12 91 232 209 64 387 447 18 389 1,107 1,335

Recurring PAT 487 185 525 683 475 111 823 929 626 191 1,162 1,342 1,879 2,338 3,321 4,006

Extraordinary 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Reported PAT 487 185 525 683 475 111 823 929 626 191 1,162 1,342 1,879 2,338 3,321 4,006

EPS (Rs) 2.84 1.08 3.06 3.98 2.77 0.65 4.80 5.42 3.65 1.11 6.78 7.82 10.96 13.63 19.37 23.36

Key Drivers

Cash Contract Revenues 4,493 4,244 6,482 6,500 2,970 3,600 5,220 5,400 2,673 3,240 4,698 4,860 21,718 17,190 15,471 13,924

BOT EPC Revenues 1,114 333 420 2,000 2,700 2,835 3,402 4,082 4,050 4,253 5,103 6,124 3,866 13,019 19,529 29,294

Mining EPC Revenue 723 659 1,002 800 831 757 1,152 920 956 871 1,325 1,058 3,183 3,661 4,210 4,841

Irrigation EPC Revenue 1,684 903 739 1,500 1,852 993 776 1,575 2,037 1,092 854 1,733 4,826 5,196 5,716 6,288

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

Sequential Growth (%)

Revenue -6 % -24 % 40 % 19 % -13 % -27 % 65 % 22 % -27 % -32 % 96 % 20 % - - - -

(Increase) / Decrease in Work in progress

- - - - - - - - - - - - - - - -

EBITDA -4 % -25 % 44 % 17 % -2 % -36 % 103 % 4 % -14 % -48 % 186 % 2 % - - - -

EBIT 7 % -35 % 72 % 24 % -3 % -47 % 161 % 4 % -17 % -60 % 308 % 2 % - - - -

Recurring PAT 10 % -62 % 183 % 30 % -30 % -77 % 641 % 13 % -33 % -69 % 509 % 15 % - - - -

EPS 39 % -62 % 183 % 30 % -30 % -77 % 641 % 13 % -33 % -69 % 509 % 15 % - - - -

Yearly Growth (%)

Revenue -3 % -17 % 15 % 20 % 12 % 8 % 26 % 29 % 8 % 0 % 19 % 16 % 4 % 20 % 12 % 26 %

EBITDA -3 % -19 % 27 % 21 % 23 % 4 % 48 % 31 % 16 % -5 % 34 % 32 % 6 % 29 % 23 % 12 %

EBIT -11 % -32 % 32 % 49 % 35 % 9 % 65 % 39 % 19 % -10 % 40 % 38 % 8 % 40 % 28 % 14 %

Recurring PAT 23 % -53 % 94 % 55 % -3 % -40 % 57 % 36 % 32 % 72 % 41 % 44 % 24 % 24 % 42 % 21 %

EPS 23 % -33 % 84 % 95 % -3 % -40 % 57 % 36 % 32 % 72 % 41 % 44 % 42 % 24 % 42 % 21 %

Margin (%)

EBITDA 11 % 11 % 11 % 11 % 12 % 10 % 13 % 11 % 13 % 10 % 14 % 12 % 11 % 11 % 13 % 11 %

EBIT 8 % 7 % 8 % 8 % 9 % 7 % 10 % 9 % 10 % 6 % 12 % 11 % 8 % 9 % 10 % 9 %

PBT 6 % 3 % 6 % 7 % 6 % 2 % 8 % 9 % 9 % 4 % 12 % 12 % 6 % 7 % 10 % 9 %

PAT 6 % 3 % 6 % 7 % 5 % 2 % 8 % 7 % 6 % 3 % 9 % 9 % 6 % 6 % 7 % 7 %




Consolidated Financials Forecast P&L (Rs Mn) FY17A FY18E FY19E FY20E

Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E

Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E

Revenue 45,700 55,669 63,153 74,759 Equity Capital 172 172 172 172 PAT before MI -1,622 6,869 8,189 5,749

Op. Expenditure 33,078 36,342 40,222 50,306 Reserve 9,284 14,437 19,998 25,559 Depreciation 3,211 4,630 4,631 7,283

EBITDA 12,622 19,327 22,931 24,452 Networth 9,456 14,609 20,170 25,730 Others 0 0 0 0

Depreciation 3,211 4,630 4,631 7,283 Long Term Debt 95,041 90,125 95,966 95,572 Taxes Paid 94 1,365 1,631 1,762

EBIT 9,411 14,697 18,301 17,170 Def Tax Liability 16,501 18,959 28,685 31,970 Change in WC -7,213 738 4,505 -2,591

Interest Expense 11,874 8,603 6,993 7,887 Minority Interest 0 97 206 320 Operating C/F -5,718 10,872 15,693 8,678

Other Income 842 4,149 567 585 Account Payables 5,605 3,168 3,561 4,499 Capex -5,219 -33,952 -11,710 4,478

PBT -1,622 6,869 8,189 5,749 Other Curr Liabi 8,579 7,976 8,965 11,326 Change in Invest 0 0 0 0

Tax 94 1,365 1,631 1,762 Total Liabilities & Equity 135,182 134,933 157,552 169,418 Others 0 27,664 -13,292 -14,372

PAT bef. MI & Assoc. -1,716 5,504 6,557 3,987 Net Fixed Assets 99,379 113,029 145,660 158,914 Investing C/F -5,219 -6,289 -25,002 -9,894

Minority Interest -1,173 0 0 0 Capital WIP 0 0 0 0 Change in Debt 8,651 -4,917 5,841 -394

Profit from Assoc. 0 0 0 0 Others 9,901 -2,090 -14,351 -24,993 Change in Equity -1,160 0 0 2,775

Recurring PAT -543 5,504 6,557 3,987

Inventory 1,234 1,639 1,842 2,327 Others 3,433 2,204 8,839 2,198

Extraordinaires 0 0 0 0 Account Receivables 15,912 12,018 12,280 15,515 Financing C/F 10,924 -2,712 14,680 4,579

Reported PAT -543 5,504 6,557 3,987 Other Current Assets 7,441 7,151 3,562 5,733 Net change in cash -14 1,871 5,372 3,364

FDEPS (Rs) -3.2 32.1 38.2 23.2 Cash 1,316 3,187 8,558 11,922 RoE (%) -5 % 46 % 38 % 17 %

DPS (Rs) 0.7 1.7 5.0 6.0 Total Assets 135,182 134,933 157,552 169,419

RoIC (%) 6 % 9 % 8 % 6 %

CEPS (Rs) 8.7 59.1 65.2 65.7 Non-cash Working Capital 10,402 9,664 5,159 7,750

Core RoIC (%) 5 % 7 % 7 % 6 %

FCFPS (Rs) -18.1 59.8 -27.4 23.3 Cash Conv Cycle 83.1 63.4 29.8 37.8 Div Payout (%) -27 % 6 % 15 % 30 %

BVPS (Rs) 55.1 85.2 117.6 150.0 WC Turnover 4.4 5.8 12.2 9.6 P/E -99.1 9.8 8.2 13.5

EBITDAM (%) 28 % 35 % 36 % 33 % FA Turnover 0.5 0.5 0.4 0.5 P/B 5.7 3.7 2.7 2.1

PATM (%) -1 % 10 % 10 % 5 % Net D/E 9.9 6.0 4.3 3.3 P/FCFF -17.4 5.2 -11.5 13.5

Tax Rate (%) -6 % 20 % 20 % 31 % Revenue/Capital Employed 0.4 0.5 0.5 0.5 EV/EBITDA 13.0 8.3 7.4 6.9

Sales Growth (%) 12 % 22 % 13 % 18 %

Capital Employed/Equity 11.2 10.2 7.7 6.5

EV/Sales 3.6 2.9 2.7 2.3

FDEPS Growth (%) -63 % -1,113 % 19 % -39 %

Dividend Yield (%) 0.2 % 0.6 % 1.6 % 0.0 %

TTM P/E vs. 2 yrs. forward EPS growth TTM EV/EBITDA vs. 2 yrs. forward EBITDA growth TTM P/B vs. 2 yrs. forward RoE

21x

7x

14x

28x

35x

-40%

-20%

0%

20%

40%

60%

80%

100%

-200

-100

0

100

200

300

400

Jun/0

8

Dec/

08

Jun/0

9

Dec/

09

Jun/1

0

Dec/

10

Jun/1

1

Dec/

11

Jun/1

2

Dec/

12

Jun/1

3

Dec/

13

Jun/1

4

Dec

/14

Jun/1

5

Dec/

15

Jun/1

6

Dec/

16

Jun/1

7

Dec/

17

Jun/1

8

EPS Growth

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

Jun/

08

Dec

/08

Jun/

09

Dec

/09

Jun/

10

Dec

/10

Jun/

11

Dec

/11

Jun/

12

Dec

/12

Jun/

13

Dec

/13

Jun/

14

Dec

/14

Jun/

15

Dec

/15

Jun/

16

Dec

/16

Jun/

17

Dec

/17

Jun/

18

4x

8x

11x

14x

16xEBITDA Growth

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

500

600

Jun/

08

Dec

/08

Jun/

09

Dec

/09

Jun/

10

Dec

/10

Jun/

11

Dec

/11

Jun/

12

Dec

/12

Jun/

13

Dec

/13

Jun/

14

Dec

/14

Jun/

15

Dec

/15

Jun/

16

Dec

/16

Jun/

17

Dec

/17

Jun/

18

RoE

1x

2x

3x

4x

5x




Historical Consolidated Financials P&L (Rs Mn) FY14A FY15A FY16A FY17A

Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A

Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A

Revenue 27,325 34,468 40,658 45,700 Equity Capital 151 172 172 172 PAT before MI 261 -2,325 -1,400 -1,622

Op. Expenditure 22,870 28,624 30,639 33,078 Reserve 12,579 15,201 11,132 9,284 Depreciation 1,305 2,235 2,326 3,211

EBITDA 4,456 5,844 10,019 12,622 Networth 12,730 15,372 11,304 9,456 Others 3,127 6,047 7,264 0

Depreciation 1,305 2,235 2,326 3,211 Long Term Debt 55,718 69,628 86,390 95,041 Taxes Paid -561 -679 -801 94

EBIT 3,151 3,609 7,693 9,411 Def Tax Liability 800 23,640 14,096 16,501 Change in WC 3,732 -1,427 483 -7,213

Interest Expense 4,555 6,150 10,752 11,874 Minority Interest 2,258 1,894 0 0 Operating C/F 7,864 3,850 7,872 -5,718

Other Income 306 442 651 842 Account Payables 3,880 4,728 3,907 5,605 Capex -12,042 -14,091 -17,309 -5,219

PBT 120 -882 -1,191 -405 Other Curr Liabi 3,322 4,068 8,500 8,579 Change in Invest -947 983 4 0

Tax -141 343 219 94 Total Liabilities & Equity 78,707 119,330 124,197 135,182 Others -1,420 -467 523 0

PAT bef. MI & Assoc. 261 -1,224 -1,409 -499 Net Fixed Assets 52,313 75,878 100,019 99,379 Investing C/F -14,409 -13,575 -16,783 -5,219

Minority Interest -181 -592 -1,173 -1,173 Capital WIP 7,754 20,100 0 0 Change in Debt 11,454 13,646 8,278 8,651

Profit from Assoc. 2 -22 0 0 Others 3,399 3,999 7,253 9,901 Change in Equity 268 3,153 2 -1,160

Recurring PAT 444 -654 -237 674 Inventory 1,638 2,134 1,410 1,234 Others -4,661 -6,431 -182 3,433

Extraordinaires -1,217 -117 -422 0 Account Receivables 5,758 6,839 8,086 15,912 Financing C/F 7,060 10,368 8,098 10,924

Reported PAT 444 -654 -237 674 Other Current Assets 5,538 8,285 6,100 7,441 Net change in cash 516 644 -813 -14

EPS (Rs) -4.5 -10.9 -8.5 -3.2 Cash 2,309 2,095 1,329 1,316

RoE (%) -6 % -13 % -11 % -5 %

DPS (Rs) 0.7 0.7 0.7 0.7

Total Assets 78,707 119,330 124,197 135,182

RoIC (%) 5 % 3 % 5 % 6 %

CEPS (Rs) 2.0 -1.2 -1.8 8.7 Non-cash Working Capital 5,732 8,463 3,189 10,402 Core RoIC (%) 3 % 1 % 4 % 5 %

FCFPS (Rs) -17.1 -16.7 16.4 -18.1 Cash Conv Cycle 76.6 89.6 28.6 83.1 Div Payout (%) 29 % -8 % -14 % -27 %

BVPS (Rs) 74.2 89.6 65.9 55.1 WC Turnover 4.8 4.1 12.7 4.4

P/E -100.7 -69.6 -28.8 -37.0

EBITDAM (%) 16 % 17 % 25 % 28 % FA Turnover 0.5 0.4 0.4 0.5 P/B 4.4 4.2 3.5 4.8

PATM (%) 2 % -5 % -3 % -1 % Net D/E 4.2 4.4 7.5 9.9 P/FCFF -18.4 -18.8 19.1 -17.4

Tax Rate (%) 13 % -16 % -9 % -6 % Revenue/Capital Employed 0.5 0.5 0.4 0.4 EV/EBITDA 25.4 24.5 28.9 16.7

Sales growth (%) 27 % 26 % 18 % 12 %

Capital Employed/Equity 5.2 6.5 8.3 11.2

EV/Sales 4.1 4.1 7.1 4.6

FDEPS growth (%) 45 % 142 % -22 % -63 %

Dividend Yield (%) 0.2 % 0.2 % 0.2 % 0.2 %




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