Munjal show ltd

K E Y N O T E

Munjal Show Ltd.
wa

Deep A. K
pak Kolhe, An
nalyst
deepa
ak@keyno
otecapitals.net

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pitals Institutio
onal Research is also available on
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K E Y N O T E
Munjal Showa Ltd Date: 21-Dec-2012

Key Stock Data Investment Summary
Sector Auto Parts Dominant position in shock absorbers: At present only two domestic players,
CMP `63.25 Gabriel India (GIL) and MSL dominate the industry by contributing 80% of total industry
52wk High/Low 88.0/60.0 volumes. MSL commands a market share of above 55% in two-wheeler shock
Market Cap `255Cr absorbers.
6m Avg. daily vol 13132
Munjal Showa is not affected due to separation of Hero and Honda: Munjal showa
BSE Sensex 19453.9
Reco ‘Buy’ supply its product to Hero Motocorp and Honda Motorcycle & Scooter India. Both
Target Price `85.71 clients have aggressive expansion plans, which would be beneficial for the Munjal
Showa.
Stock Codes
Strong growth going forward, sales at a CAGR of 18.2% over FY09-FY14E: MSL
Bloomberg Code MJS IN management stressed that current capacities of the company will be able to fulfill the
Reuters Code MNJL.BO expected demand from the clients. Given its end-to-end arrangement with its clients,
BSE Code 520043 we expect company’s Net sale to grow at 18.2% CAGR for the period of FY09-FY14E.
NSE Code MUNJALSHOW
Face Value `2 Lower tax and interest outgo to ensure robust profit growth: MSL’s Haridwar Plant
is on tax free regime and therefore EPS accretive. We expect it to bring down effective
Shareholding pattern tax rate from 21.9% in FY12 to 11% in FY13.
(30th Sep, 2012)
Attractive Dividend Paying History: MSL’s stock price gives a healthy dividend yield
of 4.74. The company increased its dividend by 20% from `2.5/share to `3/share in
Other FY12. Increase in dividend yield also demonstrates that the company is in stable
s
33.10 growth conditions.
%
Munjal Showa VS Gabriel India: After comparing MSL with Gabriel India, We found
Prom
DII oter
MSL trading at steep discount to Gabriel India on the basis of PE and P/S ratio.
1.86% 65.02
% Valuations: We initiate coverage with “Buy” recommendation with the DDM based
FII
0.02% target price of `85.71, arriving at 4.68x FY13E and 3.71x FY14 earning for the levered
firm.
Price Performance (%)
Key Financials (`Cr)
1 Mth 3 Mths 6 Mths 1 Yr
-2.1% -3.6% -19.2% -0.2%
Particulars FY09 FY10 FY11 FY12 FY13E FY14E
Net Sales 829.4 988.0 1,289.3 1,556.9 1,699.6 1,913.6
Stock Price Performance
YoY Growth % 16.9% 19.1% 30.5% 20.8% 9.2% 12.6%
MSL Sensex Total Expenditure 788.5 934.1 1208.3 1434.2 1582.0 1776.4
145 EBITDA 40.9 53.9 81.0 122.7 117.6 137.2
YoY Growth % 24.1% 31.7% 50.2% 51.5% -4.1% 16.7%
135
EBITDA Margin (%) 4.9% 5.5% 6.3% 7.9% 6.9% 7.2%
125 NPAT 20.7 24.6 34.0 67.1 73.3 92.3
YoY Growth % 3.6% 19.8% 34.1% 102.1% 10.5% 26.0%
115
NPAT Margin (%) 2.5% 2.5% 2.6% 4.3% 4.3% 4.8%
105 ROE (%) 13.0% 14.2% 17.7% 29.2% 26.0% 27.2%
95 EPS (`) 5.2 6.2 8.5 16.8 18.3 23.1
PE(x) 12.2 10.3 7.4 3.8 3.5 2.7
P/BV(x) 1.6 1.5 1.3 1.1 0.9 0.7
E- Keynote Capitals Research Estimates

Keynote Capitals Research 2

K E Y N O T E
Abo Compa
out any
Mun Showa, a Hero group company wa established in 1985 in c
njal as d collaboration with Showa
Corp
poration of JJapan. The Company op perates as a ancillary and manufac
an ctures auto
components for th two-wheeler and four-w
he wheeler indust Its primar products ar front fork,
try. ry re
shoc absorbers, struts, gas s
ck , springs and w
window balancers. The company opera ates through
plants based in H
Haryana and U
Uttarakhand.

duct-wise rev
Prod venue break (FY12)
kup Chart 1

Shoc absorbers
ck
contribuutes more th
han
0.67%
90% in the top-line
n e
3.24%
% 90.52%
5.57%

Market leader in two-
shock absorb
wheeler s bers
Shock A
Absorbers Struts Othe
ers Window Balan
W ncers

Mun Showa re
njal eported sales growth of 2
s 20.8% in FY1 while its e
12 earnings rose 97.3% on
e
impr
roved margins. A strong eexpansion in PAT margin f
from 2.5% to 4.3% demon
o nstrates the
A stron expansion in
ng n
impr
roved operatio
onal environm
ment.
PAT marg from 2.5% to
gin %
4.3% demonstrates t the Munnjal Showa’s client base includes like Maruti S
e Suzuki, Hero Motocorp a and Honda
improve operation
ed nal Moto ently, the group company Hero Motoco contribute the major c
orcyles. Curre orp es chunk in the
vironment.
env top line of MSL. T
Therefore, MS is benefitin from Hero’s expanding product portfo
SL ng olio.

Client List Chart 2

Maruti Su
uzuki Ltd.

Hero Mo
otoCorp Ltd.
Currenntly, the grou
up
company Hero Motoc
y corp
contributes the maj jor Hero M
Motors Ltd.
chunk in the top line of
n e Munjal sh
howa Ltd.
MSL
Honda Mo
otorcycles an Scooters I
nd India (Pvt) Lt
td.

Honda-Siel Cars India L
Ltd.

Majesti Auto Ltd.
ic

3 Keynote Ca
apitals Resea
arch

K E Y N O T E
Key Management Personnel
Munjal Showa established out of technical and financial collaboration between Hero group
MSL established out of and Showa Corporation of Japan. While Showa Corporation holds 26% stake and Munjal
technical and financial group holds 39% stake in the company as on Q2FY13. MSL is the sole supplier of shock
collaboration between absorbers to Hero Motocorp Ltd. Following is the list of key management people in the
Hero group and Showa
company.
Corporation of Japan.
Management People Chart 3

Mr.Brijmohan Lall Munjal - Chairman/Founder Director
Strong assistance from
promoter group Mr.Mahesh Taneja - Chief Financial Officer

Mr.Yogesh Chander Munjal - Managing Director

Mr.Tetsuo Terada - Joint Managing Director

Mr.Pankaj Gupta - Gen Mgr:F&A/Secretary

Performance at glance
MSL has come up out of the turbulent years FY08 and FY09 strongly. While its sales grew
2.5% and 16.9% in terms of Net sales during FY08 and FY09 respectively, PAT declined by
FY12 was much better
23.1% in FY08 and showed moderate by 3.6% in FY09. The growth was tempered by steep
year as company posted
improved performance rise in interest rates and phenomenal increase in raw material inputs especially steel. The
owing to recovery in slowdown has resulted in direct impact on the productions and sales of the component
domestic market. manufactures.

Whereas, FY12 was much better year as company posted improved performance owing to
recovery in domestic market. The company also reported Net sales and PAT growth at a
CAGR of 17.6% and 21.0% for the period of FY07-12.
`Cr
5 Yr
Particulars FY08 FY09 FY10 FY11 FY12 CAGR
(%)
MSL reported Net sales Net Sales 709.4 829.4 988.0 1289.3 1556.9 17.6%
and PAT growth at a % Change 2.5% 16.9% 19.1% 30.5% 20.8%
CAGR of 17.6% and
EBITDA 33.0 40.9 53.9 81.0 122.7 24.2%
21.0% for the period of
EBITDA Margin (%) 4.7% 4.9% 5.5% 6.3% 7.9%
FY07-12.
PAT 19.7 20.4 24.5 32.8 66.3 21.0%
PAT Margin (%) 2.8% 2.5% 2.5% 2.5% 4.3%
% Change -23.1% 3.6% 19.8% 34.1% 102.1%
EPS (`) 4.8 5.2 6.2 8.5 16.8
Dividend yield (%) 3.2% 3.2% 3.2% 4.0% 4.7%
Installed Capacity
Shock Absorbers (No) 21513000 21513000 30542400 30542400 30542400
Struts (No) 1212000 2424000 2424000 2424000 2424000
Window Balancers (No) 1006500 1006500 818100 818100 818100


K E Y N O T E
Investment Rationale
Dominant position in shock absorbers
MSL commands a Being a technology intensive industry, unorganised sector has no presence in the OEM
market share of above segment for shock absorbers. At present only two domestic players, Gabriel India (GIL) and
55% in two-wheeler MSL dominate the industry by contributing 80% of total industry volumes. MSL commands a
shock absorbers market share of above 55% in two-wheeler shock absorbers and about 8% in the passenger
cars segment.

During the year 2010-11 the Market size of shock absorber grew 31% y-o-y to `3644Cr.
According to CMIE, According to CMIE, the market will cross `5300Cr in 2013-14 registering a CAGR of 14%
Shock absorbers
during FY11-14. CMIE expects the industry’s sales to grow by 16.3% in FY13. In terms of
market will cross
`5300Cr in 2013-14 input costs as well, the industry is better off. Steel prices are expected to rise by a moderate
3.7% during the year. Hence, raw material expenses are likely to rise in line with sales.

Particulars Units 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Production 000 nos 56358.9 68919.6 74777.8 82106 91794.5
CMIE expects the
industry’s sales to Export Tonnes 3748.3 8512.1 9005.8 9951.5 11683
grow by 16.3% in FY13.
Import Tonnes 2679.2 5300.7 5692.9 6441 7481.2

Realisation Rs./Numbers 487.1 518.8 534.4 555.7 575.2

Sales Rs crore 2745.4 3575.5 3995.8 4562.6 5279.7

Domestic
Rs crore 2782.1 3644 4079.4 4665.3 5397.6
Market value
Source CMIE
Under the JV Hero
Group could not export Munjal Showa is not affected due to separation of Hero and Honda
to international
In December 2010, the Board of Directors of the Hero Honda Group have decided to
markets (except Sri
terminate the joint venture between Hero Group of India and Honda of Japan. The Hero
Lanka) and the
Group would buy out the 26% stake of the Honda. Under the joint venture Hero Group could
termination would
not export to international markets (except Sri Lanka) and the termination would mean that
mean that Hero Group
Hero Group can now export.
can now export.
Munjal Showa to benefit from Hero Motocorp and HMSI’s expansion plans.

Hero Motocorp and Munjal showa is sole supplier to Hero Motocorp Ltd.
Honda Motorcycle have MSL also provides products to Honda Motorcycle & Scooter India, Private Limited (HMSI).
very aggressive HMSI is the wholly owned subsidiary of Honda Motor Company Ltd, Japan.
expansion plans
Hero Motocorp and Honda Motorcycle have very aggressive expansion plans, which would
be beneficial for the Munjal Showa.

5 Keynote Capitals Research

K E Y N O T E
Strong growth going forward, sales at a CAGR of 18.2% over FY09-FY14E
New product launches
Munjal showa is a supplier of shock absorber to leading two wheeler player. The company
by two wheeler auto
giants will create a has been supplying shock absorbers to HMCL (Hero Motocorp Ltd), HMSI (Honda
huge demand for the Motorcycles and Scooters India Pvt Ltd) etc. MSL is a sole supplier of shock absorbers to
company’s products. HMCL. Company’s existing clients have targeted to meet predetermined sales targets with
around 10% growth, with the support of new models likely to be launched both in 2 Wheeler
and 4 Wheeler segment in the coming years.

MSL’s manufacturing units in Gurgaon, Manesar and Haridwar with installed capacities of
MSL management
30.54Mn Shock absorbers, 2.42Mn Struts and 0.82Mn Window balancer are almost using
stressed that current
capacities of the their full capacities. During FY12 MSL produced 32.36Mn Shock absorbers, 0.98Mn Struts
company will be able to and 0.74Mn window balancer which we expect to register a CAGR of 2.8%, 9.2% and 4.5%
fulfill the expected respectively over FY12-14E ensuing from the demand from the client on new launches and
demand from the better domestic demand. MSL management stressed that current capacities of the company
clients will be able to fulfill the expected demand from the clients. Given its end-to-end arrangement
with its clients, we expect company’s Net sale to grow at 18.2% CAGR for the period of
FY09-FY14E.

Net Sales to grow 9.2% in FY13E Chart 5
MSL’s installed
capacities of 30.54Mn 2500 35%
Shock absorbers, 1913.6 30%
2.42Mn Struts and 2000 1699.6
1556.9 25%
0.82Mn Window
` Cr

1500 1289.3 20%
balancer 988.0
1000 829.4 15%
709.4
10%
500
5%
0 0%
FY08 FY09 FY10 FY11 FY12 FY13E FY14E

Net Sales % Growth (RHS)

Lower tax and interest outgo to ensure robust profit growth

Lower tax is game MSL’s Haridwar Plant is on tax free regime and therefore EPS accretive. We expect it to
changer for the bring down effective tax rate from 21.9% in FY12 to 11% in FY13.
company

FY12 FY13
Particulars
Q1 Q2 Q3 Q4 Q1 Q2
Total Tax (` Cr) 3.9 3.81 2.85 8.21 1.66 0.72

% Change Q-o-Q -16.3% -2.3% -25.2% 188.1% -79.8% -56.6%

% Change Y-o-Y 8.0% 56.8% -12.0% 76.2% -57.4% -81.1%

% Effective tax rate 19.8% 21.3% 17.8% 25.4% 10.9% 7.6%


K E Y N O T E
Tax Rate to go down Chart 7

25.00 40.0%
37.1% 23.09
MSL posted strong 35.1% 36.4% 35.0%
EPS growth of 97.18% 20.00
in FY12 as compared 29.0% 18.32 30.0%
16.78
to FY11 15.00 25.0%
21.9%
20.0%
10.00 15.0%
8.51
11.5%
5.17
6.15 10.0% 10.0%
5.00 4.83
5.0%
0.00 0.0%

EPS (`) Effective Tax Rate (%) (RHS)

Interest cost to go down due to repayment of loan

Apart from tax benefits, the company is also reducing pressure of debt from its balance
sheet. As on FY12 the company has total debt of `73.16Cr, which includes secured loan of
Apart from tax `63.16cr and unsecured loan of `10Cr. Total debt of the company declined by 15% as
benefits, the company
compared to FY11. MSL reported interest coverage ratio of 10.99x in FY12 as compared to
is also reducing
8.86x in the previous year. This indicates that earnings can easily cover interest payment.
pressure of debt from
its balance sheet. The Debt to Equity ratio is expected to decline to 0.13x by FY14E from 0.29x (FY12) on
account of a reduction in debt. The interest coverage ratio is expected to improve to 27.58x in
FY14E from 10.99x (FY12) owing to decline in the interest outgo.
Improvement in Debt to Equity Ratio Chart 8
0.80 30.00
0.68
0.70
0.61 25.00
0.60
The Debt to Equity 20.00
0.50
ratio is expected to 0.42
decline to 0.13x by 0.40 15.00
FY14E from 0.29x 0.29
0.30 0.23
(FY12) on account of 10.00
0.19
a reduction in debt. 0.20 0.13
5.00
0.10
0.00 0.00

Total Debt to Equity (x) Interest coverage ratio (x) (RHS)


K E Y N O T E
The tax and interest benefit will ensure steady cash flows and intact earnings growth for the
company in the current scenario of increasing raw material costs and wage hike.

Margins impressive going forward Chart 6
2500 9%
Lower tax and interest 7.9% 8%
outgo to ensure 2000 6.9% 7.2% 7%
robust profit growth 6.3% 6%
1500 5.5%
4.7% 4.9% 4.8% 5%
` Cr
4.3% 4.3% 4%
1000
2.8% 3%
2.5% 2.5% 2.5%
500 2%
1%
0 0%
Net Sales EBITDA Margin (RHS) PAT Margin (RHS)

Attractive Dividend Paying History

MSL’s stock price gives a healthy dividend yield of 4.74. The company increased its dividend
by 20% from `2.5/share to `3/share in FY12. Increase in dividend yield also demonstrates
Increase in dividend that the company is in stable growth conditions.
yield also Dividend History
demonstrates that the
Year End 200803 200903 201003 201103 201203
company is in stable
growth conditions. Dividend amount (`Cr) 8 8 8 10 12
Dividend % 100 100 100 125 150
Dividend Yield (%)* 3.16% 3.16% 3.16% 3.95% 4.74%
*Stock price considered = `63.25 per share
We expect MSL to maintain a payout ratio in the range of 15% to 17.7% in FY13E and
FY14E. We have built in an estimate for dividend per share at `3.25 and `3.5 for FY13E and
The company FY14E respectively.
increased its dividend Dividend Yield Chart 9
by 20% from
`2.5/share to `3/share 6% 5.53%
5.14%
in FY12 4.74%
5%
3.95%
4% 3.16% 3.16% 3.16%
3%
2%
1%
0%

Dividend Yield (%)


K E Y N O T E
Peer comparison

MSL trading at steep We have compared MSL with its immediate competitor Gabriel India. Gabriel India is a
discount to Gabriel manufacturer and supplier of Shock absorbers, Struts, Front forks and Engine bearings. It
India on the basis of also has a wide range of Ride control products. It has well-known clients like Bajaj Auto,
PE and P/S ratio. Ashok Leyland and Tata Motors etc.

After comparing MSL with Gabriel India, We found MSL trading at steep discount to Gabriel
India on the basis of PE and P/S ratio.

Munjal Showa VS Gabriel India `Cr

Munjal Showa Ltd Gabriel India Ltd
Particulars
FY12 FY12

Net Sales 1556.88 1128.24
Dividend yield of
munjal showa is PAT 66.33 47.47
higher than the
Gabriel India. PAT Margin (%) 4.3% 4.2%

EPS (`) 16.78 3.61

PE (x) 3.77 7.83

Stock Price (`) 63.25 28.25

Mkt cap (`) 257 405.67

P/Sale (x) 0.17 0.36

Dividend Yield (%) 4.74% 2.31%

Valuations

At current market price of `63.25 stock is trading at 3.45x FY13E and 2.74x FY14E earnings,
Which is low as compared to Gabriel India. Considering improved demand from clients and
At current market
decline in the interest outgo as well as lower effective tax rate is likely to boost the bottom-
price of `63.25 stock
line of the company. We initiate coverage with “Buy” recommendation with the DDM based
is trading at 3.45x
FY13E and 2.74x target price of `85.71, arriving at 4.68x FY13E and 3.71x FY14 earning for the levered firm.
FY14E earnings, Dividend Discount Model
Which is low as
compared to Gabriel Gordon Growth Model
India.
Single stage DDM model

FY12

Dividend Per Share 3.00


K E Y N O T E
Assumptions

CoE (r)
Rfr 8.00%
Rm 15.00%
Beta 0.54
CoE 11.78%
Gn 8%
Target Price (`) 85.71
Upside 33.93%

Valuations Table

ROE to be in the
range of 25% to 28% Particulars FY09 FY10 FY11 FY12 FY13E FY14E

EPS (`) 5.17 6.15 8.51 16.78 18.32 23.09

RoE (%) 13% 14% 18% 29% 26% 27%

P/E (x) 12.23 10.28 7.44 3.77 3.45 2.74

Price/BV (x) 1.58 1.46 1.32 1.10 0.90 0.75

Risk and concern

The key concerns are volatility in raw material prices such as steel, iron etc

The concentration of business with few customers, may adversely affect the profitability
of the Company.

The profitability of the Company may further be affected by changes in Government
Policies regarding excise duty and import duty.


K E Y N O T E
Financial Statement
Profit and Loss A/C `Cr
Net sale to grow at
12.6% in FY14 on Y/E, 31st March FY09 FY10 FY11 FY12 FY13E FY14E
account of new Net Sales 829.4 988.0 1,289.3 1,556.9 1,699.6 1,913.6
launches and better % change 16.9% 19.1% 30.5% 20.8% 9.2% 12.6%
domestic demand EBITDA 40.9 53.9 81.0 122.7 117.6 137.2
EBITDA margin (%) 4.9% 5.5% 6.3% 7.9% 6.9% 7.2%
Other income 14.3 20.0 2.3 1.6 1.1 0.9
We expect effective Interest exp/ (inc) 5.5 12.1 9.1 11.2 7.0 5.0
tax rate to go down PBTD 49.8 61.8 74.2 113.1 111.7 133.1
from 21.9% in FY12 to Depreciation 16.9 23.1 26.3 27.2 28.9 30.5
11% in FY13. PBT 32.9 38.7 47.9 85.9 82.8 102.6
Taxes 12.2 14.1 13.9 18.8 9.5 10.3
PAT (Reported) 20.7 24.6 34.0 67.1 73.3 92.3
PAT margin to be in Less: Extraordinary Income /Others 0.3 0.1 1.2 0.8 0.0 0.0
the range of 4% ‐ 4.8% Adj PAT 20.4 24.5 32.8 66.3 73.3 92.3

in FY13E & FY14E Adj PAT margin (%) 2.5% 2.5% 2.5% 4.3% 4.3% 4.8%
Source: E- Keynote capitals Research
Balance Sheet Statement `Cr

Y/E, 31st March FY09 FY10 FY11 FY12 FY13E FY14E
Liabilities
Equity share capital 8.0 8.0 8.0 8.0 8.0 8.0
Total Res. & Surplus 157.3 172.6 195.0 248.2 300.5 361.9
Total loan fund was Total Shareholders’ funds 165.3 180.6 203.0 256.2 308.5 369.9
declined by 14.6% in Secured Loan 101.3 88.8 80.7 63.2 50.5 44.7
FY12 Unsecured Loan 0.0 34.9 5.0 10.0 8.0 5.0
Total loans 101.3 123.7 85.7 73.2 58.5 49.7
Deferred tax lia. 13.6 17.3 16.7 15.7 16.6 17.6
Other liability 0.0 0.0 0.6 0.7 0.7 0.7
Total liabilities 280.2 321.5 306.0 345.6 384.3 437.9
Assets
Net fixed assets 199.8 254.2 254.5 245.0 262.7 282.3
Cash and Cash Capital WIP 40.6 8.5 8.6 11.2 10.9 11.6
equivalents increased Total non-current assets 240.3 262.8 263.1 256.2 273.6 293.9
by 51.6% in FY12 Inv - non current 10.0 5.0 0.0 3.0 3.0 3.0
Current assets
Inventories 28.8 30.4 36.7 49.1 52.5 61.2
Sundry debtors 91.5 128.2 143.0 176.0 189.5 200.3
Cash & cash equivalents 5.3 2.4 3.1 4.7 5.6 6.1
Loans and Advances 29.4 37.3 45.0 45.7 49.3 55.3
Total current assets 154.9 198.3 227.7 275.5 296.9 322.9
Total current liabilities 116.1 131.8 176.8 178.2 177.5 168.3
Total provisions 13.1 16.3 14.8 15.9 17.4 19.4
Net current assets 25.8 50.2 36.2 81.4 102.0 135.1
Other Asset 4.1 3.5 6.8 5.0 5.6 5.8
Total assets 280.2 321.5 306.0 345.6 384.3 437.9


K E Y N O T E
Cash Flow Statement `Cr

Cash flow from operations
PBT 32.9 38.7 47.9 85.9 82.8 102.6
Tax paid 12.2 14.1 13.9 18.8 9.5 10.3
Dep & amortization 16.9 23.1 26.3 27.2 28.9 30.5
Working capital changes 0.7 27.3 (14.7) 43.6 19.8 32.6
Others (0.3) (8.1) 2.1 (4.9) (21.6) (25.2)
A-Net cash from operations 36.6 12.3 77.0 45.9 60.8 65.1
B-Net cash from investments 90.7 31.9 26.9 16.7 25.4 25.8
C-Net cash from financing 57.3 16.7 (49.5) (27.5) (34.6) (38.8)
Net change in cash (A-B+C) 3.1 (2.9) 0.7 1.6 0.8 0.5
Cash at the end of the period 5.3 2.4 3.1 4.7 5.6 6.1

Key Ratios

Growth
Net sales (%) 16.9% 19.1% 30.5% 20.8% 9.2% 12.6%
EBITDA (%) 24.1% 31.7% 50.2% 51.5% -4.1% 16.7%
PAT adjusted (%) 3.6% 19.8% 34.1% 102.1% 10.5% 26.0%

MSL is trading at 3.8x
Valuations
FY12 earnings, which
is low as compared to EPS (`) 5.2 6.2 8.5 16.8 18.3 23.1
its historical PE P/E (x) 12.2 10.3 7.4 3.8 3.5 2.7
Price/BV (x) 1.6 1.5 1.3 1.1 0.9 0.7
EV/EBITDA (x) 8.5 6.9 4.1 2.6 2.6 2.2
P/Sales (x) 0.31 0.26 0.20 0.16 0.15 0.13

Profitability
EBITDA margin (%) 4.9% 5.5% 6.3% 7.9% 6.9% 7.2%
Adj PAT margin (%) 2.5% 2.5% 2.6% 4.3% 4.3% 4.8%
Debt to equity to be in RoE (%) 13.0% 14.2% 17.7% 29.2% 26.0% 27.2%
comfort zone RoCE (%) 9.5% 11.3% 20.3% 32.5% 27.8% 28.3%

B/S ratios
Inventory days 10.6 10.2 8.8 9.3 10.1 10.1
Creditor days 33.7 32.5 34.5 35.2 31.7 27.4
Debtors days 33.0 37.8 35.6 34.8 36.5 34.8
Debt/equity 0.61 0.68 0.42 0.29 0.19 0.13


K E Y N O T E

KEYNOTE CAPITALS LTD.
Member
Stock Exchange, Mumbai (INB 010930556)
National Stock Exchange of India Ltd. (INB 230930539)
Over the Counter Exchange of India Ltd. (INB 200930535)
Central Depository Services Ltd. (IN-DP-CDSL-152-2001)
The Ruby, 9th Floor
Senapati Bapat Marg
Dadar (W), Mumbai – 400 028.
T: +91-22-30266000, F: +91-22-30266088
www.keynotecapitals.com

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