“SUBSCRIBE” to Prince Pipes and Fittings Ltd.

Betting on demand revival and strong retail franchise

Salient features of the IPO: • Prince Pipes and Fittings Ltd. (PPFL), a polymer pipes & fittings

manufacturer, is planning to raise up to Rs. 5,000mn through an IPO, which opens on 18th Dec. and close on 20th Dec. 2019. The price band is Rs. 177 - 178 per share.

• Pre-IPO placement: On 28th Nov. 2019, the company has undertaken a private placement by converting 0.6mn compulsorily convertible preference shares into 6mn equity share for a cash consideration of Rs. 1,061.8mn. Effective price per share is Rs. 178.

• The issue is combination of fresh and OFS. PPFL will not receive any proceeds from OFS. From the fresh issue (including proceeds from pre-IPO placement) net proceeds, the company will utilize the funds for repaying or prepaying certain outstanding debt, finance the new expansion project and upgrade of certain equipment at the manufacturing facilities.

Key competitive strengths: • Strong brands in the pipes & fittings segment with over 30 years

experience • Comprehensive product portfolio across polymers serving diverse

end-use applications • Strategically located manufacturing facilities with a core focus on

quality • Large and growing distribution network • Technical collaboration with a reputed international player • Strong management team Risk and concerns: • Continued economic slowdown • Unfavorable product-mix • Unfavorable volatility in international crude prices and forex rates • Unexpected movement in the interest cost • Delay in planned capacity expansion • Intense competition Peer comparison and valuation: At the higher price band of Rs. 178 per share, the company’s share is valued at a P/E multiple of 23.5x (to its restated FY19 EPS of Rs. 7.6) as compared to peer average of 25.7x. Below are few key observations of the issue: (continued in next page)

18th Dec. 2019

1

Recommendation SUBSCRIBE Price Band Rs. 177 - 178 per Share Face Value Rs. 10 Shares for Fresh Issue 14 - 14.1mn Shares Shares for OFS 14 - 14.1mn Shares Fresh Issue Size Rs. 2,500mn OFS Issue Size Rs. 2,500mn

Total Issue Size 28.1 - 28.2mn Shares (Rs. 5,000mn)

Bidding Date 18th Dec. - 20th Dec. 2019 MCAP at Higher Price Band Rs. 19,585mn

Enterprise Value at Higher Price Band Rs. 18,769mn

Book Running Lead Manager

JM Financial Ltd. and Edelweiss Financial Services Ltd.

Registrar Link Intime India Pvt. Ltd. Sector/Industry Plastic Products

Promoters

Mr. Jayant Shamji Chheda, Mrs. Tarla Jayant Chheda, Mr. Parag Jayant Chheda, Mr. Vipul Jayant Chheda and Mrs. Heena Parag Chheda

Pre and post - issue shareholding pattern Pre - Issue Post - Issue

Promoter & Promoter Group

90.06% 65.68%

Public 9.94% 34.32% Total 100.00% 100.00% Retail application money at higher cut-off price per lot Number of Shares per Lot 84 Application Money Rs. 14,952 per Lot Analyst Rajnath Yadav Research Analyst (022 - 6707 9999; Ext: 912) Email: rajnath.yadav@choiceindia.com

• PPFL is a leading polymer pipes & fittings manufacturer in India. The company markets its products under two brand names: Prince Piping Systems; and Trubore. It currently manufactures polymer pipes & fittings using four different polymers: UPVC, CPVC, PPR, and HDPE. As at 31st Oct. 2019, the company had a product range of 7,167 SKUs. Its products are used for varied applications in plumbing, irrigation, and soil, waste and rain water (SWR) management; thereby meeting the requirements of both the rural and urban markets. Due to its comprehensive product range, the company is positioned as an end-to-end polymer piping systems solution provider.

• As of 31st Oct. 2019, it sold products to 1,151 distributors in India and claims to have widest network across India. According to the management, ~80% of these are exclusive distributors. And top-20 distributors generated 12-15% of the revenue in FY19. It is predominantly a retail focused player. As in FY19, PPFL generated around 92-93% of the business from B2C mode and rest from B2B mode.

• The company has six strategically located manufacturing plants, with a strong presence in North, West and South India. As on 31st Oct. 2019, the total production capacity was 0.19mn tonnes and operated at a utilization level of 69.6%, which is considered to be an optimum utilization level in the industry. Additionally, the company has five contract manufacturers, which generates 7% of the production on tonnage basis. To meet the increasing demand, PPFL is undergoing capacity expansion at the Rajasthan plant from existing 0.006mn tonnes to 0.02mn tonnes by FY20 end. Also, a green field plant is getting executed in Telangana with total estimated installed capacity of 0.052mn tonnes. The plant is likely to commence production in FY21. Majority of the net proceeds from the fresh issue and pre-IPO placement would be utilized for this green field plant.

• Because of the multi-location manufacturing facility, the company got aided with increased market penetration across India. PPFL has established a strong presence in North, west and South India. As on FY19, the company generated 38.6%, 26.9%, 23.5% and 11% of the business from North, South, West and East India.

© CHOICE INSTITUTIONAL RESEARCH

Peer comparison and valuation (Contd…):

• The domestic plastic pipe industry size is around Rs. 290-300bn. Of this, around 60-65% is organized. Based on FY19 revenue of PPFL, it had a market share of ~5% in the domestic plastic pipe industry.

• In FY19, PPFL generated 71% of the business from low-margin uPVC products, while high margin products generated rest. The sales-mix across pipe and fitting stood at 60:40 (in terms of volume, it stood at 80:20). Pipes have margin of 12-13%, while fittings have margin of around 30-35%.

• Certain part of the fresh issue net proceeds will be utilized for repaying or prepaying debt availed by the company. As on FY19, PPFL had total debt of Rs. 2,969.1mn with pre-issue debt equity ratio of 0.7x. Post-issue after the repayment of certain debt, the ratio is likely to decline to 0.3-0.4x.

• One of the promoter group entities has issued bond worth Rs. 2,000mn, of which Rs. 1,951mn is outstanding as on 31st Oct. 2019. For securing these bonds, the promoters have pledged 35% of the equity share capital with IDBI trusteeship. The OFS proceeds will be utilized by the promoter to repay the debt.

• Coming to financial performance, PPFL has reported a consistency in the profitability and return ratio over FY14-19. It reported a 7.7% CAGR rise in total operating income over FY14-19 to Rs. 15,718.7mn in FY19. EBITDA increased by 12.7% CAGR to stood at 1,859.1mn in FY19. EBITDA margin expanded by 237bps during the period to 11.8% in FY19. Reported PAT increased by 27.2% CAGR to Rs. 833.5mn in FY19. PAT margin improved by around 3ppts to 5.3% in FY19. The company had a positive operating cash flow over FY14-19, which increased by 76.8% CAGR to Rs. 2,204.9mn in FY19. Average operating cash flow during FY14-19 was around Rs. 1,174.2mn. Average RoIC and RoE over FY14-19 was 20.4% and 19.8%, respectively.

• In H1 FY20, the company has registered a volume growth of around 15% in the subdued economic environment. Currently, it is gaining market share from other stressed organized players like Jain Irrigation and others. Going forward, we are forecast a top-line of Rs. 17,813.6mn in FY20E (a growth of 13.3% over FY19), with an EBITDA and PAT margin of 13.6% and 7%, respectively, as compared to a respective level of 11.8% and 5.3% in FY19. Reported EPS would be higher by 50.3% over FY19 to Rs. 11.4 in FY20E. Moreover, we are estimating a top-line of Rs. 20,212.7mn in FY21E, with an EPS of Rs. 12.4.

On valuation front, based on the higher price band, PPFL is demanding a P/E multiple of 23.5x (to its restated FY19 EPS of Rs. 7.6), which is at a marginal discount to peer average of 25.7x. Considering the margins and return profile, we feel that the demanded valuation is justified. With respect to the projected FY20E and FY21E earnings, it is demanding a significant discounted valuation to its peers. Thus, considering the revival in the end-user demand, wide product-mix, strong retail franchise and business contribution from the fittings, we assign a “SUBSCRIBE” rating for the issue.

Company Name Face

Value (Rs.)

CMP (Rs.)

MCAP (Rs. mn)

EV (Rs. mn)

Stock Return (%) Number of Distributors

(*)

Total Number of

Touch Points (*)

TTM Total Operating Revenue (Rs. mn)

TTM EBITDA (Rs. mn)

TTM PAT (Rs. mn)

TTM EBITDA Margin

(%)

TTM PAT

Margin (%)

1M 3M 6M 1Y

Prince Pipes and Fittings Ltd. 10 178.0 19,585 18,769 1,408 46,171 15,719 1,859 834 11.8% 5.3%

Astral Poly Technik Ltd. 1 1,140.0 171,755 172,708 4.6% 1.6% 5.4% 33.0% 750 28,000 25,073 3,849 1,958 15.4% 7.8%

Finolex Industries Ltd. 10 555.4 68,923 67,276 -2.6% 5.4% 11.0% 7.3% 850 18,000 30,913 6,043 3,498 19.5% 11.3% Supreme Industries Ltd. 2 1,121.3 142,429 143,676 -1.6% -1.3% 3.8% 2.6% 984 56,120 7,846 4,486 14.0% 8.0%

Average 16.3% 9.0%

Company Name TTM EPS (Rs.)

BVPS (Rs.)

DPS (Rs.)

Debt Equity Ratio

Total Asset Turnover

Ratio

RoE (%)

RoCE (%)

P / E (x)

P / B (x)

EV / Sales (x)

EV / EBITDA

(x)

MCAP / Sales (x)

Earning Yield (x)

Prince Pipes and Fittings Ltd. 7.6 70.5 0.0 0.4 1.1 10.7% 14.5% 23.5 2.5 1.2 10.1 1.2 4.3%

Astral Poly Technik Ltd. 13.0 85.8 0.6 0.1 1.2 15.1% 20.1% 87.7 13.3 6.9 44.9 6.9 1.1% Finolex Industries Ltd. 28.2 203.7 12.1 0.0 0.9 13.8% 19.4% 19.7 2.7 2.2 11.1 2.2 5.1% Supreme Industries Ltd. 35.3 169.6 15.7 0.1 1.7 20.8% 26.2% 31.7 6.6 2.6 18.3 2.5 3.1% Average 9.4 0.1 1.3 16.6% 21.9% 25.7 4.7 2.4 14.7 2.4 4.1%

Company Name

5Y Top-line Growth

(CAGR, %)

5Y EBITDA Growth

(CAGR, %)

5Y PAT Growth

(CAGR, %)

Avg 5Y EBITDA Margin

(%)

Avg 5Y PAT

Margin (%)

5Y Capital Employed

Growth (CAGR, %)

5Y CFO Growth

(CAGR, %)

Working Capital Cycle

(Days)

5Y Avg CFO / Capital

Employed (x)

5Y Avg Total Asset Turnover

(x)

5Y Avg RoE (%)

5Y Avg RoIC (%)

Prince Pipes and Fittings Ltd. 11.0% 22.8% 51.8% 10.7% 4.1% 36.7% 15.8% 61.8 29.5% 1.1 18.1% 18.2%

Astral Poly Technik Ltd. 15.1% 23.0% 26.7% 13.7% 7.0% 18.2% 30.8% 66.0 19.7% 1.0 15.0% 14.7% Finolex Industries Ltd. 5.7% 30.1% 64.5% 16.3% 9.3% 26.1% 17.7% 41.6 17.6% 1.2 12.5% 21.7% Supreme Industries Ltd. 7.2% 4.2% 8.6% 15.6% 8.3% 10.4% -1.9% 33.2 26.6% 1.0 22.5% 21.9% Average 9.3% 19.1% 33.3% 15.2% 8.2% 18.2% 15.5% 46.9 21.3% 1.1 16.6% 19.5%

Note: All data points as on FY19; “*” Data from RHP; Source: Choice Equity Broking

Offer Opens on 18-Dec-2019

Offer Closes on 20-Dec-2019

Finalization of Basis of Allotment 26-Dec-2019

Unblocking of ASBA Account 27-Dec-2019

Credit to Demat Accounts 30-Dec-2019

About the issue: • PPFL is coming up with an initial public offering (IPO) with 28.1 - 28.2mn shares (fresh issue: 14 - 14.1; OFS shares: 14 -

14.1mn shares) in offering. The offer represents around 25.53% of its post issue paid-up equity shares of the company. Total IPO size is Rs. 5,000mn.

• The issue will open on 18th Dec. 2019 and close on 20th Dec. 2019.

• The issue is through book building process with a price band of Rs. 177 - 178 per share.

• The issue is combination of fresh and OFS. PPFL will not receive any proceeds from OFS. From the fresh issue (including proceeds from pre-IPO placement) net proceeds, the company will utilize the funds for repaying or prepaying certain outstanding debt, finance the new expansion project and upgrade of certain equipment at the manufacturing facilities.

• 50% of the net issue shall be allocated on a proportionate basis to qualified institutional buyers, while rest 15% and 35% is reserved for non-institutional bidders and retail investors, respectively.

• Promoter holds 90.06% stake in the company and post-IPO this will come down to 65.68%. Public holding will increase

from current 9.94% to 34.32%.

Pre and post issue shareholding pattern (%)

Pre Issue Post Issue (at higher price band)

Promoter & Promoter Group (%) 90.06% 65.68%

Public (%) 9.94% 34.32%

Source: Choice Equity Broking

Indicative IPO process time line:

Commencement of Trading 31-Dec-2019

Company introduction: PPFL is recognized as one of the leading polymer pipes & fittings manufacturers in India in terms of number of distributors (Source: RHP). The company markets its products under two brand names: Prince Piping Systems; and Trubore. It currently manufactures polymer pipes using four different polymers: UPVC, CPVC, PPR, and HDPE, and fittings using three different polymers: UPVC, CPVC, and PPR. As at 31st Oct. 2019, PPFL had a product range of 7,167 SKUs. Its products are used for varied applications in plumbing, irrigation, and soil, waste and rain water (SWR) management; thereby meeting the requirements of both the rural and urban markets. Due to its comprehensive product range, the company is positioned as an end-to-end polymer piping systems solution provider. PPFL have six strategically located manufacturing plants, with a strong presence in North, West and South India. Its plants are located at the following locations: Athal (Union Territory of Dadra and Nagar Haveli); Dadra (Union Territory of Dadra and Nagar Haveli); Haridwar (Uttarakhand); Chennai (Tamil Nadu); Kolhapur (Maharashtra) and Jobner (Rajasthan). As on 31st Oct. 2019, the total installed capacity of at six existing plants was 0.24mn tonnes per annum. The company plans to expand the installed capacity at Jobner plant from 0.006mn tonnes per annum to 0.017mn tonnes per annum by 31st Dec. 2019 and to 0.021mn tonnes per annum by the end of FY20. PPFL also uses five contract manufacturers, of which two are in Aurangabad (Maharashtra), one is in Guntur (Andhra Pradesh), one is in Balasore (Odisha) and one is in Hajipur (Bihar). The company plans to set up a new manufacturing plant in Sangareddy (Telangana), with a total estimated installed capacity of 0.052mn tonnes per annum and is expected to be operational in FY21. It distributes its products from six plants and 11 warehouses. PPFL sell its products to distributors, who then resell the products to wholesalers, retailers, and plumbers. As of 31st Oct. 2019, the company sold products to 1,151 distributors in India. It sells the Trubore products directly to wholesalers and retailers. As of 31st Oct. 2019, the company sold Trubore products to 257 wholesalers and retailers.

Source: Company Presentation

Company introduction (Contd…):

Source: Company Presentation

Company introduction (Contd…): Financial performance: PPFL has reported a consistency in the profitability and return ratio over FY14-19. On the back of 8.5% CAGR rise in the sales of finished goods, PPFL reported a 7.7% CAGR rise in total operating income over FY14-19 to Rs. 15,718.7mn in FY19. Business contribution from the sales of finished goods increased from 92.9% in FY14 to 96.2% in FY19. In Q1 FY20, top-line stood at Rs. 3,797.7mn, while business from finished goods stood at 97.6%. Cost of revenue which is around 70% of the top-line increased by 7.8% CAGR during the period. Consequently, total operating expenditure increased by 7.2% CAGR, thereby resulting to a 12.7% CAGR rise in EBITDA over FY14-19 to stood at 1,859.1mn in FY19. EBITDA margin expanded by 237bps during the period to 11.8% in FY19. Q1 FY20 EBITDA stood at Rs. 527.1mn with a margin of 13.9%. Depreciation charge increased by 11.3% CAGR, while finance cost declined by 5.4% CAGR over FY14-19. Other income increased by 10.1% CAGR. Consequently, reported PAT increased by 27.2% CAGR over FY14-19 to Rs. 833.5mn in FY19. PAT margin improved by around 3ppts to 5.3% in FY19. In Q1 FY20, reported PAT stood at Rs. 266.7mn with a margin of 7%. The company had a positive operating cash flow over FY14-19, which increased by 76.8% CAGR to Rs. 2,204.9mn in FY19. Average operating cash flow during FY14-19 was around Rs. 1,174.2mn. Operating cash flow before working capital changes increased by 14.9% CAGR. Working capital cycle declined from 108.2 days in FY14 to 61.8 days in FY19. Average RoIC and RoE over FY14-19 was 20.4% and 19.8%, respectively.

Source: Choice Equity Broking

(Rs. mn) FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 CAGR (%) Y-o-Y (%) Total Operating Revenue (Gross) 10,831.2 10,340.9 10,810.6 13,300.2 13,205.5 15,718.7 3,797.7 7.7% 19.0% EBITDA 1,024.3 817.1 996.2 1,626.3 1,633.4 1,859.1 527.1 12.7% 13.8% Reported PAT 250.8 156.8 295.4 741.8 727.7 833.5 266.7 27.2% 14.5%

Restated Adjusted EPS 2.3 1.4 2.7 6.7 6.6 7.6 2.4 27.2% 14.5%

Cash Flow from Operating Activities 127.8 1,227.8 894.1 968.2 1,622.4 2,204.9 302.9 76.8% 35.9% NOPLAT 596.4 415.6 544.7 1,015.2 970.1 1,063.4 295.4 12.3% 9.6% FCF 407.4 (19.6) 179.3 197.1 892.3 184.5 352.8%

RoIC (%) 23.0% 16.0% 17.2% 25.4% 20.4% 20.5% 5.6% (251) bps 14 bps

Revenue Growth Rate (%) -4.5% 4.5% 23.0% -0.7% 19.0% EBITDA Growth Rate (%) -20.2% 21.9% 63.3% 0.4% 13.8% EBITDA Margin (%) 9.5% 7.9% 9.2% 12.2% 12.4% 11.8% 13.9% 237 bps (54) bps Reported PAT Growth Rate (%) -37.5% 88.3% 151.2% -1.9% 14.5% Reported PAT Margin (%) 2.3% 1.5% 2.7% 5.6% 5.5% 5.3% 7.0% 299 bps (21) bps

Fixed Asset Turnover Ratio (x) 4.8 4.5 4.3 4.6 3.7 3.6 0.9 -5.2% -0.8% Total Asset Turnover Ratio (x) 1.8 1.7 1.7 1.7 1.3 1.5 0.4 -3.7% 12.1%

Current Ratio (x) 1.1 1.1 1.2 1.3 1.3 1.2 1.2 1.6% -6.2% Debt to Equity (x) 2.6 1.9 1.6 1.3 1.2 0.7 0.7 -22.0% -35.7% Net Debt to EBITDA (x) 3.4 3.6 2.9 1.9 2.2 1.5 5.4 -15.5% -32.0%

RoE (%) 18.0% 10.2% 16.0% 30.6% 23.0% 20.8% 6.2% 277 bps (219) bps RoA (%) 4.2% 2.6% 4.5% 9.8% 7.4% 8.0% 2.6% 379 bps 59 bps RoCE (%) 27.3% 19.2% 21.5% 31.9% 22.6% 23.7% 6.8% (357) bps 108 bps

© CHOICE INSTITUTIONAL RESEARCH

Competitive strengths: • Strong brands in the pipes & fittings segment with over 30 years experience

and multiple industry awards & accolades • Comprehensive product portfolio across polymers serving diverse end-use

applications • Strategically located manufacturing facilities with a core focus on quality • Large and growing distribution network • Technical collaboration with a reputed international player, which helped to

improve the quality of products and manufacturing efficiency • Strong management team

Business strategy:

• Continue to optimize product mix to improve margins • Increase sales of DWC pipes • Increase sales of Prince Piping Systems products by reaching out to more

retailers and expanding distribution network both in new areas as well as existing areas

• Set up a new manufacturing plant in Telangana and capacity expansion at Rajasthan plant

• Expand the Trubore brand to new geographies • Brand building through major marketing initiatives

Risk and concerns:

• Continued economic slowdown • Unfavorable product-mix • Unfavorable volatility in international crude prices and forex rates • Unexpected movement in the interest cost • Delay in planned capacity expansion • Intense competition

© CHOICE INSTITUTIONAL RESEARCH

Financial statements:

Profit and loss statement (Rs. mn)

FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 CAGR over FY14 - 19 (%)

Annual Growth over

FY18 (%) Total Operating Revenue (Gross) 10,831.2 10,340.9 10,810.6 13,300.2 13,205.5 15,718.7 3,797.7 7.7% 19.0% Cost of Materials Consumed (6,838.5) (7,131.0) (7,047.1) (8,364.7) (8,938.1) (10,728.6) (2,789.9) 9.4% 20.0% Purchase of Stock in Trade (713.6) (197.8) (327.4) (1,075.4) (461.7) (340.8) (62.6) -13.7% -26.2% Changes in Inventories of Finished Goods, Stock in Trade and Work-in-Progress (178.9) 74.1 (87.2) 549.6 185.6 (204.2) 163.5 2.7% -210.0%

Excise Duty (767.8) (769.0) (736.9) (835.2) (55.1) -100.0% -100.0% Employee Benefit Expense (458.7) (487.7) (527.2) (609.6) (725.6) (783.3) (197.8) 11.3% 8.0% Other Expenses (849.4) (1,012.5) (1,088.5) (1,338.5) (1,577.1) (1,802.7) (383.7) 16.2% 14.3% EBITDA 1,024.3 817.1 996.2 1,626.3 1,633.4 1,859.1 527.1 12.7% 13.8% Depreciation and Amortization Expenses (264.5) (285.5) (296.8) (328.3) (380.9) (451.6) (118.2) 11.3% 18.6% EBIT 759.8 531.6 699.4 1,298.0 1,252.5 1,407.4 408.9 13.1% 12.4% Finance Costs (480.5) (374.0) (335.0) (363.7) (361.1) (364.0) (73.9) -5.4% 0.8% Other Income 44.0 20.6 5.6 24.8 60.3 71.3 4.3 10.1% 18.3% PBT 323.3 178.3 370.0 959.1 951.7 1,114.7 339.3 28.1% 17.1% Tax Expenses (72.5) (21.5) (74.6) (217.3) (224.0) (281.2) (72.6) 31.1% 25.5% Reported PAT 250.8 156.8 295.4 741.8 727.7 833.5 266.7 27.2% 14.5%

Balance sheet statement (Rs. mn)

FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 CAGR over FY14 - 19 (%)

Annual Growth over

FY18 (%) Equity Share Capital 480.1 480.1 480.1 450.1 900.2 900.2 900.2 13.4% 0.0% Other Equity 910.8 1,064.1 1,361.7 1,975.4 2,265.6 3,107.5 3,378.4 27.8% 37.2% Long Term Borrowings 1,123.7 934.1 1,115.1 1,332.2 1,947.6 1,512.3 1,367.5 6.1% -22.3% Non Current Lease Liabilities 8.9 60.6 44.0 39.9 -27.5% Other Non Current Financial Liabilities 112.7 137.9 139.8 154.5 162.0 160.3 160.8 7.3% -1.1% Non Current Provisions 22.6 41.8 43.1 45.5 68.8 78.2 84.9 28.2% 13.6% Deferred Tax Liabilities (Net) 135.6 116.2 109.1 117.3 127.5 135.5 114.2 0.0% 6.3% Other Non Current Liabilities 5.1 -100.0% Short Term Borrowings 2,440.0 2,061.4 1,858.9 1,887.6 1,698.3 1,456.8 1,609.3 -9.8% -14.2% Trade Payables 453.6 763.3 991.4 1,021.2 1,970.0 2,151.6 1,703.8 36.5% 9.2% Current Lease Liabilities 10.5 8.9 17.5 16.6 16.4 -4.9% Other Current Financial Liabilities 195.9 271.5 337.5 469.7 478.1 660.0 648.1 27.5% 38.0% Current Provisions 13.3 20.2 21.3 24.1 12.1 16.5 11.3 4.4% 36.7% Current Tax Liabilities 27.4 28.6 -100.0% Other Current Liabilities 59.5 59.9 55.6 118.5 58.0 164.7 81.3 22.6% 184.1% Total Liabilities 5,947.9 5,950.6 6,533.0 7,605.0 9,798.8 10,404.1 10,144.6 11.8% 6.2%

Property, Plant and Equipment 2,193.3 2,199.6 2,313.8 2,636.9 3,323.7 3,595.1 3,601.3 10.4% 8.2% Other Intangible Assets 49.2 42.1 36.3 34.8 41.5 35.6 34.6 -6.3% -14.4% Capital Work in Progress 26.4 43.5 141.3 180.3 146.8 615.1 765.9 87.8% 319.1% Right of Use Assets 22.2 10.6 78.3 62.4 58.4 -20.3% Goodwill 3.0 3.0 3.0 3.0 3.0 0.0% Non Current Investments 3.9 1.6 5.1 7.3 7.4 7.8 9.1 14.6% 5.6% Long Term Loans and Advances 48.8 50.3 53.8 51.5 73.4 74.2 79.7 8.8% 1.1% Other Non Current Financial Assets 86.8 86.8 Other Non Current Assets 140.8 132.1 25.7 14.5 692.3 582.2 622.6 32.8% -15.9% Current Investments 9.9 Inventories 1,292.0 1,125.6 1,005.2 1,742.4 2,415.2 2,010.6 2,186.6 9.2% -16.8% Trade Receivables 2,037.7 2,120.4 2,389.9 2,367.4 2,393.9 2,503.6 1,904.8 4.2% 4.6% Cash and Bank Balances 56.1 60.4 85.7 123.7 96.3 223.2 130.1 31.8% 131.7% Current Loans and Advances 3.7 2.0 3.8 3.7 2.6 2.3 2.3 -8.8% -10.0% Other Current Financial Assets 4.4 5.1 3.4 0.9 2.6 1.3 2.6 -21.4% -49.6% Income Tax Assets (Net) 27.6 21.7 14.7 24.3 5.2 -28.3% Other Current Assets 64.1 146.2 419.2 403.9 451.1 595.9 657.1 56.2% 32.1% Assets Classified as Held for Sale 70.8 -100.0% Total Assets 5,947.9 5,950.6 6,533.0 7,605.1 9,798.8 10,404.1 10,144.6 11.8% 6.2%

Source: Choice Equity Broking

© CHOICE INSTITUTIONAL RESEARCH

Financial statements:

Note: Ratios calculated on pre-issue data; Source: Company RHP

Cash flow statement (Rs. mn)

Particulars (Rs. mn) FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 CAGR over FY14 - 19 (%)

Annual Growth over

FY18 (%) Cash Flow Before Working Capital Changes 948.8 854.3 997.4 1,658.3 1,748.0 1,899.1 569.9 14.9% 8.6% Change in Working Capital (737.2) 406.5 (28.3) (471.5) 37.3 610.9 (206.7) -196.3% 1539.4% Cash Flow from Operating Activities 127.8 1,227.8 894.1 968.2 1,622.4 2,204.9 302.9 76.8% 35.9% Purchase of Property , Plant & Equipment (373.4) (311.7) (509.5) (684.7) (1,119.0) (918.0) (229.1) 19.7% -18.0% Cash Flow from Investing Activities (364.1) (308.4) (529.0) (678.9) (1,702.6) (1,050.6) (319.0) 23.6% -38.3% Cash Flow from Financing Activities 225.4 (920.4) (364.9) (262.5) 55.4 (1,067.7) (70.2) -236.5% -2028.4%

Net Cash Flow (10.9) (1.1) 0.1 26.7 (24.9) 86.6 (86.4) -251.3% -448.2% Opening Balance of Cash and Bank Balances 12.4 1.5 0.4 0.5 27.2 2.3 88.9 -28.6% -91.5% Closing Balance of Cash and Bank Balances 1.5 0.4 0.4 27.2 2.3 88.9 2.5 127.1% 3748.1%

Financial ratios Particulars (Rs. mn) FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 Revenue Growth Rate (%) -4.5% 4.5% 23.0% -0.7% 19.0% EBITDA Growth Rate (%) -20.2% 21.9% 63.3% 0.4% 13.8% EBITDA Margin (%) 9.5% 7.9% 9.2% 12.2% 12.4% 11.8% 13.9% EBIT Growth Rate (%) -30.0% 31.5% 85.6% -3.5% 12.4% EBIT Margin (%) 7.0% 5.1% 6.5% 9.8% 9.5% 9.0% 10.8% Reported PAT Growth Rate (%) -37.5% 88.3% 151.2% -1.9% 14.5% Reported PAT Margin (%) 2.3% 1.5% 2.7% 5.6% 5.5% 5.3% 7.0%

Liquidity ratios Current Ratio 1.1 1.1 1.2 1.3 1.3 1.2 Debt Equity Ratio 2.6 1.9 1.6 1.3 1.2 0.7 Net Debt to EBITDA 3.4 3.6 2.9 1.9 2.2 1.5

Turnover ratios Inventories Days 61.0 60.8 52.1 56.4 82.3 71.6 Debtor Days 68.7 73.4 76.1 65.3 65.8 56.9 Payable Days (21.4) (30.6) (42.9) (41.3) (59.2) (66.7) Cash Conversion Cycle 108.2 103.6 85.3 80.4 88.9 61.8 Fixed Asset Turnover Ratio (x) 4.8 4.5 4.3 4.6 3.7 3.6 Total Asset Turnover Ratio (x) 1.8 1.7 1.7 1.7 1.3 1.5

Return ratios RoE (%) 18.0% 10.2% 16.0% 30.6% 23.0% 20.8% RoA (%) 4.2% 2.6% 4.5% 9.8% 7.4% 8.0% RoCE (%) 27.3% 19.2% 21.5% 31.9% 22.6% 23.7%

Per share data Restated Reported EPS (Rs.) 2.3 1.4 2.7 6.7 6.6 7.6 2.4 Restated DPS (Rs.) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Restated BVPS (Rs.) 12.6 14.0 16.7 22.0 28.8 36.4 38.9 Restated Operating Cash Flow Per Share (Rs.) 1.2 11.2 8.1 8.8 14.7 20.0 2.8 Restated Free Cash Flow Per Share (Rs.) 3.7 (0.2) 1.6 1.8 8.1 1.7 Dividend Payout Ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

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