Download - Larsen & Toubro Result Updated

7/31/2019 Larsen & Toubro Result Updated

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Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 4QFY12 4QFY11 3QFY12 % chg (yoy) % chg (qoq)Net sales 18,461 15,384 13,999 20.0 31.9Op. profit 2,561 2,341 1,343 9.4 90.7

Adj. net profit 1,843 1,537 839 19.9 119.7Source: Company, Angel Research

Larsen and Toubro (L&T) posted a good set of numbers for 4QFY2012, which

were broadly in-line with our expectations; however, the company disappointed

on the order inflow front. As of 4QFY2012, L&Ts order backlog stands at

`1,45,723cr, 11.0% yoy growth. Order inflow for the quarter declined by 30.2%

to`21,159cr, taking the order inflow for FY2012 to `70,574cr (down 12% yoy).

We prefer L&T over its peers, as it is a market leader and fundamentally thestrongest infrastructure company. We maintain L&T as our top pick in the sectorand, hence, continue to recommend Buy on the stock.Performance in-line with estimates: On the top-line front, L&T reported decenttop-line growth of 20.0% yoy to `18,461cr, marginally below our estimate of

`18,945cr. On the EBITDA front, performance was as per our expectations, with

the company reporting a yoy dip of 130bp to 13.9% against our expectation of

13.7%. On the bottom-line front, L&T reported 13.9% yoy growth to `1,920cr,

marginally higher than our estimate of `1,862cr, owing to exceptional gain

(`55cr) and lower tax rate (26.9%).

Outlook and valuation: For FY2013, management has given a guidance of15-20% growth for both revenue and order inflow. We believe although the

company can achieve this guidance on the revenue front, given its robust order

backlog, it would be difficult to achieve 15-20% growth on the order inflow front,

considering the challenging macro environment and hence are factoring order

inflow growth of 10.6% for FY2013. We believe L&T is best placed to benefit fromthe gradual recovery in capex cycle, given its diverse exposure to sectors, strongbalance sheet and cash flow generation as compared to peers.We maintain L&T as our top pick in the sector and maintain our Buy rating on thestock with a target price of `1,553.Key financials (Standalone)Y/E March (` cr) FY2011 FY2012E FY2013E FY2014ENet sales 43,905 53,171 59,559 69,089% chg 18.6 21.1 12.0 16.0

Adj. net profit 3,342 3,993 4,369 4,720% chg 15.5 19.5 9.4 8.0

FDEPS (`) 54.1 64.7 70.8 76.5EBITDA margin (%) 12.9 11.8 12.1 11.5

P/E (x) 21.4 17.9 16.4 15.2

RoAE (%) 16.6 17.0 16.1 15.3

RoACE (%) 18.5 17.7 17.2 16.3

P/BV (x) 3.3 2.8 2.5 2.2

EV/Sales (x) 1.8 1.5 1.3 1.2

EV/EBITDA (x) 13.7 12.3 11.1 10.1

Source: Company, Angel Research

BUYCMP `1,160

Target Price `1,553

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 0.0

MF / Banks / Indian Fls 43.8

FII / NRIs / OCBs 19.7

Indian Public / Others 36.6

Abs. (%) 3m 1yr 3yr

Sensex (9.2) (12.5) 36.6

LNT (15.9) (24.1) 22.4

Face Value (`)

BSE SensexNifty

Reuters Code

71,026

1.3

1,868/971

365,809

Infrastructure

Avg. Daily Volume

Market Cap (` cr)

Beta

52 Week High / Low

2

16,2164,908

LART.BO

LT@IN

Nitin Arora022-39357800 Ext: 6842

[email protected]

Larsen & ToubroPerformance Highlights

4QFY2012 Result Update | Infrastructure

May 14, 2012


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Larsen & Toubro | 4QFY2012 Result Update

May 14, 2012 2

Exhibit 1:Quarterly performance (Standalone)

Y/E March (` cr) 4QFY12 4QFY11 3QFY12 % Chg (yoy) % Chg (qoq) FY2012 FY2011 % ChgNet sales 18,461 15,384 13,999 20.0 31.9 53,171 44,013 18.8Total expenditure 15,900 13,043 12,655 21.9 25.6 46,888 38,422 18.9Operating profit 2,561 2,341 1,343 9.4 90.7 6,283 5,591 18.6OPM (%) 13.9 15.2 10.4 (130)bp 350bp 11.8 12.7 (100)bp

Interest 121 136 191 (11.1) (36.5) 666 647 30.5

Depreciation 180 236 180 (23.5) 0.0 699 599 44.5

Non operating income 263 370 230 (28.8) 14.6 930 1,045 15.2

Extraordinary/Dividend from subs 106 149 219 (28.9) (51.6) 463 436 (106.2)

Profit before tax 2,629 2,488 1,421 5.7 85.0 6,310 5,826 (3.5)Tax 708 802 429 (11.7) 65.0 1,854 1,868 12.4

Reported net profit 1,920 1,686 992 13.9 93.7 4,456 3,958 (9.5)PAT (%) 10.4 11.0 7.1 (60)bp 330bp 8.4 9.0 (60)bp

Reported EPS 31.1 27.3 16.1 13.9 93.7 72.2 64.1 (12.3)

Adjusted profit after tax 1,843 1,537 839 19.9 119.7 4,109 3,616 9.1Adj. PAT (%) 10.0 10.0 6.0 - 400bp 7.7 8.2 (50)bp

Adj. FDEPS 29.9 24.9 13.6 19.9 119.7 66.6 58.6 8.9Source: Company, Angel Research

Exhibit 2:4QFY2012 Actual vs. Estimates

(` cr) Estimates Actual Variation (%)Net Sales 18,945 18,461 (2.6)

EBITDA 2,595 2,561 (1.3)

Interest 200 121 (39.5)Tax 842 708 (15.9)

Reported PAT 1,862 1,920 3.1


Key highlights of the analyst meet

L&Ts management is fairly confident on delivering 15-20% growth on the

order inflow and revenue front. The company is eyeing infrastructure,

(including roads, metro rails, DFC and airports), hydrocarbon, buildings

and power T&D for getting orders.

Further, L&T is already L1 in `12,000cr-15,000cr orders, which were

supposed to be awarded in FY2012 but got spilled over to FY2013.

L&T is also looking to diversify/expand in new geographies (Saudi Arabia,

Kuwait, Iraq, Indonesia and Brazil). Further the company is hoping to

increase its order inflow from outside India, from 18% currently to 25%.

For the power sector, L&T believes the generation segment would continue

to suffer in the near term, given the structural issues faced by the sector.

Despite heightened competitive intensity, management has clarified that it

has enough levers at its disposal to ensure that the current EBITDA margin(+/-50bp) is maintained for FY2013.


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May 14, 2012 3

Top line grows by healthy 20%

For 4QFY2012, L&T reported decent top-line growth of 20.0% yoy to `18,461cr,

marginally below our estimate of `18,945cr. This was mainly on account of

pick-up in the E&C segment, which recorded 23.4% top-line growth to`16,638cr.Revenue and order inflow guidance for FY2013 at 15-20%

For FY2013, management has given a guidance of 15-20% growth for both

revenue and order inflow. L&Ts order backlog currently stands at `1,45,723cr,

11.0% yoy growth. Order inflow for the quarter declined by 30.2% to `21,159cr,

taking the order inflow for FY2012 to `70,574cr (down 12% yoy). However,

management is confident of achieving order inflow of`80,000cr-84,000crduring

FY2013.We believe although the company can achieve this guidance on the

revenue front, given its robust order backlog, it would be difficult to achieve

15-20% growth on the order inflow front, considering the challenging macroenvironment.

Exhibit 3:Stable execution expected going ahead


Exhibit 4:Order inflow disappoints


25.3

7.33.0

(5.7)

28.1

6.4

17.8

40.5

13.2

20.3 20.522.7 20.0

(10.0)

-

10.0

20.0

30.0

40.0

50.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Sales (` cr, LHS) Growth (yoy %, RHS)

139.5

(21.8)

47.5

23.4

(16.9)

63.3

11.4

(24.9)

27.1

3.6

(21.3)

28.2

(30.2)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Order Boo king (` cr, LHS) Growth ( yoy %, RHS)


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May 14, 2012 4

EBITDA margin in-line with estimates

On the EBITDA front, performance was as per our expectations, with the company

reporting a yoy dip of 130bp to 13.9% against our expectation of 13.7% for the

quarter. For FY2012, EBITDAM stood lower by 100bp to 11.8%. EBITDAM was

lower as: 1) MCO expenses were impacted by higher input costs; and 2) staff cost

increased primarily due to compensation restructuring and manpower buildup.

We note that the dip in EBITDAM is in the range guided by the management

(75-125bp for FY2012). This guidance was on the back of change in order book

mix towards infrastructure projects (which yields lower margins compared to the

other segments), enhanced competition witnessed in all segments with no respite in

sight and fluctuations in commodity prices. Further, going ahead, management

believes that EBITDAM should be at 11.3-12.3%.

Bottom line beats estimates owing to lower tax rate

On the bottom-line front, L&T reported yoy growth of 13.9% to `1,920cr in

4QFY2012, marginally higher than our estimate of `1,862cr, due to exceptional

gain (`55cr) and lower tax rate (26.9%).

Exhibit 5:Margin trend


Exhibit 6:PATM aided by lower tax rate


15.0

11.210.6

12.3

15.112.8

10.8 10.8

15.2

11.9

10.49.6

13.9

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

500

1,000

1,500

2,000

2,500

3,000

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

EBITDA (` cr, LHS) EBITDAM (%, RHS)

10.4

7.67.0

7.6

10.0

8.07.0 7.0

10.0

7.36.6

6.0

10.0

-

2.0

4.0

6.0

8.0

10.0

12.0

0

200

400

600

800

1,0001,200

1,400

1,600

1,800

2,000

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Adj. PAT (` cr, LHS) PATM (%, RHS)


5/15


May 14, 2012 5

Segmental performance

Engineering and construction (E&C): The E&C segment, which contributed ~90%to the companys gross revenue, witnessed good traction and recorded growth of

22.3% yoy for the quarter to`16,709cr, primarily on account of strong execution

of its order book. On the margin front, the segment witnessed a dip of 100bp on a

yoy basis to 13.6%, but reported a jump of 330bp on a sequential basis.

Machinery and industrial products (MIP): The MIP segment witnessed pressures oflow level of mining activities and slowing industrial capex, resulting into a decline

of 5.7% on a yoy basis to `817cr; however, the segment grew by 13.5% on a

sequential basis. EBIT margin, at 16.3%, also witnessed contraction of 370bp yoy

and 180bp qoq during the quarter.

Electrical and electronics (E&E): The E&E segment witnessed decent revenue duringthe quarter, as it recorded 14.2% yoy growth to`1,143cr. EBIT margin came in at13.9%, registering a dip of 130bp on a yoy basis.

Exhibit 7: Segmental performance

Y/E March (` cr) 4QFY12 4QFY11 3QFY12 % chg (yoy) % chg (qoq)Revenue 18,646 15,519 14,155 20.2 31.7Engg & Const. (E&C) 16,709 13,664 12,465 22.3 34.0

Mach. & Ind. Products (MIP) 817 866 720 (5.7) 13.5

Electrical & Electronics (E&E) 1,143 1,001 843 14.2 35.7

Others 275 211 267 30.6 2.9

Intersegment revenue 298 224 139 33.2 113.9

EBIT 2,602 2,361 1,552 10.2 67.7Engg. & Const. 2,265 1,991 1,282 13.8 76.7

Mach. & Ind. Products 133 173 130 (23.1) 2.5

Electrical & Electronics 159 152 72 4.8 122.8

Others 32 46 68 (29.2) (52.2)

Intersegment margins (12) 1 - 0.0 0.0

EBIT (%) 14.0 15.2 11.0 (120) bp 300 bpEngg. & Const. 13.6 14.6 10.3 (100) bp 330 bp

Mach. & Ind. Products 16.3 20.0 18.1 (370) bp (180)bp

Electrical & Electronics 13.9 15.2 8.5 (130) bp 540 bp

Others 11.8 21.8 25.4 (1000) bp (1360) bp

Capital Employed 35,252 29,271 33,868 20.4 4.1Engg. & Const. 10,807 7,546 10,438 43.2 3.5

Mach. & Ind. Products 701 470 682 49.1 2.8

Electrical & Electronics 1,363 1,186 1,344 14.9 1.4

Others 600 543 677 10.6 (11.4)

Unallocable 21,780 19,525 20,727 11.5 5.1



6/15


May 14, 2012 6

Subsidiary performance

L&T InfoTech registers decent performance

L&T InfoTech, the companys technology subsidiary, reported a decentperformance for 4QFY2012, registering 16.5% yoy growth in revenue to`817cr.

On the profitability front, the subsidiary reported NPM of 13.2% with profit of

`110cr during the quarter.

Order book analysis

As of 4QFY2012, L&T stands tall on an order backlog of `1,45,723cr. Order

inflow for 4QFY2012 came in at `21,159cr, down 30.2% yoy, taking the order

inflow for FY2012 to `70,574cr. For FY2012, ~18% orders came from the

international market, owing to traction on the hydrocarbon/T&D space. L&Ts

order book is majorly dominated by the infra (43%) and power (28%) segments.

Process (15%), hydrocarbon (10%) and others (4%) constitute the remaining part of

the order book. The company has given a guidance of 15-20% for order booking

in FY2013, which is above our expectations.

Client wise, 35% of L&Ts outstanding order book comes from the public sector

and 48% comes from the private sector. Captive work orders account for the

balance 17%. Notably, there has been a drop in the share of public sector orders

in the past few quarters.

Exhibit 8:Decline in order booking for 4QFY2012 (`cr)


Exhibit 9:Order book composition (`1,45,723cr)


9,571

18,36517,793

23,843

15,626

20,464

13,366

30,313

16,19016,096

17,129

21,159

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Process H ydrocarbon Power Infrastructure Others T otal

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

P rocess H ydrocarbon P ower Inf rastructure Others


7/15


May 14, 2012 7

Outlook and valuation

We maintain our Buy rating with a target price of`1,553

We believe L&T will continue to occupy a unique position in the Indian E&C spaceas a diversified and large engineering play, with exposure to areas ranging from

power, defense, nuclear to equipment, in spite of short-term concerns.

At the CMP of`1,160, the stock is trading at 15.2x FY2014E earnings and 2.2x

FY2014E P/BV on a standalone basis. We have used the sum-of-the-parts (SOTP)

methodology to value the company to capture all its business initiatives and

investments/stakes in different businesses. Ascribing separate values to its parent

business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap

basis, our target price works out to`1,553. We maintain our Buy recommendationon the stock.It may be noted here that the L&T stock has historically traded at a premium to the

BSE Sensex. At our SOTP target price, the stock would trade at 20.1x FY2014E

standalone adjusted EPS of `76.5, which is at a premium of 38.6% over Angels

FY2014E Sensex target P/E multiple of 14.5x and lower than the historical

premium commanded by L&T over BSE Sensex.

Exhibit 10:L&T Parent historic P/E multiple premium to BSE Sensex


On one-year forward P/E basis, historically L&T has traded at an average P/E of

27.2x, 28.6x and 28.6x over the past seven, five and three years, respectively.

Thus, our implied target P/E multiple of 20.1x is way below its historical average to

factor in the prevailing challenging business environment.

0%

20%

40%

60%

80%

100%

120%

140%

14-May-0

5

14-Aug-0

5

14-Nov-0

5

14-Feb-0

6

14-May-0

6

14-Aug-0

6

14-Nov-0

6

14-Feb-0

7

14-May-0

7

14-Aug-0

7

14-Nov-0

7

14-Feb-0

8

14-May-0

8

14-Aug-0

8

14-Nov-0

8

14-Feb-0

9

14-May-0

9

14-Aug-0

9

14-Nov-0

9

14-Feb-1

0

14-May-1

0

14-Aug-1

0

14-Nov-1

0

14-Feb-1

1

14-May-1

1

14-Aug-1

1

14-Nov-1

1

14-Feb-1

2

14-May-1

2

L&T Premium/(Discount) to Sensex 7YEAR AVG 5YEAR AVG 3YEAR AVG


8/15


May 14, 2012 8

Exhibit 11:L&T Parent one-year forward P/E band


Exhibit 12:Derivation of SOTP-based target price for L&T (FY2014E)

Business Segment Methodology Remarks ` cr `/share % to TPL&T- Parent P/E 16x FY2014E Earnings 75,513 1,223 78.8Infrastructure Subsidiaries 3,632 59 3.8IDPL (stake - 97.5%) P/BV

L&T acq. 2.36% stake of IDFC at Rs118cr in1QFY11

3,632 59 3.8

Key Subsidiaries - Services 11,058 179 11.5L&T Infotech P/E 12x FY2014E Earnings 6,421 104 6.7

L&T Finance Mcap Basis 20% holding company discount 4,636 75 4.8

Key Subsidiaries - Manufacturing 3,319 54 3.5Tractor Engineers P/E 5x FY2014E Earnings 89 1 0.1

Associate Companies P/E 5x FY2014E Earnings 2,000 32 2.1

L&T MHI Boilers and Turbines (51%) P/E 5x FY2014E Earnings 1,230 20 1.3

Other Subsidiaries 2,338 38 2.4Satyam Stake Mcap 20% holding company discount 142 2 0.1

Other Investments P/BV 1x FY2014E Book Value, Mcap 2,197 36 2.3

Total 95,859 1,553 100Source: Company, Angel Research

Exhibit 13:Key assumptions (` cr)FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Order Inflow 51,600 69,572 79,769 70,574 78,048 86,346

Revenue 33,926 37,035 43,905 53,171 59,559 69,089

Order Backlog (Y/E) 70,300 100,239 130,217 145,723 164,411 184,310

OB/Sales (x) 2.1 2.7 3.0 2.7 2.8 2.7


0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

14-May-0

5

14-Aug-0

5

14-Nov-0

5

14-Feb-0

6

14-May-0

6

14-Aug-0

6

14-Nov-0

6

14-Feb-0

7

14-May-0

7

14-Aug-0

7

14-Nov-0

7

14-Feb-0

8

14-May-0

8

14-Aug-0

8

14-Nov-0

8

14-Feb-0

9

14-May-0

9

14-Aug-0

9

14-Nov-0

9

14-Feb-1

0

14-May-1

0

14-Aug-1

0

14-Nov-1

0

14-Feb-1

1

14-May-1

1

14-Aug-1

1

14-Nov-1

1

14-Feb-1

2

14-May-1

2

P/E 7YEAR AVG 5YEAR AVG 3YEAR AVG


9/15


May 14, 2012 9

Exhibit 14:Angel EPS forecast vs. consensus

Angel Forecast Bloomberg Consensus Variation (%)FY2012E 70.8 77.9 (9.2)

FY2013E 76.5 85.7 (10.8)


Investment arguments

Best stock to play the Indian infrastructure theme: We believe L&T is bestplaced to benefit from the gradual recovery in the capex cycle, given its

diverse exposure to sectors, strong balance sheet and cash flow generation as

compared to its peers, which grapple with issues such as strained cash flow,

high leverage and limited net worth and technological capabilities.


10/15


May 14, 2012 10

Exhibit 15:Recommendation summary

Company CMP TP Rating Top-line (` cr) EPS (`) Adj. P/E OB/FY12E FY13E FY14E CAGR (%) FY12E FY13E FY14E CAGR (%) FY12E FY13E FY14E Sales(x)

ABL 194 302 Buy 1,522 2,014 2,294 22.7 18.0 28.4 30.8 30.8 10.8 6.9 6.3 4.2

CCCL 15 - Neutral 2,145 2,526 2,792 14.1 (1.1) 1.8 2.8 - - 8.1 5.2 2.7

HCC 18 - Neutral 3,988 4,239 4,522 6.5 (3.7) (1.8) (0.8) - - - - 3.8

IRB Infra 109 186 Buy 3,131 3,821 4,582 21.0 14.9 15.0 16.9 6.5 7.3 7.3 6.4 -

ITNL 159 265 Buy 5,606 6,619 7,925 18.9 25.6 22.0 26.7 2.1 6.2 7.2 6.0 4.3

IVRCL 45 79 Buy 5,057 5,758 6,860 16.5 2.0 4.7 6.0 72.7 22.3 9.6 7.5 4.4

JP Assoc. 61 104 Buy 13,963 16,017 18,359 14.7 2.9 4.2 5.0 30.9 21.0 14.6 12.2 -

L&T 1,160 1,553 Buy 53,171 59,559 69,089 14.0 64.7 70.8 76.5 8.7 17.9 16.4 15.2 2.7Madhucon 46 84 Buy 1,952 2,503 2,903 21.9 4.4 5.8 6.5 21.8 10.4 7.9 7.0 3.8

NCC 34 76 Buy 4,946 5,790 7,022 19.1 1.4 3.5 5.4 97.6 24.7 9.8 6.3 4.3

Patel Engg 88 - Neutral 3,573 3,609 3,836 3.6 14.9 14.0 14.5 (1.1) 5.9 6.2 6.0 2.7

Punj Lloyd 44 - Neutral 10,557 11,592 12,993 10.9 2.8 1.8 3.2 7.2 16.0 24.3 13.9 2.6

Sadbhav 135 199 Buy 2,604 2,989 3,314 12.8 9.3 10.2 11.3 10.5 14.6 13.3 12.0 2.7

Simplex In. 207 316 Buy 5,929 6,732 7,902 15.4 19.6 27.2 35.1 33.9 10.6 7.6 5.9 2.9


Exhibit 16:SOTP break-up

Company Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total` % to TP ` % to TP ` % to TP ` % to TP ` % to TP `

ABL 128 42 - - 174 58 - - - - 302CCCL 20 100 - - - - - - - - 20

HCC (5) (20) 12 50 16 70 - - - - 23

IRB Infra 98 59 - - 64 39 4 3 - - 166

ITNL 53 20 - - 180 68 - - 33 12 265

IVRCL 54 69 - - - - 25 31 - - 79

JP Assoc. 34 32 27 26 - - - - 43 42 104

L&T 1,223 79 - - - - 330 21 - - 1,553Madhucon 33 39 2 2 50 59 - - - 84

NCC 43 57 2 2 10 13 - - 22 28 76

Patel Engg 55 51 17 16 16 15 - - 19 18 106

Punj Lloyd 72 100 - - - - - - - - 72

Sadbhav 102 51 - - 98 49 - - - - 199

Simplex In. 316 100 - - - - - - - - 316



11/15


May 14, 2012 11

Profit & loss statement (Standalone)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014EGross sales 34,045 36,996 43,886 53,100 59,641 69,243Less: Excise duty 398 321 390 567 637 740

Net Sales 33,647 36,675 43,496 52,533 59,004 68,504Other operating income 280 360 409 637 555 586

Total operating income 33,926 37,035 43,905 53,171 59,559 69,089% chg 36.4 9.2 18.6 21.1 12.0 16.0

Total Expenditure 30,094 32,295 38,306 46,888 52,439 61,186

Net Raw Materials 16,798 17,309 21,272 26,072 29,207 34,214

Other Mfg costs 9,434 11,144 12,160 14,948 16,521 19,181

Personnel 1,998 2,379 2,885 3,663 3,540 4,110

Other 1,864 1,463 1,990 2,204 3,170 3,681

EBITDA 3,832 4,739 5,599 6,283 7,120 7,903% chg 35.6 23.7 18.1 12.2 13.3 11.0

(% of Net Sales) 11.4 12.9 12.9 11.8 12.1 11.5

Depreciation& Amortisation 283 380 562 699 816 969

EBIT 3,550 4,360 5,036 5,583 6,305 6,934% chg 35.3 22.8 15.5 10.9 12.9 10.0

(% of Net Sales) 10.5 11.9 11.6 10.6 10.7 10.1

Interest & other Charges 350 505 647 666 853 1,004

Other Inc (incl Ass/JV pft) 643 768 1,087 1,338 1,399 1,516

(% of PBT) 16.7 16.6 19.8 21.4 20.4 20.4

Recurring PBT 3,842 4,623 5,475 6,255 6,851 7,447% chg 28.5 20.3 18.4 14.2 9.5 8.7

Extraordinary Expense/(Inc.) (871) (1,394) (429) (55) - -

PBT (reported) 4,713 6,016 5,904 6,310 6,851 7,447Tax 1,231 1,641 1,946 1,854 2,013 2,188

(% of PBT) 26.1 27.3 33.0 29.4 29.4 29.4

PAT (reported) 3,482 4,376 3,958 4,456 4,838 5,259Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 3,482 4,376 3,958 4,456 4,838 5,259ADJ. PAT (excl. div from Subs) 2,595 2,893 3,342 3,993 4,369 4,720% chg 32.4 11.5 15.5 19.5 9.4 8.0

(% of Net Sales) 7.7 7.9 7.7 7.6 7.4 6.9

Basic EPS (`) (Reported) 59.2 72.6 65.0 72.8 78.4 85.2Fully Diluted EPS ( ) (Diluted) 42.0 46.9 54.1 64.7 70.8 76.5% chg 32.4 11.5 15.5 19.5 9.4 8.0


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May 14, 2012 12

Balance sheet (Standalone)Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E FY2014ESOURCES OF FUNDSEquity Share Capital 118 121 122 122 123 123Preference Capital - - - - - -

Reserves& Surplus 12,343 18,191 21,725 25,092 28,788 32,847

Shareholders Funds 12,460 18,312 21,846 25,215 28,911 32,971Minority Interest - - - - - -Total Loans 6,556 6,801 7,161 8,381 10,276 12,282

Deferred Tax Liability 48 77 263 263 263 263

Total Liabilities 19,065 25,190 29,271 33,859 39,450 45,516APPLICATION OF FUNDSGross Block 5,575 7,236 8,897 10,241 12,144 14,058

Less: Acc. Depreciation 1,418 1,728 2,224 2,923 3,739 4,708

Net Block 4,157 5,508 6,673 7,318 8,405 9,350Capital Work-in-Progress 1,038 858 785 942 1,130 1,356

Goodwill - - - - - -

Investments 8,264 13,705 14,685 15,685 17,185 18,685Current Assets 23,448 26,362 34,951 42,819 49,408 58,834

Cash 775 1,432 1,730 2,160 2,135 3,361

Loans & Advances 6,791 5,997 8,189 10,197 12,238 14,196

Other 15,882 18,932 25,032 30,462 35,035 41,276

Current liabilities 17,842 21,243 27,823 32,905 36,679 42,709

Net Current Assets 5,606 5,119 7,128 9,914 12,730 16,124Mis. Exp. not written off 0 - - - - -

Total Assets 19,065 25,190 29,271 33,859 39,450 45,516


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May 14, 2012 13

Cash flow statement (Standalone)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E FY2014EProfit before tax 4,713 5,881 5,904 6,310 6,851 7,447

Depreciation 283 387 562 699 816 969Change in Working Capital 2,049 (1,143) 1,711 2,357 2,840 2,169

Less: Other income 643 768 1,087 1,338 1,399 1,516

Direct taxes paid 873 1,519 1,946 1,854 2,013 2,188

Cash Flow from Operations 1,431 5,124 1,723 1,461 1,414 2,543(Inc.)/ Dec. in Fixed Assets (1,980) (1,481) (1,589) (1,501) (2,091) (2,140)

(Inc.)/ Dec. in Investments (1,329) (5,442) (979) (1,000) (1,500) (1,500)

Other income 643 768 1,087 1,338 1,399 1,516

Cash Flow from Investing (2,666) (6,154) (1,482) (1,163) (2,192) (2,123)Issue of Equity 23 2,133 347

Inc./(Dec.) in loans 1,922 168 360 1,220 1,895 2,006

Dividend Paid (Incl. Tax) 717 863 996 1,085 1,139 1,196

Others (183) 249 345 (4) (3) (4)

Cash Flow from Financing 1,045 1,687 57 131 753 807Inc./(Dec.) in Cash (190) 657 299 429 (25) 1,226

Opening Cash balances 965 775 1,432 1,730 2,160 2,135Closing Cash balances 775 1,432 1,730 2,160 2,135 3,361


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May 14, 2012 14

Key RatiosY/E March FY2009 FY2010 FY2011 FY2012E FY2013E FY2014EValuation Ratio (x)P/E (on FDEPS) 27.6 24.7 21.4 17.9 16.4 15.2P/CEPS 24.7 21.7 18.2 15.1 13.7 12.5

P/BV 5.7 3.9 3.3 2.8 2.5 2.2

Dividend yield (%) 0.7 0.9 1.1 1.2 1.3 1.4

EV/Sales 2.3 2.1 1.8 1.5 1.3 1.2

EV/EBITDA 20.0 16.1 13.7 12.3 11.1 10.1

EV / Total Assets 4.0 3.0 2.6 2.3 2.0 1.8

Order Book to Sales 2.1 2.7 3.0 2.8 2.8 2.7

Per Share Data (`)EPS (Basic) 59.2 72.6 65.0 72.8 78.4 85.2

EPS (fully diluted) 42.0 46.9 54.1 64.7 70.8 76.5

Cash EPS 47.0 53.4 63.8 76.6 84.7 92.9

DPS 8.4 10.2 12.4 14.4 15.0 15.8

Book Value 203.5 299.0 356.7 411.7 472.1 538.4

DuPont AnalysisEBIT margin 10.5 11.8 11.5 10.5 10.6 10.0

Tax retention ratio 0.7 0.7 0.7 0.7 0.7 0.7

Asset turnover (x) 2.2 1.8 1.7 1.8 1.7 1.7

ROIC (Post-tax) 17.2 15.1 13.2 13.3 12.9 12.3

Cost of Debt (Post Tax) 5.1 5.5 6.2 6.1 6.5 6.3

Leverage (x) 0.4 0.4 0.3 0.2 0.3 0.3

Operating ROE 21.8 18.6 15.0 15.1 14.6 14.0

Returns (%)ROCE (Pre-tax) 22.0 19.7 18.5 17.7 17.2 16.3

Angel ROIC (Pre-tax) 23.3 20.7 19.6 18.8 18.3 17.5

ROAE 23.6 18.8 16.6 17.0 16.1 15.3

Turnover ratios (x)Asset Turnover (Gross Block) 6.9 5.8 5.4 5.6 5.3 5.3

Inventory / Sales (days) 54 36 12 12 13 12

Receivables (days) 94 105 98 95 99 97

Payables (days) 63 73 79 88 93 88

Working capital cycle (ex-cash) 34.9 42.0 37.8 45.1 56.2 61.7Solvency ratios (x)Net debt to equity 0.5 0.3 0.2 0.2 0.3 0.3

Net debt to EBITDA 1.5 1.1 1.0 1.0 1.1 1.1

Interest Coverage 10.1 8.6 7.8 8.4 7.4 6.9


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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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