Bharat Petroleum Corporation Ltd. - InvestmentGuruIndiavid.investmentguruindia.com/report/2020/October/Bharat... · 2020. 10. 8. · Bharat Petroleum Corporation Ltd. 3 in itself

Bharat Petroleum Corporation Ltd.

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Initiating Coverage

Bharat Petroleum Corporation Ltd. 08-October-2020


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Industry LTP Recommendation Base Case Fair Value Bull Case Fair Value Time Horizon

Refineries/ Petro-Products Rs. 342.25 Buy at LTP & add further on dips to Rs 315-319 band Rs. 394 Rs. 428 2 quarters

Our Take: Bharat Petroleum Corporation Ltd (BPCL) is amongst the most dominant players with Maharatna status in the oil and gas sector. In India it has presence across both refining and marketing segments. BPCL has a 15 per cent market share in India's refining capacity and a 23 per cent market share of India's fuel retail outlets.

With 7.8 mmtpa production capacity, BPCL’s Bina refinery has higher complexity and will have higher refining margins. The refinery has stabilized and is positively contributing to BPCL's profitability. Full stablization of Kochi Refinery by FY21 will further boost profitability. Its discoveries in Mozambique and Brazil could provide good opportunity to enhance its footprint in the E&P (Exploration and Production) space and lower the impact of under-recoveries in the long run.

We expect BPCL's GRMs to fall to US$ 1.5 per barrel in FY21, from US$ 2.5 in FY20 and US$ 4.6 in FY19 mainly on account of subdued demand along with weak gasoline and diesel cracks. We expect crude throughput of 28.5/33.1mmt and core GRM of USD 3.6/4.1 per bbl in FY21/22E as the economy recovers. However, it is likely to continue to remain well below the peak margins of US$ 6-7 in FY16-FY18 when crude oil prices were at a low. Recent oil price fall has trimmed inventory gains but it has the potential to boost marketing margins. Marketing margins for BPCL remain high as the fall in crude prices has not been passed over to the consumers fully. This situation can continue for some more time and this bounty will offset low refining margins in the interim.

Valuations & Recommendation: BPCL is well-placed to take advantage of the improved demand outlook as the economy opens up and with overall throughput much higher than the industry average. As petroleum products are essential services, BPCL’s refining and marketing operations continued despite the lockdown and is expected to get back to normalcy very soon. Also we expect, further improvement in demand to normal levels, upon full lifting up of the lockdown and stabilisation of economic activity. However, the net sales may remain subdued in Q2FY21. BPCL’s strong operational profile driven by dominant market position supported by established marketing and distribution network and sizable refining capacity makes us positive on the stock. BPCL’s value of investments and non-core assets ((Indraprastha Gas, Petronet LNG, other JVs (excluding Bina refinery), upstream assets (Mozambique, Brazil) and Numaligarh refinery)) account for nearly its entire value, indicating that the market is ascribing no or negligible value to its core refining and fuel marketing businesses. BPCL also holds 20.23 cr shares (9.33% stake)

HDFC Scrip Code BHAPET

BSE Code 500547

NSE Code BPCL

Bloomberg BPCL IN

CMP Oct 07, 2020 342.25

Equity Capital (Rscr) 2169.0

Face Value (Re) 10.0

Equity Share O/S (cr) 216.9

Market Cap (Rscrs) 74242.7

Book Value (Rs) 185.7

Avg. 52 Wk Volumes 9537588

52 Week High 549.0

52 Week Low 252.0

Share holding Pattern % (June, 2020)

Promoters 53.0

Institutions 32.4

Non Institutions 14.6

Total 100.0

Fundamental Research Analyst Abdul Karim [email protected]

mailto:[email protected]


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in itself. Out of this it may transfer 2% to a separate Employee stock purchase scheme and the rest can be sold by way of a bulk or block deal. The proceeds of this (~Rs.5500 cr) can be distributed by way of dividend or buyback or may be used to bring down debt. BPCL is on the divestment/privatization list. However repeated extensions in the last date for submitting EoI has resulted in investors losing patience and the stock price beginning to erode. Investors could buy the stock at the LTP and add on dips to Rs 315-319 band (valuing refining, marketing and pipeline businesses at 4.0, 3.5 and 4.0 time EBITDA multiple +value of other listed and unlisted investments). Based on SOTP valuation, Base case fair value of the stock is Rs 394 (valuing refining, marketing and pipeline businesses at 5.0, 5.0 and 6.5 time EBITDA multiple +value of other listed and unlisted investments) and the bull case fair value of the stock is Rs 428 (valuing refining, marketing and pipeline businesses at 6.0, 5.5 and 6.5 time EBITDA multiple +value of other listed and unlisted investments) over the next 2 quarters. At the CMP of Rs 342.25 the stock trades (valuing refining, marketing and pipeline businesses at 4.0, 4.0 and 6.5 time EBITDA multiple +value of other listed and unlisted investments) at 8.5xFY22E EV/EBITDA. Financial Summary (Standalone)

Particulars (Rs Cr) Q1FY21 Q1FY20 YoY-% Q4FY20 QoQ-% FY19 FY20 FY21E FY22E

Total Operating Income 38785.1 76317.9 -49.2 68991.4 -43.8 2,98,225.6 2,84,571.9 1,90,399.3 2,16,035.0

EBITDA 3915.8 2179.9 79.6 -1699.7 -330.4 15,112.2 8,349.0 10,815.9 13,468.2

Depreciation 995.9 914.1 8.9 947.4 5.1 3,417.8 4,080.1 4,463.7 4,862.5

Other Income 593.3 538.5 10.2 1156.8 -48.7 2,037.5 619.0 1,987.2 2,046.8

Interest Cost 587.1 452.4 29.8 578.6 1.5 1,764.0 2,637.0 2,553.0 2,309.3

Tax 850.0 276.7 207.2 -707.9 -220.1 4,377.5 -14.2 -36.5 -52.7

RPAT 2076.2 1075.1 93.1 -280.2 -841.0 7,590.5 2,265.1 5,823.0 8,395.9

Diluted EPS (Rs) 10.6 5.5 93.1 -6.9 -252.6 39.7 15.5 46.0 65.5

RoE-% 20.1 8.4 21.7 24.8

P/E (x) 8.6 22.0 7.4 5.2

EV/EBITDA 7.3 15.5 11.3 8.5

(Source: Company, HDFC sec)


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Q1FY21 Result Review Bharat Petroleum Corporation Ltd (BPCL) reported below expectation numbers in Q1FY21 but posted 93.1 per cent YoY rise in standalone net profit to Rs 2,076.2 crore in Q1FY21. Revenues from operations fell 49.2.2 per cent to Rs 38,785 crore, impacted by COVID-19 pandemic in Q1FY21. Company witnessed lower refinery throughput and revenue from operations due to lower demand of petroleum products. Sharp drop in sales volume and throughput indicate that huge inventory gains aided the Q1 earnings.

BPCL's gross refining margins (GRMs) stood at US$ 0.39 per barrel vs US$ 0.75 per barrel in Q4FY20 and US$ 2.81 per barrel in Q1FY20. Refinery throughput stood at 6.49 MMT in Q1FY21 vs. 9.16MMT in Q1FY20 and Market Sales was at 7.61 MMT in Q1FY21 vs. 11.18MMT in Q1FY20 and export sales increased to 0.79MMT vs. 0.23MMT in Q1FY20.

As the economy re-opens gradually, the company expects the refinery throughput and revenue from operations to improve and reach normal levels. Also, as per the management, in the month of August, utilization levels in Kochi and Mumbai have been normalized.

Recent Triggers Planned capex on ongoing projects could bring earning visibility in medium to long term BPCL is planning for capacity expansion for BS VI motor spirit, setting up second-generation ethanol bio refinery in Orissa, cross-country petroleum, oil, and lubricants (POL) pipeline and marketing terminals at various locations, and expansion of the retail outlet network. Apart from this, Company has plans for capex towards investment in its subsidiaries i.e. Bharat Petro Resources Limited (BPRL) and Bharat Gas Resources Limited (BGRL) towards exploration and production activities and expansion of the city gas distribution (CGD) network.

BPCL’s ongoing expansion projects Projects Operation Location Cost Rs. cr Completion on

Gasoline Hydro Treatment Unit (GTU) To produce 100% BS VI MS (Motor Spirit) Mumbai 554 Jun-19

Propylene Derivative Petrochemical Project (PDPP)

To produce niche petrochemicals such as Acrylic Acid, Oxo Alcohols and Acrylates

Kochi 5245.96 Under commissioning.

BS-VI Motor Spirit Block Project (MSBP) To produce BS-VI MS & HSD Kochi 3288.96 Mar-21

Production of value added petrochemicals Production of Polyols, Propylene Glycol and Mono Ethylene Glycol

Kochi 11130 On planning phase

2G Ethanol Bio-refinery Setting up a Second Generation (2G) Bio-refinery

Bargarh 1607 Feb-22


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LPG Import Facility Setting up LPG Import Terminal Haldia 1097.5 Under commissioning.

POL Terminal with Railway Siding Construction of a new rail fed POL terminal Pune 282.6 Completed in Aug-20

Coastal Terminal with Railway Siding Setting up of a coastal terminal and railway siding

Krishnapatnam 580.2 In Progress

Resitement Project Resitement of Raichur Depot to Gulbarga Gulbarga 226.3 Dec-20

New POL Terminal at Radhanagar, Old Ranchi and Dhanbad Depots to be resited to Radhanaga

Bokaro 248.6 Mar-22

Manmad Pipeline Re-routing Laying of a 50 Km long 18” dia pipeline Mumbai 449.6 Feb-21

Multiproduct Pipeline from Bina Dispatch Terminal to POL Terminal at Kanpur

Laying of approx. 355 Km multiproduct pipeline

Kanpur 1524.1 Dec-21

Multiproduct Pipeline from Irugur to Devangonthi

Laying of a 294 Km long 16” dia multiproduct POL cross-country pipeline

Devangonthi 1472 Aug-22

(Source: Company, HDFC sec) For FY21, BPCL is looking to incur capex of around Rs 8,000 crore (revised from Rs 12,500 crore), split largely into refining Rs 2,300 crore, marketing Rs 3500 crore, petchem Rs 800 crore, and exploration Rs 100 crore. This will be funded by debt of around Rs. 4,000 crore and remaining through internal accruals as well as liquidating special GoI bonds.. BPCL aims to add 2500 new retail outlets over next 2 years. As on Mar 2020 BPCL had 16,234 retail outlets across India. For long run, ongoing capex could bring earning visibility. However, we expect BPCL will not start large new projects until its divestment is complete, given uncertainty about the potential new owner and weak industry conditions. Government invites bids for sale of BPCL The Government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising of 114.91 crore equity shares, which constitutes 52.98 per cent of BPCL’s equity share capital along with transfer of management control to a strategic buyer (except BPCL’s equity shareholding of 61.65 percent in Numaligarh Refinery Ltd-NRL). NRL stake will be sold to a state-owned oil and gas firm. NRL has negligible debt, although the refinery contributes 6-8 percent of BPCL's throughput, and generates better GRMs than BPCL's other refineries given its higher complexity and tax benefits, contributing 18 per cent of BPCL's EBITDA. The valuation at which NRL is sold will determine the credit impact on BPCL, should NRL's sale proceeds be used to reduce debt at BPCL. The bidding will be a two-stage affair, with qualified bidders in the first expression of interest (EoI) phase being asked to make a financial bid in the second round. As per the


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bidding criteria, PSUs are not eligible to participate in the privatization. Any private company having a networth of US$ 10 billion is eligible for bidding and consortium of no more than four firms will be allowed to bid. The deadline of 16 November 2020 for the submission of expressions of interest has been extended four times since the initial announcement in November 2019. As per the management, the disinvestment process is on track and will be completed by Mar-21. Privatisation benefits Expectation of volume growth: BPCL has wide network across the India and its retail presence has been strong in urban areas. National highway presence is ~20% of its ROs (~3,000). New promoter could focus on network expansion in national highway to add fast and stable volume growth. Reliance Industries and BP (J.V) are exercising similar strategy to add volume growth.

Cost rationalisation efforts: There is an opportunity to rationalize employee costs in the range 0.7-0.8% of revenues translating into potential annual savings of ~Rs 1500 crore. The company has offered voluntary retirement scheme (VRS) in July 2020 to employees, who have completed 45 years. Post privatization, new promoter could take more corrective action to reduce its employee cost.

Professionalism to add productivity: Post privatization, Company is likely be on path to recovery with professionalism infused into its

operations. It will be a good news for the minority shareholders public who can reap in good returns on BPCL shares. Refinery utilisation stood at 80% vs. +100% historically in FY21TD and GRMs is likely to recovers to positive territory India’s Q1FY21 refinery utilisation was at ~80%, well below the pre-Covid utilisation of +100%, given the sharp 22.5% YoY contraction in domestic oil demand in Q1FY21. Refinery utilisation in Q1FY21 was at 74% for BPCL. Post Q1FY21 results, we expect that domestic oil demand recovery might take a few months and hence refining utilisations might be capped in the near term. BPCL’s utilisation was kept at a similar level MoM due to management’s focus on profitability.

A global major with a well-recognized brand as a potential new owner could usher in faster growth, operating leverage gains, cost savings, and a gradual increase in premium auto fuel acceptance, driving significant improvement in profitability and return ratios over the medium term. BPCL offers a large value unlock opportunity to the potential acquirer. This includes liberty on retail pricing, freedom to focus in refining and marketing on high margin and high-in-demand products, possibility of reduction in cost of sourcing crude by hedging and other means.


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Throughput ('000 tn)

Capacity Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20

BPCL-Mumbai 12000 1,291 1,338 768 907 972 1,097 828

BPCL-Kochi 15500 1,369 1,368 815 676 931 844 936

BORL-Bina 7800 652 733 332 440 387 411 451

NRL-Numaligarh 3000 225 248 170 206 250 219 226

BPCL Total 38300 3,536 3,687 2,086 2,229 2,540 2,571 2,441

Refinery Utilisation (%)

Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 YTD

BPCL-Mumbai 129% 134% 77% 91% 97% 110% 83% 103%

BPCL-Kochi 106% 106% 63% 52% 72% 65% 72% 77%

BORL-Bina 100% 113% 51% 68% 60% 63% 69% 75%

NRL-Numaligarh 90% 99% 68% 82% 100% 88% 90% 88%

BPCL Total 111% 116% 65% 70% 80% 81% 76% 85% (Source: PPAC, HDFC sec)

Singapore Gross Refining margin (GRM) recovered to US$0.1/bbl in Aug’20 after falling to a record low of -US$1.5/bbl in May ‘20. Gasoline & Fuel Oil cracks improved to US$0.6/-4.8/bbl in Aug’20. However, Naphtha, gas oil and Jet Kero cracks witnessed a decline. Marketing margins increased significantly for BPCL in Q1FY21 and boosted EBITDA compared with the Q4FY20. Marketing margins rose despite a hike in excise duty on auto fuels, as the fall in crude oil prices was not fully passed on to consumers. BPCL's refining throughput and marketing volumes fell by 39 per cent and 26 per cent respectively.

Long term Triggers Established player in oil and gas industry in India with continued support from the government BPCL is Government of India (GoI) owned (52.98% as on June 30, 2020), BPCL has a dominant position in the domestic market for key petroleum products such as high speed diesel (HSD), motor spirit (MS), Superior Kerosene Oil and Liquefied Petroleum Gas (LPG). BPCL has its presence in both upstream and downstream segments. It is India’s second-largest OMC with domestic sales volume of over 43.36 MMT in FY20 and is India’s third-largest refining company with a total refining capacity of 38.30 MMT (on consolidated basis), representing around 15% of India's total refining capacity as on March 31, 2020.


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Gross Under Recovery- Rs in Cr


The government has supported OMCs through budgeted subsidies and discounts from upstream companies, thereby minimising their sales-related under-recovery burden. Post deregulation of diesel, under-recoveries have declined significantly, further aided by favourable crude prices and reduced consumption of subsidised LPG. The government is expected to continue to support BPCL by absorbing a large portion of its sales-related under-recoveries, if any. Strong operating efficiency BPCL (along with its Subsidiaries/Joint Venture) has four major refineries located at Mumbai, Kochi, Numaligarh and Bina. Mumbai refinery has a capacity of 12 mmtpa and Kochi has a current capacity of 15.5 mmtpa. BPCL's subsidiary at Numaligarh has a capacity of 3 mmtpa and Bharat Oman Refineries Ltd has 7.8 mmtpa at Bina in Madhya Pradesh, making it a total consolidated capacity of 38.3 mmtpa and standalone capacity of 27.5 mmtpa. The GRMs have been lower in FY20 owing to weaker product cracks and also sharp decline in crude prices in Q4FY20, but now it is recovering. The Numaligarh and Bina refineries continue to report relatively higher GRMs. The capacity utilization for the refineries of the company is consistently high, indicating strong operating efficiency. The refineries (Mumbai & Kochi) are located near the coast, which provides an advantage to the company in saving transportation costs.


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BPCL’s high capacity utilisation at refineries ensures strong operating efficiency and proximity of refineries to the coast gives logistical advantage and helps control transportation cost in procuring crude. The refinery at Numaligarh has high operational efficiency, as reflected in healthy GRM, even after excluding excise duty benefit, and has fared consistently better than other public sector refiners. BPCL’s overall GRM could improve further, supported by recently completed modernisation and capacity expansion of the refineries at Kochi, Kerala, and Bina, Madhya Pradesh. Auto fuels contribute 57% to volumes of BPCL. Gross marketing margins on these has risen @~15% over the past 3-4 years. BPCL has land available at all three refineries for additional expansion requirement in future. It also has 3,000 acres of land in UP, which can be used for the petrochemicals plant.

BPCL to open 1,000 more fuel stations The Government of India is making huge investments to expand pipeline network as well as build import capacities to meet growing gas demand in the country. Also, the expansion of city gas distribution networks by various CGD players is going to raise the share of gas as a transportation fuel as well as kitchen fuel. BPCL is planning to add 1,000 fuel stations in the current financial year even as it expects to be privatised by the end of the current fiscal. BPCL has also reduced its capex target to Rs 8,000 crore from the earlier target of Rs 12,500 crore Sound financial profile, dented to some extent in FY20

BPCL, on a consolidated basis, reported Total Operating Income (TOI) of Rs. 284,571.9 crore as against Rs. 298,225.6 crore in FY19, EBITDA and PAT margin deteriorated from 5.1 per cent in FY19 to 2.9 per cent in FY20 and 2.6 per cent in FY19 to 1.1 per cent in FY20 respectively.

On a consolidated basis, overall gearing deteriorated as on March 31, 2020 to 1.7x as on March 31, 2020 from 1.1x as on March 31, 2019 owing to higher borrowings viz. term loans, foreign currency loans, higher working capital borrowings and finance lease.

Interest coverage ratio also declined from 6.6x in FY19 to 1.6x in FY20, owing to increase in interest expenses due to higher borrowings and lower EBITDA.


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What could go wrong? The unprecedented event of COVID-19 has affected the company’s operations and is likely to impact the overall business in near term.

If the Covid-19 disruption lasts longer than anticipated, the growth of the company will get further disrupted. Economic slowdown, volatility in oil and gas prices and regulatory changes in Oil and Gas industry could impact its growth story in near

future. The changing macro-economic scenario can have an impact on the growth plan of the Company. BPCL faces under-recoveries on account of controlled prices of domestic SKO and LPG. While the government has provided budgetary

support, absence of an institutionalised mechanism to meet under-recoveries has led to delay in subsidy receipts. The oil prices and crack spreads are a function of many dynamic markets and fundamental factors such as global demand supply dynamics,

geo-political stability in countries with oil reserves, OPEC policies, exchange rates, etc. These factors have translated in high level of volatility in oil prices. Thus, Company’s profitability is exposed to volatility of crude prices and crack spreads as well as foreign exchange fluctuations.

Pain due to lower GRM (Gross refining margins) could result in permanent closure of high-cost refineries, especially in EU and Japan, which have very high operating costs exceeding USD5/bbl. BPCL’s operating cost is amongst the lowest globally at USD2.0-2.25/bbl and may hence survive and thrive in such a scenario.

Company expects revenues to start flowing in from its exploration play in Mozambique from FY24 onwards. Whereas, in Brazil it has found substantial oil reserves having completed an extended drill test recently and expects to go for a final investment decision by Q3FY21 subject to regulatory approvals, delay in Mozambique project could impact it earning going forward.

Large global Oil & Gas players may not bid in BPCL’s privatization, as low oil prices and weak fuel demand curb their investment plans. While the Narendra Modi-government has pinned hopes on BPCL privatisation to meet its FY21 disinvestment goal, rating agencies are not sure how the stake sale will play out on the balance sheet of the company. The government has finally admitted that the disinvestment target for 2020-21 will not be met.

Currently, PSU refiners make much lower refining margins as private companies as they are obligated to produce petroleum products for the need of the country; despite it not being remunerative.

Kochi Refinery upgrade undertaken by BPCL has hit the return ratios as the much expected GRM improvement did not happen resulting in the high distillate output failing to contribute to higher profitability.

As LNG prices have fallen sharply due to low global demand, the investment by BPCL in Mozambique project may need to be written down , in case the prices do not recover fast.

BPCL lost ~200bps market share in gasoline and 250bps market share in diesel over FY16-20 as private retailers expanded.


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Company Profile: BPCL is a government undertaking and integrated refining and marketing company. It is India's second-largest oil marketing and the third-

largest refining company, with a consolidated refining capacity of 38.3 mtpa, representing 15% of India's total installed capacity. BPCL

operates two refineries, both along the west coast: a 12-mtpa refinery in Mumbai, and a 15.5-mtpa refinery in Kochi. It also owns a 61.65%

stake in Numaligarh Refinery Ltd (NRL), which has a refinery with capacity of 3 mtpa in North-East India. BPCL, through its JV, BORL, operates

a 7.8- mtpa refinery in Bina. Retail operations are supported by a nationwide marketing network comprising around 16,200 retail outlets

and 2,241 kilometre of product pipeline.

Refinery Throughput (MMT) Production (MMT)


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Market Sales Volume(MMT) Net Refining Margin-US$/bbl


Peer Comparison Company CMP Rs. Mar Cap Rs.Cr. EPS 12M Rs. Div Yld % ROE % OPM % PATM-% Debt / Eq P/E P/BV

Reliance Inds 2257.5 1488850.7 64.7 0.3 10.3 15.9 7.9 0.8 35.9 3.2

B P C L 342.3 74242.7 17.6 4.8 12.6 3.9 2.2 1.8 13.8 2.0

I O C L 75.2 70794.5 -2.6 5.7 8.7 3.4 2.0 1.4 8.7 0.7

H P C L 171.1 26065.0 26.3 5.7 11.1 3.0 2.1 1.4 5.2 0.8 (Source: Company, HDFC sec)


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Stock Valuation based on SOTP

Fair Value Based on


Business EBIDTA (Rs bn) Multiple Value (Rs bn) Value (Rs/sh) Valuation basis

Standalone

Refining 36.32 4.0 143.5 73 EV/EBIDTA on Mar 22E

Marketing 60.52 4.0 239.0 122 EV/EBIDTA on Mar 22E

Pipelines 9.44 6.5 61.3 31 EV/EBIDTA on Mar 22E

Standalone net Debt (98.3) (50) As on Mar 22E

Standalone Equity Value 106.27 3.25 345.57 176

E & P

Mozambique 66.7 34 DCF based. Crude oil price of USD55/bbl and Gas price at

13.5% slope to crude oil price. Reserves of 70tcf.

Investments

Numaligarh Refinery (NRL) 101.0 32 BPCL's stake is 61.65%

Traded InvestmentsNo of shares

(bn) CMP

Petronet LNG 0.19 220.0 41.3 16 25% discount to CMP

IGL 0.16 390.0 61.4 23 25% discount to CMP

Oil india 0.02 92.0 1.6 1 25% discount to CMP

Value of other investments 48.3 25

Investments Equity Value 320.27 130

CWIP 72.15 37

Value per share 342

Business Multiple Fair Value Bull Case Fair Value Base Case Fair Value Add on Dips

Refining EV/EBITDA 4.0 6.0 5.0 4.0

Marketing EV/EBITDA 4.0 5.5 5.0 3.5

Pipelines EV/EBITDA 6.5 6.5 6.5 4.0

354.0 428.0 394.0 317.0Value


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Financials (Standalone) Income Statement Balance Sheet

(Rs Cr) FY18 FY19 FY20 FY21E FY22E As at March FY18 FY19 FY20 FY21E FY22E

Net Revenues 235769.8 298225.6 284571.9 190399.3 216035.0 SOURCE OF FUNDS

Growth (%) 17.2 26.5 -4.6 -33.1 13.5 Share Capital 1966.9 1966.9 1966.9 1966.9 1966.9

Operating Expenses 220597.2 283113.4 276222.9 179583.4 202566.8 Reserves 34651.7 36797.8 34565.5 39710.4 49967.7

EBITDA 15172.7 15112.2 8349.0 10815.9 13468.2 Shareholders' Funds 36618.6 38764.7 36532.3 41677.3 51934.6

Growth (%) 10.4 -0.4 -44.8 29.5 24.5 Long Term Debt 28904.3 34315.6 43853.1 50714.1 47314.1

EBITDA Margin (%) 6.4 5.1 2.9 5.7 6.2 Net Deferred Taxes 5522.4 6792.0 6163.9 6403.6 7116.4

Depreciation 2885.0 3417.8 4080.1 4463.7 4862.5 Long Term Provisions & Others 1768.4 1878.3 2036.4 2218.7 2324.9

EBIT 12287.7 11694.5 4268.9 6352.3 8605.7 Minority Interest 1905.1 2070.0 2056.3 2118.0 2181.6

Other Income 1782.7 2037.5 619.0 1987.2 2046.8 Total Source of Funds 74718.7 83820.7 90642.1 103131.8 110871.5

Interest expenses 1185.7 1764.0 2637.0 2553.0 2309.3 APPLICATION OF FUNDS

PBT 12884.6 11968.1 2250.9 5786.5 8343.2 Net Block & Goodwill 45539.0 49314.6 60141.7 67194.8 71352.3

Tax 4381.6 4377.5 -14.2 -36.5 -52.7 CWIP 9875.4 13654.5 17756.7 15989.5 16361.8

RPAT 8503.0 7590.5 2265.1 5823.0 8395.9 Other Non-Current Assets 24406.9 25179.7 29713.4 29977.9 30251.5

APAT 9008.6 7802.3 3055.4 9050.1 12879.0 Total Non Current Assets 79821.3 88148.8 107611.8 113162.2 117965.5

Growth (%) 3.3 -13.4 -60.8 196.2 42.3 Current Investments 0.0 0.0 0.0 0.0 0.0

EPS 45.8 39.7 15.5 46.0 65.5 Inventories 22529.5 22934.9 22242.6 14008.2 14313.9

Trade Receivables 5204.8 6906.3 5378.0 4109.5 4662.9

Cash & Equivalents 5791.4 10794.1 8552.9 8638.4 8724.8

Other Current Assets 7073.5 8146.3 7078.2 6830.3 10634.3

Total Current Assets 40599.3 48781.5 43251.8 33586.4 38335.8

Short-Term Borrowings 8093.0 8598.9 17795.2 3295.2 3295.2

Trade Payables 13231.9 17384.7 13107.2 9454.6 10734.4

Other Current Liab & Provisions 24376.9 27126.1 29319.2 30867.0 31400.3

Total Current Liabilities 45701.9 53109.7 60221.5 43616.8 45429.9

Net Current Assets -5102.6 -4328.1 -16969.8 -10030.4 -7094.0

Total Application of Funds 74718.7 83820.7 90642.1 103131.8 110871.5


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Cash Flow Statement Key Ratios

(Rs Cr) FY18 FY19 FY20 FY21E FY22E (Rs Cr) FY18 FY19 FY20 FY21E FY22E

Reported PBT 12,884.6 11,968.1 2,250.9 5,786.5 8,343.2 EBITDA Margin 6.4 5.1 2.9 5.7 6.2

Non-operating & EO items -1,277.1 -1,825.8 171.3 1,239.9 2,436.3 EBIT Margin 5.2 3.9 1.5 3.3 4.0

Interest Expenses 1,185.7 1,764.0 2,637.0 2,553.0 2,309.3 APAT Margin 3.8 2.6 1.1 4.8 6.0

Depreciation 2,885.0 3,417.8 4,080.1 4,463.7 4,862.5 RoE 24.6 20.1 8.4 21.7 24.8

Working Capital Change -4,916.9 -1,621.8 3,357.1 7,291.6 845.8 RoCE 38.4 35.4 13.4 20.0 20.5

Tax Paid -2,914.0 -3,107.9 -613.9 276.3 765.4 Solvency Ratio

OPERATING CASH FLOW ( a ) 7,847.3 10,594.3 11,882.5 21,610.8 19,562.6 Net Debt/EBITDA (x) 2.4 2.8 7.4 5.0 3.8

Capex -7,781.9 -10,972.5 -19,009.4 -9,749.5 -9,392.2 Net D/E 1.0 1.1 1.7 1.3 1.0

Free Cash Flow 65.4 -378.2 -7,127.0 11,861.3 10,170.4 PER SHARE DATA

Investments -2,621.0 -832.5 -2,745.0 0.0 0.0 EPS 45.8 39.7 15.5 46.0 65.5

Non-operating income 655.5 2,097.3 -1,169.7 1,722.7 1,773.2 CEPS 60.5 57.0 36.3 68.7 90.2

INVESTING CASH FLOW ( b ) -9,747.4 -9,707.7 -22,924.1 -8,026.8 -7,619.0 Dividend 16.8 21.3 19.5 9.5 15.5

Debt Issuance / (Repaid) 5,524.3 5,917.1 18,733.8 -7,639.0 -3,400.0 BVPS 186.2 197.1 185.7 211.9 264.0

Interest Expenses -1,185.7 -1,764.0 -2,637.0 -2,553.0 -2,309.3 Turnover Ratios (days)

FCFE 4,403.9 3,775.0 8,969.8 1,669.3 4,461.1 Debtor days 8.1 8.5 6.9 7.9 7.9

Share Capital Issuance 655.6 0.0 0.0 0.0 0.0 Inventory days 34.9 28.1 28.5 26.9 24.2

Dividend -3,305.3 -4,188.3 -3,839.3 -1,869.5 -3,053.8 Creditors days 20.5 21.3 16.8 18.1 18.1

Others -543.0 -1,192.9 -1,304.0 -1,791.6 601.8 VALUATION

FINANCING CASH FLOW ( c ) 1,145.9 -1,228.1 10,953.4 -13,853.1 -8,161.3 P/E 7.5 8.6 22.0 7.4 5.2

NET CASH FLOW (a+b+c) -754.2 -341.5 -88.2 -269.1 3,782.2 P/BV 1.8 1.7 1.8 1.6 1.3

Cash & Equivalents 6,803.1 6,461.6 6,373.4 6,104.3 9,886.5 EV/EBITDA 6.9 7.3 15.5 11.3 8.5

EV / Revenues 0.4 0.4 0.5 0.6 0.5

Dividend Yield (%) 4.9 6.2 5.7 2.8 4.5 (Source: Company, HDFC sec)


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One Year Stock Price Chart



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