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Recommendation BUY Success Unfolding! Gati Ltd is India’s largest express distribution and supply chain (EDSC) company and also operates in the cold chain segment, freight forwarding and coastal shipping businesses. Recently, the company announced a JV with Japanese Company and is transferring its EDSC business to the JV Company retaining 70% of the stake.
Investment Rationale
In recent past, Gati has successfully resolved the following issues:
1. FCCB Restructured: Gati rolled over its FCCB’s worth $ 15mn which were due for redemption on Dec 6
th 2011. The new FCCB’s were issued for $
22mn at a yield to maturity of 5.76% and repayable after 5 years. 2. Improvement in the Financial Health: The Company has Rs.490 crores of
Debt in its books, out of which Rs.330 crores would get transferred to the JV Company. KWE’s share of investment at Rs.267 crore would be used for largely repaying debt and partly for expansions. This would reduce the interest component of the company significantly in FY13E to Rs. 24.5 crores against Rs.50 crores in FY11.
3. Loss making Shipping Business: The shipping business is not in a great shape and the company has recently hived it off into a separate company and is also looking for a strategic partner. Shipping Industry itself is not doing well and Gati’s shipping asset required capital investments for dry docking of the vessels and the company has dry docked its vessels in the current quarter and has now deployed them for operations. Consequently, a strategic investor can also bring in revival into this business.
Synergies from the JV with KWE to boost growth in the core business EDSC segment is the core business for Gati and has been growing at a 20-25% rate yearly. Post the JV with KWE; we expect this segment to get further boost on the back of unlocking of synergies between the two companies and grabbing share of the unorganized sector which is almost 80% currently. We expect Gati’s EDSC segment to grow at a CAGR of 22% over a period of FY10-FY13E.
Focus on the cold chain segment would be positive The cold chain segment is a high growth, high margin business for the company and plans to almost double the fleet size by FY13E to 300. Consequently, Gati also plans to develop some part of its vast land bank into warehouses which should complement its cold chain business. Government has recently announced significant fiscal benefit to boost this sector.
Valuation & Recommendation For Gati, in the recent past there was concern about the timely redemption of FCCB, High Debt, and loss making shipping business amongst others. Infusion of capital by KWE would boost Gati’s performance. We believe the positives should start flowing in from FY13E onwards. The divestment of shipping business or induction of JV partner into it with majority holding will be positive for Gati. The stock is trading attractively at 7.8x/4.3x on FY13E P/E and EV/EBIDTA. We initiate coverage on Gati Ltd with a BUY recommendation and price objective of Rs.46 which is 27% upside from the current levels.
CMP Rs. 36
Target Price Rs 46
Sector Logistics
Stock Details
BSE Code 532345
NSE Code GATI
Bloomberg Code GTIC IN
Market Cap (Rs cr) 275.4
Free Float (%) 55.63
52- wk HI/Lo (Rs) 79.1/23.3
Avg. volume BSE (Quarterly)
4,15,568
Face Value (Rs) 2.0
Dividend (FY 11) 25 %
Shares o/s (Crs) 8.6
Relative Performance 1Mth 3Mth 1Yr
Gati -7% -2.5% -47.9%
Sensex 0.4% 8.7% -10.6%
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Shareholding Pattern 31st
Mar 12
Promoters Holding 44.37%
Institutional (Incl. FII) 2.63%
Corporate Bodies 14.90%
Public & others 38.10%
Kavita Vempalli – Research Analyst (022 3926-8173) [email protected]
Sunil Jain – Head of Research - Retail (022 3926-8196) [email protected]
Amrita Burde – Research Associate (022 3926-8233) [email protected]
Consolidated Sales-Rs cr Growth (%) EBITDA - Rs cr Margin (%) PAT (Rs cr) Margin (%) EPS (Rs) PE (x) EV/EBITDA
FY11A 1203.0 29.9% 92.5 7.7% 14.10 1.2% 1.64 22.0 8.1
FY12E 1248.9 3.8% 99.2 7.9% 22.09 1.8% 2.55 14.1 5.9
FY13E 1500.3 20.1% 138.5 9.2% 39.72 2.6% 4.59 7.8 4.3
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Company Overview
Gati Ltd is India’s largest express distribution and supply chain (EDSC) company operating through a fleet of
more than 4000 vehicles, 436 depots and 64 Distribution Warehouses. Almost 80% of the express business
is provided through Road and the rest through Railways and Air. Apart from the surface express, the
company also operates in the supply chain management, freighter and coast to coast shipping businesses.
Recently, Company has announced a Joint venture with a Japanese Company KWE and is transferring its
express and supply chain business and a debt of Rs 330 crs to the JV Company Gati Kinetsu Express Private
Limited wherein Gati Ltd. would hold 70% of the holding. KWE would be investing Rs 267 crore in this joint
venture. This JV will have unmatched distribution services, facilities and IT capabilities among any Indian
logistics company. That will also result in a significant expansion of KWE's presence and capabilities in
India.
Milestones
1989 Started operations as a door-to door cargo company. 1994 Introduced the concept of Cash on Delivery for the first time in India. 1995 Introduced Call Free Number for the first time in Indian Logistics industry 1996 Tied up with Indian Airlines to facilitate speeder delivery shipments 1997 The first 3PL service Provider in India. 1998 First Logistics company to receive ISO 9001 certification. 1999 Expanded services to SAARC countries. 2001 Launched India’s first Millennium Parcel Train Service. 2003 Launched GEMS an end to end cargo management service. 2004 Started Mechantronic warehouses in major cities in India. 2008 Launched a Centralized Call centre in Nagpur 2008 Strategic Alliance with General Logistics Systems, Europe’s Parcel Leader. 2009 Launched a Real Time shipment delivery information system. 2009 Launched Gati Academy. 2010 Started www.makemygiftz.com 2012 Formed a JV with Japanese global logistics service major Kintetsu World Express (KWE). 2012 Transferred its Shipping Business into separate entity M/s. Gati Ship Private Limited.
EDSC excluding cold chain and Int Freight
Business would be transferred to the new JV
firm, Gati KWE Ltd. where Gati Ltd. would hold
70% stake.
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INDUSTRY The Road Transport Services industry has been a rather unorganized sector (80% share) in India it is dominated by transporters with fleets smaller than five trucks and that account for over two-thirds of the total trucks owned and operated in India.
Road Freight Rates The Road freight rates saw a decline in the month of Feb 2012 by 1% QoQ due to over capacity of vehicles of all routes. However, industry is expecting strong freight rates for the last month of the financial year. The rates have grown at a CAGR of 5% over 2005-2012 periods and are expected to remain strong in the second half of FY2013E.
130
152
166 168 171 172 175 174
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170
180 Indian Road Freight Index trend
Source: TCIL
LOGISTICS INDUSTRY
MODES OF TRANSPORT INFRASTRUCTURE SEGMENTS END-USER INDUSTRIES
Road Rail Coastal Air Pipeline
Warehousing
Cold storage
Food grains Cars Consumer Durables FMCG IT Hardware Organised Retails Pharmaceuticals Textiles Two-wheelers
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Booming 3PL (third party logistics) services
Country Logistics cost as a % of GDP Share of 3PL
India 13.0 – 14.0% Less than 10%
China 18% Less than 10%
USA 10% 34%
Europe 7% 54%
Source: Deloitte
Third party logistics (3PL) providers typically specialize in integrated operation, warehousing and
transportation services that can be scaled and customized to customers' needs. This market was estimated
to be ~ $ 69mn in 2010. It is a broad based service being now offered by the Indian Logistic companies and
is still at a nascent stage as seen in the above table. As per latest RNCOS report, the 3PL market is
anticipated to witness a CAGR of around 36% during the 2012-2014 period.
Industrial/Economic growth and logistics
As per a recent Crisil report, India’s GDP is expected to grow at ~ 7% in 2012-13. This is on the assumption of a mild recession during early 2012 in Euro Zone and no progress on domestic policy reforms. Industry experts are anticipating better traction in the economy in the H2FY13E, thus IIP would see improvement going forward which is the key indicator for the Logistics industry to improve as well. However, recently it has turned negative.
Source: GoI As per Crisil reports, In 2011-12, road freight movement is estimated to grow by a lower 6-7%, in BTKM (Billion Tonne Kilometers) terms as compared to 13-15% CAGR over 2005-06 to 2010-11. Given the macroeconomic headwinds, freight availability is expected to remain below the long term average in 2011-12 as well. However, the industrial growth is expected to recover by the second half of 2012-13 as interest rates are likely to cool off by the end of 2011-12. Therefore, road BTKM growth is expected to be slightly higher at 7-9% as against the current years. Consequently, the utilisation level of transporters is expected to edge higher in 2012-13.
Crisil also expects the proposed spending by the Government of India on improving road infrastructure in the country in the 12th Five-Year Plan to lead to higher incremental demand for logistics services.
Given the fact that logistics sector growth has positive correlation with a country’s economic health and considering that India’s economic health is believed to improve from the current levels, the sector is likely to receive a major push going forward.
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Investment Rationale
Success Unfolding! Gati has faced problems in the past and has successfully resolved most of them. Primarily, the company had a FCCB overhang and overall huge debt in its books. By introducing a strategic investor into its business, Gati has re-structured its business by transferring its core EDSC business into a JV company Gati Kinetsu Express Private Limited (KWE) in which it holds 70% stake. KWE is a Japanese Logistics player.
1. FCCB re-structured Gati restructured its FCCB’s worth $ 15mn which were due for redemption on Dec 6th 2011.The new FCCBs were issued for $22 million at a yield to maturity of 5.76% with a maturity of 5 years. This FCCB would remain in the parent company Gati Ltd.
2. Improvement in the financial health The Company has Rs.490 crore of Debt in its books, out of which Rs.330 crore would get transferred to the JV Company. KWE’s share of investment at Rs.267 crore will be utilized to release debt of Rs.150 crore in the JV Company and ~ Rs.90 crore would be transferred to Gati Ltd which would be used for partially paying debt and partly for expansions. This would reduce the interest component of the company significantly in FY13E to Rs. 24.5 crores against Rs.50 crores in FY11.
Source: Company
3. Strategic Investor/Demerger of the shipping business might see revival
In shipping business, the company functions through 3 different routes and operates through 4 vessels out of which 3 are owned. Gati shipping business provided end to end logistics solutions with Shipping Cargo Services right from origin to port, port to port and port to destination using multimodal connectivity. It provides regular liner services between: 1) East Coast of India and ports in Andaman sea, Bay of Bengal and Malacca Straits. 2) Indian ports and Ports in Andaman sea, Bay of Bengal and Malacca Straits 3) Colombo - Tuticorin Bi-weekly service.
The shipping business is not in a great shape and the company has hived it off into a separate company and is also looking for a strategic partner. In the first nine months FY12, this division has
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made revenues of Rs.16 crore against Rs.79 crore in the same period last year. It is even incurring losses against the marginal profits it used to make earlier. This can be attributed to two reasons; 1. Overall shipping industry is facing problems and 2. The asset quality of the company is poor and requires investments for dry docking. However, the company has had major maintenance work done for its ships in the current quarter and has now deployed on chartered. Company is again likely to incur losses in the shipping division in the current quarter (Q4FY12) on account of dry docking of ships, but likely to breakeven from Q1FY13 (July- Sep) onwards.
Synergies from the JV with KWE to boost growth in the core business Gati Ltd enjoys early entrant benefits and is the leader in the express distribution segment which includes movement of goods in the commercial segment catering to the Auto, Consumer Durables, Telecom and Technology sector. It has a PAN India presence in terms of its connectivity and boasts of the fleet size of more than 4000 vehicles (300 owned vehicles). It operates through 2 mn sq. ft. of warehouse/40 warehouses (6 owned). Moreover, it also has good presence in international destinations with delivery centers in the APAC region. International business contributes 7% of the Express Distribution business. The first 200 customers do not contribute more than 25% of EDSC segment and thus the company does not face any risk of client concentration.
Within the EDSC segment, Road transport consists of almost 80% means of business, the rest being equal between Rail and Air. In the rail segment, Gati runs 7 dedicated parcel trains on long term lease from railways. The company has an integrated ERP structure with proper Vehicle Tracking System.
EDSC segment is the core business for the company and has been growing at a 20-25% rate yearly. Gati has entered into a definitive agreement with the Japanese firm KWE which is a $ 4bn freight forwarding company. Gati would hold ~ 70% stake in the JV Company and the company expects this business to grow at a faster pace. This, we believe would be on the back of firstly due to opening of synergies with the Japanese company and secondly by increasing its market share through ‘Go to market strategy’ in the express cargo business by grabbing some of the unorganized sector’s share which is currently 80%. Within EDSC segment, the company currently earns EBIDTA margins of 15% in the Road transport and is targeting 16-17% though the JV firm. We expect Gati’s EDSC segment to grow at 14% in FY12E and by 19% in FY13E to reach revenues of Rs. 1234 crores.
EDSC Revenues & Growth
Source: Company data, Nirmal Bang Securities
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Expansion in the cold chain segment coupled with the industry uptick would be positive Kausar India (Gati’s subsidiary which it acquired in 2007) is into cold chain segment which is a high growth business for the company and would remain in the parent company Gati Ltd. The management sees lot of traction in this segment and thus has plans to almost double the fleet size by FY13E to 300 from the current 160. Consequently, Gati has a land bank whose book value is Rs.75 crores with a market value is Rs.300 crores. Out of the Rs.75 crores worth land, Rs.20 crores worth operational land would go into the JV Company. Part of the rest of the land would be utilized to build & develop warehouses which would complement the cold chain business. We expect cold chain segment to grow by 45% in FY12E and by 50% in FY13E to reach revenues of ~ Rs.66 crores.
Source: Company data, Nirmal Bang Securities
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Investments in the entire gamut of Logistics sector to add value in the long run E-Commerce: This is a new emerging business for Gati and even in the industry wherein logistic
company serves to companies which are selling product through internet. In this business, Gati provides complete Logistics solutions to the client like merchandise management, shipment booking, collections and payments, etc. Company’s clientele includes STAR CJ, NAPTOL, and TV18 amongst others. This is a high margin business and the company is targeting Rs.50 crores of revenues in this segment in FY13E from the current Rs.12 crores. Here, the company also hosts a web portal called www.makemygiftz.com.
Import-Export Trading: Through its subsidiary, the company trades in mobile phone and other business which is low margin business and not a major focus area for the company. Gati Import Export Trading Ltd. posted Revenues and Profits of Rs.93 crores and Rs 1 crore respectively in FY11.
Fuel Stations: Through its subsidiary, Company runs 4 fuel stations located at Hyderabad, Bangalore and others. These stations contributed 11% of consolidated revenues at Rs.130 crores in FY11 and are profitable.
Freight Forwarding Business: Gati International is a leading provider of freight forwarding and logistics services specializing in air freight and ocean freight shipments and associated supply chain management solutions. It has offices in Singapore, Hong Kong, China, Nepal, Bhutan, Malaysia. Dubai, Thailand and agency network that spans across 70 countries. This segment is a part of the EDSC business and has 7-8% EBIDTA margins; however it makes loss at the PAT level. This segment would remain in the parent Gati Ltd.
Source: Company
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Financial Performance Gati’s EDSC division posted robust growth to the tune of 26% (YoY) in consolidated revenues of FY11. Its standalone revenues for FY11 and 9MFY12 also grew by 24% and 11% respectively as against the same period last year. To boost the current revenues and to expand its reach to the global markets, Gati has transferred its core business into the JV firm Gati KEW Ltd which would also reduce its debt significantly. The coastal business of Gati has not been doing too well and witnessed significant de-growth in revenues against the same period last year. It has been incurring losses on the back of requirement for capital investment for dry docking its vessels. Gati has hived off this business into a separate subsidiary and has made investments of ~ Rs.25 crores in the shipping segment for repairing its ships, paying off outstanding creditors and purchasing of containers in the current Quarter. In addition, Gati is also scouting for a strategic partner in the shipping segment. Revenues from Fuel stations grew by 12% on a YoY basis to Rs 130.17 crs while Gati Import Export Trading Ltd. saw a vigorous increase of revenues by 936% to Rs 92.9 crs in FY11 from a meager Rs 8.96 crs in FY10. As per the division wise margin performance, the strongest performance is shown by EDSC segment which posted ~11% margins on a consolidated basis during FY11. The consolidated EDSC segment includes numbers of the international freight forwarding business.
Source: Company
FY 10 FY11 9MFY11 9MFY12 FY10 FY11
Segment Revenues
Express Distribution & Supply Chain 652.03 808.8 597.3 660.86 720.38 904.56
Coast to Coast(Shipping) 93.23 92.0 79.22 16.26 93.23 91.97
Fuel Stations 0 0 0 0 116.71 130.17
Gati Import Export Trading Ltd 0 0 0 0 8.96 92.90
- inter segment revenues 0.54 0.68 0.38 0.06 13.17 16.62
Other Operating Revenues 6.68 5.63 4.41 6.00 0.00 0.00
Total Revenues 751.41 905.74 680.55 683.06 926.11 1202.98
EBIT
Express Distribution & Supply Chain 79.04 96.16 70.48 95.51 75.18 95.76
Coast to Coast(Shipping) 2.08 0.08 2.37 -16.12 2.08 0.08
Fuel Stations 0.00 0.00 1.54 1.50
Gati Import Export Trading Ltd 0.00 0.00 0.36 1.00
Total EBIT 81.12 96.24 72.85 79.39 79.16 98.3
EBIT Margins%
Express Distribution & Supply Chain 12.12% 11.89% 11.80% 14.45% 10.44% 10.59%
Coast to Coast(Shipping) 2.24% 0.09% 2.99% -99.14% 2.24% 0.08%
Fuel Stations 1.32% 1.15%
Gati Import Export Trading Ltd 4.02% 1.08%
Standalone Consolidated
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Q3FY12 Results (Latest) Update
Standalone revenues in Q3FY12 de-grew 7% YoY on the back of near nil revenues from its shipping
segment. During the Quarter, the vessels were halted in requirement of dry docking. Gati’s core business
(EDSC) grew 4.8% YoY, while there was a dip of 6% QoQ due to slower growth in the overall economy.
However, the companies have employed a new Marketing chief for this segment and have started a new
scheme for promotions and sales during the Q4 Quarter which should see this segment rebounding.
In the middle of March 2012, the company invested Rs.25 crores in the shipping segment. However, the
company has chartered its vessels out to an outside party for their operations in the current quarter and
only marginal revenues are expected from the shipping segment in Q4FY12 quarter. However, we can
expect full blown revenues from this segment to flow in from the Q1FY13E quarter onwards once the
company starts its operations again on its own.
Standalone Q3 FY12 Q3FY12 Q3FY11 Y-o-Y Q2 FY12 Q-o-Q
Net Sales 210.22 226.9 -7.3% 231.95 -9.4%
Other Operating Income 0.4 1.8 (76.5%) 4.1 -89.6%
Total Income 210.7 228.7 (7.9%) 236.1 -10.8%
Employee Expenses 26.0 25.5 25.5
Other Expenses 26.5 21.6 22.5% 23.8 11.0%
Repairs & Maint 0 2.78 0
Operating Expenses 142.61 153.93 (7.4%) 158.85 -10.2%
Total Expenditure 195.12 203.79 208.14
EBITDA 15.53 24.9 -37.6% 27.95 -44.4%
Margin 7.4% 11.0% (359)bps 12.1% (466)bps
Interest 14.0 13.4 5.1% 13.5 4.2%
Depreciation 5.6 5.2 7.9% 6.1 (7.8%)
Other Income 0.0 0.1 (100%) 0.05 (100%)
Exceptional item (expense) 16 0 NA -7 (345.6%)
Income before taxes 12.18 6.5 88.8% 1.83 565.6%
Margin 6% 3% 295 bps 1% 500 bps
Income taxes 4.1 2.9 44.9% (3.5) (219.7%)
Net Income for the period 8.05 3.6 123.6% 5.28 52.5%
Margin 3.8% 1.6% 224 bps 2.3% 155 bps
EPS Rs. 0.9295612 0.4 121.3% 0.61 52.4%
Source: Company data, Nirmal Bang Research
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Valuation & Recommendation
Gati’s core business of Express Cargo Supply chain and Distribution is doing very well and the company has
now transferred this business into the JV company which we believe would get further boost through the
synergies it would avail with the KWE JV. In addition, the company finds a lot of traction in the supply
management business and plans to develop its cold chain segment and warehouses. Moreover, it has
made investments in the e-commerce business, which though is small at this point, is growing
exponentially. Gati’s international Freight forwarding business is not doing well currently, but can see some
improvement going forward. Finally, its Fuel Stations are contributing steady revenues and profits.
Gati has been facing certain problems in the past year viz: 1. FCCB Redemption, which it has now
successfully restructured, 2. High Debt of Rs.468 crores which would now reduce with infusion of capital by
KWE and 3.Loss making Shipping business where it plans to bring in a strategic investor. Company has done
dry docking of ships by infusing capital to the tune of Rs.25 crores in between Mar-May 2012.
The infusion of money by JV partner in JV directly subscribing to 20% capital of JV and in parent company
by acquiring 10% capital of JV will boost Gati’s performance. The money is likely to be infused by JV partner
in Q4 FY12 (April-June Qtr). The benefit of the money infusion will be visible only in FY13 (July-June). We
may continue to see one more quarters of sub optimal performance and thereafter Gati should start
posting better results. The divestment of shipping business or induction of JV partner in shipping business
with majority holding will be a big positive for Gati. We feel worst is priced in the stock price of Gati and it
will start performing once the results start improving.
The stock is trading attractively at 7.8x/4.3x on FY13E P/E and EV/EBIDTA respectively. We initiate coverage on Gati Ltd with a BUY recommendation and price objective of Rs.46 which is 27% upside from the current levels.
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Peer Comparison
Source: BBG for TCI estimates
We have compared Gati Ltd with Transport Corporation Ltd (TCI) since its business model is similar to that
of Gati Ltd. TCI is trading at lower valuations because of lower revenue growth visibility. TCI grew at a
CAGR of 14.2% during FY08-FY11, while Gati has a grown at a CAGR of 18.8% during the same period. As
per BBG estimates, TCI is expected to grow at a CAGR of 6.9% during the period FY011-FY13E, while we
expect Gati Ltd to grow at a CAGR of 12% during the same period. Secondly, Gati also earns higher
margins in its express cargo and supply chain division (75% of revenues) at ~ 14%; while TCI margins for the
similar business (49% of revenues) waive ~ 7.7%. Finally, Average Quarterly Volume of TCI is ~ 3590 shares,
while that of Gati are 4.4 lakh of shares for the same period. Thus, Gati gets premium valuations against
TCI. Moreover, Gati is attractively priced on the basis of EV/EBIDTA and EV/Sales basis.
Risks to Recommendation
The overall industry/economy growth remains muted: Gati’s revenues are majorly driven by the growth of the overall economy. If our economy growth remains muted, it will adversely affect the revenues of the company.
Competition: The logistics sector is extremely competitive. Although, It has a huge potential to grow further with many opportunities lying untapped; it also calls for more competition.
Increase in fuel costs: A rise in fuel charges could have an adverse impact on the company’s margins.
Promoters have pledged 92.4% of their holding for providing financial assistance to Amrit Jal Ventures Ltd (Group Company) which is into Hydro Power business.
The company is involved in a lot of small businesses like import export trading, running fuel stations, e-commerce and coast to coast shipping. Presence in various businesses can divert its focus from the core business.
PE
FY12E FY13E FY12E FY13E FY12E FY13E FY12E FY13E FY12E FY13E FY12E FY13E FY13E
Gati Ltd 1248.9 1500.3 99.2 138.5 7.3% 12.0% 11.4% 13.8% 5.9 4.3 0.47 0.40 7.8
Transport Corp 1904.9 2116.1 151.8 173.3 16.6% 17.7% 16.8% 18.1% 5.0 4.5 0.40 0.37 6.9
EV/SalesSales EBITDA ROE ROCE EV/EBIDTA
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Financial Performance
Consolidated (Rs. In Crs) FY10 FY11 FY12E FY13E Financial Health (Rs. In Crs) FY10 FY11 FY12E FY13E
Income from operations 926.1 1203.0 1248.9 1500.3 Share Capital 17.0 17.2 17.3 17.3
% change 17.2% 29.9% 3.8% 20.1% Reserves & Surplus 272.6 278.4 293.5 334.6
EBITDA 80.1 92.5 99.2 138.5 Loan funds 454.1 468.3 310.0 325.0
% change in EBIDTA 61.3% 15.4% 7.3% 39.7% Minority Interest 0.0 0.0 150.0 167.0
Deferred Tax Liabilities 9.6 10.4 10.0 10.0
Depreciation 27.18 25.43 26.50 28.00 Total Liabilities 753.3 774.3 780.8 853.9
Interest 44.3 49.8 52.0 25.0 Goodwill on consol 20.7 21.7 22.0 23.0
Other Income 7.3 6.5 13.8 7.5 Net Fixed Assets (Incl CWIP) 453.3 451.9 458.1 495.5
Exceptional Item 0.0 0.0 2.3 0.0 Investments 20.2 20.2 20.0 18.0
PBT 16.0 23.7 36.8 93.0 Sundry Debtors 149.7 190.3 209.3 255.4
Tax 6.5 9.6 14.7 36.3 Cash & Bank 19.2 31.9 32.7 41.3
PAT 9.5 14.1 22.1 56.7 Loans & Advances 170.9 245.3 250.2 262.7
Minority Interest 0.0 0.0 0.0 17.0 Inventories 12.7 12.1 12.0 14.0
PAT after minority interest 9.5 14.1 22.1 39.7 C A L&A 352.5 479.6 504.2 573.4
EPS (Rs.) 1.1 1.6 2.6 4.6 CL & P 94.3 199.3 223.9 256.4
Total Assets 753.3 774.3 780.8 853.9
Qtly Standalone (Rs. In Crs) Q4FY 11 Q1FY 12 Q2FY 12 Q3FY12 Cash Flow (Rs. In Crs) FY10 FY11 FY12E FY13E
Income from operations 225.3 236.3 236.1 210.7 Operating
EBITDA 24.1 27.5 28.0 15.5 OP before WC 80.1 92.5 99.2 138.5
EBIDTA % 10.7% 11.6% 11.8% 7.4% Change in WC (44.09) (26.83) (6.27) (31.07)
Dep 5.8 8.3 6.1 5.6 (-) Tax (6.53) (9.63) (14.73) (36.28)
Op Income 18.3 19.2 21.9 9.9 CF from Operation 29.50 56.00 78.18 71.18
Interest 12.6 12.3 13.5 14.0 Investment
Other Inc. (0.11) 0.06 0.05 0.00 Capex 10.86 (22.34) (21.45) (47.73)
Exceptional item (Expense) 0.00 0.00 -6.63 16.28 Other Investment 0.16 0.00 0.21 2.00
PBT 5.6 6.9 1.8 12.2 Other Income 7.34 6.46 13.80 7.50
Tax 1.8 3.1 -3.5 4.1 Total Investment 18.35 (15.88) (7.44) (38.23)
PAT 3.8 3.8 5.3 8.1 Financing
Adj PAT 3.72 3.83 11.91 -8.23 Dividend Paid (3.97) (5.00) (7.70) (16.16)
Change in Borrowings (22.63) 14.21 (158.34) 15.00
Performance Ratios FY10 FY11 FY12E FY13E Change in Equity Capital 0.06 0.17 0.12 0.00
PAT growth (%) (150.9%) 48.5% 56.7% 79.8% Interest Paid (44.25) (49.76) (52.00) (25.00)
EBITDA margin (%) 8.7% 7.7% 7.9% 9.2% Others 20.78 12.96 (2.04) (15.15)
PAT margin (%) 1.0% 1.2% 1.8% 2.6% Total Financing (50.02) (27.42) (219.96) (41.30)
ROCE (%) 8.0% 9.5% 11.4% 13.8% Net Chg. in Cash (2.17) 12.7 0.8 8.67
ROE (%) 3.4% 4.8% 7.3% 12.0% Cash at beginning 21.3 19.2 31.9 32.7
Cash at end 19.2 31.9 32.7 41.3
Valuation Ratios FY10 FY11 FY12E FY13E Per Share Data FY10 FY11 FY12E FY13E
Price Earnings (x) 32.3 22.0 14.1 7.85 Reported EPS 1.1 1.6 2.6 4.6
Price / Book Value (x) 1.08 1.05 1.00 0.89 BV per share 33.4 34.1 35.9 40.6
EV / Sales 0.81 0.62 0.47 0.40 Cash per share 4.5 6.0 6.1 6.9
EV / EBITDA 9.32 8.09 5.94 4.30 Dividend per share 0.4 0.5 0.8 1.6
Source: Nirmal Bang Research
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Disclaimer:
This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities Pvt Ltd). The information, analysis and
estimates contained herein are based on Nirmal Bang Research assessment and have been obtained from sources believed to be reliable. This
document is meant for the use of the intended recipient only. This document, at best, represents Nirmal Bang Research opinion and is meant for
general information only. Nirmal Bang Research, its directors, officers or employees shall not in any way be responsible for the contents stated
herein. Nirmal Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection. This
document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang Research, its affil iates and their employees
may from time to time hold positions in securities referred to herein. Nirmal Bang Research or its affiliates may from time to time solicit from or
perform investment banking or other services for any company mentioned in this document.
Nirmal Bang Research (Division of Nirmal Bang Securities Pvt Ltd)
B-2, 301/302, Marathon Innova, Opp. Peninsula Corporate Park
Off. Ganpatrao Kadam Marg Lower Parel (W), Mumbai-400013 Board No. : 91 22 3926 8000/8001
Fax. : 022 3926 8010
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