L&T 4Q FY 2013

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

Quarterly highlights - StandaloneY/E March (` cr) 4QFY13 4QFY12 3QFY13 % chg (yoy) % chg (qoq)Net sales 20,294 18,461 15,429 9.9 31.5Op. profit 2,451 2,561 1,475 (4.3) 66.2

Reported PAT 1,769 1,865 1,029 (5.2) 72.0Source: Company, Angel Research

Larsen and Toubro (L&T) posted decent set of numbers for 4QFY2013, which

were broadly in-line with our expectation both on revenue and order inflows

front. However, owing to higher-than-anticipated other income and lower tax rate

PAT came in ahead of our estimate. L&T secured orders worth`27,929cr during

4QFY2013, taking the order book to`1,53,604cr (a growth of 5.4% yoy). Orderinflows were mainly driven by major orders bagged in the infrastructure (28%),

power (41%) and process (12%) segments.

Performance in-line with estimates: On the top-line stood, L&T reported decenttop-line growth of 9.9% yoy to`20,294cr which was in-line with our estimate of

`20,303cr. The decent growth in revenues was mainly driven by pick up in

execution in the engineering and construction (E&C) and machinery & industrial

product segment. On the EBITDA front, performance was as per our expectations

with the company reporting a yoy dip of 180bp to 12.1% in 4QFY2013 against

our expectations of 12.0%. On the bottom line front, L&T reported PAT of

`1,788cr a decline of 6.9% and was higher than our estimate of `1,573cr. The

PAT was higher than our estimate mainly due to surge in other income and lower

tax rate. Other income grew 19.2% yoy to`374cr for the quarter.

Outlook and valuation: For FY2014, the management has given a guidance of15-17% growth in revenue and 20% growth in order inflow and +/- 50bp on

EBITDA margins. We believe given its robust order backlog, healthy order inflows

during the past few quarters and strong execution capabilities, the company is

well placed to achieve its guidance on the revenue front, given its robust order

backlog. However, it would be difficult to achieve 20% growth on the order inflow

front, considering the challenging macro environment. We believe L&T is best

placed to benefit from a gradual recovery in the capex cycle, given its diverse

exposure to sectors and a strong balance sheet. We maintain our Buy rating on thestock with a target price of `1,761.Key financials (Standalone)Y/E March (`cr) FY2012 FY2013E FY2014E FY2015ENet Sales 52,545 60,373 68,396 77,435% chg 20.7 14.9 13.3 13.2

Adj.Net Profit 3,937 4,132 4,768 5,408% chg 19.7 4.9 15.4 13.4

EBITDA (%) 11.8 10.5 10.5 10.5

FDEPS (`) 64.3 67.5 77.9 88.3P/E (x) 23.6 22.5 19.5 17.2

P/BV (x) 3.7 3.2 2.9 2.5

RoE (%) 16.7 15.2 15.5 15.6

RoCE (%) 17.3 15.2 15.6 16.0

EV/Sales (x) 1.9 1.6 1.5 1.3EV/EBITDA (x) 16.1 15.7 14.0 12.5

OB/Sales (x) 2.8 2.5 2.5 2.4

Order Inflows 70,574 88,035 98,687 111,432

% chg (11.5) 24.7 12.1 12.9

Source: Company, Angel Research

BUYCMP `1,517

Target Price `1,761

Investment Period 12 Months

Stock Info

Sector

Net debt (` cr) 7,344

Bloomberg Code

Shareholding Pattern (%)

Promoters -

MF / Banks / Indian Fls 36.3

FII / NRIs / OCBs 21.0

Indian Public / Others 42.7

Abs. (%) 3m 1yr 3yr

Sensex 2.2 25.2 22.0

LT 3.5 30.4 (5.7)

Reuters Code LART.BO

LT@IN

BSE Sensex 20,062

Nifty 6,095

Avg. Daily Volume 200,322

Face Value (`) 2

Beta 1.2

52 Week High / Low 1720/1106

Infrastructure

Market Cap (` cr) 93,427

Viral Shah022-39357800 Ext: 6842

[email protected]

Larsen & ToubroPerformance Highlights

4QFY2013 Result Update | Infrastructure

May 22, 2013

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Larsen & Toubro | 4QFY2013 Result Update

May 22, 2013 2

Exhibit 1:Quarterly performance (Standalone)Y/E March (` cr) 4QFY13 4QFY12 3QFY13 % chg (yoy) % chg (qoq) FY2013 FY2012 % chgNet Sales 20,294 18,461 15,429 9.9 31.5 60,873 53,171 14.5Total Expenditure 17,843 15,900 13,954 12.2 27.9 54,466 46,888 16.2Operating Profit 2,451 2,561 1,475 (4.3) 66.2 6,407 6,283 2.0OPM (%) 12.1 13.9 9.6 (180)bp 252bp 10.5 11.8 (129)bp

Interest and Financial Chgs 281 121 238 132.1 18.1 982 666 47.5

Depreciation 222 180 200 23.2 10.9 818 699 17.0

Non Operating Income 374 314 437 19.2 (14.4) 1,851 1,338 38.3

Nonrecurring items 19 55 93 (66.0) (79.9) 248 55 350.1

Profit Before tax 2,341 2,629 1,567 (10.9) 49.4 6,705 6,310 0.8Tax 553 708 445 (21.9) 24.2 1,794 1,854 (3.2)

Net Profit before MI 1,788 1,920 1,122 (6.9) 59.4 4,911 4,457 10.2PAT (%) 8.8 10.4 7.3 (159)bp 154bp 8.1 8.4 (31)bpMinority Interest (MI) - - - - - - -Adjusted net profit after MI 1,769 1,865 1,029 (5.2) 72.0 4,132 3,937 4.9

Adj. PAT (%) 8.7 10.1 6.7 (139)bp 205bp 6.8 7.4 (62)bp

Adj. FDEPS 28.9 30.5 16.8 (5.2) 72.0 67.5 64.3 4.9Source: Company, Angel Research

Exhibit 2:4QFY2013 Actual vs Estimates(` cr) Estimates Actual Variation (%)Net Sales 20,303 20,294 (0.0)EBITDA 2,436 2,451 0.6

Reported PAT 1,573 1,769 12.5Source: Company, Angel Research

Key highlights of the analyst meet

L&Ts management is fairly confident on delivering 20% growth on orderinflows and 15-17% growth on the 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 has removed slow moving orders worth `17,000cr from theorder book in 4QFY2013 and is confident of getting orders worth

`35,000cr-40,000cr in 1HFY2014.

The company is hoping to increase its order inflows from outside India,from 13% currently to 20%.

Despite heightened competitive intensity, management has clarified that ithas enough levers at its disposal to ensure that the current EBITDA margin

(+/-50bp) is maintained for FY2014.

NWC continues to remain weak at ~16% of sales in 4QFY2013 comparedto 12% in March 2012. The management believes that this should be the

upper limit for the same in the light of the current scenario.

For FY2013, the company has issued a bonus shares in the ratio of 1:2and also has a declared a dividend of`18.5/share subject to shareholders

approval.

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May 22, 2013 3

Top-line grew by decent 9.9%

On the top-line stood, L&T reported decent top-line growth of 9.9% yoy to

`20,294cr which was in-line with our estimate of `20,303cr. The decent

growth in revenues was mainly driven by pick up in execution in the

engineering and construction (E&C) and machinery & industrial product

segment.

Aggressive order book guidance

For FY2014, the management has given a guidance of 15-17% growth in revenue

and 20% growth in order inflow. The guidance is mainly based on (a) high share

of exports in both order inflows and revenues (power T&D and hydrocarbon) and

(b) continued momentum in infrastructure segment (building and factories,

railways, airports, etc). L&Ts order backlog currently stands at `1,53,604cr

(excluding slow moving orders worth `17,000cr), indicating a growth of 5.4%..

Order inflow for the quarter increased by 32.0% yoy to `27,929cr, taking the

order inflow for FY2013 to `88,035cr (up 24.7% yoy). However, management is

confident of achieving order inflow of `100,000cr during FY2014. We believe

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

robust order backlog, it would be difficult to achieve 20% growth on the order

inflow front, considering the challenging macro environment.

Exhibit 3:Revenue growth momentum continues


Exhibit 4:Robust order inflows during the quarter


9,4

83

11,2

45

13,9

84

18,4

61

11,9

55

13,1

95

15,4

29

20,2

94

21.0 21.4 23.5 22.4

26.1

17.3

10.39.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0

5,000

10,000

15,000

20,000

25,000

1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

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

16,1

90

16,0

96

17,1

29

21,1

59

19,5

94

20,9

67

19,5

45

27,9

29

3.6

(21.3)

28.2

(30.2)

21.0

30.3

14.1

32.0

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

40.0

0

5,000

10,000

15,000

20,000

25,000

30,000

1QFY12 3QFY12 1QFY13 3QFY13

Order Inflow Growth (yoy %, RHS)

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May 22, 2013 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 180bp to 12.1% in 4QFY2013 against our expectations of

12.0%. For FY2013, the EBITDAM decline by 129bp yoy to 10.5% mainly on

account of (a) increased in staff cost led by high employee base and annual salary

revision, (b) MCO expenses was impacted by higher input costs and (c) higher

SGA cost mainly due to non linear expense items. Going ahead, 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 FY2014 and believes that EBITDAM should be looked at on a

yearly basis rather than on a quarterly basis owing to volatility based on job mix.

Bottom line beats estimates owing to lower tax rate

On the bottom line front, L&T reported PAT of`1,788cr a decline of 6.9% and washigher than our estimate of `1,573cr. The PAT was higher than our estimate

mainly due to surge in other income and lower tax rate. Other income grew 19.2%

yoy to`374cr for the quarter.

Exhibit 5:EBITDA margin in line with estimates


Exhibit 6:PAT growth driven by higher other income


1,1

26.5

1,1

74.1

1,3

67.6

2,5

61

1,0

87

1,4

06

1,4

75

2,4

51

11.9

10.49.8

13.9

9.1

10.79.6

12.1

0.0

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


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

690.1

709.4

772.0

1,8

65

902

871

1,0

29

1,7

69

7.3

6.35.5

10.1

7.5

6.6 6.7

8.7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

200

400

600800

1,000

1,200

1,400

1,600

1,800

2,000


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

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May 22, 2013 5

Segmental performance

Engineering and construction (E&C): The E&C segment, which contributed ~90%to the companys gross revenue, witnessed strong traction in order inflows and

recorded revenue of `18,392cr in 4QFY2013, registering a growth of 9.5% yoy.

On the margin front, EBITDAM came in at 12.2% in 4QFY2013, a decline of

230bp yoy; owing to change in job mix and high input costs. The company

secured orders worth `24,917cr (up 29% yoy) and `79,766cr (up 25% yoy) in

4QFY2013 and FY2013 respectively. This was mainly from infra sector

(transportation, urban & water) and power sector (particularly T&D space).

Machinery and industrial products (MIP): The MIP segment continued to witnesspressures from persistent headwinds, ie sluggish demand in construction and

mining sectors, and increased competition. The MIPs segment reported revenues

of`745cr in 4QFY2013, an increased by 9.3% yoy; mainly driven by increased in

export of industrial valves. The EBITDA margin came in at 16.3% (18.6%) in

4QFY2013 and was impacted by increased input costs and intense competition.

Electrical and electronics (E&E): The E&E segment reported revenues of `1,117crmainly due to sluggish demand, continuing competitive pressures and tight

liquidity. However, the EBIT margin came in at 11.2% (up 428bp), owing to better

realisation and favorable product mix.

Exhibit 7: Segmental performanceY/E March (` cr) 4QFY13 4QFY12 3QFY13 % chg (yoy) % chg (qoq)Revenues 20,784 19,141 15,819 8.6 31.4Engg & Const. (E&C) 18,392 16,794 13,882 9.5 32.5

Mach. & Ind. Products (MIP) 745 681 593 9.3 25.5Electrical & Electronics (E&E) 1,117 1,143 886 (2.3) 26.0

Others 381 275 338 38.4 12.5

Intersegment revenue 150 248 119 (39.5) 26.0

EBIT 2,421 2,582 1,685 (6.2) 43.7Engg & Const. 2,065 2,290 1,280 (9.8) 61.3

Mach. & Ind. Products 105 159 161 (34.2) (34.7)

Electrical & Electronics 146 112 99 30.1 47.8

Others 105 32 145 223.7 (27.6)

Intersegment margins - (12) - 0.0 0.0

EBIT (%) 11.6 13.5 10.7 (184)bp 100bpEngg & Const. 11.2 13.6 9.2 (241) bp 201bp

Mach. & Ind. Products 14.1 23.4 27.1 (1,034)bp (1,403)bp

Electrical & Electronics 13.1 9.8 11.1 428bp 295bp

Others 27.6 11.8 42.9 1,581bp (1,527)bp

Capital Employed 38,219 35,570 39,806 7.4 (4.0)Engg & Const. 14,971 10,980 15,355 36.3 (2.5)

Mach. & Ind. Products 596 596 563 0.0 5.9

Electrical & Electronics 1,281 1,363 1,384 (6.0) (7.4)

Others 850 850 714 0.0 19.1

Unallocable 20,520 21,780 21,790 (5.8) (5.8)Source: Company, Angel Research

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May 22, 2013 6

Subsidiary performance

L&T InfoTech registers healthy performance

L&T InfoTech, the companys technology subsidiary, reported a healthyperformance for 4QFY2013, registering a 24.4% yoy growth in revenue to

`1,004cr. On the profitability front, the subsidiary PAT grew by 49.0% yoy to

`202crin 4QFY2013, with PATM of 20.1%.

Order book analysis

L&Ts order backlog currently stands at`1,53,604cr (excluding slow moving orders

worth `17,000cr), indicating a growth of 5.4%.. Order inflow for the quarter

increased by 32.0% yoy to `27,929cr, taking the order inflow for FY2013 to

`88,035cr (up 24.7% yoy). For 4QFY2013, ~15% of the orders came from the

international market. As of 3QFY2013, L&Ts order book is majorly dominated by

the infra (49%) and power (28%) segments. Process (10%), hydrocarbon (8%) and

others (5%) constitute the remaining part of the order book. The company has

given a guidance of 20% for order booking in FY2014, which is above our

expectations considering the challenging macro environment.

Client wise, 34% of L&Ts outstanding order book comes from the public sector

and 53% comes from the private sector. Captive work orders account for the

balance 13%. Notably, there has been a drop in the share of public sector orders

in the past few quarters. However, the management expects good quantum of

government orders going forward.

Exhibit 8:Higher-than-expected order inflow


Exhibit 9:Order book composition (`1,53,604cr)


16,09617,129

21,15919,594

20,96719,545

27,929

-

5,000

10,000

15,000

20,000

25,000

30,000

2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Process Hydrocarbon Power Infrastructure Others Total

(`cr)

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000


Process Hydrocarbon Power Infrastructure Others

(`cr)

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May 22, 2013 7

Outlook and valuation

We recommend Buy with a target price of`1,761

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 and equipment, in spite of short-term concerns.

At the current market price of `1,517, the stock is trading at 17.2x FY2015E

earnings and 2.5x FY2015E 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`1,761. We maintain our Buy ratingon 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 15x FY2015E

standalone adjusted EPS of `88.3, which is at a premium of 8% over Angels

FY2015E Sensex P/E multiple of 14x and lower than the historical premium

commanded by L&T over BSE Sensex.

Exhibit 10:L&T Parent historic P/E band


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

22.0x, 23.0x and 23.8x over the past seven, five and three years, respectively.

Thus, our implied target P/E multiple of 19.9x is way below its historical average to

factor in the prevailing challenging business environment.

0%

20%

40%

60%

80%

100%

120%

May-0

9

Jul-09

Sep-0

9

Nov-0

9

Jan-1

0

Mar-10

May-1

0

Jul-10

Sep-1

0

Nov-1

0

Jan-1

1

Mar-11

May-1

1

Jul-11

Sep-1

1

Nov-1

1

Jan-1

2

Mar-12

May-1

2

Jul-12

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

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May 22, 2013 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 FY2015E Earnings 81,118 1,318 74.9Infrastructure Subsidiaries 5,363 87 4.9IDPL (stake - 97.5%) P/BV L&T acq. 2.36% stake of IDFC at Rs118cr in 1QFY11 5,363 87 4.9

Key Subsidiaries - Services 16,153 262 14.9L&T Infotech P/E 10.0x FY2015E Earnings 6,835 111 6.3

L&T Finance Mcap Basis 20% holding company discount 9,318 151 8.6

Key Subsidiaries - Manufacturing 3,327 54 3.1Tractor Engineers P/E 5x FY2015E Earnings 98 2 0.1

Associate Companies P/E 5x FY2015E Earnings 2,000 32 1.8

L&T MHI Boilers and Turbines (51%) P/E 5x FY2015E Earnings 1,230 20 1.1

Other Subsidiaries 2,399 39 2.2Satyam Stake Mcap 20% holding company discount 203 3 0.2

Other Investments P/BV 1x FY2015E Book Value, Mcap 2,197 36 2.0

Total 108,360 1,761 100Source: Company, Angel Research

Exhibit 13:Key assumptions (` cr)FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EOrder Inflow 69,572 79,769 70,574 88,035 98,687 111,432

Revenue 36,675 43,540 52,545 60,373 68,396 77,435

Order Backlog (Y/E) 100,239 130,217 145,723 153,604 168,258 183,718

OB/Sales (x) 2.7 3.0 2.8 2.5 2.5 2.4


0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Oct-05

Feb-0

6

Jun-0

6

Oct-06

Feb-0

7

Jun-0

7

Oct-07

Feb-0

8

Jun-0

8

Oct-08

Feb-0

9

Jun-0

9

Oct-09

Feb-1

0

Jun-1

0

Oct-10

Feb-1

1

Jun-1

1

Oct-11

Feb-1

2

Jun-1

2

Oct-12

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

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May 22, 2013 9

Exhibit 14:Angel EPS forecast vs consensusAngel Forecast Bloomberg Consensus Variation (%)

FY2014E 77.9 83.5 (6.8)

FY2015E 88.3 93.5 (5.6)


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.

Company background

L&T - the largest Indian infrastructure conglomerate - is present across almost all

the infrastructure segments and is at the forefront of the Indian infra growth story.

Over the years, the company has diversified across various segments to encash the

untapped infra opportunity, not only in India but in other geographies as well, and

has an excellent track record of achieving the same. Over the past 10 years

(FY2002-12), L&T has reported a CAGR of 21.3% and 29.1% in its top-line and

bottom-line, respectively.

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May 22, 2013 10

Exhibit 15:Recommendation summaryCompany CMP TP Rating Top-line (` cr) EPS (`) P/E OB/

FY12 FY13E FY14E CAGR (%) FY12 FY13E FY14E CAGR (%) FY12 FY13E FY14E Sales(x)ABL 204 255 Buy 1,853 1,928 2,234 9.8 16.0 18.0 22.2 17.7 12.7 11.3 9.2 2.3CCCL 12 - Neutral 1,931 2,281 2,492 13.6 (3.3) 0.7 2.0 - (3.5) 17.1 5.8 2.2

IRB Infra 123 157 Buy 3,687 3,997 4,312 8.1 16.7 15.7 16.6 (0.3) 7.4 7.9 7.4 2.4

ITNL 175 230 Buy 6,645 7,444 8,041 10.0 26.8 29.8 32.1 9.4 6.6 5.9 5.5 2.2

IVRCL 21 35 Buy 3,773 6,287 6,836 34.6 (3.9) 2.3 3.0 - - 8.8 6.8 4.9

JP Assoc. 73 90 Buy 13,358 14,850 15,631 8.2 2.2 2.5 2.9 13.8 33.3 29.0 25.7 -

L&T 1,517 1,761 Buy 60,873 68,946 78,040 13.2 67.5 77.9 88.3 14.4 22.5 19.5 17.2 2.5NCC 34 45 Buy 5,863 6,576 7,264 11.3 3.1 4.1 4.8 24.6 11.2 8.4 7.2 3.3

Punj Lloyd 48 - Neutral 11,717 12,954 14,740 12.2 (0.2) 0.5 0.9 - - 94.8 51.6 1.9

Sadbhav 109 153 Buy 1,565 2,511 2,736 32.2 1.5 7.3 7.8 131.3 74.9 15.0 14.0 3.3

Simplex In. 106 164 Buy 6,026 6,824 7,563 12.0 14.1 18.0 23.4 28.8 7.5 5.9 4.5 2.5

Unity Infra 32 45 Buy 2,180 2,455 2,734 12.0 12.7 14.6 14.9 8.0 2.5 2.2 2.2 2.0


Exhibit 16:SOTP break-upCompany Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total

` % to TP ` % to TP ` % to TP ` % to TP ` % to TP `ABL 87 34 - - 168 66 - - - - 255

CCCL 16 100 - - - - - - - - 16

IRB Infra 45 29 - - 112 71 - - - - 157

ITNL 80 35 - - 120 52 - - 30 13 230IVRCL 15 43 - - - - 20 57 - - 35

JP Assoc. 24 27 23 25 - - - - 43 48 90

L&T 1,318 75 - - - - 443 25 - - 1,761NCC 25 57 - - 7 16 - - 12 27 44

Punj Lloyd 64 100 - - - - - - - - 64

Sadbhav 54 35 - - 99 65 - - - - 153

Simplex In. 164 100 - - - - - - - - 164

Unity Infra 45 100 - - - - - - - - 45


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May 22, 2013 11

Profit & loss statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EGross sales 36,675 43,540 52,545 60,373 68,396 77,435Less: Excise duty 360 366 625 500 550 605Net Sales 37,035 43,906 53,171 60,873 68,946 78,040Other operating income 9.1 18.6 21.1 14.5 13.3 13.2

Total operating income 32,259 38,266 46,888 54,466 61,714 69,824% chg 15,740 10,675 11,175 12,028 17,788 20,212

Total Expenditure 8,721 9,396 10,747 14,472 13,789 15,608

Net Raw Materials 2,379 2,830 3,666 4,436 4,902 5,441

Other Mfg costs 1,574 10,070 12,527 14,581 16,547 18,730

Personnel 3,845 5,295 8,772 8,948 8,687 9,833

Other 4,776 5,640 6,283 6,407 7,232 8,216EBITDA 21.8 18.1 11.4 2.0 12.9 13.6% chg 12.9 12.8 11.8 10.5 10.5 10.5

(% of Net Sales) 416 599 699 818 912 995

Depreciation & Amortisation 4,360 5,040 5,583 5,589 6,321 7,220EBIT 20.6 15.6 10.8 0.1 13.1 14.2% chg 11.9 11.6 10.6 9.3 9.2 9.3

(% of Net Sales) 505 619 666 982 1,027 1,137

Interest & other Charges 2,026 1,147 1,338 1,851 2,038 2,230

Other Income (incl pft from Ass/JV) 34.5 20.6 21.4 28.7 27.8 26.8

(% of PBT) - - - - - -

Recurring PBT 5,881 5,569 6,255 6,457 7,332 8,314% chg 49.2 (5.3) 12.3 3.2 13.5 13.4

Extraordinary Expense/(Inc.) 135.7 332.9 55.0 247.6 - -

PBT (reported) 6,016 5,901 6,310 6,705 7,332 8,314Tax 1,640.9 1,943.6 1,853.8 1,794.0 1,961.9 2,224.5

(% of PBT) 27.3 32.9 29.4 26.8 26.8 26.8

PAT (reported) 4,376 3,958 4,457 4,911 5,370 6,089Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 4,376 3,958 4,457 4,911 5,370 6,089ADJ. PAT (excl. div from Subs) 4,151 3,289 3,937 4,132 4,768 5,408% chg 54.1 (20.8) 19.7 4.9 15.4 13.4(% of Net Sales) 11.2 7.5 7.4 6.8 6.9 6.9

Basic EPS (`) (Reported) 72.7 65.0 72.8 80.2 87.7 99.4Fully Diluted Adj. EPS (`) 68.9 54.0 64.3 67.5 77.9 88.3% chg 49.9 (21.6) 19.0 4.9 15.4 13.4

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May 22, 2013 12

Balance sheet (Standalone)Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ESOURCES OF FUNDSEquity Share Capital 120 122 122 123 123 123Share App Money - warrants 25 - - - - -

Reserves & Surplus 18,166 21,724 25,101 29,020 32,428 36,690

Shareholders Funds 18,312 21,846 25,223 29,143 32,551 36,813Minority Interest - - - - - -Total Loans 6,801 7,161 9,896 8,834 9,834 10,834

Deferred Tax Liability 77 263 133 242 242 242

Total Liabilities 25,190 29,271 35,252 38,219 42,627 47,890APPLICATION OF FUNDSGross Block 7,290 8,957 10,536 11,572 13,072 14,572

Less: Acc. Depreciation 1,799 2,312 2,931 3,504 4,143 4,839

Net Block 5,492 6,644 7,605 8,067 8,929 9,733Capital Work-in-Progress 874 771 759 835 918 1,010

Goodwill - - - - - -

Investments 13,705 14,685 15,872 16,103 17,603 19,103Current Assets 26,395 35,010 43,457 47,169 53,330 59,963Inventories 1,415 1,577 1,777 2,064 2,367 2,678

Sundry Debtors 11,158 12,428 18,730 22,613 25,689 29,078

Cash 1,432 1,730 1,905 1,456 1,402 1,389

Loans & Advances 6,036 8,225 9,128 9,163 9,804 11,015

Other 6,353 11,049 11,918 11,873 14,067 15,804

Current liabilities 21,277 27,839 32,441 33,955 38,154 41,919

Net Current Assets 5,119 7,170 11,016 13,214 15,176 18,044Mis. Exp. not written off - - - - - -

Total Assets 25,190 29,271 35,252 38,219 42,627 47,890

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May 22, 2013 13

Cash flow statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EProfit before tax 6,016 5,901 6,310 6,705 7,332 8,314

Depreciation 322 514 619 573 638 697

Change in Working Capital 1,143 (1,753) (3,671) (2,647) (2,016) (2,881)

Less: Other income (2,026) (1,147) (1,338) (1,851) (2,038) (2,230)

Direct taxes paid (1,641) (1,944) (1,854) (1,794) (1,962) (2,225)

Cash Flow from Operations 3,815 1,571 66 986 1,954 1,675(Inc.)/ Dec. in Fixed Assets (1,494) (1,564) (1,567) (1,111) (1,583) (1,592)

(Inc.)/ Dec. in Investments (5,442) (979) (1,187) (231) (1,500) (1,500)

Other income 2,026 1,147 1,338 1,851 2,038 2,230

Cash Flow from Investing (4,909) (1,396) (1,416) 508 (1,045) (862)Issue of Equity 28 (24) 1 1 - -

Inc./(Dec.) in loans 245 360 2,735 (1,062) 1,000 1,000

Dividend Paid (Incl. Tax) (717) (863) (996) (1,112) (1,145) (1,360)

Others 2,194 650 (215) 230 (817) (466)

Cash Flow from Financing 1,750 123 1,524 (1,943) (962) (826)Inc./(Dec.) in Cash 657 298 175 (450) (53) (14)

Opening Cash balances 775 1,432 1,730 1,905 1,456 1,402Closing Cash balances 1,432 1,730 1,905 1,456 1,402 1,389

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May 22, 2013 14

Key RatiosY/E March FY2010 FY2011 FY2012E FY2013E FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 22.0 28.1 23.6 22.5 19.5 17.2

P/CEPS 20.0 23.8 20.0 18.8 16.4 14.5

P/BV 5.1 4.2 3.7 3.2 2.9 2.5

Dividend yield (%) 0.8 1.0 1.1 1.1 1.3 1.1

EV/Sales 2.7 2.2 1.9 1.6 1.5 1.3

EV/EBITDA 20.6 17.4 16.1 15.7 14.0 12.5

EV / Total Assets 3.9 3.4 2.9 2.6 2.4 2.1

Per Share Data (`)EPS (Basic) 68.9 54.0 64.3 67.5 77.9 88.3

EPS (fully diluted) 68.9 54.0 64.3 67.5 77.9 88.3

Cash EPS 75.8 63.9 75.7 80.8 92.8 104.6

DPS 12.5 14.5 16.5 16.6 19.7 16.6

Book Value 299.4 358.8 411.9 475.9 531.5 601.1

Dupont AnalysisEBIT margin 11.9 11.6 10.6 9.3 9.2 9.3

Tax retention ratio 72.7 67.1 70.6 73.2 73.2 73.2

Asset turnover (x) 1.7 1.7 1.7 1.7 1.8 1.8

ROIC (Post-tax) 15.1 13.2 13.0 11.7 11.9 12.1

Cost of Debt (Post Tax) 5.5 5.9 5.5 7.7 8.1 8.1

Leverage (x) 0.4 0.3 0.3 0.3 0.3 0.3

Operating ROE 18.7 15.1 15.1 12.8 12.8 13.1

Returns (%)ROCE (Pre-tax) 19.7 18.5 17.3 15.2 15.6 16.0

Angel ROIC (Pre-tax) 21.7 20.3 18.8 16.3 16.6 16.8

ROE 27.0 16.4 16.7 15.2 15.5 15.6

Turnover ratios (x)Asset Turnover (Gross Block) 5.8 5.4 5.5 5.5 5.6 5.6

Inventory / Sales (days) 14 12 12 12 12 12

Receivables (days) 104 98 107 124 128 128

Payables (days) 192 213 217 207 198 195

Wcap cycle (ex-cash) (days) 229 242 257 262 258 258Solvency ratios (x)Net debt to equity 0.3 0.2 0.3 0.3 0.3 0.3

Net debt to EBITDA 1.1 1.0 1.3 1.2 1.2 1.1

Interest Coverage 8.6 8.1 8.4 5.7 6.2 6.4

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

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L&T 4Q FY 2013