Fluidomat Limited| BSE Scrip Code: 522017

Other Elect. Equip./ Prod. October 5, 2012

Equity Statistics Current Market Price Rs. 35.9 52 Week High/Low Rs. 41.45/24.90 Market Capitalisation Rs. Crores 17.69 Free Float Rs. Crores 8.63 Dividend Yield % 3.48 One Year Regression Beta Times 0.45 BSE Volumes Trend - Average = 2.38 Thousand
30 25 20 15 10 5 0

Business Summary Fluidomat Limited (Fluidomat) an ISO 9001:2008 Certified Company manufactures a wide range of fixed-speed and variable-speed fluid couplings for industrial and automotive drives upto 3,500 KW since 1971. Fluidomat provides application-engineering expertise; drive solution and energy saving support to its clients. The company has gained rich experience in application engineering with proven performance of its couplings in almost all sectors of industries. Fluidomat factory at Dewas, near Indore in Central India, is equipped with sophisticated manufacturing, research and development, quality control and testing facilities to ensure quality and consistency. Fluidomat has supplied couplings which find application in different sections including Coal-base Power Plants, Steel, Cement, Paper, Chemical & fertilizer industry, Petrochemical Industry, Underground and Open Pit Coal and Mines, Harbor Handling and Nuclear Power Generation Plants, both in India and abroad. Fluidomat is currently trading at 5 times the FY12 EPS and 1.4 times the adjusted book value.

Relative Returns
196 146

96
Fluidomat Ltd Sensex

Returns Absolute Rel. to Sensex

100%

1M 3M 5% -6% -2% -13% Shareholding Pattern

6M 1 Yr 5% 38% -5% 18%

Board of directors Person Role Qualification Ashok Jain CMD B.E (Elec.) Kunal Jain ED B.S (Chemical Engineering), MBA M.K. Shah NED B.Com, FCA K.C. Jain NED M.Com Naredra Kathed NED Praful R. Turakhia NED B.E. (Mech.) Source: AR and CARE Research Note: CMD: Chairman and Managing Director, ED: Executive Director, NED: Non Executive Director, I - Independent

80% 60%
40% 20% 0%

Sep`11

Dec`11
Promoter DII

Mar`12
FII Others

Jun`12

Source: BSE, Capitaline and CARE Research

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Background The company was incorporated as Fluidomat Private Limited in 1975 and later converted into public limited company. Fluidomat was promoted by Mr Ashok Jain, Dr V K Sankahala and Mr D K Kemkarthe. Fluidomat took over the business of Hydrodynamic Equipments during 1982. Fluidomat manufactures fluid couplings and flexible couplings at its plant at Dewas, Madhya Pradesh which has an installed capacity to manufacture 1,500 couplings p.a. Fluidomat is one among the leading manufacturers of fluid couplings in the country aided by the indigenous technology developed by the company after continuous R & D efforts. Business overview Fluidomat derived about 99.5% of its total operating income in FY12 from sale of products (including spares and components) and the remaining income from services and scrap sales. Fluidomats export earnings for FY12 stood at Rs.1.5 crore as against Rs.0.6 crore earned in FY11, witnessing y-o-y growth rate of 162%. Fluidomat derives major portion of its income from domestic market. As on March 31, 2012, Fluidomat was debt-free. Strengths and growth drivers ISO: 9001:2008 by British Standard Institution for quality system; The companys penetration into new geographies like African and East European market likely to support the revenue growth Risk and concerns Weak macro-economic environment in key markets of the company; Intense competition from domestic players; Small scale of operations restricting economies of scale Future strategy and expansion plans The company is ramping up the production capacity to meet the growing demand. Industry outlook Growth in the domestic engineering industry has been fuelled by growth in key end-user industries and many new projects undertaken in various core industries such as railways, power and infrastructure. Capacity creation in sectors such as infrastructure, oil and gas, power, mining, automobiles, auto components, steel, refinery and consumer durables has driven growth in this sector. Apart from demand from user industries, the availability of technical education infrastructure that provides an increased number of technically trained human resources each year has been another key factor aiding the engineering industry in India. Furthermore, India is being preferred by global manufacturing companies as an outsourcing destination due to its lower labour cost and better designing capabilities. The capital goods industry contributes 16% of GDP and it provides critical input; machinery and equipment; to the remaining sectors. Manufacturing thus forms the key end-user sector of capital goods and further drives the performance of the industry. Capital goods sector registered a growth of 7.6% during April-July 2011-12 as compared to 23.1% during the corresponding period of FY11. The upsurge in industrial growth, coupled with governments emphasis on infrastructure developments has augured well for the capital goods industry. The initiatives of the government towards FDI have also served as a catalyst to further raise the demand for engineering goods and machinery. The engineering industry attracts around 36% of the total FDI through an automatic route, subject to a limit of US$ 2 mn of lump sum payments. Removal of tariff protection on capital goods, delicensing of heavy electrical industry and allowance of 100% FDI, infrastructure development and reduction of custom duties on various equipments are some of the initiatives by the government, which have positively impacted the engineering sector.

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Peer comparison Income statement (Rs. Crore) Total income Net sales EBITDA Ordinary PAT Adjusted PAT Per share data (Rs.) Adjusted BVPS Diluted EPS Growth (Y-o-Y) (%) Growth in total income Growth in net sales Growth in EBITDA Growth in adjusted PAT Growth in EPS* Profitability ratio (%) EBITDA margin Adjusted PAT margin Valuation ratios (Times) Price/EPS (P/E) Price/Book value (P/BV) Enterprise value (EV)/EBITDA Source: BSE, Capitaline and CARE Research Note: Hittco: Hittco Tools Ltd., Apar: Apar Industries Ltd. NM: Non Meaningful Quarterly financials Income statement (Rs. crore) Total income Net sales EBITDA Ordinary PAT Adjusted PAT Growth (Q-o-Q) (%) Growth in net sales Profitability ratio (%) EBITDA margin Adjusted PAT margin Source: BSE, Capitaline and CARE Research NM: Non Meaningful Q1FY13 5.2 5.2 0.8 0.5 0.5 (42.5) 15.3 9.4 Q4FY12 9.0 9.0 2.0 1.3 1.3 57.4 22.2 14.2

Fluidomat 27.3 26.8 5.5 3.6 3.6 26.8 7.3 32.9 32.9 46.0 54.3 54.3 20.3 13.1 5.0 1.4 2.8

Year ended March 31, 2012 Hittco Apar 8.8 3,707.0 8.7 3,596.5 1.6 158.1 0.9 73.0 0.9 74.1 12.0 1.6 8.9 8.6 14.2 10.1 10.1 18.5 9.9 4.5 0.6 4.0 136.0 19.3 21.1 18.6 (29.1) (22.2) (34.6) 4.4 2.0 9.1 1.3 5.2

Q3FY12 5.8 5.7 1.2 0.8 0.8 (16.8) 20.7 13.9

Q2FY12 6.9 6.9 1.3 0.9 0.9 28.5 19.3 12.3

Q1FY12 5.4 5.3 1.0 0.6 0.6

18.4 11.9

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Financial analysis Fluidomats top-line has grown at a CAGR of 16.18% from FY08 to FY12. Increase in scale of operations has also aided the company to improve its EBITDA margin over the years. EBITDA margin fell by 120 bps in FY12 y-o-y on account of higher proportion of revenue from contract manufacturing. The Company is debt-free as on March 31, 2012. The networth of the company was Rs.13.2 crore as on March 31, 2012. For the year ending March 2012, Fluidomat has declared an equity dividend of 12.50% amounting to Rs.1.25 per share. At the current price per share of Rs.35.9, this results in a dividend yield of 3.48%. Annual financial statistics FY08 Income statement (Rs. crore) Total income 12.9 Net sales 13.2 EBITDA 2.4 Depreciation and amortisation 0.3 EBIT 2.1 Interest 0.3 PBT 1.9 Ordinary PAT 1.2 Adjusted PAT 1.2 Balance sheet (Rs. crore) Adjusted networth 5.6 Total debt 1.9 Cash and bank 0.2 Investments Net fixed assets (incl. CWIP) 3.3 Net current assets (excl. cash, cash equivalents) 4.5 Per share data (Rs.) Adjusted BVPS 11.3 Diluted EPS* 2.4 DPS Growth (Y-o-Y) (%) Growth in total income Growth in net sales Growth in EBITDA Growth in adjusted PAT Growth in EPS* Key financial ratio EBITDA margin (%) 18.4 Adjusted PAT margin (%) 9.2 RoCE (%) RoE (%) Gross debt - equity (times) 0.3 Net debt - equity (times) 0.3 Interest coverage (times) 6.3 Current ratio (times) 2.6 Inventory days Receivable days Source: BSE, Capitaline and CARE Research Financial year (FY) refers to the period from April 1 to March 31 NM: Non Meaningful FY09 14.5 14.3 2.7 0.3 2.4 0.3 2.2 1.4 1.4 7.0 1.6 0.5 4.1 4.6 14.1 2.8 12.3 8.2 11.9 16.9 16.9 19.1 9.5 18.8 22.3 0.2 0.2 8.1 2.8 101.0 107.1 FY10 17.1 17.7 3.4 0.3 3.0 0.2 2.9 1.9 1.9 8.9 1.2 1.9 4.0 4.8 18.0 3.9 18.0 23.7 22.7 39.1 39.8 18.9 11.3 20.1 24.2 0.1 NM 15.8 3.1 72.0 93.4 FY11 20.6 20.2 3.7 0.4 3.4 0.2 3.4 2.3 2.3 10.3 0.0 1.8 4.4 4.7 20.9 4.7 1.0 20.5 13.9 11.6 20.8 20.8 18.5 11.3 20.9 24.0 0.0 NM 22.5 2.3 72.6 94.1 FY12 27.3 26.8 5.5 0.4 5.1 5.3 3.6 3.6 13.2 2.4 5.5 5.9 26.8 7.3 0.6 32.9 32.9 46.0 54.3 54.3 20.3 13.1 26.5 30.5 NM NM 2.4 65.5 87.0

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DISCLOSURES Each member of the team involved in the preparation of this grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company. This report has been sponsored by the BSE Investors Protection Fund.

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