1QFY2013 Result Update | Textile

August 23, 2012

S. Kumars Nationwide
Performance Highlights
1QFY2013 highlights (Standalone)
Y/E March (` cr) Net Sales Operating profit OPM (%) Adj. PAT 1QFY13
884 188 21.2 31

BUY
CMP Target Price
Investment Period

`21 `38
12 Months

4QFY12
967 222 23.0 57

% chg. (qoq)
(8.6) (15.6) (175)bp (45.8)

1QFY12
783 163 20.8 36

% chg. (yoy)
12.9 15.3 44bp (13.5)

Source: Company, Angel Research

Stock Info Sector Market Cap (` cr) Net debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Textile 620 3,762 1.5 52 / 21 479,509 10 17,850 5,415 SKNL.BO SKNL IN

S. Kumars Nationwide Ltd (SKNL) reported a mixed set of numbers for 1QFY2013. On a standalone basis, the company's top-line grew by 12.9% yoy to `884cr, in line with our estimate of `898cr for the quarter. The companys operating margin improved marginally on a y-o-y basis by 44bp and came in at 21.2% for the quarter. The disappointment came at the PAT front on account of elevated interest and depreciation cost coupled with high tax outgo. The companys profit saw a decline of 13.5% on a y-o-y basis and stood at `31cr, 34.2% lower our estimate of `47cr. Consolidated segmental performance: The revenue from consumer textile grew by 11.0% yoy to `605cr (`545cr), luxury textile (primarily comprising Reid & Taylor) grew by 14.4% yoy to `279cr (`244cr), ready to wear grew by 20.4% yoy to `219cr (`182cr), home textiles grew by 8.5% yoy to `113cr (`105cr) and luxury cotton grew by 29.7% to `52cr (`40cr). However, all the segments (except the luxury cotton segment) saw a contraction in their operating margins mainly because of an increase in the raw material cost. The revenue from international business declined marginally by 1.3% yoy to `354cr (`359cr) due to the slowdown in the European and the US markets.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 48.6 13.5 26.2 11.8

Abs.(%) Sensex SKNL

3m 11.4

1yr 9.2

3yr 14.2 (58.4)

(21.6) (52.9)

Outlook and valuation

We expect SKNLs consolidated revenue to post a 14.2% CAGR to `8,290cr and profit to post a 10.9% CAGR to `486cr over FY2012-14E. Currently, at `21, SKNL (standalone) is trading at a PE of 2.6x; and on a consolidated basis, it is trading at 1.3x for FY2014E. We maintain our Buy recommendation on the stock with a revised target price of `38, based on SOTP valuation.

SOTP valuation
Value of SKNL's stake in Reid & Taylor (discounted by 75%) (`cr) Expected value of SKNL standalone (target PE of 2x for FY2014E) (`cr) Net value of the company (SKNL standalone + Reid & Taylor) Existing no.of shares (cr) Expected CMP (`) Source: Company, Angel Research 654 471 1,125 30 38

Key financials (Consolidated)

Year FY2013E Sales (` cr) 7,279 OPM (%) 20.5 PAT (` cr) 398 486 EPS (`) 13.4 16.3 RoE (%) 12.3 13.1 P/E (x) 1.6 1.3 P/BV (x) 0.2 0.2 EV/ Sales (x) 0.7 0.6 EV/ EBITDA (x) 3.2 3.0

Tejashwini Kumari
022-39357800 Ext: 6856 tejashwini.kumari@angelbroking.com

FY2014E 8,290 20.5 Source: Company, Angel Research

Please refer to important disclosures at the end of this report

S. Kumars Nationwide | 1QFY2013 Result Update

Standalone 1QFY2013 performance

Exhibit 1: 1QFY2013 Performance highlights (Standalone)
Y/E March (` cr) Net Sales Net raw material (% of Sales) Employee Cost (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (% of Sales) Tax (% of PBT) Reported PAT Extraordinary Expense/(Inc.) Adjusted PAT PATM Equity capital (cr) EPS (`)
Source: Company, Angel Research 1QFY13 884 638 72.2 19 2.1 39 4.4 696 188 21.2 107 32 0 49 5.5 18 37.0 31 31 3.5 29.7 1.0 4QFY12 967 674 69.7 35 3.6 36 3.7 745 222 23.0 102 25 (0) 95 9.8 38 39.8 57 57 5.9 29.7 1.9 (45.8) (45.8) (45.8) (51.8) (6.6) (15.6) (175)bp 5.0 24.9 (333.3) (48.2) 8.8 (46.2) % chg. (qoq) (8.6) (5.3) 1QFY12 783 557 71.1 17 2.1 47 5.9 620 163 20.8 90 21 1 53 6.8 18 33.2 36 36 4.6 29.7 1.2 (13.5) (13.5) (13.5) 2.3 12.2 15.3 44bp 19.8 52.1 (71.4) (8.3) (15.7) 11.7 % chg. (yoy) 12.9 14.6 FY2012 3,511 2,455.50 69.9 88.45 2.5 193.88 5.5 2,738 773 22.0 403.56 92.22 2.01 279 8.0 99.66 35.7 180 180 5.1 29.7 6.0 FY2011 2,757 1,930 70.0 54 1.9 188 6.8 2,171 586 21.3 314 74 4 202 7.3 29 14.5 173 (0) 173 6.3 29.7 5.8 3.9 3.9 4.0 240.8 26.1 32 76bp 28.5 24.6 (47.4) 38.3 3.2 64.8 % chg 27.3 27.3

Exhibit 2: 1QFY13 Vs. Angel estimate

Y/E March (` cr) Net sales EBITDA EBITDA margin (%) Interest Depreciation Tax % of PBT Reported PAT
Source: Company, Angel Research

1QFY13 884 188 21.2 107 32 18 37 31

Angel est. 898 190 21.1 97 25 21 31 47

% diff (1.6) (1.1) 11bp 10.2 27.9 (14.4) 589 (34.2)

Revenues and operating margin in-line

SKNL (standalone) reported a mixed set of numbers for 1QFY2013 with revenue and EBITDA in line with our estimates. The company's top-line grew by 12.9% yoy to `884cr, in line with our estimate of `898cr for the quarter. The operating margin improved marginally by 44bp yoy to 21.2% for the quarter; however, it saw a dip of 275bp on a sequential basis, mainly because of an increase in the raw material cost as a percentage of net sales from 69.7% in 4QFY2012 to 72.2% in 1QFY2013. There was a significant decline of 148bp in the employee cost (as a percentage of net sales) on a sequential basis, mainly because of the companys continuous effort to cut down the requirement majorly in the international operations.
August 23, 2012

S. Kumars Nationwide | 1QFY2013 Result Update

Exhibit 3: Revenue trend

1,200 1,000 800 30.2 26.0 19.6 13.8 12.9 Revenue (LHS) yoy growth (RHS) 36.9 32.6 30.0 40 35 30 25

Exhibit 4: Margin improved marginally on y-o-y basis

250 200 150 100 20.4 19.2 20.3 EBITDA (LHS) 22.3 20.8 EBITDA Margin (RHS) 23.0 22.1 21.0 21.2 25 23 21 19

35.1

(` cr)

( ` cr)

(%)

600 400

20 15 10 5 0

114

128

140

189

163

180

200

222

591

627

693

850

783

859

902

967

884

200 0

188

50

17 15

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Source: Company, Angel Research

1QFY13

Source: Company, Angel Research

Higher interest & depreciation cost dented profit

The interest cost for the quarter increased by 22.2% yoy to `107cr from `88cr, mainly on account of escalation in average cost of borrowed funds in line with the market rate of interest. The depreciation for the quarter also stood higher at `32cr, ie a 52.1% yoy increase, mainly because of the commencement of new plants. The tax outgo for the company in 1QFY2013 was `18cr with an effective tax rate as high as 37.0%. Consequently, the companys profit saw a decline of 13.5% on a yo-y basis and came in at `31cr, 34.2% lower than our estimate of `47cr.

Consolidated 1QFY2013 performance

Exhibit 5: 1QFY2013 Performance highlights (Consolidated)
Y/E March (` cr) Net Sales Operating profit OPM (%) Interest Depreciation Tax Adj. PAT 1QFY13 1,617 319 19.7 162 50 34 65 4QFY12 1,716 375 21.9 145 38 37 131 % chg. (qoq) (5.8) (15.0) (214)bp 12.1 31.7 (7.4) (50.6) 1QFY12 1,457 292 20.1 111 34 48 88 % chg. (yoy) 11.0 9.1 (34)bp 46.1 49.6 (28.7) (26.6)

Source: Company, Angel Research

On a consolidated basis, SKNL reported an 11.0% yoy increase in its top-line to `1,617cr with an operating margin of 19.7%, ie a 34bp dip on a y-o-y basis. The company saw a decline in net profit by 26.6% on a y-o-y basis, which came in at `65cr.

August 23, 2012

1QFY13

(%)

S. Kumars Nationwide | 1QFY2013 Result Update

Segmental Performance (consolidated)

Exhibit 6: Segmental performance (consolidated)
SBUs Consumer Textiles/Belmonte Net Sales EBITDA EBITDA margin Luxury Textiles Net Sales EBITDA EBITDA margin Ready to wear Net Sales EBITDA EBITDA margin Home Textiles Net Sales EBITDA EBITDA margin Luxury Cotton Net Sales EBITDA EBITDA margin International Business Net Sales EBITDA EBITDA margin Source: Company, Angel Research 354 10 2.8 359 22 6.1 (1.3) (54.7) (331)bp 296 10 3.4 19.5 (0.3) (56)bp 52 13 25.6 40 8 20.0 29.7 66.3 562 bp 51 15 29.3 1.9 (10.9) (369)bp 113 19 16.8 105 18 17.4 8.5 4.8 (58)bp 129 20 15.8 (11.7) (6.2) 99 bp 219 42 19.3 182 37 20.4 20.4 13.6 (115)bp 267 53 20.0 (17.9) (21.0) (75)bp 279 104 37.3 244 93 38.3 14.4 11.4 (100)bp 310 121 38.8 (10.1) (13.7) (154)bp 605 133 22.0 545 123 22.5 11.0 8.5 (52)bp 668 159 23.8 (9.3) (16.3) (183)bp Q1FY13 Q1FY12
% chg. (yoy)

Q4FY12

% chg. (qoq)

The revenue from the consumer textile segment grew by 11.0% yoy to `605cr (`545cr), luxury textile (primarily comprising Reid & Taylor) grew by 14.4% yoy to `279cr (`244cr), ready to wear grew by 20.4% yoy to `219cr (`182cr), home textiles grew by 8.5% yoy to `113cr (`105cr) and luxury cotton grew by 29.7% to `52cr (`40cr). The luxury cotton segment clocked the highest growth mainly on account of an increase in capacity utilization at the Bharuch plant to 80% (70% in the 4QFY2012) and due to a strong order book. However, all the segments (except the luxury cotton segment) saw a contraction in their operating margins mainly because of an increase in the raw material cost. The revenue from international business declined marginally by 1.3% yoy to `354cr (`359cr).The decline was mainly due to the slowdown in the European and the US markets. This segment also took a substantial hit at the EBITDA level mainly because of reduction in proportion of full price sales in HMX. On the contrary, Leggiuno delivered higher margins for the quarter. However, the management expects the margin to improve and come to ~5.5-6.0% for FY2013E as the company is taking various cost rationalizations measures, improving brand visibility and revamping product portfolio.

August 23, 2012

S. Kumars Nationwide | 1QFY2013 Result Update

Investment arguments
Strong brand recognition
SKNL, being a multi-brand company, is very clear about differentiating its brands across segments so that brands do not end up cannibalizing each other. The company follows a strong brand ambassador-led strategy, as part of which, its major domestic brands are endorsed by big celebrities such as Amitabh Bachchan, Shahrukh Khan and Sachin Tendulkar. The company has been spending rigorously on advertising for the recognition of its brands. In FY2011, the company spent `110cr on advertisement (including conferences, publicity and business promotion activities). We expect the companys advertising spend to increase to `176cr by FY2014E. The company is also gearing up for the launch of its premium casual brand, Kruger (price range: `999-4,999), competing with brands such as Tommy Hilfiger (Arvind Ltd JV) and ColorPlus (Raymond).

Overseas acquisitions to start paying off in coming years

SKNL extended its presence overseas to European and North American markets by expanding its brand portfolio to 45 leading brands, catering to various price points. SKNL acquired Leggiuno in Italy (October 2008) and HMX in the US (May 2009). The company has also signed an 80:20 JV between its wholly owned UK subsidiary, SKNL (UK) Ltd, and Louis Vuitton (LVMH) group for the global menswear license of DKNY brand. In FY2012, the revenue from the international business stood EBITDA margin at 4.7%. Further, we expect revenue from business to post a 14.5% CAGR over FY2012-14E to `1,747cr companys efforts for various cost rationalizations measures, visibility and revamping product portfolio. at `1,334cr, with the international mainly backed by improving brand

Reid & Taylor IPO A potential re-rating trigger

SKNL had filed a Draft Red Herring Prospectus (DRHP) with SEBI on December 9, 2010, for the listing of Reid & Taylor (74.4% subsidiary) for an expected issue size of ~`1,000cr. However, the IPO for the same didnt materialize due to the then prevailing unfavorable and volatile market. Going forward, if the IPO hits the market, we expect it to command a premium over SKNLs valuation because of its strong brand name, supported by healthy financial and operational efficiency.

Well-diversified portfolio
SKNL deals in branded products across various price segments, ranging from the mass level to premium category. The companys product portfolio ranges from fabric to ready-to-wear apparel. SKNL is also present in the home textile segment. This positioning allows the company to capitalize on the consumption patterns of all segments domestically. In addition, with its overseas acquisitions, the company is expanding its presence across the globe. The company has a strong brand portfolio of 45 owned and licensed brands, such as Reid & Taylor, Belmonte, S Kumars and Carmichael House and international names such as HMX, Hickey Freeman, Exclusively Misook, Austin Reed, Jag Jeans, Bobby Jones and DKNY.

August 23, 2012

S. Kumars Nationwide | 1QFY2013 Result Update

Financials
SKNL (Standalone)
Exhibit 7: Assumptions
2013E Average volume growth (%) Average realization growth (%) Average change in RM prices (%)
Source: Angel Research

2014E 10.2 3.9 5.0

10.2 4.1 7.0

Exhibit 8: Change in estimates

Earlier estimates Y/E March Net sales (` cr) OPM (%) Adj. PAT (` cr) FY2013E
4,027 22.1 226

Revised estimates FY2013E

4,027 21.1 177

% chg FY2013E
(100)bp (21.8)

FY2014E
4,609 22.1 275

FY2014E
4,609 21.2 236

FY2014E
(89)bp (14.2)

Source: Company, Angel Research

Top-line to grow at a CAGR of 14.6%

Though the management expects the revenue to grow at ~20%, we remain conservative and expect the companys revenues to grow at a CAGR of 14.6% over FY2012-14E to `4,609cr in FY2014E. The growing demand for branded fabrics and apparels in the future with changing consumers preference (shift from the unorganized market towards the branded market and from textile to ready-to-wear apparel) is expected to drive growth for the company. Also the companys strong brand positioning and its strategically planned growth strategy, which includes 1) rollout of additional exclusive brand outlets for Reid & Taylor (~160 stores), Kruger and Belmonte to expand their distribution and franchisee networks, 2) setting up a shirts factory to improve margins by offering readymade products, 3) scaling up capacity utilization at BSFC and 4) capacity expansion in the luxury and mid-premium textile segments, are expected to be the companys growth drivers.

Margin to remain under pressure owing to high raw material cost

We expect the companys operating margin to remain under pressure in the near future. The employee cost is expected to come down for the full year as the company is constantly cutting down the employee requirement in the international businesses, but the same will get offset by increase in raw material costs, thus pressurizing the operating margin. We expect the margin to be 21.1% and 21.2% for FY2013E and FY2014E respectively.

August 23, 2012

S. Kumars Nationwide | 1QFY2013 Result Update

Exhibit 9: Sales to be driven by volume growth

5,000 39.0 4,000 3,000 2,000 2,155 2,757 3,511 1,000 0 FY2010 FY2011 Revenue (LHS) FY2012 FY2013E FY2014E Revenue growth (RHS) 28.0 27.3 40 30 (%) 50

Exhibit 10: Margin to remain under pressure

1,200 1,000 21.3 800 22.0 21.1 21.2 22 21 19.6 20 19 18 FY2010 FY2011 EBITDA (LHS) FY2012 FY2013E FY2014E EBITDA Margin (RHS) 23

(`cr)

( ` cr)

14.7 4,027

14.5 4,609

20 10 0

400

422

586

773

Source: Company, Angel Research

Source: Company, Angel Research

Profit to decline marginally in FY2013E but rebound by FY2014E

We expect the depreciation cost for the company to increase, taking into account the commencement of the suit factory at Bangalore (at the end of Q3FY2012). Also, going forward, we expect the interest cost for the company to remain elevated. However, the relative increase in interest outgo for the company is expected to come down, assuming the interest rate to be stable at 17% and debt to increase by 10% and 6% for FY2013E and FY2014E respectively. Moreover, the tax outgo for the company has increased with effective rate at 34.0%, post losing the minimum alternate tax (MAT) credit entitlement in FY2012. Consequently, we expect the profit to decline marginally to `177cr for FY2013E, but to rebound to `236cr in FY2014E.

August 23, 2012

848

976

200

(%)

600

S. Kumars Nationwide | 1QFY2013 Result Update

Outlook and valuation

Considering the macroeconomic condition and factoring in the 1QFY2013 performance, we have revised our operating margin and earnings downwards; however, we maintain our revenue growth. We remain positive on the companys future growth considering its growth plans which includes - 1) rollout of additional exclusive brand outlets for Reid & Taylor (~160 stores), Kruger and Belmonte to expand its distribution and franchisee networks, 2) setting up a shirts factory to improve margins by offering readymade products, 3) scaling up capacity utilization at BSFC and 4) capacity expansion in the luxury and mid-premium textile segments. We expect SKNLs consolidated revenue to post a 14.2% CAGR to `8,290cr and profit to post a 10.9% CAGR to `486cr over FY2012-14E. GIC had invested `900cr in Reid & Taylor in July 2008 for a 25.6% stake, which gives a value of `2,614cr for the 74.4% stake of SKNL. On a conservative basis, discounting SKNLs stake in Reid & Taylor by 75%, its value in Reid & Taylor would be `654cr. Assuming a PE of 2x for SKNL (standalone) for FY2014E, we get a value of `471cr. Thus, the net value of SKNL would be `1,125cr, including the stake in Reid & Taylors, while the company currently has a market cap of `620cr. Currently, at `21, SKNL (standalone) is trading at a PE of 2.6x; and on a consolidated basis, it is trading at 1.3x for FY2014E. We maintain our Buy recommendation on the stock with a revised target price of `38, based on SOTP valuation.

Exhibit 11: SOTP valuation of JLL

GIC investment in Reid & Taylor (` cr) GIC's Stake SKNL's stake in Reid & Taylor (%) Value of SKNL's stake in Reid & Taylor (` cr) Value after discounting stake by 75% (` cr) SKNL's Standalone PAT (FY2014E) (` cr) Target PE (x) Expected Mcap (` cr) Net value of the company (SKNL standalone + Reid & Taylor value) Existing no.of shares (cr) SKNL's current Mcap (` cr) CMP Expected CMP (`) Upside (%)
Source: Company, Angel Research 900 25.6 74.4 2,614 654 236 2 471 1,125 30 620 21 38 81

August 23, 2012

S. Kumars Nationwide | 1QFY2013 Result Update

Exhibit 12: One-year forward PE band

140 120 100 80

(` )

60 40 20 0

Aug-08

Aug-09

Aug-10

Aug-11

Price (`)

2x

4x

6x

8x

Source: Company, Angel Research

Exhibit 13: Comparative analysis

Company SKNL - Standalone SKNL - Consolidated Alok Industries* Arvind Ltd.* Raymond* Year end FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E
FY2014E

Mcap (` cr)
620 620 620 620 1,272 1,272 1,771 1,771 2,196 2,196

Sales (` cr)
4,027 4,609 7,279 8,290 11,730 12,855 5,302 5,901 4,091 4,628

OPM (%)
21.1 21.2 20.5 20.5 25.0 24.4 12.8 13.3 12.9 13.3

PAT (` cr)
177 236 398 486 546 673 273 364 174 228

EPS (`)
6.0 7.9 13.4 16.3 6.6 8.1 10.6 14.1 28.4 37.1

RoE (%)
10.9 13.2 12.3 13.1 14.8 17.5 12.5 14.3 12.0 14.2

P/E (x)
3.5 2.6 1.6 1.3 2.3 1.9 6.4 4.8 12.9 9.8

P/BV (x)
0.4 0.3 0.2 0.2 0.4 0.3 0.8 0.7 1.5 1.3

EV/Sales (x)
0.7 0.6 0.7 0.6 1.2 1.1 0.7 0.6 0.8 0.7

EV/EBITDA (x)
3.2 3.0 3.2 3.0 4.7 4.4 5.4 4.7 6.1 5.2

Source: Company, Angel Research, * Bloomberg estimates

Concerns
Economic slowdown
According to industry reports, the domestic textile and apparel market is expected to post a CAGR of 11% to UD$220bn over FY2010-20E, mainly driven by increasing disposable incomes and awareness in the mass market about branded fabrics and garments. However, any slowdown in the economy may adversely affect demand and hence the companys revenue.

Further postponement of Reid & Taylor IPO

SKNL had filed DRHP with SEBI on December 9, 2010, for the listing of Reid & Taylor. However, the IPO for the same didnt materialize due to the then prevailing unfavorable and volatile market condition. If the IPO is delayed further, it may be a concern for the company as Reid & Taylors IPO is a major re-rating trigger for SKNL.

High net debt to equity level

Owing to the acquisitions and expansion activities, the net debt to equity for SKNL (consolidated) has been at high levels in previous years. However, the management expects the debt level to come down in the coming years as the investments start yielding profits. However, if that doesnt happen, it may be a concern for the company going forward.
August 23, 2012

Aug-12

Feb-09

Feb-10

Feb-11

Feb-12

S. Kumars Nationwide | 1QFY2013 Result Update

Company background S Kumars Nationwide Ltd

SKNL is one of the leading textile and apparel companies in India, which is involved in the manufacturing, marketing and distribution of polyester blended suitings, worsted suitings, workwear fabric, home textiles and ready-to-wear garments. The companys main growth drivers include its strong brand positioning, diverse product portfolio that caters to all socioeconomic segments, vertically integrated business model, presence across the value chain and contemporary product offerings. SKNL is a market leader in the uniforms segment, with a 30% market share. In addition, the company is the second largest player in the worsted suiting segment. Further, SKNL is one of the largest institutional suppliers of textiles to defense and police forces in India. The company is also a leader in the formal wear segment in North America with popular brands, Coppley, HMX and Hickey Freeman.

Reid & Taylor

Reid & Taylor, a 74.4% subsidiary of SKNL, is the flagship brand of the company. The remaining 25.6% is owned by the Government of Singapore Investment Corporation (Ventures) Pte Ltd (GIC). In July 2008, GIC invested `900cr in Reid & Taylor for its stake, which gives a value of `2,614cr to SKNLs stake. Reid & Taylor covers premium and super premium fabrics, such as worsted, all-

wool and wool polyester blended suitings, which cater to the premium and super premium markets, as well as ready-to-wear garments that focus on the formal wear part of the premium segment. The apparel range includes formal
and casual daywear suits, jackets, trousers, ties and other accessories along with a wide range of t-shirts, jeans and other weekend wear. According to CARE Research, Reid & Taylor has a ~24% share (in 2010) of the worsted fabrics

market in India.

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10

S. Kumars Nationwide | 1QFY2013 Result Update

Profit and Loss (Standalone)

Y/E March (` cr) Net Sales Other operating income Total operating income % chg Net Raw Materials % chg Other Mfg costs % chg Personnel % chg Other % chg Total Expenditure EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of Net Sales) Recurring PBT % chg PBT (reported) Tax (% of PBT) PAT (reported) Extraordinary Expense/(Inc.) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2010 2,155 2,155 39.0 1,547 32.8 31 29.9 41 43.0 113 31.9 1,733 422 71.2 19.6 42 380 72.9 17.7 244 5 0.2 137 69.2 142 36 25.2 106 (4) 110 1,008.2 5.1 4.6 4.6 946.7 FY2011 2,757 2,757 28.0 1,930 24.7 58 88.1 54 30.8 130 14.4 2,171 586 38.9 21.3 74 512 34.7 18.6 314 4 0.1 198 44.9 202 29 14.5 173 (0) 173 57.7 6.3 6.1 6.1 30.9 FY2012 3,511 3,511 27.3 2,456 27.3 63 9.0 88 64.8 131 0.7 2,738 773 31.9 22.0 92 681 32.9 19.4 404 2 0.1 277 39.9 279 100 35.7 180 180 3.9 5.1 6.0 6.0 (0.5) FY2013E 4,027 4,027 14.7 2,869 16.9 72 14.7 93 4.7 145 11.0 3,179 848 9.7 21.1 128 719 5.7 17.9 454 2 0.1 266 (4.1) 268 91 34.0 177 177 (1.4) 4.4 6.0 6.0 (1.4) FY2014E 4,609 4,609 14.5 3,278 14.2 83 14.5 106 14.5 166 14.5 3,633 976 15.2 21.2 141 835 16.1 18.1 481 3 0.1 354 33.3 357 121 34.0 236 236 33.1 5.1 7.9 7.9 33.1

August 23, 2012

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S. Kumars Nationwide | 1QFY2013 Result Update

Balance Sheet (Standalone)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves& Surplus Shareholders Funds Total Loans Other Long Term Liabilities Long Term Provisions Deferred Tax (Net) Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Less: Impairment Net Block Capital Work-in-Progress Lease adjustment Goodwill Investments Long Term Loans and advances Other Non-current asset Current Assets Cash Loans & Advances Inventory Debtors Other current assets Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 881 230 651 564 426 2,229 46 427 726 1,030 409 1,819 3,460 1,068 304 764 55 504 493 205 2,550 21 355 941 1,189 45 805 1,745 3,766 1,487 396 1,091 24 517 585 48 2,901 11 206 1,162 1,494 28 1,141 1,760 4,025 1,710 524 1,186 74 517 585 48 3,213 30 262 1,355 1,539 28 1,220 1,994 4,403 1,881 665 1,216 124 517 585 48 3,663 27 300 1,546 1,761 28 1,393 2,269 4,758 313 765 1,077 2,366 17 3,460 337 1,175 1,512 2,226 0 1 27 3,766 350 1,208 1,557 2,426 0 1 40 4,025 350 1,344 1,694 2,668 0 1 40 4,403 350 1,539 1,889 2,828 0 1 40 4,758 FY2010 FY2011 FY2012 FY2013E FY2014E

August 23, 2012

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S. Kumars Nationwide | 1QFY2013 Result Update

Cash Flow (Standalone)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Direct taxes paid Others Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in LT loans & adv. Others Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2010 142 42 (260) (36) 148 36 (156) (219) (8) (384) 3 428 (79) 351 3 43 46 FY2011 202 74 49 (29) (424) (129) 323 (78) 698 (1,188) (246) 24 (140) (39) 504 349 (25) 46 21 FY2012 279 92 (25) (100) (2) 245 (388) (13) (65) 2 (464) 12 200 (41) 38 210 (10) 21 11 FY2013E 268 128 (215) (91) (2) 88 (273) 2 (271) 243 (41) 202 19 11 30 FY2014E 357 141 (277) (121) (3) 97 (221) 3 (218) 160 (41) 119 (2) 30 27

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S. Kumars Nationwide | 1QFY2013 Result Update

Key Ratios (Standalone)

Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV EV/Net sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset TO (Gross Block) Inventory / Net sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT/ Int.) 1.8 4.5 1.6 1.1 2.9 1.6 1.2 2.5 1.7 1.3 2.5 1.6 1.2 2.3 1.7 2.8 110 158 73 278 2.8 110 147 102 231 2.7 109 139 130 181 2.5 114 139 140 168 2.6 115 139 140 167 11.0 15.8 11.0 13.7 16.2 13.3 17.1 19.8 11.7 16.5 19.2 10.9 17.7 20.6 13.2 17.7 0.7 0.9 11.8 8.5 1.8 17.7 18.6 0.9 0.9 13.9 11.7 1.1 16.3 19.4 0.6 1.0 12.8 11.2 1.2 14.7 17.9 0.7 1.1 12.7 11.8 1.3 13.8 18.1 0.7 1.1 13.6 11.5 1.2 16.1 4.6 4.6 6.4 45.6 6.1 6.1 8.7 1.0 53.1 6.0 6.0 9.1 1.0 52.4 6.0 6.0 10.3 1.0 57.0 7.9 7.9 12.7 1.0 63.5 5.7 4.1 0.6 1.2 6.0 0.7 3.6 2.5 0.4 0.8 4.0 0.6 3.5 2.3 0.4 0.7 3.3 0.6 3.5 2.0 0.4 0.7 3.2 0.6 2.6 1.6 0.3 0.6 3.0 0.6 FY2010 FY2011 FY2012 FY2013E FY2014E

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S. Kumars Nationwide | 1QFY2013 Result Update

Profit and Loss (Consolidated)

Y/E March (` cr) Net Sales Other operating income Total operating income % chg Net Raw Materials % chg Other Mfg costs % chg Personnel % chg Other % chg Total Expenditure EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of Net Sales) Recurring PBT % chg PBT (reported) Tax (% of PBT) PAT (reported) Minority interest PAT after MI Extraordinary Expense/(Inc.) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2010 3,838 3,838 69.8 2,316 58.5 124 57.6 313 328.4 338 84.9 3,091 747 60.7 19.5 81 665 58.3 17.3 264 23 0.6 401 45.7 425 147 34.7 277 48 229 (3) 232 73.5 6.0 9.8 9.8 63.8 FY2011 5,180 5,180 35.0 2,971 28.3 187 50.8 506 61.5 487 44.1 4,151 1,029 37.9 19.9 125 905 36.0 17.5 390 43 0.8 515 28.4 558 165 29.6 392 62 331 (1) 332 43.0 6.4 11.6 11.6 18.7 FY2012 6,355 6,355 22.7 3,738 25.8 203 8.9 584 15.5 492 1.0 5,017 1,337 29.9 21.0 148 1,190 31.5 18.7 533 10 0.2 656 27.4 666 195 29.3 471 76 395 395 19.1 6.2 13.3 13.3 14.1 FY2013E 7,279 7,279 14.6 4,333 15.9 232 14.1 659 13.0 564 14.6 5,788 1,491 11.5 20.5 207 1,284 7.9 17.6 599 11 0.2 685 4.4 696 226 32.4 471 72 398 398 0.8 5.5 13.4 13.4 0.8 FY2014E 8,290 8,290 13.9 4,934 13.9 260 12.2 756 14.6 642 13.8 6,592 1,698 13.9 20.5 230 1,468 14.3 17.7 641 13 0.2 827 20.7 839 272 32.4 567 81 486 486 22.0 5.9 16.3 16.3 22.0

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S. Kumars Nationwide | 1QFY2013 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves& Surplus Equity Share Warrants Equity Application Money Shareholders Funds Minority Interest Total Loans Other Long Term Liabilities Long Term Provisions Deferred Tax (Net) Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Less: Impairment Net Block Capital Work-in-Progress Lease adjustment Goodwill Investments Long Term Loans and advances Other Non-current asset Current Assets Cash Loans & Advances Inventory Debtors Other current assets Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 1,573 376 1,196 783 125 1 4,077 132 921 1,307 1,717 748 3,329 5,434 1,839 490 1,349 59 125 1 782 225 4,882 82 1,194 1,586 1,968 53 1,126 3,756 0 6,297 2,615 638 1,977 247 125 1 931 50 5,728 32 1,175 2,023 2,459 39 1,647 4,081 0 7,411 3,004 845 2,159 497 125 1 931 50 6,197 55 1,346 2,239 2,518 39 1,703 4,493 0 8,257 3,345 1,075 2,270 647 125 1 931 50 7,074 81 1,575 2,503 2,876 39 1,928 5,146 0 9,170 313 1,855 13 6 2,188 337 2,759 150 5,434 337 2,401 33 6 2,777 411 2,999 2 34 75 6,297 350 2,674 3,023 487 3,795 0 3 103 7,411 350 3,097 3,447 507 4,197 0 3 103 8,257 350 3,616 3,965 589 4,510 0 3 103 9,170 FY2010 FY2011 FY2012 FY2013E FY2014E

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S. Kumars Nationwide | 1QFY2013 Result Update

Cash Flow (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Direct taxes paid Others Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in LT loans & adv. Others Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2010 349 44 (727) (153) 114 (374) (517) (2) 60 (459) (70) 409 591 931 98 11 109 FY2011 425 81 (1,029) (147) 550 (120) (862) 2 389 (470) 3 955 (344) 613 23 109 132 FY2012 558 125 (478) (165) (305) (266) 458 0 1,007 (1,831) (366) 24 240 (39) 357 582 (50) 132 82 FY2013E 666 148 (374) (195) (10) 235 (964) (0) (27) (138) (1,129) 12 797 (41) 76 844 (50) 82 32 FY2014E 696 207 (390) (226) (11) 277 (640) 11 (629) 402 (41) 14 375 23 32 55

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S. Kumars Nationwide | 1QFY2013 Result Update

Key Ratios (Consolidated)

Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV EV/Net sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset TO (Gross Block) Inventory / Net sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT/ Int.) 1.2 3.5 2.5 1.0 2.8 2.3 1.2 2.8 2.2 1.2 2.8 2.1 1.1 2.6 2.3 3.2 101 139 72 304 3.0 102 130 82 259 2.9 104 127 101 233 2.6 107 125 106 223 2.6 104 119 101 223 12.6 15.7 12.1 14.5 15.2 13.4 16.3 17.2 13.6 15.7 17.2 12.3 16.2 17.9 13.1 17.3 0.7 0.9 10.2 7.6 1.2 13.5 17.5 0.7 0.9 10.7 9.5 1.0 11.9 18.7 0.7 0.9 12.2 11.1 1.2 13.5 17.6 0.7 1.0 11.6 10.1 1.2 13.4 17.7 0.7 1.0 12.1 9.9 1.1 14.4 9.8 9.8 13.2 92.5 11.6 11.6 16.0 1.0 97.4 13.3 13.3 18.2 1.0 101.7 13.4 13.4 20.3 1.0 115.9 16.3 16.3 24.1 1.0 133.3 2.7 2.0 0.3 0.8 4.3 0.6 1.9 1.4 0.2 0.7 3.4 0.6 1.6 1.1 0.2 0.7 3.3 0.6 1.6 1.0 0.2 0.7 3.2 0.6 1.3 0.9 0.2 0.6 3.0 0.6 FY2010 FY2011 FY2012 FY2013E FY2014E

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S. Kumars Nationwide | 1QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

S. Kumars Nationwide No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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