Result Update

September 9, 2016
Rating matrix
Rating

Buy

Target

| 720

Solar Industries (SOLEXP)

Target Period

12 months

Potential Upside

12%

Weak pick-up in bulk segment, overseas

business faces currency headwinds

Whats changed?
Target
EPS FY17E

Changed from | 752 to | 720

Changed from | 22.8 to | 21.1

EPS FY18E
Rating

Changed from | 27.8 to 26.7

Unchanged

Solar Industries (SIL) revenues came in at | 425 crore, up 9.6% YoY

(our estimate: | 475 crore) due to lower-than-expected volume
growth in the bulk segment. Realisations in the bulk segment also
declined 10.3% due to a decline in prices of ammonium nitrate. The
company has taken a translation loss of | 20 crore as it faced currency
headwinds in its overseas market of Nigeria, Turkey and Zambia

EBITDA came in at | 86.6 crore, up 21.2% YoY (our estimates | 90.9

crore). EBITDA margins came in at 20.4% vs. 18.4% YoY (our
estimates 19.1%). The company reported higher margins due to
superlative growth in the cartridge segment, 36.7% volume growth,
driven by improved demand from infrastructure segment - road
construction, housing and well-sinking

Quarterly performance
Revenue
EBITDA
EBITDA (%)
PAT

Q1FY17
424.9
86.6
20.4
47.1

Q1FY16
387.8
71.4
18.4
41.4

YoY (%)
9.6
21.2
200 bps
13.9

Q4FY16
430.7
82.8
19.2
48.2

QoQ (%)
-1.3
4.5
120 bps
-2.3

FY15
1346

FY16
1533

FY17E
1765

FY18E
2153

254

298

348

417

Key financials
(YoY Growth)
Net Sales
EBITDA
Net Profit

147

166

191

241

EPS (|)

16.3

18.4

21.1

26.7

Valuation summary
FY15
39.3

P/E

FY16
34.9

FY17E
30.3

FY18E
24.0

Target P/E

44.2

39.2

34.1

27.0

EV / EBITDA

24.0

20.3

17.4

14.6

P/BV

7.5

6.7

5.6

4.8

RoNW

20.0

19.1

18.6

19.9

RoCE

18.6

21.1

22.2

24.0

Stock data
Stock Data
Market Capitalization

| 5791.4 Crore

Total debt (FY16)

| 346.6 Crore

Cash and Investments (FY16)

| 106.3 Crore

EV (FY16)

| 6031.6 Crore

52 week H/L

4324 / 2850

Equity capital

| 18.1 Crore

Face value

| 10

MF Holding (%)

18.2

FII Holding (%)

2.2

Price performance
Return %
Solar Industries

1M
1.0

3M
3.4

Premier Explosives

(2.9)

Keltech Energies

0.5

| 640

6M
1.5

12M
-9.8

(1.8)

5.5

15.5

1.4

14.3

21.8

Research Analyst
Chirag Shah
chirag.shah@icicisecurities.com
Sagar Gandhi
sagar.gandhi@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

The company reported a PAT of | 47.1 crore, up 13.9% YoY (our

estimates | 51.9 crore)
Subdued performance due to lower volume growth in bulk segment
SIL was witnessing consistent demand for its explosives from large
players like Coal India (CIL) and Singareni Collieries Company (SCCL).
However, the company witnessed lower offtake in Q1FY17 due to
subdued demand from CIL. As per management, the growth is likely to
pick-up in subsequent quarters and the company will witness healthy
growth of 20-25% for the full year FY17E. Historically, SILs share in this
category is at ~30% in most large tenders with second players share at a
distant 11%. In addition to this demand from recently awarded mines in
coal auctions will lead to a strong pipeline of new tenders coming up over
FY17E-18E. Hence, we believe SIL is well placed to witness a value
growth of 24% CAGR in the bulk segment and 12% in the cartridge
segment over FY16-18E. Contribution from cartridge segment is expected
to improve on the back of improved domestic demand from private
infrastructure players and higher exports. For SIL, cartridge segment
which contributes ~30% of the topline, realisations in the export markets
are 2x domestic market.
Defence order execution, strong domestic markets to drive next leg of
growth
The management has guided that it will execute ~| 50 crore of defence
orders in FY17E (HMX | 30 crore and propellants | 20 crore). Defence
being a high margin business (20% and above), the management intends
to pursue this opportunity by exploiting areas where ordnance factory
boards face capacity limitations. In the overseas business, SILs revenues
are likely to remain flat in FY17E. This is despite the currency headwinds,
as the translation losses are moderated by strong volume growth in the
overseas markets. In Q1FY17 also, SIL witnessed strong volume growth
of 27% and 18% in Turkey and Zambia, respectively.
Maintain BUY on favourable growth story with target price of | 720
On improvement in bulk volumes due to higher coal production in India,
pick up in cartridge (both domestic and exports), improved visibility of
orders from defence segment along with capacity expansion in overseas
markets, we believe SILs earnings will grow at CAGR of 20.6% over
FY16-FY18E. We value SIL at 27x FY18E EPS of | 26.7 to arrive at a target
price of | 720/share and maintain our Buy rating on the stock.

Variance analysis
Q1FY17 Q1FY17E

Q1FY16

YoY (%)

Q4FY16 QoQ (%)

Total Revenues

424.9

475.1

387.8

9.6

430.7

-1.3

Raw materials costs

Employees Cost

242.6
25.0

265.0
24.6

226.8
20.9

7.0
19.5

252.8
24.1

-4.1
3.8

Other Expenses

70.8

94.6

68.7

3.0

71.0

-0.3

338.3

384.2

316.3

6.9

347.9

-2.7

EBITDA

86.6

90.9

71.4

21.2

82.8

4.5

EBITDA margins (%)

20.4

19.1

18.4 195 bps

9.4

9.3

8.3

Total Expenditure

Depreciation
EBIT

19.2 115 bps

13.7

8.5

77.2

81.5

63.2

22.2

74.3

3.9

6.6

6.0

4.3

53.7

5.9

12.0

Other Income

3.2

5.0

3.4

-6.5

4.5

-28.4

Extra Ordinary Item

0.0

0.0

0.0

NA

0.0

0.0

PBT

73.8

80.6

62.3

18.4

72.9

1.3

Total Tax

23.7

24.2

16.9

40.5

22.4

6.1

PAT(after MI)

47.1

51.9

41.4

13.9

48.2

-2.3

Q1FY17

Q1FY17E Q1FY16

YoY (%)

Q4FY16

High margin at 20.4% due to strong perfromance in cartridge segment

10.0

Interest

Key Metrics

Comments
Weak volume growth in bulk segment at 10.7% YoY, Cartridge segment volume
grows at 36.7% YoY. Realizations weak on the both the segments

QoQ (%)

Bulk (MT)

47843 59608.9

43224

10.7

48830

-2.0

Bulk (|/MT)

32829 35498.1

36596

-10.3

32552

0.9

Cartridge (MT)
30665 26538
Cartridge (|/MT)
52628 53432
Detonator (mn nos.)
41.7 38.6
Detonator (|/nos)
9.9 9.1809
Detonator Fuse (mn metre)
25.4 18.3
Detonator Fuse (|/metre)
5.8
7
Source: Company, ICICIdirect.com Research

22426
53972
35.5
9
15.3
6

36.7
-2.5
17.5
8.4
66.0
-4.3

30612
54808
40.3
10.3
22.1
5.2

0.2
-4.0
3.7
-4.1
15.0
11.3

The bulk volumes exhibited lower than expected growth on account of slow pick-up
from Coal India.
Drop in realisations due to pass through of input costs, mostly ammonium nitrate
Pick-up in cartridge volume due to strong exports and pick-up in infrastructure
activities

Change in estimates
(| Crore)

Old

FY17E
New

Revenue

1,852.2
356.0
19.2

FY18E
New % Change

% Change

Old

1,772.4

-4.3

2,235.6

2,163.5

-3.2

347.9

-2.3

427.9

417.2

-2.5

19.6

43 bps

19.1

19.3

18 bps

PAT
206.3
191.1
EPS (|)
22.8
21.1
Source: Company, ICICIdirect.com Research

-7.4
-7.4

252.0
27.8

241.2
26.7

-4.3
-4.3

EBITDA
EBITDA Margin (%)

Comments
Revised downwards for FY17E as we have revised volume projection
marginally downwards
EBIDTA margins to remain stable on improving contribution from cartridge
business and exports

Assumptions
Current
FY15

Earlier

FY16

FY17E

FY18E

FY17E

Bulk (MT)
136716
183412
Bulk (|/MT)
36399
34040
Cartridge (MT)
84887
87759
Cartridge (|/MT)
56121
55316.484
Detonator (mn nos.)
131.4
145.9
Detonator (|/no.)
11.2
9.8
Detonator Fuse (mn mtr)
56.4
71.0
Detonator Fuse (|/mtr)
6
6
Source: Company, ICICIdirect.com Research

227431
31119
98290
57407
167.8
10.2
81.6
7

282014
32421
110085
54645
193.0
13.0
93.8
7

229265
33442
98290
55414
167.8
9.9
81.6
7

FY18E

Comments
Volumes for FY17E & FY18E revised downwards due to a delay in offtake from
286581 Coal India and Singareni Coal mines.
33108
110085
54860 Revised upwards due to better realisations from export markets
193.0
13.0
93.8
7

Company Analysis
ICICI Securities Ltd | Retail Equity Research

Page 2

Bulk volumes expected to grow at 24% CAGR over FY16-18E

SILs volumes in the bulk segment have grown from 94,962 MT in FY12 to
1, 83,412 MT in FY16, implying a CAGR of 17.9%. The demand in this
segment is expected to remain buoyant due to successful allocation cum
allotment of over 60 mines over past few quarters. We believe SIL is well
placed to capture this opportunity especially with recent addition in
licensed capacities due strategic acquisitions (namely M/s Blastec (India)
Private Ltd & M/s Emul Tek Private Ltd). The current licensed capacity in
this segment stands at ~3, 00,000 MT. As per the management, volumes
from tender business are also expected to improve significantly, with
increased focus of government on Coal India and Singareni Collieries to
increase their mining volumes. SILs newly commissioned facility at
Kothagudam (Andhra Pradesh) along with two new facilities at Barbil
(Odisha) & Kota (Rajasthan) will also contribute significantly to the volume
growth.
Domestic coal production has grown at a notable ~9%YoY in FY16 over
FY15. Given the context of better growth rates in coal production, bulk
volumes are expected to increase to 2,82,014 MT by FY18E. Historically,
SIL has achieved superior volume growth compared to the industry. We
expect the same trend to continue. Hence, we have estimated SILs bulk
volumes will grow at a CAGR of 24% to 2,82,014 MT in FY16-18E.
Exhibit 1: SIL volumes - Bulk Segment
28.6
210000
23.1

(MT)

140000

30

24.7

25

20.5

20

105000

15
106988

136716

183412

227431

282014

114330

70000
35000

35

FY13

FY14

FY15

FY16

FY17E

FY18E

Bulk (Solar)

(%)

175000

29.0

28.2

10
5
0

Market Share

Source: Company, ICICIdirect.com Research

Cartridge volumes expected to grow at 12% CAGR over FY16-18E

SILs volumes in the cartridge segment have grown from 66,071 MT in
FY12 to 87759 MT in FY16, at a CAGR of 7.4%. In Q1FY17, the cartridge
volumes have gone up by 36.7% YoY to 30665 MT. However, in the same
period, the realisations have remained flat at | 52,626 per MT. The
improvement in the realisations is mostly due to increase in exports as
cartridge fetches higher realisations in the export market. As per
management, both cartridge volumes and realisations are expected to
improve from here, on account of higher demand from domestic private
infrastructure players, private miners and continued up-tick in exports.
The estimated investment of over | 15 trillion in construction sector in
FY16-20E is expected to be a potent demand booster for steel, cement &
power production. Increase in the production of coal, iron ore and other
minerals will augur well for accelerated demand for cartridges. Riding on
these demand boosters, we expect SILs cartridge volumes to grow at a
CAGR 12% CAGR to 1,10,085 MT by FY18E.

ICICI Securities Ltd | Retail Equity Research

Page 3

Exhibit 2: SIL volumes - Cartridge segment

28.3

100000

29.6

29.2

31.1

31.0

30

25.5

25

(MT)

80000

20

60000

15

40000
68955

84887

87759

98290

110085

10
75761

20000

35

120000

FY13

FY14

FY15

FY16

FY17E

FY18E

Cartridge (Solar)

5
0

Market Share

Source: Company, ICICIdirect.com Research

Defence business: Execution visibility from FY17E onwards

SIL has witnessed improved demand from the defence segment from
Q4FY16. The current order book of the company in this segment is now
| 80 crore. The same is executable by H1FY18E. SIL had already executed
capex of | 200 crore in this segment for setting up a production capacity
of 50 tonne per annum (TPA) of HMX and 10,000 propellants. The same
was utilised to set up a capacity of 2500 propellant and 50 TPA of HMX.
Going ahead, the company has capex plans of ~| 50 crore in FY17E and
FY18E to increase the propellant capacity from 2,500 units to 10,000 units
and HMX capacity from 50 TPA to 100 TPA.
The integrated pinaka rocket launcher facility is likely to come up in the
next four or five months. The management is confident of winning orders
in this segment as it believes that the upcoming facility addresses an area
where there are capacity constraints, especially the ordnance factory
board (OFB) end.
Assuming realisation of | 1 crore per tonne of HMX a realisation of | 6
lakh per propellant for Pinaka, we have estimated the HMX production
will generate revenues of | 60 crore and | 90 crore in FY17E and FY18E,
respectively.
SIL is also planning to foray into manufacturing of bi-modular-charge
systems (BMCS) for artillery guns. BMCS is a crucial component required
to propel the shell out of the barrel, this was so far imported, mainly from
France. In last one year around 10 lakh modules were imported. BMCS
can increase the rate of firing, especially for a gun like Bofors. Ordnance
Factory Board's (OFB) plans to have a dedicated factory for making BMCS
could not take off after being conceived 15 years ago. The government
now plans to open this area to private players. SIL has already applied for
necessary licenses in this segment and is awaiting for the approval.

ICICI Securities Ltd | Retail Equity Research

Page 4

Revenue growth of 18.6% CAGR (FY16-18E) to be driven by all segments

We expect consolidated revenues to increase from | 1538.2 crore in FY16
to | 2163.5 crore in FY18E at a CAGR of 18.6%, mainly on the back of
strong domestic growth, expanding overseas operations, exports and
improved visibility in defence business (FY17E onwards).
Exhibit 3: Revenue trend
2500

2163.5

2000
( | crore)

1500

1772.4
1351.9

1538.2

1133.0

1000
500
0
FY14

FY15

FY16

FY17E

FY18E

Source: Company, ICICIdirect.com Research

Going ahead, we expect revenues from domestic operations to grow at a

CAGR of 16.6% from | 1163 crore in FY16 to | 1581 crore in FY18E.
Growth in domestic revenues is expected to be driven by 21% CAGR in
bulk explosive revenues for FY16-18E. The cartridge, detonator and
detonator fuse revenues are expected to grow at a CAGR of 10.5%,
32.4% and 19.9%, respectively, for the same period. Overseas operations
and exports are expected to continue the growth momentum. Revenues
from defence too are likely to go ~11x from here (FY16 revenue | 8
crore). We have built-in | 90 crore of revenue for FY18E in this segment.
Exhibit 5: Consolidated revenue break-up

80

600

60

FY14
Bulk

FY15
Cartridge

FY16
Detonator

FY17E

251
66
90

FY18E

Detonator Fuse

Source: Company, ICICIdirect.com, Research

788

564
172
59
60

708

143
46
13

470

624

147
32
0

200

498

400

Defence

(%)

800
602

100

493

1000

380
401
174
45
0

(| crore)

Exhibit 4: Domestic revenue break-up (including exports)

40

0.0
21.8

0.1
25.1

0.5
23.8

3.0
20.9

4.3
19.7

78.2

74.8

75.7

76.1

76.0

FY14

FY15

FY16

FY17E

FY18E

20
0

Domestic

Overseas

Defense

Source: Company, ICICIdirect.com, Research

EBIDTA margins to remain stable at ~19% over FY16-18E

The consolidated EBITDA is expected to increase from | 297.5 crore in
FY16 to | 417.2 crore in FY18E at a CAGR of 18.4% while EBITDA margins
are expected to stabilise at 19.3% in FY18E. The margin expansion from
14.3% in FY09 to 19.3% in FY16 can be attributed to a high degree of
operating leverage and increasing revenue share of higher margin
yielding overseas business from 12.8% in FY11 to 23.8% in FY16. Going
ahead, we expect the growth trajectory in EBITDA and margin expansion
to come through increase in revenue share from commencement of the
high margin defence business (margins in excess of 20%).

ICICI Securities Ltd | Retail Equity Research

Page 5

Exhibit 6: Consolidated EBITDA trend

500
347.9
254.0

300
200
100

203.0

19.3

18.8

17.9

23

297.5

21
19.6

19.3

19

(%)

(| crore)

400

25

417.2

17

15
FY14

FY15

FY16

EBITDA

FY17E

FY18E

EBITDA margin

Source: Company, ICICIdirect.com Research

Consolidated PAT to grow at 20.7% CAGR in FY16-18E

We expect consolidated PAT to grow at a CAGR of 20.7% from | 166.1
crore in FY16 to | 232.9 crore in FY18E. Historically, growth in net profit
has tracked revenue growth as degree of combined leverage has always
been more than 1. In FY09-14, when revenues grew at 18.4% CAGR, net
profit grew at 21.8% CAGR. Accordingly, we expect the same leverage to
continue for FY16-18E and hence the growth in profitability may continue
to be higher than revenue growth.

300
250
200
150
100
50
0

241.2
118.4
10.5

166.1

147.4

10.8

10.9

191.1
10.8

13
12

11.1

11

(%)

(| crore)

Exhibit 7: Consolidated PAT trend

10
9

FY14

FY15

FY16
PAT

FY17E

FY18E

PAT Margin

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoE, RoCE to grow at 19.4% and 23.8%, respectively, by FY18E

In the last few years, the RoE, RoCE have declined from 22.1%, 21.2% in
FY10 to 19.1%, 21.1%, respectively, in FY16. This was on the back of the
company incurring a capex to increase the licensed capacity for domestic
operations, its expansion in overseas subsidiaries and foray in the
defence business. However, going ahead, we expect RoE, RoCE to
resurrect back to 19.4%, 23.8% in FY18E; on the back of expansion in
margins & improvement in asset turnover due to higher capacity
utilisation in bulk and cartridge operations.
Exhibit 8: RoE, RoCE trend

25
(%)

22

24.0

22.2

21.1
18.6

19

16.4

16

19.1

20.0

19.1

18.6

FY14

FY15

FY16

FY17E

19.9

13
10

ROE

FY18E

ROCE

Source: Company, ICICIdirect.com Research

Cash flows set to improve; CFO/EBITDA at 0.5x

The company is expected to generate better cash flows with cash flow
from operations (CFO) improving from | 157.3 crore in FY15 to | 210
crore in FY18E. CFO is likely to remain subdued in FY17E due to higher
capex of | 135 crore in FY16-17E (against estimates of | 100 crore). The
same is likely to continue as the management has guided for higher
capex of | 200 crore for FY17E-18E. However, we believe strong CFO will
ensure repayment of working capital loans and smooth execution of the
planned capex. The FCF is also expected to grow to | 50 crore in FY18E.
The CFO/EBITDA, a measure of quality of earnings, is also expected to
stabilise at ~0.5x in FY18E.
Exhibit 10: Free cash flow, free cash flow yield

300
200

0.6

0.6
203.0
123.1

297.5
254.0 247.1

417.2
347.9
159.2 0.5

157.3

0.8
210.0 0.5

0.4
0.2

0.0
FY15
CFO

FY16
EBITDA

FY17E

FY18E
CFO/EBITDA

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

2.0

1.9

1.5

51.8
0.9

50

50.0
0.2

0
-50

2.5

111.6

100

0.6

100
FY14

150

1.0

(| crore)

| crore

400

0.8

(x)

500

FY14-0.6 FY15
(37.6)

FY16

1.0
0.9 0.5

(%)

Exhibit 9: CFO, EBITDA, CFO/EBITDA trend

9.2

0.0

FY17E

FY18E

-0.5
-1.0

FCFF

FCFF yield

Source: Company, ICICIdirect.com Research

Page 7

Outlook and valuation

SIL possesses wide moats in the form of industry leadership, significant
entry barriers, optimal product mix and carefully pre-planned capacity
additions to benefit the most from the revival in mining & infrastructure
activity. Even in the export & overseas business, we believe that, SIL has
just scratched the surface of growth, with many more un-penetrated
markets yet to be explored. New business segments like defence
business will further solidify SILs business model at a time when
governments prerogative is to indigenise defence manufacturing, which
will allow SIL to scale the defence business at a faster pace. Even during
times of moderate/muted business environment, SIL had witnessed
robust revenue CAGR of ~40%, over FY12-16, backed by a strong ~15%
volume CAGR (bulk + cartridge) coupled with capacity expansion and
market share gains. This speaks for the pedigree of the management and
business model that has evolved over time and reiterates our confidence
on the company to capture onto the upcoming opportunity with the
revival in industrial activity. Hence, SIL is a rare combination of excellent
growth track record, proactive management, conservative leverage
approach, expanding margins & return ratios and a 20%+ growth
guidance from the management for the next three years.
Going ahead, the Coal & Power ministry has set up a stiff target of
achieving 1000 million tonnes of coal production to be achieved by CIL till
FY20E (~ 540 million tonnes in FY16), which implies a ~16% production
volume growth CAGR over FY16-FY20E. This is turn will create an
incremental demand of ~8 lakh tonnes of explosives over the same
period. Being the largest player, SIL is well set to capitalise on the
forthcoming opportunity given the kind of product mix, existing capacities
and future capex plans it commands.
We expect SIL's revenues, EBITDA & PAT to grow at a CAGR of 18.6%,
18.4% & 20.5% respectively over FY16-18E. Consistency in revenue, PAT
growth, disciplined capex programmes, gradual overseas expansion and
new segment diversification has already exhibited into rerating of the P/E
multiples of SIL. The crucial catalyst for a further rerating dwells of the
execution of the 1000 mn tonne target of coal production by FY20E and
allocation over 60 mines to private sector. So in case the stiff coal
production target sees the light of the day and if private start mining
activities at full pace then the street would be undermining the earnings
growth for the industry and SIL in particular. We are pencilling in a 20.5%
PAT CAGR over FY16-FY18E for SIL and value the company at 27x FY18E
EPS of |26.7 to arrive at target price | 720.
Exhibit 11: Valuation
Sales (| crore)
Gorwth (%)
EPS (|)
EPS growth(%)
P/E (x)
EV/EBITDA (x)
RoNW (%)
RoCE (%)

FY15
1345.5
19.5
16.3
24.5
39.3
24.0
20.0
18.6

FY16
1532.9
13.9
18.4
12.7
34.9
20.3
19.1
21.1

FY17E
1764.6
15.1
21.1
15.0
30.3
17.4
18.6
22.2

FY18E
2153.3
22.0
26.7
26.2
24.0
14.6
19.9
24.0

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

Company snapshot
900

120.0

800

100.0

700

80.0

500

60.0

400

(%)

(|)

600

40.0

300
200

20.0

100
0
Aug-14

Nov-14

Jan-15

Series1

Apr-15

Jun-15

Idirect target

Sep-15

Nov-15

Jan-16

Consensus Target Mean

Apr-16

Jun-16

0.0
Sep-16

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research, Initiated coverage 9th Jan 2015

Key events
Date/Year
Event
2012
SIL's market share increases from 24% to 27% & the domestic production grows by 24%
2013
Commences commercial production of ANFO in Turkey
2013
Expands operations in Zambia by introducing cartridges in the market
2014
Foray into defence business by setting up manufacturing facilities of HMX & propellant
2014
Starts new bulk explosive facility in Kothagudem
2015
SIL acquires two companies M/s Blastec (India) Private Ltd & M/s Emul Tek Private Ltd
2015
SIL plans to foray to into manufacturing of bi-modular charge systems (BMCS)
Source: Company, ICICIdirect.com Research
[

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Shareholding Pattern

Name
Latest Filing Date
Nuwal (Satyanarayan Nandlal)
30-Jun-2016
Nuwal (Kailashchandra Nandlalji)
30-Jun-2016
Nuwal (Indiradevi Kailashchandra)
30-Jun-2016
SBI Funds Management Pvt. Ltd.
30-Jun-2016
Nuwal (Leeladevi Satyanarayan)
30-Jun-2016
Nuwal (Sohandevi Nandlal)
30-Jun-2016
Nuwal (Manish Satyanarayan)
30-Jun-2016
Nuwal (Kailashchandra) HUF
30-Jun-2016
Nuwal (Satyanarayan) HUF
30-Jun-2016
ICICI Prudential Life Insurance Company Ltd.
30-Jun-2016

% O/S
22.48%
19.60%
6.15%
5.98%
5.61%
5.14%
4.77%
2.77%
2.73%
2.66%

Position
20.34M
17.74M
5.57M
5.42M
5.08M
4.65M
4.31M
2.51M
2.47M
2.41M

Position Change
0
0
0
0
0
0
0
0
0
-0.01M

(in %)
Promoter
FII
DII
Others

Sep-15
72.9
1.9
17.1
8.2

Dec-15
73.0
1.9
17.9
7.2

Mar-16
73.0
2.2
20.9
3.9

Jun-16
73.0
2.0
20.9
4.1

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
Kotak Mahindra Asset Management Company Ltd.
Pasari (Khushboo Anish)
Pasari (Anish)

Value
+0.64M
+0.00M
+0.00M

Shares
+0.07M
+0.00M
+0.00M

Sells
Investor name
Morgan Stanley Investment Management (India)
DSP BlackRock Investment Managers Pvt. Ltd.
Baroda Pioneer Asset Management Co.
J.P. Morgan Asset Management (Hong Kong)
Edelweiss Asset Management Ltd.

Value
-1.76M
-0.37M
-0.17M
-0.11M
-0.11M

Shares
-0.17M
-0.04M
-0.02M
-0.01M
-0.01M

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

Financial summary
Profit and loss statement
(Year-end March)

| Crore

Cash flow statement

| Crore

(Year-end March)

FY15

FY16

FY17E

FY18E

147.4

166.1

191.1

241.2

FY15

FY16

FY17E

FY18E

Gross Sales

1,456.5

1,658.3

1,912.6

2,331.7

Net Sales

1,345.5

1,532.9

1,764.6

2,153.3

Add: Depreciation

31.5

32.8

37.0

40.8

6.4

5.3

7.8

10.2

Add: Interest Paid

17.9

20.7

26.8

29.0

1,351.9

1,538.2

1,772.4

2,163.5

Cash Flow before WC changes

196.7

219.6

255.0

311.0

(Increase)/Decrease in inventory

(12.1)

1.8

(20.6)

(40.5)

Other Operating Income

Total Revenue
Raw Material Expenses
Employee Expenses
Other Expenses
Total Operating Expenditure
Operating Profit (EBITDA)
Interest
Other Income
PBDT
Depreciation
PBT after Exceptional Items
Total Tax
PAT before MI
Minority Interest

Profit after Tax

768.7

874.1

1,009.0

1,222.0

(6.0)

(74.6)

(38.7)

(67.1)

79.8

88.2

105.8

141.0

(Increase)/Decrease in debtors
(Increase)/Decrease Loans & Advances

(13.3)

12.3

(15.3)

(35.0)

249.4

278.5

309.7

383.3

(Increase)/Decrease in Current assets

23.8

7.6

(66.2)

(38.9)

1,097.9

1,240.7

1,424.5

1,746.3

Net Increase in Current Assets

(7.5)

(52.9)

(140.8)

(181.4)

254.0

297.5

347.9

417.2

17.9

20.7

26.8

7.9

12.4

22.2

244.1

289.2

343.3

422.2

Net Increase in Current Liabilities

(31.9)

80.4

45.1

80.4

Net cash flow from operating activities

157.3

247.1

159.2

210.0

29.0

(Purchase)/Sale of Fixed Assets

(105.4)

(135.5)

(150.0)

(160.0)

34.0

Inc / (Dec) in Deferred Tax Liability

17.3

(1.0)

Net CF from Investing Activities

(130.0)

(89.2)

Proceeds/(Repayment) Secured Loan

31.5

32.8

37.0

40.8

202.6

256.4

306.3

381.4

(135.5)

(155.5)

(142.4)

(63.3)

5.2

10.0

Proceeds/(Repayment) Unsecured Loan

70.3

39.3

8.2

10.0

46.3

76.4

99.6

119.2

(Payment) of DDT

(36.0)

(49.0)

(54.5)

(58.8)

156.3

180.0

206.6

262.2

Interest Paid

(17.9)

(20.7)

(26.8)

(29.0)

8.9

13.8

15.5

21.0

PAT

147.4

166.1

191.1

241.2

EPS

16.3

18.4

21.1

26.7

Source: Company, ICICIdirect.com Research

(123.0)

(119.2)

(44.8)

(67.8)

Net Cash flow

Net CF from Financing Activities

(95.7)

38.7

(21.0)

(13.3)

Cash and Cash Equivalent (beginning)

133.0

37.3

76.0

55.0

Cash and Cash Equivalent at the end

37.3

76.0

55.0

41.6

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

Key ratios

(Year-end March)

FY15

FY16

FY17E

FY18E

(Year-end March)

Equity Capital

18.1

18.1

18.1

18.1

Per Share Data

FY15

FY16

FY17E

FY18E

Reserve and Surplus

757.8

849.5

1,009.2

1,191.6

Reported EPS

16.3

18.4

21.1

26.7

Total Shareholders funds

775.9

867.6

1,027.3

1,209.7

Secured Loan

198.1

134.9

140.0

150.0

Cash EPS

19.8

22.0

25.2

31.2

BV per share

85.7

95.9

113.5

133.7

Unsecured Loan

172.5

211.8

220.0

230.0

Dividend per share

17.0

4.5

5.0

6.5

Total Debt

370.7

346.6

360.0

380.0

Cash Per Share

14.3

19.9

23.5

27.9

Deferred Tax Liability

44.4

43.3

43.3

43.3

Operating Ratios (%)

Minority Interest

47.1

56.6

72.1

77.6

EBITDA / Net Sales

18.9

19.4

19.7

19.4

1,238.0

1,314.1

1,502.8

1,710.6

EBIT / Net Sales

16.5

17.3

17.6

17.5

PAT / Net Sales

11.5

10.8

10.8

11.2

Inventory days

44.7

38.8

38.0

38.0

Total Liabilites
Gross Block

713.9

881.0

1,039.1

1,199.1

Accumulated Depreciation

129.1

180.5

213.0

252.7

Debtor days

51.9

63.3

63.0

63.0

Net Block

584.9

700.5

826.1

946.5

Creditor days

38.5

51.2

52.0

55.0

61.1

48.2

40.0

40.0

Total Fixed Assets

Capital WIP

645.9

748.6

866.1

986.5

Other Investments

7.7

7.8

8.8

9.8

29.6

30.3

30.3

30.3

Inventory

Liquid Investments

164.9

163.1

183.7

224.2

Return Ratios (%)

RoE

20.0

19.1

18.6

19.9

RoCE

18.6

21.1

22.2

24.0

RoIC

20.8

22.8

22.5

23.5

Valuation Ratios (x)

Debtors

191.3

265.9

304.6

371.7

P/E

39.3

34.9

30.3

24.0

Loans and Advances

155.8

143.5

158.8

193.8

EV / EBITDA

24.0

20.3

17.4

14.6

Other Current Assets

117.9

110.3

176.5

215.3

37.3

76.0

55.0

41.6

667.2

758.8

878.5

1,046.6

Cash
Total Current Assets

EV / Net Sales

4.5

3.9

3.4

2.8

Market Cap / Sales

4.3

3.8

3.3

2.7

Price to Book Value

7.5

6.7

5.6

4.8

Creditors

142.0

214.9

251.4

324.5

Solvency Ratios

Provisions
Total Current Liabilities

9.1
151.1

16.5
231.5

25.1
276.5

32.4
356.9

Debt / EBITDA

1.5

1.2

1.0

0.9

Net Current Assets

516.1

527.3

602.0

689.7

Debt / Equity
Current Ratio

0.5
4.2

0.4
2.9

0.4
3.0

0.3
2.8

1,238.1

1,314.1

1,502.8

1,710.6

Quick Ratio

3.1

2.2

2.3

2.2

Total Assets

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Source: Company, ICICIdirect.com Research

Page 10

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 11

Disclaimer
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ICICI Securities Ltd | Retail Equity Research

Page 12