INITIATING COVERAGE

7 SEP 2016

GMDC
BUY
INDUSTRY
CMP (as on 6 Sep 2016)
Target Price

METALS
Rs 93
Rs 125

Nifty

8,943

Sensex

28,978

KEY STOCK DATA

Bloomberg

GMDC IN

No. of Shares (mn)

318

MCap (Rs bn) / ($ mn)

29/442

6m avg traded value (Rs mn)

42

GMDC has seen its lignite volume taper off in the

past few years. Decline in international coal prices
and heavy state taxation further weighed on lignite
pricing. We expect lignite volumes to be close to
bottoming out, while strengthening international
coal prices and GST led normalization in taxation
should help support lignite pricing and profitability.
We initiate with a BUY and a TP of Rs 125 (5.0x FY18
EV/EBITDA).

Investment arguments

STOCK PERFORMANCE (%)

52 Week high / low

Turning a corner

Rs 101 / 52
3M

6M

12M

Absolute (%)

39.4

52.9

26.6

Relative (%)

32.1

35.4

10.2

SHAREHOLDING PATTERN (%)

Promoters

74.00

FIIs

2.02

FIs

13.10

Public & Others

10.88

Source : BSE

Ankur Kulshrestha
ankur.kulshrestha@hdfcsec.com
+91-22-6171 7346
Sarfaraz Singh
sarfaraz.singh@hdfcsec.com
+91-22-6171 7331

GMDCs lignite volumes have consistently declined

since FY12 given operational and land acquisition

issues. However, they may be close to bottoming
out despite the certain exhaustion of its largest
mine, Panandhro, as other mines ramp-up output
to replace lost volumes.

Declining imported coal prices have weighed on

GMDCs pricing in the past. Recent strengthening

(Imported coal prices up ~30% from the bottom in
Dec-15) is likely to put back some pricing power in
the hands of the miner, since most of its
customers do not have the much cheaper CIL coal
as an option due to logistical realities. Costlier
alternatives also lend support to the volumes.

Gujarat taxes lignite at a VAT rate of 22.5%, much

steeper compared to other lignite producing

states like Rajasthan and TN (VAT rates of 5 5.5%).

The taxation (VAT + excise) on lignite works out to

~37% of assessable value, allowing little elbow
room for GMDC to compete with alternatives (coal
VAT at 4%). With GST, taxation rates should
converge with other lignite mining states, leaving
more on the table for GMDC and its customers.
(current net realisations ~45% of sale price). We
note that an 18% GST rate would lower the levies
by ~Rs250/t (~45% of the FY16 lignite PBIT/t)

With the Akrimota power plant stabilizing, and a

sizeable (and growing) portfolio of renewable
assets, power division is expected to contribute
meaningfully to the earnings.

Valuation

and
view:
With
repeated
disappointments on volume front weighing it
down, GMDC trades at inexpensive valuations
(3.6/2.9x FY17/18 EV/EBITDA and 10-11 P/E).
Despite excess cash, payouts have been dismal.
Higher payouts/buybacks, in line with other PSUs,
should help rerate the valuations further.

Financial Summary
(Rs mn)
Net Sales
EBITDA
PAT
Diluted EPS (Rs)
P/E (x)
EV / EBITDA (x)
RoE (%)

FY15
FY16 FY17E FY18E FY19E
14,188 11,894 13,715 14,462 15,755
5,216 3,135 3,855 4,472 5,285
3,911 2,279 3,320 3,446 4,056
12.3
7.2
10.4
10.8
12.8
7.5
12.9
8.9
8.5
7.3
3.6
5.0
3.6
2.9
2.0
12.8
6.9
9.6
9.3
10.2

Source: Company, HDFC sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

GMDC : INITIATING COVERAGE

Lignite (Ext. as % of total)-LHS

80

Rs mn

65

60

FY19E

5,000

FY18E

70

FY17E

10,000

FY16

75

FY15

15,000

Source: Company, HDFC sec Inst Research

15.00

GMDC Mines - Overview

Panandhro
Rajpardi
Mata no Madh
Tadkeshwar
Bhavnagar
Umarsar

Mining
Capacity
3.0
1.0
4.8
2.5
5.0
1.0

Source: Company, HDFC sec Inst Research

Stripping
Ratio
3.6
15.1
9.5
9.5
22.0
9.5

Lignite CV
(kcal/kg)
3,058
N/A
3,801
2,881
3,440
4,195

mnT
10.2

11.3

Rajpardi
Tadkeshwar
Umarsar

10.9

10.00

8.4

8.7

7.0

5.00
-

FY11

Mine

Panandhro
Mata no Madh
Bhavnagar

FY16

Power

Others

FY15

20,000

Lignite

FY14

Lignite is the mainstay of GMDCs business

FY13

GMDCs lignite volumes have consistently declined

since FY12 given operational and land acquisition
issues. However, they may be close to bottoming
out despite the certain exhaustion of its largest
mine, Panandhro, as other mines ramp-up output
to replace lost volumes.
Lignite mining is the mainstay of GMDCs
business. It directly accounts for >65% of
external revenues and supports the pithead
power plant at Akrimota.

Akrimota Power plant. However, reserves in

Panandhro have run out and it will likely cease
production in FY17 itself.
From a peak of 11.3 mT in FY12, GMDC volumes
have tapered off and it produced only 7.0 mT in
FY16. The steep declines in some of the large
mines have been on account of delays in land
acquisition, changes in land use and operational
issues.
Key operational issues faced by GMDC
involve strata control and slope stability. E.g.
collapsing of benches at Rajpardi and
Bhavnagar, sliding of external dumps at
Tadkeshwar etc.
Land acquisition challenges, especially post
enactment of Land acquisition Act of 2013,
have increased. Further, specific issues like
transfer of leased land to forest/sanctuary
(Panandhro) and allowing the land under
mining lease to be used for private nonmining purposes by authorities (Tadkeshwar)
have hurt land availability for mining.
Volumes have tapered off

FY12

Lignite volumes may have bottomed out

FY14

Lignite, the mainstay of

GMDCs business has suffered
sharp declines in volumes due
to operational and land
acquisition issues at its mines.

Panandhro, the largest mine, supplies lignite to

Invesment thesis

Source: Company, HDFC sec Inst Research

Page | 2

GMDC : INITIATING COVERAGE

Lignite may be close to

bottoming out, despite the
exhaustion of Panandhro, the
largest mine as other mines
ramp up.

However, GMDCs production may be close to

bottoming out, despite the certainty of Panandhro
ceasing production sometime in FY17 itself.
2015 with a capacity of 1 mTPA will be used to
supply to Akrimota power plant. Given the higher
stated GCV of lignite (~4,200 kcal/kg) vs
Panandhro (~3,058 Kcal/kg), Umarsar should be
able to replace the higher capacity mine as a
source of lignite to Akrimota.

Declining imported coal prices have weighed on

GMDCs pricing in the past. Recent strengthening
(Imported coal prices up ~30% from the bottom in
Dec-15) is likely to put back some pricing power in
the hands of the miner, given most of its customers
do not have much cheaper CIL coal as an option due
to logistical realities. Costlier alternatives also lend
support to the volumes.

Despatch of lignite from Rajpardi project has

GMDC competes with imported coal and pet-

Umarsar, which was commissioned in March

restarted in 1QFY17 and is likely to replace some

of the lost volume from Panandhro.

Tadkeshwar and Bhavnagar, which have been

Declining coal price weighed

down GMDCs pricing in the
past, especially given the coast
based nature of its clientele

Rising imported coal prices improve lignite

competitiveness

impacted by aforementioned land acquisition

and R&R issues are expected to bring up the
remainder of the production loss from
Panandhro mine.

We note that our volume numbers remain at risk

given historical disappointments. GMDC has been
unable to meet its volume targets as some of the
aforementioned problems plagued its operations.

coke (to a limited extent). This is on account of

coastal/near-coast location of a large proportion
of its customers. Given geographical hurdles,
comparison with CIL is not useful, nearest
collieries (Western Coalfields) being >700 kms
away.

Lignite vs coal
Parameters
CV(Kcal/kg)
Moisture
Ash
Fixed Carbon
Sulphur

Imported
Lignite
Coal
2400 - 3360 5200 - 5600 2800 - 3200
6 - 8%
30 - 40%
35 - 40%
30 - 40%
4 - 5%
8 - 12%
30 - 40%
40 - 42%
22 - 25%
0.5 - 0.8%
0.1 - 0.2%
1 - 3%

CIL (F Grade)

Source: Company, MEAI, HDFC sec Inst Research

Landed imported coal prices have hardened by

~30% since the bottom in Dec-15 and are now

uncompetitive vs domestic coal and lignite.

Page | 3

GMDC : INITIATING COVERAGE

Lignite pricing now attractive vs alternatives

0.37
0.35

0.33
0.34

FY15

FY16

0.79

0.30

0.37
0.35

0.50

0.77

0.93

FY14

0.95

0.70

0.38
0.35

0.40

FY13

0.80

0.41
0.34

0.50

Coal India Realisations

FY12

GMDC Realisations
(Rs/'000 kcal)

Rs/'000 Kcal

0.90

0.60

GMDCs pricing more dynamic than CILs

0.32
0.28

1.00

0.20
0.59

GMDC - Imported Imported CIL (G15) Petcoke

Lignite Coal (RB1,
Coal
(Domestic)
SA)
(Indonesia)

Source: Company, Steelmint, Bloomberg, CBEC, HDFC sec Inst

Research
Note: Lignite prices of Tadkeshwar mine taken for reference
Prices inclusive respective levies. Petcoke : 7,800 kcal/kg, SA - RB1
- 6,000 kcal/kg, CIL, G15 2,950 kcal/kg

The relative realizations help assess comparative

pricing of GMDC with CIL coal. While largely
similar on an energy content basis, GMDC has
been more dynamic in pricing.

We note that due to lower average energy

content, GMDC gets hurt by flat levies more than
CIL. In other words, given the same pricing per
kcal, GMDC will earn lesser than CIL given lower
base pricing and higher cess. We do not expect
this to change meaningfully in the future.

0.10
-

FY11

Recent run-up in international

coal/pet-coke imparts support
to GMDCs pricing and volumes

Source: Company, Coal India, HDFC sec Inst Research

Note: Reported realizations/t (net of levies) used. Average grade of
3000 kcal/kg for GMDC and 4200 kcal/kg for Coal India assumed.

GMDC supplies ~80% of its volumes to small

customers
operating
in
sectors
like
bricks/ceramics, textiles, paper, chemicals and
other SMEs. These operations typically use handfired boilers which work better with lignite and
may be unable to use high energy intensity fuels.
Further, the ticket sizes of these customers
prevent them from accessing the imported coal
market meaningfully.

Page | 4

GMDC : INITIATING COVERAGE

GMDCs customers pay one of

the highest levies due to high
VAT in Gujarat (22.5%). This is
likely to come down with GST
implementation

Uneven lignite taxation another window of

opportunity
Gujarat taxes lignite at a VAT rate of 22.5%, much
steeper compared to other lignite producing states
(Rajasthan/TN @ 5.0-5.5%). The total taxation on
lignite works out to ~37% of assessable value,
allowing little elbow room for GMDC to compete
with alternatives. With GST expected to roll out,
taxations rates should converge, leaving more on
the table for GMDC and its customers.

Gujarat levies a 20% VAT and a 2.5% special VAT

on lignite, while coal and pet-coke are charged

VAT at 4%! State/central levies form a
substantial chunk of the sale price of lignite in
the state.

State & central levies form 40-45% of lignite sales

price
Vat, 18%

Basic, 46%
Clean cess,
19%

22.5%
5.0%
5.5%

Source: Company, TN CTD, RERC, HDFC sec Inst Research

Based on GMDCs pricing the effective rate of

taxation on lignite in Gujarat works out to 3537% (Excise + VAT as a % of assessable value)

Lignite taxation - Likely GST impact

Head
Basic Price (a)
Mine closure (b)
Royalties: 6% of Basic + 30%
contribution to DMF + 2% contribution
to NMET (Effective : 7.9%) (c)
Assessable (d=a+b+c)
Excise (6% of Assessable) (e)
Clean Cess (f)
Sub-Total (g=d+e+f)
VAT (20% of sub-total) (h)
Additional VAT 2.5% of subtotal (i)
Sales price (g+h+i)
Excise + VAT (e+h+i)
% of Assessable
GST @18% of Assessable (j)
Difference (e+h+i-j)

Rs/t
950
198
75
1,223
73
400
1,697
339
42
2,078
455
37%
220
235

Source: Company, HDFC sec Inst Research

Note: BA grade lignite (Bhavnagar Mine) taken for reference.

Excise, 4%
Royalty, 4%

VAT rate on lignite in states

Parameters
Gujarat
Tamil Nadu
Rajasthan

Mine
closure, 9%

Source: Company, HDFC sec Inst Research

Note: BA grade lignite (Bhavnagar Mine) taken for reference.

Amongst the lignite producing/consuming states,

Gujarat has the highest incidence of VAT. The
other two states tax lignite at rates similar to
that on coal.

We note that lignite royalties (~7.9%) are lesser

than coal (14.3%). However, royalties are levied

at base prices while VAT is levied on a cascade of
taxation on top of base prices that the producer
receives. In a hypothetical situation in which all
levies are normalized, i.e. coal and lignite levies
are bought on an even keel, GMDC still stands to
benefit given much higher incidence of taxation
on account of state VAT.
Page | 5

GMDC : INITIATING COVERAGE

With the Akrimota power plant stabilizing, and a

sizeable (and growing) portfolio of renewable
assets, power division is expected to contribute
meaningfully to the earnings.

GMDC now operates 410 MW of thermal, wind

and solar power capacity in Gujarat.

GMDC power capacity evolution

Thermal

Solar

5.0

5.0

5.0

151

151

151

250

250

250

250

FY14

FY15

FY16

MW

400
300

Wind

FY13

500

5.0

53

5.0
93

93

250

250

FY12

Stabilization of Akrimota
power plant and sizeable
renewable capacity should
contribute meaningfully

Power division to add meaningfully

FY11

Imposition of GST will remove the VAT anomaly and

render GMDCs lignite much more competitive vs
other energy sources. Substantial portion of this
relief should find its way into GMDCs net
realisations. Further, given levies under GST can be
offset, unlike current VAT regime.

200
100
0

Source: Company, HDFCsec

Of this, 250MW of thermal capacity at Akrimota

power plant is fed by mines in the vicinity.

Currently it is being fed by Panandhro, with
Umarsar/Mata-no-madh taking over after
exhaustion.

Page | 6

GMDC : INITIATING COVERAGE

Solid Balance Sheet Adds Further Comfort

Beset with low PLFs, last two years better

PLF (%)

65.2%

65.0%
60.0%
55.0%

62.0%
53.5%

53.5%

45.0%

chunk of the cash (~Rs 10 bn in FY15) is parked in

inter-corporate deposits, which yield reasonable
returns (average yield in FY14-16: 9.2%).

45.0%

FY16

FY15

FY14

FY13

40.0%

FY12

Given GMDCs net cash situation and planned

investments covered by expected cash flows,
Balance Sheet is expected to remain comfortable.
Return of cash to shareholders should be value
accretive.

GMDC is net cash (Rs13.7 bn at FY16E). A large

53.5%

50.0%

FY11

GMDC is net cash and

committed capex can be
funded easily from internal
cash flows. Return of excess
cash to shareholders should be
managements focus.

70.0%

Source: Company, HDFCsec

Akrimota has been beset with lower PLFs given

difficulties in running CFBC plants. This is similar

to the difficulties faced by other operators like
GIPCL. In 2013, GMDC engaged KEPCO (Korea
Electric Power Corporation) for a 15 years O&M
contract. The performance has markedly
improved in FY15-16 when the plant ran at PLFs
above 60% for the first time since FY10.

Under the terms of PPA with GUVNL the rate of

Return of Equity is 16%, Normative Plant Load
Factor is 68.5% and auxiliary consumption @
10%.

The renewable power capacity of ~156 MW is

split between 151MW of wind capacity at various
locations in Gujarat and 5MW of solar power at
Panandhro lignite project. These capacities
operate at PLFs of ~20% on an average. Further
50MW wind capacity is being added, for which
order was placed in September 2015.

We would prefer GMDC to return some of this

cash to shareholders, in line with PSUs in recent
past (MOIL, NMDC, Coal India). This would help
improve the return ratios too. While mining
capex remains minimal, GMDC has indicated
investments into renewables, touched upon
earlier, to the tune of ~Rs 4.5bn in FY17-18. This
should be easily covered with the cash generated
from operations.

In its FY16 full year results, GMDC had also

started proportionately consolidating the debt

from Bhavnagar Energy Corporation Ltd (BECL),
where it owns a 26% stake and is a promoter.
BECL is putting up a 500 MW power plant in
Bhavnagar district. First unit of the plant
(250MW) had its COD in May 2016. We await
1HFY17 numbers to see the treatment of BECL
debt under IndAS.

Page | 7

GMDC : INITIATING COVERAGE

Valuation of the company

A life-of-mine discounted cash flow (DCF) is the

best way to value a mining company. However,

the availability of life of mine data remains
limited. E.g. Panandhro has been widely
expected to run out sometime in FY14-16 period,
but still continues to produce well into FY17.

EV/EBITDA (Rolling 1-year Fwd)

10.0

mines where reserves/quality are not well

established. Lastly, we believe that the low near
term valuations that GMDC currently trades at
(4-5x EV/EBITDA) discounts on 6-7 years of mine
life on FY18 values. As such, we value GMDC at
5.0x FY18 EV/EBITDA.

P/E (Rolling 1-year forward)

Average
-1 Stdev

16.0

P/E (x)
+1 Stdev

Average
-1 Stdev

14.0

8.0

12.0
10.0

6.0

8.0

4.0

6.0
4.0

2.0

Source: Company, HDFC sec Inst Research

Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
Apr-12
Aug-12
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15
Aug-15
Dec-15
Apr-16
Aug-16

2.0

Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
Apr-12
Aug-12
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15
Aug-15
Dec-15
Apr-16
Aug-16

Valuations have taken a hit

due to recent disappointments.
Delivery on lignite volumes
should help valuations rerate
back to normal.

EV/EBITDA (x)
+1 Stdev

Further, GMDC continues to get allocations of

Source: Company, HDFC sec Inst Research

Page | 8

GMDC : INITIATING COVERAGE

Key Assumptions
FY15
8.71
1,272
1,495

Lignite volumes (mT)

Lignite realisations (Rs/T)
Power units (mn kWh)

FY16
6.98
1,283
1,574

FY17E
7.50
1,385
1,667

FY18E
7.50
1,413
1,763

FY19E
8.05
1,413
1,763

Source: Company, HDFC sec Inst Research

Comparative valuations
Company

MCap
(Rs mn)

CMP
(Rs)

TP
(Rs)

Reco

Coal India
Neyveli Lignite
GMDC

2,135.1
128.9
29.8

329
77
94

369
NR
125

Buy
NR
Buy

P/E (x)
FY17E
FY18E
16.2
13.8
9.2
7.7
8.9
8.5

EV/EBITDA (x)
FY17E
FY18E
8,2
7.0
5.2
4.6
3.6
2.9

RoE (%)
FY17E
FY18E
39.4
48.6
8.9
10.1
9.6
9.3

Source: Company, Bloomberg, HDFC sec Inst Research

Page | 9

GMDC : INITIATING COVERAGE

Income Statement
Year ending March (Rs mn)
Net Revenues
Growth %
Mining expenses
Royalty and clean energy cess
Employee expenses
Other operating expenses
Operating profits
Operating Profit Margin (%)
Other operating income
EBITDA
EBITDA %
EBITDA Growth %
Depreciation
EBIT
Other Income (including EO
items)
Interest
PBT
Tax
RPAT
EO (Loss) / Profit (Net Of Tax)
APAT
APAT Growth (%)
Adjusted EPS (Rs.)
EPS Growth (%)

Balance Sheet
FY15
14,188
10.0
4,733
1,464
964
1,811
5,216
36.8
223
5,438
38.3
(16.9)
1,373
4,066

FY16
11,894
(16.2)
3,682
2,028
1,017
2,032
3,135
26.4
234
3,369
28.3
(38.1)
1,325
2,044

FY17E
13,715
15.3
3,722
3,000
1,032
2,106
3,855
28.1
245
4,100
29.9
21.7
1,225
2,875

FY18E
14,462
5.4
3,730
3,000
1,048
2,212
4,472
30.9
258
4,730
32.7
15.4
1,318
3,412

FY19E
15,755
8.9
3,864
3,220
1,064
2,322
5,285
33.5
271
5,555
35.3
17.4
1,430
4,125

2,309

1,213

1,382

1,511

1,669

17
6,358
1,355
5,003
1,092
3,911
(10.9)
12.3
(10.9)

6
3,251
972
2,279
2,279
(41.7)
7.2
(41.7)

0
4,256
936
3,320
3,320
45.7
10.4
45.7

0
4,923
1,477
3,446
3,446
3.8
10.8
3.8

0
5,794
1,738
4,056
4,056
17.7
12.8
17.7

Source: Company, HDFC sec Inst Research

As at March (Rs mn)

SOURCES OF FUNDS
Share Capital
Reserves
Total Shareholders Funds
Long Term Debt
Short Term Debt
Total Debt
Deferred Taxes
Long Term Provisions & Others
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
CWIP
Investments
LT Loans and Advances
Total Non-current Assets
Inventories
Debtors
Other Current Assets
Cash & Equivalents
Total Current Assets
Creditors
Other Current Liabilities &
Provns
Total Current Liabilities
Net Current Assets
TOTAL APPLICATION OF FUNDS

FY15

FY16

FY17E

FY18E

FY19E

636
31,781
32,417
0
0
0
2,079
4,207
38,703

636
33,032
33,668
0
0
0
1,625
5,164
40,456

636
35,203
35,839
0
0
0
1,625
5,164
42,628

636
37,502
38,138
0
0
0
1,625
5,164
44,926

636
40,409
41,045
0
0
0
1,625
5,164
47,834

17,562
745
2,989
7,447
28,743
521
811
905
10,838
13,075
515

17,516
1,035
3,242
6,293
28,085
435
974
905
13,685
15,998
681

17,291
1,535
3,242
6,293
28,360
572
634
905
15,737
17,848
634

19,473
1,035
3,242
6,293
30,042
490
753
905
16,435
18,583
753

20,043
535
3,242
6,293
30,112
667
758
905
19,096
21,426
758

2,603

2,947

2,947

2,947

2,947

3,118
9,957
38,700

3,628
12,370
40,455

3,581
14,267
42,627

3,700
14,883
44,925

3,705
17,721
47,833

Source: Company, HDFC sec Inst Research

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GMDC : INITIATING COVERAGE

Cash Flow
Year ending March (Rs mn)
Reported PBT
Non-operating & EO items
Interest expenses
Depreciation
Working Capital Change
Tax paid
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
Non-operating Income
INVESTING CASH FLOW ( b )
Debt Issuance/(Repaid)
Interest expenses
FCFE
Share Capital Issuance
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
EO Items/Others
Closing Cash & Equivalents

Key Ratios
FY15
6,358
(2,309)
17
1,373
(3,893)
(2,177)
(631)
(551)
(1,181)
(386)
1,217
281
0
(17)
297
0
(1,148)
(1,165)
(1,515)
1,451
10,838

Source: Company, HDFC sec Inst Research

FY16
3,251
(1,213)
6
1,325
1,244
(972)
3,641
(600)
3,041
(253)
1,213
361
(0)
(6)
367
0
(1,148)
(1,155)
2,847
13,685

FY17E
4,256
(1,382)
0
1,225
156
(936)
3,319
(1,500)
1,819
0
1,382
(118)
0
0
(118)
0
(1,148)
(1,148)
2,053
15,737

FY18E
4,923
(1,511)
0
1,318
82
(1,477)
3,335
(3,000)
335
0
1,511
(1,489)
0
0
(1,489)
0
(1,148)
(1,148)
697
16,435

FY19E
5,794
(1,669)
0
1,430
(177)
(1,738)
3,641
(1,500)
2,141
0
1,669
169
0
0
169
0
(1,148)
(1,148)
2,661
19,096

PROFITABILITY (%)
EBITDA Margin
APAT Margin
RoE
Core RoCE
RoCE
EFFICIENCY
Tax Rate (%)
Asset Turnover (x)
Inventory (days)
Debtors (days)
Payables (days)
Cash Conversion Cycle (days)
Debt/EBITDA (x)
Net D/E
Interest Coverage
PER SHARE DATA
EPS (Rs/sh)
CEPS (Rs/sh)
DPS (Rs/sh)
BV (Rs/sh)
VALUATION
P/E
P/BV
EV/EBITDA
OCF/EV (%)
FCF/EV (%)
FCFE/Market Cap (%)
Dividend Yield (%)

FY15

FY16P

FY17E

FY18E

FY19E

38.3
27.6
12.8
20.9
13.6

28.3
19.2
6.9
10.6
6.9

29.9
24.2
9.6
15.0
9.6

32.7
23.8
9.3
15.0
9.3

35.3
25.7
10.2
17.0
10.2

21.3
0.5
13
17
15
15
N/M
N/M
N/M

29.9
0.4
15
27
18
23
N/M
N/M
N/M

22.0
0.5
13
21
18
17
N/M
N/M
N/M

30.0
0.5
13
17
18
13
N/M
N/M
N/M

30.0
0.5
13
17
18
13
N/M
N/M
N/M

12.3
20.1
3.0
101.9

7.2
11.3
3.0
105.9

10.4
14.3
3.0
112.7

10.8
15.0
3.0
119.9

12.8
17.3
3.0
129.1

7.5
0.9
3.6
(3.4%)
(6.4%)
(3.1%)
3.2

12.9
0.9
5.0
19.6%
16.3%
11.6%
3.2

8.9
0.8
3.6
21.1%
11.5%
5.8%
3.2

8.5
0.8
2.9
24.3%
2.4%
(3.9%)
3.2

7.3
0.7
2.0
28.0%
16.5%
7.8%
3.2

Source: Company, HDFC sec Inst Research

Page | 11

GMDC : INITIATING COVERAGE

RECOMMENDATION HISTORY
GMDC

Date
7-Sep-16

TP

150

CMP
93

Reco
BUY

Target
125

130
110
90
70

Sep-16

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

50

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month
d

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GMDC : INITIATING COVERAGE

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