13 August 2019

1QFY20 Results Update | Sector: Technology

Info Edge India

BSE SENSEX S&P CNX
36,958 10,926
CMP: INR2,173 TP: INR2,050 (-6%) Neutral
Motilal Oswal values your support in Standalone steady; Losses in investee portfolio remain high
the Asiamoney Brokers Poll 2019 for
India Research, Sales and Trading  Broad-based revenue growth in standalone business: 1QFY20 standalone
team. We request your ballot. revenue was INR3.1b (in-line), +6.9% QoQ/20.5% YoY. Recruitment revenues
grew 19.2% YoY (v/s 18.4% YoY in 4QFY19). 99acres.com grew 34.7% YoY
(v/s 45.8% in 4QFY19). On a consolidated level, revenue grew 15.4% YoY to
INR3.2b and EBIT grew 16.4% YoY to INR1.1b. Cons. net losses increased
754% YoY to INR 1.9b, led by higher losses in investee companies.
Bloomberg INFOE IN
Equity Shares (m) 104 Consolidated performance — share of net losses of JVs ballooned to INR2.5b
M.Cap.(INRb)/(USDb) 265.7 / 3.7 (v/s INR0.9b in 1QFY19; profit of INR0.9b in 4QFY19), which was INR3.1b for
52-Week Range (INR) 2432 / 1313 full-year FY19, helped by one-time sale of Middle East operations.
1, 6, 12 Rel. Per (%) 4/26/50  EBIT beat due to lower operating expense: EBIT margin declined 40bp QoQ
12M Avg Val (INR M) 390 to 29.1% (v/s est. 26.1%). Advertisement expense increased 46% YoY to
Free float (%) 59.4
INR548.6m (v/s est. INR571.6m). At PBT level, losses were pruned in
Financials & Valuations (INR b) Recruitment Solutions, while it slightly expanded in 99acres.com. Adj. PAT at
Y/E Mar 2019 2020E 2021E INR749m (-5.1% YoY/-10.6% QoQ), missed estimates by 22%, mainly due to
Net Sales 11.0 13.2 15.7 lower other income and higher ETR.
EBITDA 3.4 4.5 5.5  Recruitment businesses steady on higher IT hiring: Despite the economic
PAT 2.8 3.8 4.7 slowdown, Naukri.com continues to witness stable growth due to IT Hiring
EPS (INR) 23.0 30.8 38.1
(revenues from IT grew 25%+ YoY). Muted recruitment in Auto, Infra,
Gr. (%) 54.2 34.3 23.5
190.7 215.0 246.1
Telecom and NBFCs remains a challenge, but also an opportunity when the
BV/Sh (INR)
RoE (%) 14.2 15.7 16.7 economy turns. For 99acres.com, the underlying industry remains sluggish.
RoCE (%) 14.2 15.6 16.5 Jeevansathi.com is marking its efforts by increasing ad spends and offering
P/E (x) 94.9 70.7 57.2 lower pricing, preferring volume share over value share for now.
P/BV (x) 73.7 55.0 44.1  Valuation View: We expect multi-dimensional growth at INFOE, backed by
recruitment, real estate and its biggest investee company – Zomato. Our
Estimate change
SOTP-based price target of INR2,050 is up marginally after factoring in
TP change
traction in standalone core segments. Our price target implies 6% downside
Rating change
to CMP. Maintain Neutral.
Quarterly Performance (Standalone) (INR Million)
Est. Var. (% /
Y/E March FY19 FY20E FY19 FY20E 1QFY20 bp)
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Revenues 2,595 2,650 2,811 2,927 3,128 3,195 3,335 3,535 10,983 13,192 3,090 1.2
YoY (%) 16.7 17.7 23.7 21.6 20.5 20.6 18.7 20.8 20.0 20.1 19.1 150bp
Salary costs 1,106 1,118 1,151 1,212 1,298 1,242 1,270 1,298 4,586 5,108 1,280 1.4
Ad and Promotion costs 376 404 503 474 549 575 600 636 1,757 2,360 572 -4.0
Other Expenses 270 304 324 328 272 320 323 334 1,226 1,249 304 -10.7
Operating Profit 843 825 833 913 1,010 1,058 1,141 1,267 3,413 4,476 935 8.0
Margins (%) 32.5 31.1 29.6 31.2 32.3 33.1 34.2 35.8 31.1 33.9 30.2 200bp
Other Income 236 275 296 304 245 330 348 378 1,112 1,301 370 -33.7
Depreciation 53 52 50 49 99 101 103 104 204 407 57 74.0
PBT bef. Extra-ordinary 1,026 1,048 1,079 1,168 1,139 1,270 1,369 1,522 4,320 5,300 1,248 -8.7
Provision for Tax 236 267 335 331 390 317 342 381 1,169 1,430 294 32.5
ETR (%) 23.0 25.5 31.1 28.3 34.2 25.0 25.0 25.0 27.1 27.0 23.6 1060bp
PAT bef. Minority 630 781 744 663 667 952 1,027 1,142 2,818 3,788 954 -30.0
EOI -160 0 0 -174 -82 0 0 0 -334 -82 0
Adjusted PAT 790 781 744 838 749 952 1,027 1,142 3,152 3,870 954 -21.5
QoQ (%) 39.5 -1.1 -4.8 12.6 -10.6 27.1 7.9 11.2 13.8
YoY (%) 22.9 -5.5 5.8 48.0 -5.1 21.9 38.1 36.3 15.1 22.8 20.7
EPS (INR) 5.1 6.4 6.1 5.4 5.4 7.7 8.4 9.3 23.0 30.8 7.2 -24.3
E: MOFSL Estimates
Ashish Chopra – Research analyst (Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Research Analyst: Anmol Garg (Anmol.Garg@MotilalOswal.com); +91 22 7193 4271 / Mohit Sharma (Mohit.Sharma@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Info Edge India

1QFY20: Topline above estimates

 Standalone revenue was INR3.13b, +6.9% QoQ and 20.5% YoY v/s our estimate
of INR 3.09b (19.5% YoY).
 Revenue from recruitment segment increased by 19.2% YoY to INR 2.2B.
99acres.com grew 34.7% YoY to INR 564m.

Exhibit 1: Revenue growth of 20.5% YoY in 1QFY20

Revenue (INR m) Revenue Growth - YoY (%)

22.1 23.7
20.6 21.6 20.5
17.7
15.5 16.7
13.1 12.6
7.3 8.0 7.2

1,976 2,100 1,861 2,084 2,225 2,252 2,272 2,407 2,595 2,650 2,811 2,927 3,128
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20
Source: Company, MOFSL

Beat on EBIT margins

 EBIT margin was 29.1%, 300bp beat on our estimate – led by lower than
anticipated advertisement expense (17.5% of revenue vs. est. of 18.5%) and
lower other expenses (6.8% of sales vs. exp. of 8.2%)
 Advertisement and promotion expenses stood increased 46% YoY and 16%
sequentially.
 Adj. PAT was INR749m, -5.1% YoY and -10.6% QoQ, missing our estimate by 22%
mainly on account of lower other income ( INR 245m vs. est. of INR370m) and
higher ETR (34% vs. est of 23%).

Exhibit 2: Margins decreased 40bp QoQ

EBIT (INR m) EBIT Margin (%)

37.1
32.4 30.4
27.6 29.2 29.2 27.9 29.5 29.1
27.1
22.3
17.6 18.1

347 570 337 576 649 835 736 538 790 773 783 864 911
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

Source: Company, MOFSL

Takeaways from management commentary

99acres.com
 Market outlook: Real estate market continues to languish. Hence, billing growth
has slowed this quarter. Growth of 18% varies across cities, ranging between
single-digits to 25%. Financing issues for both builders and buyers of new homes
is the main reason for the sluggishness. Hence, new launches are likely to be hit,
which will impact revenue growth. Despite this, the online pie is still very tiny,

13 August 2019 2
 Info Edge India

and if broader market grows even moderately, 99acres.com should continue to

grow, unless there is a big crash.
 Company intends to continue investing on platform development, data quality
as well as on higher advertisement in order to increase/ retain market share.
 In the classified listing space, 99acres.com has close to 50% market share; ~30k
brokers are active on the platform.

Exhibit 3: Growth tapering off for 99acres.com

99acres.com (INR m) YoY (%)

47.9 45.8
35.7 38.6 34.7
30.8 33.4
279 261
275
11.1 12.7
2.8 5.8
0.6 -1.7
308 314 326 341 373 419 452 504 544 564
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20
Source: Company, MOFSL

Naukri.com
 In the quarter, Naukri.com added 19k fresh CVs on a daily basis and saw 366k
CVs being modified per day. Its traffic share is 85%+ and 67% including
Indeed.com.
 IT/ITeS continued to drive growth for Naukri.com. Southern markets are doing
better than the western and northern regions of India.
 Naukri continues to aggressively invest in marketing and underlying technology
for product improvement.
 It completed the acquisition of IIMJOBS.com (for INR800m), which had billing of
INR570m in 1QFY20 with 22% YoY growth. Operationally, the company is near
break-even. Using the Naukri.com distribution muscle, many platforms including
IIMJOBS.com can be extended to a lot more customers.
 Competition: Indeed.com has been active over the last 5-7 years, aggressively
trying to attract more job seekers. But, the corporate segment has not been its
main focus, and also, it has not featured on television in recent months. Google
Jobs is not yet planning to monetize its platform. Further, not much activity has
been witnessed on Monster.com either.
 Traffic share: Naukri.com’s traffic share is up 85% v/s ~70% in the previous
quarter. Typically, competition cuts down on investments during an economic
slowdown; however, in the said period, Naukri.com has invested more and
gained competitor’s market share.
 Value-added services: Over time, Naukri.com may integrate with some
assessment centers for psychometric tests and other screening methods (not a
big effort right now).
 Market outlook: IT/ ITES segment grew 20%+ in the quarter. Healthcare,
Education, and SME segments also contributed to the growth. Auto, Telecom,
Infrastructure and NBFCs were weak. Infrastructure sector’s revenue share is

13 August 2019 3
 Info Edge India

down from 25% now down to 15-16% over last 10 years. The Jobseek index in
July was up 14%, but share of the IT sector within it was over 25%+.
 Margins: 1QFY20 saw much investment in marketing, which will continue in
2QFY20 as well. Impact of continued investment in products will have some
gestation period. Further, management is also experimenting with an entry in
areas such as the blue-collar space and premium hiring market. These teams are
not expected to generate revenues for some time.

Exhibit 4: Growth impacted by muted hiring in Infra, Banking, Auto, Telecom, etc.
Recruitment (INR m) YoY (%)
21.2 20.4 20.5
18.4 19.2
15.2 15.7
14.0 12.7
11.0
8.5 9.2
6.0

1,440 1,555 1,404 1,555 1,598 1,648 1,690 1,752 1,841 1,907 2,037 2,074 2,195
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20
Source: Company, MOFSL

Jeevansathi.com
 From a virtual nobody, Jeevansathi.com has approx. revenues of
INR200m/quarter. 1QFY20 saw 10.3% YoY increase in billing, while revenue
increased 9.9% YoY.
 INFOE will continue investing in Jeevansathi.com to catch up on market share.
Previous spends have resulted in increased traffic and higher number of
registrations.
 Market: The northern region (slow in adopting the internet) has two strong
players – Shaadi.com and Jeevansathi.com. The western region has three
players. Around 50-60% of the market is captured by the North and the West.

Exhibit 5: Matrimony business seeing increased traction on higher add spends

37.6
Jeevansathi.com (INR m) YoY (%)
30.5
23.8 23.0
19.7
15.4 142 16.7 182 184 177
11.0 9.5
5.7 6.6
4.0 4.0
150 143 135 175 177 166 170 189 199
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

Source: Company, MOFSL

13 August 2019 4
 Info Edge India

Others:
 Main contributors to the consolidated losses are Zomato and Policybazaar.
 Zomato: Overall growth continues across businesses; the company has has
started controlling costs and reducing losses. Last year, Zomato had a profit
boost from one-off sale of its ME business.
 Policybazaar.com and Paisabazaar.com are also growing strongly. Revenue
growth has been 60%+ over the last two fiscals.
 New investments in start-ups:
 Shoeconnect: A B2B player connecting shoe manufacturers to shoe
retailers. It is a fragmented industry, doing logistics and distribution. This
start-up is attracting interest from other investors as well.
 ShopKirana: This start-up is focused around last mile distribution to the
grocery stores.
Exhibit 6: Change in estimates
Revised Earlier Change
Standalone business FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E
Revenue (INRb) 11.0 13.2 15.7 11.0 13.1 15.6 0.0 1.0 1.1
YoY (%) 20.0 20.1 19.3 20.0 19.0 19.1 0bp 110bp 20bp
EBITDA (%) 31.1 33.9 35.1 31.1 30.0 32.2 0bp 390bp 290bp
EBIT (%) 29.2 30.8 32.3 29.2 28.3 30.6 0bp 260bp 170bp
EPS (INR) 23.0 30.8 38.1 23.0 31.9 39.0 0.0 -3.3 -2.3
Source: MOFSL, Company

Valuation and view

 A direct and high-quality play on the exploding e-commerce opportunity
 India’s Ecommerce industry is expected to grow from current size of USD14b
to USD70b by 2020. As per Google, Classifieds segment is expected to grow
at a CAGR of 22.5%, with jobs, real estate and matrimony constituting 2/3rd
of the market.
 As the GDP growth revives it India, it will directly benefit INFO’s recruitment
segment growth, which has had a 7-8pp historical multiplier effect for every
1pp uptick in GDP growth. Naukri.com’s traffic share is almost 70%
 Reducing industry burn vindicates a prudent investment strategy:
The scenario in venture capital funding looks changed in the last few months
with Companies making a pivot towards monetization and profitability. This
would imply that the worst in terms of month-on-month burn is behind. We
believe this plays into INFOE’s strategy of staying put to protect its market
leadership in multiple franchises like 99acres.com, and it can now look forward
to deriving the financial rewards from the investments sooner rather than later.
 Revival of GDP growth to help flagship recruitment segment: Naukri.com
should directly and disproportionately benefit from the pick-up in GDP growth.
This should be compounded by pickup in demand for IT resources. We expect
revenue CAGR of 15% over FY18-20E in flagship Naukri.com’s revenues. With
the worst in the real estate market now behind, and growth returning on a small
base; as more clarity emerges on RERA, we expect we revenue CAGR of 20%
over FY18-20.
 Disciplined management action drives confidence:
 Backing strong teams: Despite buying significant stake in investee
companies, the approach has been to back teams and get involved as and
when guidance is sought.

13 August 2019 5
 Info Edge India

 Prioritizing: Investments where either scale visibility dwindled and / or

company’s focus changed, INFOE has been quick to write them off its books
(INR356m to date)
 Feeding the virtuous cycle: Irrespective of business cycles, Naukri.com’s
cost base increases 15-20% every year to stay ahead in terms of product
innovation.
 SOTP-based price target of INR2,050: We adopt sum-of-the-parts (SOTP)
methodology to value INFOE. We separately value the in-house business –
Naukri.com, 99acres.com, Jeevansathi.com and also INFOE’s share in its
investee companies – Zomato.com, Meritnation.com and Policybazaar.com.
While the recruitment business remains the cash cow, 99acres.com, along with
holdings in Zomato.com, driving significant value for the company, going
forward.
 We expect multi-dimensional growth at INFOE, backed by recruitment, real
estate and its biggest investee companies Zomato and Policybazaar. Our SOTP-
based price target of INR2,050 is up marginally after factoring in traction in
standalone core segments. Our price target implies 6% downside to CMP.
Maintain Neutral.
Exhibit 7: SOTP valuation
Valuation Contributi
Segment Methodology Methodology description towards INFOE on (INR
(INR b) per share)
 We value Naukri.com's post tax operating profits at 25x.
Historically, INFOE traded at 30x+ when recruitment
Naukri 25x recruitment NOPLAT segment dominated and all others were insignificantly small 130.3 1069
(INR20 per share of investments). INFOE's valuation on
overall company's profits (including yield on cash) was 30x+
 At the mid of sales multiple of peers such as
rightmove.co.uk, realestate.com.au, zillow.com,
zoopla.co.uk
99acres.com 12x forward sales All trade in a tight sales band of 6-17x 24.8 203
Growth in 99acres.com is expected to be higher than peers
once the real estate segment picks up. But we ascribe
median multiple of 12x.
 Zomato’s valuation was USD2b as per the last round of
Valuation ascribed in the funding. INFOE’s stake in the same is 27.68%. We assume a
Zomato.com 59.3 487
latest round of funding valuation of USD2.5b (in talks to raise USD1b at a higher
pre-money valuation)
 Meritnation raised USD4m in the latest round of funding on
Valuation ascribed in the
Meritnation June 2015. This, as per our analysis, values the company at 3.3 27
latest round of funding
~USD300m.as per the last funding round
 PolicyBazar has recently secured funding from Softbank.
Valuation ascribed in the
Policybazaar.com INFOE to increase stake in PolicyBazar by buying-in from 12.9 105
latest round of funding
PremJi Investments.
 JS is the 3rd biggest player in the online matrimony market.
Jeevansathi.com 3x forward sales We assume 25% CAGR in revenues and value the franchise 2.5 20
at 3x forward revenues
 Canvera raised INR100m from INFOE in latest round of
Valuation ascribed in the funding (2QFY16), which increased INFOE's stake from 36%
Canvera 0.0 0
latest round of funding to38%, effectively pegging the company's value at
INR4000m
Other investee
At investment value  Happily Unmarried 1.6 13
companies
Cash On books 15.4 127
Total 2,052
Source: MOFSL

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 Info Edge India

Exhibit 8: 1-year forward PE band Exhibit 9: 1-year forward PB band

P/E (x) Avg (x) Max (x) P/B (x) Avg (x) Max (x)
109.0 Min (x) +1SD -1SD 12.3 Min (x) +1SD -1SD

83.5 10.3 10.0 9.4

84.0
61.6 61.8 8.3
59.0 6.7
44.9 6.3
5.2
34.0 28.3 4.3
21.8 2.8 3.8
9.0 2.3
Jun-09

May-12

Apr-15

Aug-19
Dec-10

Sep-16

Feb-18
Oct-13

Jun-09

May-12

Apr-15

Aug-19
Dec-10

Sep-16

Feb-18
Oct-13

13 August 2019 7
 Info Edge India

Story in charts
Exhibit 10: Recruitment segment dominated the standalone Exhibit 11: … and is the only materially profit-making
business… business in the group, real estate just broke even
Recruitment Matrimonial Real Estate Standalone business EBITDA (INR m)

1,238
18

6
2

70 -88 -147
Recruitment Matrimonial Real Estate Others

Source: Company, MOFSL Source: Company, MOFSL

Exhibit 12: Recruitment business is closely linked to GDP Exhibit 13: … but leadership position should sustain on the
growth… network effect
Recruitment revenue growth (%) GDP Growth (%)

8.9 25.4
7.2 7.6 7.2
6.8 6.9
24.1 4.5 4.7
6.7 19.6 19.4
17.5
11.3 12.1 12.3
9.8
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Exhibit 14: Investee company details

Amt. Invested Holding
Company (INR m) %
Zomato Media Pvt Ltd. 1520 26.38
Applect Learning Systems Pvt Ltd. 1380 65.70
Etechaces Marketing and Consulting Pvt Ltd. 5760 15.58
Happily Unmarried Marketing Pvt Ltd. 260 41.14
Unnati Online Pvt Ltd 40 28.60
VCare Technologies Pvt Ltd. 40 14.80
Ideaclicks Infolabs Pvt. Ltd. 50 45.30
Wishbook Infoservices Pvt. Ltd. 50 29.00
NoPaperForms Solutions Pvt.Ltd. 340 48.10
International Educational Gateway Pvt. Ltd 130 29.60
Agstack Technologies Private Limited 200 37.21
Bizcrum Infotech Pvt. Ltd. 120 29.80
Medcords Healthcare Solutions Pvt. Ltd. 30 11.40
Printo Document Services Pvt. Ltd. 200 25.10
Shop Kirana E Trading Private Ltd 130 15.50
Source: MOFSL, Company

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 Info Edge India

Financials and Valuations

Income Statement (INR Million)
Y/E Mar 2014 2015 2016 2017 2018 2019 2020E 2021E
Net Sales 5,059 6,116 7,123 8,021 9,155 10,983 13,192 15,735
Change (%) 15.7 20.9 16.5 12.6 14.1 20.0 20.1 19.3
EBITDA 1,968 2,520 3,247 3,752 3,931 4,586 5,108 6,012
EBITDA Margin (%) 662 842 1,318 881 1,164 1,757 2,360 2,832
Depreciation 761 931 1,137 1,114 1,088 1,226 1,249 1,370
EBIT 1,668 1,822 1,421 2,275 2,973 3,413 4,476 5,520
33.0 29.8 20.0 28.4 32.5 31.1 33.9 35.1
Interest 174 173 210 241 215 204 407 434
Other Income 51 30 1 1 1 1 70 70
Extraordinary items 432 764 721 625 971 1,112 1,301 1,222
PBT 1,876 2,383 1,932 2,659 3,728 4,320 5,300 6,238
Tax 591 736 539 575 991 1,169 1,430 1,559
Tax Rate (%) 31.5 30.9 27.9 21.6 26.6 27.1 27.0 25.0
Min. Int. & Assoc. Share 1,285 1,647 1,393 2,084 2,737 3,152 3,870 4,678
Reported PAT 0 292 -160 -40 -913 -334 -82 0
Adjusted PAT 1,285 1,939 1,233 2,044 1,824 2,818 3,788 4,678
Change (%) 25.7 50.9 -36.4 65.7 -10.8 54.5 34.5 23.5

Balance Sheet (INR Million)

Y/E Mar 2014 2015 2016 2017 2018 2019 2020E 2021E
Share Capital 1,092 1,202 1,209 1,211 1,216 1,220 1,221 1,221
Reserves 6,530 15,422 16,431 18,620 19,859 22,019 24,976 28,773
Net Worth 7,622 16,624 17,640 19,831 21,074 23,239 26,197 29,994
Debt 4.4 2.8 60.2 52.3 44.0 46.0 639.4 639.4
Deferred Tax 7,626 16,627 17,700 19,883 21,118 23,285 26,836 30,633
Total Capital Employed 1,501 1,635 1,901 1,723 1,866 2,109 3,275 3,615
Gross Fixed Assets 645 700 881 1,121 1,337 1,540 1,947 2,381
Less: Acc Depreciation 857 935 1,020 602 529 569 1,328 1,234
Net Fixed Assets 95 0 0 0 0 0 0 0
Capital WIP 3,775 5,578 7,405 8,371 10,720 12,857 16,686 16,686
Investments 5,088 12,907 12,152 15,188 15,028 15,984 15,987 21,176
2,531 8,973 357 2,162 11,456 3,400 1,288 1,288
Current Assets 50 98 118 75 44 60 85 102
Debtors 2,311 3,007 9,522 11,280 1,458 1,052 2,559 5,495
Cash & Bank 69 155 347 247 0 0 0 0
Loans & Adv, Others 127 673 1,808 1,424 2,070 11,472 12,054 14,292
Curr Liabs & Provns 2,189 2,794 2,877 4,278 5,159 6,125 7,164 8,463
Curr. Liabilities 1,865 2,341 2,448 3,862 4,703 5,628 6,755 8,054
Provisions 324 452 429 416 456 496 410 410
Net Current Assets 2,899 10,114 9,275 10,910 9,869 9,860 8,822 12,713
Total Assets 7,626 16,627 17,700 19,883 21,118 23,285 26,836 30,633

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Financials and Valuations

Ratios
Y/E March 2014 2015 2016 2017 2018 2019 2020E 2021E
Basic (INR)
EPS 11.8 16.5 10.0 15.4 14.9 23.0 30.8 38.1
Cash EPS 13.7 13.0 14.0 17.4 24.2 27.5 35.1 41.9
Book Value 86.0 138.3 188.0 162.7 172.9 190.7 215.0 246.1
DPS 2.5 3.0 4.3 3.0 5.5 5.5 6.0 6.0
Payout (%) 23.6 31.2 44.2 23.2 29.3 25.6 22.8 18.8
Valuation (x)
P/E 185.0 132.1 216.9 141.6 146.4 94.9 70.7 57.2
Cash P/E 158.6 167.0 155.9 125.2 89.9 79.1 62.1 51.9
EV/EBITDA 131.1 161.3 165.9 118.7 85.2 73.7 55.0 44.1
EV/Sales 37.0 41.4 26.3 30.6 27.7 22.9 18.7 15.5
Price/Book Value 25.3 15.8 11.6 13.4 12.6 11.4 10.1 8.8
Dividend Yield (%) 0.1 0.1 0.2 0.1 0.3 0.3 0.3 0.3
Profitability Ratios (%)
RoE 14.6 11.5 6.4 10.0 13.4 14.2 15.7 16.7
RoCE 18.5 13.8 8.1 11.1 13.4 14.2 15.6 16.5
RoIC -116.2 -112.9 -338.4 -210.6 -91.1 135.3 48.4 56.7
Turnover Ratios
Debtors (Days) 4 6 6 3 2 2 2 2
Fixed Asset Turnover (x) 5.3 6.5 7.0 13.3 17.3 19.3 9.9 12.8

Cash Flow Statement

Y/E March 2014 2015 2016 2017 2018 2019 2020E 2021E
CF from Operations 1,334 1,968 809 1,653 1,901 2,097 7,112 3,961
Cash for Working Capital -425 2 6,706 630 1,166 860 438 -955
Net Operating CF 908 1,970 7,515 2,283 3,067 2,956 7,550 3,006
Net Purchase of FA -1,024 -2,151 -1,620 -1,970 -4,158 -2,276 -1,166 -340
Free Cash Flow -115 -181 5,895 314 -1,091 680 6,385 2,666
Net Purchase of Invest. 9 -6,279 1,320 1,864 -7,973 8,718 -3,926 1,222
Net Cash from Invest. -1,015 -8,430 -300 -106 -12,132 6,442 -5,091 882
Proceeds from Equity -36 7,497 25 19 48 27 0 0
Proceeds from LTB/STB 0 -4 0 -1 -1 0 -71 -70
Dividend Payments -255 -337 -726 -437 -803 -808 -881 -881
Cash Flow from Fin. -291 7,156 -701 -419 -757 -781 -953 -952
Net Cash Flow -398 696 6,514 1,759 -9,822 8,618 1,506 2,936
Opening Cash Bal. 2,709 2,311 3,007 9,522 11,280 1,458 1,053 2,559
Add: Net Cash -398 696 6,514 1,759 -9,822 -405 1,506 2,936
Closing Cash Bal. 2,311 3,007 9,522 11,280 1,458 1,053 2,559 5,495
E: MOFSL Estimates

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Explanation of Investment Rating

Investment Rating Expected return (over 12-month)
BUY >=15%
SELL < - 10%
NEUTRAL < - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products. Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company

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The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.

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