STOCK NOTE

Balaji Amines Ltd

RETAIL RESEARCH
Scrip Code
BALAMIEQNR

Dec 28, 2015

Industry
Chemicals

CMP
Rs.163

Recommendation
Buy at CMP and add on dips to Rs.128-136 band

Sequential Targets
Rs.192-216

Time Horizon
2-3 quarters

Balaji Amines Ltd (BAL) a KPR group company is a leading manufacturer of aliphatic amines in India in terms of
volume and value in its class. Broadly, the company has specialized in manufacturing Methylamines, Ethylamines,
Derivatives of Specialty Chemicals and Natural Product and its business is broadly classified into three segments,
Amines, Specialty Chemicals and Derivatives. It has recently set up a hotel in Solapur.

Price Chart

Investment Rationale
Stock Details
BSE Code

503806

NSE Code

BALAMINES

Bloomberg
Price (Rs) as on Dec 18,
2015

BLA IN
Rs. 163

Equity Capital (Rs Mn)

574.2

Face Value (Rs)

10.00

Eq. Shares O/s (Mn)

32.41

Market Cap (Rs Mn.)

5281.2

Book Value (Rs)

Avg. Volume (52 Week)
52 wk H/L (Rs)

70.3
10533
168.4/69.1

Shareholding Pattern
(As on Sept 30, 2015)

% Holding

Promoters

54.4

Institutions

0.03

Non Institutions

45.6

Total

Abdul Karim
Research Analyst
abdul.karim@hdfcsec.com

100.0

Dominant in Methylamines and no major threat of competitive intensity and margin pressure. Strong clientele.
Past expansion creates an opportunity for future.
Backward integration offers scope for better capacity utilization (vs peers) and higher value addition.

Concern
Largely depends on Pharma and Pesticide sector.
Volatility in currency movements.
Quality/regulatory risks.
Investment in Hotel and subsidiary could be return dilutive in the near term

Valuation
Considering its strong brand equity, high entry barriers, highly innovative and R&D based chemical business and
sound management, BAL could report good growth in top and bottom line going forward. We feel investors could
buy the stock at the CMP and add on dips to Rs.128-136 band (8-8.5xFY17E EPS) for sequential targets of Rs 192
(12x FY17E EPS) and Rs 216 (13.5x FY17E EPS) over the next 2-3 quarters. At the CMP of Rs 163 the stock trades at
10.2x FY17E EPS.

Financial Summary - Consolidated

Rs in Cr
Net Sales
EBITDA
EBIDAM-%
Net Profit Adjusted
PATM-%
EPS
P/E

FY12
449.52
80.66
17.9%
35.64
7.9%
11.0
3.5

FY13
511.80
80.23
15.7%
31.17
6.1%
9.6
4.0

FY14
610.13
91.03
14.9%
33.51
5.5%
10.3
3.7

FY15
618.77
101.75
16.4%
33.18
5.4%
10.2
8.0

FY16E
649.57
103.96
16.0%
40.82
6.3%
12.6
12.9

FY17E
715.29
115.22
16.1%
51.76
7.2%
16.0
10.2

(Source: Company, HDFC sec)

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Company Description:
Balaji Amines Ltd (BAL) a KPR group company, is a leading manufacturer of aliphatic amines in India in terms of
volume and value in its class. The company has expertise to cater the value based specialty chemicals. Broadly, the
company is specialized in manufacturing Methylamines, Ethylamines, Deravatives of Specialty Chemicals and
Natural Product and its business is broadly classified into three segments, Amines, Specialty Chemicals and
Derivatives. BAL commenced manufacturing of Methyl Amines in 1989, and later added facilities of Ethyl Amines
and other derivatives of Methyl amines and Ethyl amines. BAL has recently entered into hospitality business,
owning a five star hotel at Solapur in Maharashtra.
The companys three manufacturing facilities are located at Solapur and Osmanbad in Maharashtra and Hyderabad
in Telangana. BAL is the first Indian company that has set up dedicated plant for manufacturing of specialty
chemicals like N-Methyl Pyrolidine (NMP), 2-Pyrolidine, N-Ethyl Pyrolidine, Di Methyl Acetamide (DMAC), Di
Methyl Amine Hydrochloride(DMAHCC), Tri Methyl Amine Hydrochloride (TMAHCL), and Di Ethyl Amine
Hydrocholoride (DEAHCL) and Tri Ethyl Amine Hydrocholoride (TEAHCL), which are widely accepted by its clients
across the geographies.
A majority of its products are being exported to major customers worldwide and company has become one of the
leaders in Specialty Chemicals among the International Specialty Chemical players.

Business Overview:
Business Segments:
(A) Manufacturing of Aliphatic Amines

BAL has been consistently adding capacities and fine tuning process to provide quality products at lowest cost to
the customers. BAL is India's largest manufacturer of methylamines and their derivatives, with a market share of
over 60%. Through judicious and far-sighted backward/forward integration, BAL internally consumes over 70% of
its methylamines production. BAL is the world's largest producer of Di-Methyl Amine Hydrochloride (DMA-HCL)
commanding nearly 90% of the global market share. BAL is the only manufacturer in India of N-Methyl- 2Pyrrolidone (NMP). Morpholine, 2- Pyrrolidone (2-P) Gamma Butyrotactone (GBL), Poly Vinyl Pyrrolidone (PVP K30)
and N-Ethyl-2-Pyrrolidone (NEP), which are widely accepted by customers across the world.
Majority of its customers come from Active Pharmaceutical Ingredient (API), Agro Chemicals, Refiners, Water
Treatmwent Chemicals, Leather Processing Chemicals, Dye Stuff and Paint Industry.

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Balaji Amines

Amines

Specialty Chemical

Derivatives

Mono Methyl Amine(NNA)

Di Methyl Amine (DMA)
Tri Methyl Amine (TMA)
Mono Ethyl Amine (MEA)
Di Ethyl Amine (DEA)
Tri Ethyl Amine(TEA)
Dimethyl Amino Ethanol (DMAE)
Diethyl Amino Ethanol (DEAE)
Mono Methyl Amino Ethanol (MMAE)

N-Methyl Pyrrolidone (NMP)

Morpholine
2-Pyrrolidone(2-P)
N-Ethyl-2-Pyrrolidone
Gamma- Butyrolactone
Poly Vinyl Pyrrolidone
Di Methyl Formamide(DMF)

Di-Methyl Acetamide (DMAC)

Di-Methyl Amine Hydrochloride (DMA HCL)
Tri-Methyl Amine Hydrochloride (TMA HCL)
Di-Ethyl Amine Hydrochloride (DEA HCL)
Tri-Ethyl Amine Hydrochloride (TEA HCL)
Benzyl Tri Ethyl Ammonium Chloride (TEBAC)
Di-Methyl Urea (DMU)
Choline Chloride
(Source: Company, HDFC Sec)

Installed Capacity:
As of March 31, 2015, the total installed capacity of BAL stood at 1, 37,500 tpa.

(Source: Company, HDFC Sec)

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Clientele:
About 50-60% of BALs revenue goes to the pharma and pesticide sectors while the rest is split amongst a number
of other end users like oil refineries, water chemicals, rubber chemicals etc. BAL has a strong presence in the
domestic market with major clients from the pharma sector including Aurobindo, Aventis, Clariant, Dr. Reddys,
Glaxo, Merck, Ranbaxy, Sun Pharma, Wyeth, Wockhardt, etc.
Other clients including rubber and chemical companies are from Kerala, Gujarat and North India and water
companies like Ion Exchange and Thermax, Refineries like IOCL, HPCL etc. Lastly, pesticide companies like Rallis,
Meghmani and Gherdia Chemicals are also part of its client list.
Presence:

(B) Hotel Business:

In 2008, BAL had bought 3.35 acre of land in Sholapur for just Rs 2.7 crore (the market value of which currently
pegged at above Rs 25 crore). To utilize the land for diversification, BAL has set up a 5-star hotel of 128-room
spending Rs 40 crore till September 2013. The property is managed by Sarovar Group. The project has been set up
with an internal accrual of Rs 15 crore and a loan of Rs 25 crore from Bank of Baroda. A formal agreement with
Sarovar Group of Hotels has been entered for operating/ managing the hotel property in the name of Balaji
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Sarovar Premier. The hotel property was commissioned in Nov 2013.

The city, which is 250 km away from Pune and 300 km from Hyderabad, is seeing accelerated development with
the NTPC setting up a large power plant; agri institutes and agri-export zone and industries too are coming up. The
companies like Thermax, HPCL (bottling plant), Bharat Forge, Thermax, Precision, Vasavdatta Cement and several
others have already set their shops in Solapur.

BAL Key Managements:

Name
A Prathap Reddy
N Rajeshwar Reddy
D Ram Reddy
G Hemanth Reddy
T Naveena Chandra
Arati S Dudhawale
M Amarender Reddy
C S N Murthy
Kashinath R Dhole
A Srinivas Reddy
Vimala B Madon

Designation
Chairman & Managing Director
Joint Managing Director
Joint Managing Director
Whole-time Director
Director
Company Secretary
Director
Director
Director
Whole-time Director
Additional Director

Qualifications
Civil Engineer
B Com
BCom
Post Graduate in Management with Finance & Marketing
BCom CA
NA
NA
NA
MSc(Chemistry)
Masters in Computer Science
NA
(Source: Company, HDFC Sec )

The company is having a wholly owned subsidiary Bhagyanagar Chemicals Limited and substantially owned
subsidiary Balaji Greentech Products Limited.
Whereas, the undertaking of Bhagyanagar Chemicals Limited is limited to only a long term lease to its 100%
holding company Balaji Amines Limited who is carrying out manufacturing activity therein. As such the company
Bhagyanagar Chemicals Limited does not have any transactions except of lease rentals. Responsibility of safe
keeping of the assets of the company vests with the holding company Balaji Amines Limited.
During FY15 Balaji Amines limited has extended its holdings and have acquired and is holding 66% of shareholdings
of Balaji Greentech Products Limited (BGPL).
Balaji Greentech Products Limited (BGPL) is into manufacturing of energy efficient lamps and components. The
company manufactures, supplies a comprehensive range of Compact Fluorescent Lamps (CFL). BGPL incurred a loss
of Rs.3.16 cr on sales of Rs.15.7 cr in FY15.
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Industry Overview:
Chemicals are an immense and integral part of daily life. There is no industry, which is far from chemical
substances and there is no single economic sector where chemicals do not play an important role. Global chemical
market size was estimated at USD 4.2 tn in 2014 and is expected to grow at 5-6% per annum over the next decade
to reach ~USD 5.1 trillion by 2018. There is no player having a large market share across global chemical Industry.
Revenue by top key players in global chemical industry (as on FY14):

(Source: Company, HDFC sec)

Broadly, the global chemical industry is categorized as sub groups; Petrochemicals/Bulk Chemicals, Specialty
Chemicals, and Agro Chemicals.
Petrochemicals/Bulk Chemicals: The petrochemical industry largely represents organic chemistry. It is based on
carbonic compounds, mainly derived from crude oil and natural gas. Bulk chemicals include basic organic chemicals
(methanol, acetic acid etc.) and basic inorganic chemicals (caustic soda, chlor alkali etc.).
Specialty Chemicals: Specialty Chemicals is also known as performance chemicals. These are low-volume but highvalue compounds. These chemicals are derived from basic chemicals and are sold on the basis of their function.
Paint, adhesives, electronic chemicals, oilfield chemicals are some examples of specialty chemicals.
Agro Chemicals: These chemicals are extensively used for agrochemical products such as herbicides, insecticides,
fungicides and fertilizers, to maximize yields per hectare.
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Global Chemical Product wise break-up:

The segmentation of the geography of
the chemical industry majorly resides
in the Asia-Pacific region. The AsiaPacific accounted for 43% of the
industry. The remaining is split mostly
between the Americas and Europe
with 27% and 25% respectively.
Middle-East contributes only 2%.

(Source: Company, HDFC Sec, scm.ncsu.edu)

Indian Chemical industry:

India is third largest chemical producer in Asia and 6th largest producer in the world in term of volume. India
accounts for approximately 16% of the world production of dyestuff and dye intermediates. It contributes 2.11%
of Indias GDP with an estimated size of USD 144 bn and the total production capacity stands at 19300 Thousand
Metric Tonnes (as on 31st March FY14).
A large population, dependence on agriculture, and strong export demand are key growth drivers for the industry.
Even, per capita consumption of chemicals in India is lower as compared to western countries. Moreover, One
key driving factor will be increased R&D spending, which is currently at a low of 0.5% of turnover compared to
global benchmark of 3-4%. The sector is expected to clock 8% CAGR till FY18E to USD165bn.

(Source: Company, HDFC Sec, scm.ncsu.edu)

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The chemical sector has witnessed growth of 13-14% in the last 5 years while petrochemicals have registered a
growth of 8-9% over the same period. The major growth drivers, behind Indias chemical industry could be listed as
follows:
Structural advantage: With a growing market and purchasing power, the domestic industry is likely to growth at
over 10-13% in the coming years. Growing disposable incomes and increasing urbanization are fuelling the end
consumption demand for paints, textiles, adhesives and construction, which, in turn, leads to substantial growth
opportunity for chemicals companies.
High domestic consumption: The chemicals industry in India is the largest consumer of its own products,
consuming 33% of its output. With promising growth trends in the chemicals industry, this internal consumption is
also set to rise.
Diversified industry: The Indian chemicals industry has a diversified manufacturing base that produces world-class
products. There is a substantial presence of downstream industries in all segments. Further, this large and
expanding domestic chemicals market also boasts of a large pool of highly-trained scientific manpower.
Promising export potential: Chemicals constitute ~5.4% of Indias total exports. India already has a strong
presence in the export market in the sub-segments of dyes, pharmaceuticals and agro chemicals. India exports
dyes to Germany, the UK, the US, Switzerland, Spain, Turkey, Singapore and Japan.
Strong growth prospects for the Indian specialty chemicals industry:
Growth in the Indian specialty chemicals industry is driven largely by a robust domestic demand and from exports
based growth in select segments. The specialty chemicals market in India has the potential to grow at a rate of 16%
p. a. to reach USD 42bn by FY18E. This growth potential is significantly higher than the projected global chemical
industry growth rate of 3% p.a. or even that for India chemicals industry growth rate of 8-9% p.a. Moreover,
domestic demand for specialty chemicals will continue to grow led by consumer industries (Textile, Automotive
and Staples) growing faster than GDP growth, emerging customers need and leading to process and equipment
upgrades in many industries (like, textile, paper, electronics, cosmetics, plastics).
Indian chemical industry is expected to grow higher single digit in the next decade and expected to double its share
in global chemical industry to 5-6% by 2021. Indian Chemical industry has the potential to grow significantly with
imperatives like Securing Feedstock, Right Product Mix, M&A opportunities and Government initiatives.
BAL is among the front runner in this impressive growth opportunity, providing high quality products and
strengthening its market share than global peers. Considering future demand and high growth potential in newer
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products, BAL has been adding new capacities consistently. Its highly focused on R&D and cost effective measures
would provide more space for growth ahead.

Investment Rationale:
Dominant in Methylamines business and no threat of rising competitive intensity and margin pressure:
BAL is Indias largest manufacturer of Methyl Amines and its derivatives with a market share of more than 60%,
with highest quality standards. The Company is the worlds largest manufacturer of Di Methyl Amine Hydrochloride
(DMA-HCL) with 90% market share globally. BAL is the sole producer in India for N-Methyl Pyrrolidone (NMP). Day
by day, BAL has been improving its quality standard and focusing on its product promotion across the geographies.
BAL consumes a large portion of its production internally. The company has opportunities and limited competition
which could improve margin going forward. The company has focused for cost effective measures to improve its
margins.
Given the backward integration, BAL has potential to operate at better capacity utilization as compared to its peers
and provide value addition.
BAL has preferred technical collaboration with foreign players compared to its peers like RCF and Alkyl Amines
Chemicals Ltd.

(Source: Company, HDFC Sec)

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Past expansions creates an opportunity for future:

Historically, Balaji Amines has made investment in expansion and R&D activities. In FY10, BAL had set up a 1,200
MTPA PVP-K30 (Polyvinyl Pyrrolidone) plant at a capex of about Rs 35 crore. This product is presently made by
Huntsman and BASF around the globe, apart from some Chinese companies. This plant is the first of its kind in India.
During FY10, Dimethyl amino ethanol (DMAE) plant with a capacity of 10 MT/day was commissioned. During FY11, a
new project of 15,000 tpa of GBL, NMP/2P at MIDC, Chincholi, Solapur was commissioned. Further, a new plant for
manufacture of GBL/NMP/2P with an installed capacity of 50 MT/day was commissioned during February 2011.
BAL commissioned its expanded Methylamines plant at MIDC, Chincholi with a capacity of 30,000 tonnes per annum
in March 2012. The second plant for manufacture of Di Methyl Formamide (DMF) with an installed capacity of
30,000 MT a year at MIDC Chincholi, Solapur was commissioned in March, 2013
The Dimethyl Amine Hydrochloride (DMA-HCL) (70 tonnes a day) and Formamide (36 tonnes a day) units have been
commissioned in February 2013. The investment of Rs 70 crore in these projects was funded from internal accruals
of Rs 22 crore and a loan of Rs 48 crore from the State Bank of Hyderabad.
Apart from this, BAL has set up a 5-star hotel of 128-room by investing Rs 40 crore in September 2013. The project
has been set up with an internal accrual of Rs 15 crore and a loan of Rs 25 crore from Bank of Baroda.
BAL has wind power plants with a capacity of 6.5 MW. It established captive power plant of 2.5 MW in October
2008. Its 2.5 MW Co-Generation power plant at Tamalwadi, Solapur was commissioned in July, 2009, which saves
substantial cost of power & fuel increasing thereby profitability.
Among the newly added capacity, BALs 30,000 tonnes capacity dimethyl formamide plant remained unproductive
in FY14 due to operational issues, leading to lower capacity utilisation. Once operational, this would lead to better
fixed cost absorption for the company and help contain margin pressure due to volatile raw material prices.
The investments made by company in the past will bring rising earning opportunity going forward. We expect that,
the company could report better sales as well as profitability growth in near future, expecting 7% and 12% revenue
growth for FY16E and FY17E despite fall in crude prices.

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(Source: Company, HDFC Sec)

Profitability and return ratios set to improve:

Debt reduction, cost effectiveness efforts and a change in product mix could lead its margin growth going forward.
For FY16, EBITDA Margin could be steady at 16% and PAT Margin could improve by 90-100 bps at a range of 6.3%.
For FY17E, EBITDA margin could be flattish and PAT margin could ramp up by a further 80-100bps.
Return ratios trend

(Source: Company, HDFC Sec)

BAL has also been a consistent dividend payer since FY2000.

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Strong clientele:
About 50-60% of BALs sales come from pharma and pesticide sector while the rest is split amongst a number of
other end users like oil refineries, water chemicals, rubber chemicals etc. BAL has a strong presence in the domestic
market with major clients from the pharma sector including the likes of Aurobindo, Aventis, Clariant, Dr. Reddys,
Glaxo, Merck, Ranbaxy, Sun Pharma, Wyeth, Wockhardt, etc. Other clients include rubber chemical companies in
Kerala, Gujarat and North India and water companies like Ion Exchange and Thermax. Refineries like IOCL, HPCL etc.
Lastly, pesticide companies like Rallis, Meghmani and Gherdia Chemicals are also part of its client list.

Concerns:
Largely depends on Pharma and Pesticide sector:
Almost 50-60% of BALs sales come from pharma and pesticide sector while the rest depends on other end users
like oil refineries, water chemicals, rubber chemicals etc. BALs revenue growth largely depends on Pharma and
Pesticide Industry demand. Therefore, Industry specific slowdown and concerns could impact its revenue.
Volatility on currency movement:
BAL derives ~ 25% of sales from export to several countries such as UK, USA, Canada, Latin America, Germany, Italy,
Middle East, South Africa, France, Brazil, Mexico etc. BAL sells directly to its customers in India while in case of
exports it goes through distributors channel. Therefore, adverse currency movement could impact its revenues and
profitability. Almost half of the exports are denominated in Euros while the rest are in USD. The raw materials are
entirely denominated in USD.
Quality/Regulatory risks:
Being a company of chemical industry, BAL acclaimed for its quality-consciousness. It enjoys GMP (for facility and
practices) and WHO GMP (for products) certifications for some of its products. A part of this, BAL follows the norms
of USFDA, DMF (Drug Master File) and various audit agencies of countries, where the product is going for export.
Any regulatory delay/action could be a hurdle for BALs earnings as well as profitability.
Shares pledged by promoters:
64.3 lakh shares or 36.5% of promoters shareholding is pledged by them. This could create turbulence in the stock
prices in case the promoters are not able to sufficiently fund the margins in case of any unforeseen fall in the stock
price.
Loss making subsidiary:
Balaji Greentech Products, a 66% subsidiary of BAL is loss making and impacts the consolidated numbers of the
company. Further BAL has to extend financial assistance to this subsidiary to fund its losses.
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View & Valuation:

On the back of expansion and opportunities, BAL is well positioned to utilize the strong demand in both domestic
and international markets given its wide-scale of operations across geographies. Also, its efficient usage of plants,
product mix, increase in value chain and increase in plant efficiencies could energize its earnings performance going
forward. We expect the company to report 5% and 10% revenue growth for FY16E and FY17E, respectively.
Considering its strong brand equity, high entry barriers, highly innovative and R&D based chemical business and
sound management, BAL could report good growth in revenues and profits going forward. BAL has also brought
down its debt and interest payout in H1FY16 out of better working capital management. We feel investors could
buy the stock at the CMP and add on dips to Rs.128-136 band (8-8.5xFY17E EPS) for sequential targets of Rs 192
(12x FY17E EPS) and Rs 216 (13.5x FY17E EPS) over the next 2-3 quarters. At the CMP of Rs 163 the stock trades at
10.2x FY17E EPS.

Quarterly financials Standalone (Rs.in Crs)

Rs in Cr,
Net Sales
Raw Material Consumed
Stock Adjustment
Employee Expenses
Other Expenses
Total Expenses
EBITDA
Depreciation
EBIT
Other Income
Interest
EBT
Tax
PAT
Extra-ordinary Items
Adj. Profit After Extra-ord item
EPS (Rs.)
Equity
Face Value
OPM (%)
PATM (%)

Q2FY16
158.8
87.5
4.5
6.9
32.1
130.9
27.9
4.4
23.6
0.8
5.2
19.1
7.3
11.8
0.0
11.8
3.6
6.5
2.0
17.6%
7.4%

Q2FY15
150.5
80.4
4.9
5.5
31.4
122.3
28.2
4.9
23.2
0.9
7.9
16.2
5.8
10.3
1.3
9.1
2.8
6.5
2.0
18.7%
6.9%

Chg-%
5.6%
8.8%
-9.2%
24.2%
2.0%
7.0%
-0.8%
-11.0%
1.3%
-11.2%
-34.6%
18.4%
25.8%
14.2%
29.9%
(110bps)
50bps

Q1FY16
159.6
82.5
12.3
6.6
29.3
130.7
29.0
4.4
24.6
0.7
5.7
19.6
6.7
12.8
0.0
12.8
4.0
6.5
2.0
18.2%
8.0%

Chg-%
-0.5%
6.1%
-63.8%
5.0%
9.5%
0.2%
-3.6%
0.0%
-4.3%
11.0%
-9.4%
-2.2%
8.8%
-8.0%
0.0%
-8.0%
(60bps)
(60bps)

HY1 FY16
318.5
170.0
16.8
13.4
61.4
261.5
56.9
8.8
48.2
1.4
10.9
38.7
14.0
24.6
0.0
24.6
7.6
6.5
2.0
17.9%
7.7%

HY1 FY15
314.9
183.7
2.8
11.3
64.0
261.8
53.1
9.8
43.3
1.6
16.3
28.6
9.0
19.7
1.3
18.4
5.7
6.5
2.0
16.9%
6.2%

Chg-%
1.1%
-7.5%
493.3%
19.4%
-4.2%
-0.1%
7.2%
-10.7%
11.2%
-12.0%
-33.0%
35.1%
56.2%
25.4%
-100.0%
33.9%
100bps
150bps

(Source: Company, HDFC Sec)

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Business Metrics - Standalone:

Revenue from Operations-Rs in Cr
Amines Divison
Hotel Divison
Revenue from Operations
PBIT
Amines Divison
Hotel Divison

Q1FY15
161.99
2.52
164.51

Q2FY15
148.03
2.44
150.47

Q3FY15
138.88
2.87
141.75

Q4FY15
144.67
3.65
148.32

Q1FY16
156.28
3.38
159.66

Q2FY16
155.85
3.02
158.87

25.78
-0.04

23.74
-0.9

20.19
0.66

28.96
1.18

26.08
-0.81

25.15
-0.83

(Source: Company, HDFC Sec)

Financials
Income Statement - Consolidated:
Rs in Cr,
Net Sales
Material Consumed
Employee Cost
Other Expenditure
Total Expenditure
EBITDA
Depreciation
EBIT
Other Income
Interest
EBT
Tax
Reported Profit (before minority interest)
Exceptional Items
Adjusted Profit

FY11
346.77
191.70
9.04
83.01
283.75
63.02
8.30
54.73
1.74
13.56
42.91
16.36
26.55
0.00
26.55

FY12
449.52
262.65
11.90
94.31
368.86
80.66
10.38
70.29
2.85
21.21
51.93
17.08
34.85
-0.79
35.64

FY13
511.80
312.20
12.90
106.47
431.57
80.23
12.71
67.51
3.71
25.40
45.82
14.77
31.05
-0.12
31.17

FY14
610.13
380.97
15.84
122.29
519.10
91.03
16.49
74.54
2.60
31.51
45.63
12.12
33.51
0.00
33.51

FY15
618.77
359.55
20.90
136.57
517.02
101.75
20.08
81.67
4.26
34.88
51.05
17.87
33.18
0.00
33.18

FY16E
649.57
387.63
23.80
134.18
545.62
103.96
19.05
84.91
3.75
25.63
63.02
22.21
40.82
0.00
40.82

FY17E
715.29
424.57
27.74
147.76
600.07
115.22
22.89
92.33
5.29
20.19
77.43
25.68
51.76
0.00
51.76

(Source: Company, HDFC Sec)

Balance Sheet - Consolidated:

Shareholders' funds
Share Capital
Reserves & Surplus
Shareholder Fund
Minority Interest in subsidiaries
Non - current liabilities
Long Term borrowings
Deferred Tax Liabilities (Net)
Other Long Term Liabilities

RETAIL RESEARCH

FY11
6.48
106.00
112.48
0.00

FY12
6.48
138.63
145.11
0.00

FY13
6.48
164.90
171.38
0.00

FY14
6.48
194.64
201.12
0.00

FY15
6.48
221.43
227.91
1.99

FY16E
6.48
256.80
263.28
2.08

FY17E
6.48
302.34
308.82
2.23

64.15
33.66
0.65

86.15
36.61
3.69

103.72
39.82
5.85

85.95
42.44
5.04

74.80
45.13
16.35

56.10
49.64
17.99

42.08
54.61
21.58

Page | 14

Non - current liabilities

Current Liabilities
Short Term Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
Current Liabilities
Total Equity and Liabilities
Assets
Non-Current Assets
Fixed Assets
Net Block (Tangible Assets)
Capital Work-in-Progress
Non Current Investments
Other Non-Current Assets
Current Assets
Current Investments
Inventories
Trade Receivables
Cash & Cash Equivalents
Short Term Loans & Adv- and other current assets
Current Assets
Total Assets

98.45

126.44

149.40

133.43

136.28

123.73

118.26

83.60
33.45
21.34
15.98
154.37
365.30

111.05
34.71
25.79
22.56
194.11
465.66

105.58
35.51
36.34
21.14
198.57
519.35

139.46
86.97
41.52
17.73
285.68
620.24

148.46
47.56
42.40
17.96
256.38
622.56

111.35
49.83
50.88
21.55
233.61
622.70

83.51
68.59
71.23
25.86
249.19
678.51

176.64
171.90
160.06
11.84
4.02
0.72

225.72
220.66
196.00
24.67
4.02
1.05

299.37
297.31
234.38
62.92
0.02
2.05

335.79
333.50
325.39
8.12
0.02
2.28

346.76
344.43
341.11
3.32
0.02
2.31

363.91
361.82
358.17
3.65
0.02
2.08

381.25
379.36
376.07
3.29
0.02
1.87

3.84
70.60
73.75
9.03
31.44
188.66
365.30

3.84
107.40
82.14
4.48
42.08
239.94
465.66

19.94
56.75
103.71
2.68
36.89
219.97
519.35

19.94
90.63
131.53
9.75
32.60
284.44
620.24

0.00
112.38
119.37
7.00
37.06
275.81
622.56

0.00
97.88
124.58
2.98
33.35
258.79
622.70

0.00
107.78
146.98
7.47
35.02
297.26
678.51

(Source: Company, HDFC Sec)

Cash Flow Analysis - Consolidated:

Particulars, Rs in Cr

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

EBT

56.51

73.93

71.34

77.14

85.94

88.65

97.62

Depreciation and Amortization

Other Adjustment

8.30
-1.89

10.38
-3.56

12.71
-3.69

16.49
-2.60

20.08
-4.26

19.05
-21.88

22.89
-14.90

(Inc)/Dec in working Capital

Tax Paid

-43.17
-5.58

-18.68
-9.09

28.47
-14.43

31.86
-12.24

-35.97
-10.03

23.75
-22.21

5.14
-25.68

CF from Operating Activities

14.17

52.97

94.40

110.64

55.76

87.37

85.08

-57.30
0.17

-59.52
0.31

-89.87
0.37

-53.02
0.34

-8.10
0.09

-8.58
0.33

-17.95
0.35

-4.15
1.93

0.00
2.85

0.00
3.71

0.00
2.60

0.00
4.26

0.00
3.75

0.00
5.29

-59.35

-56.37

-85.79

-50.08

-3.75

-4.50

-12.31

Capital expenditure
Proceeds from sale of fixed assets
(Purchase)/Sale of Investment
Others
CF from Investing Activities

RETAIL RESEARCH

Page | 15

Inc/(Dec) in Share capital

Inc/(Dec) in Debt

65.77

21.99

17.58

-17.77

-16.96

-55.82

-41.86

-15.18
50.59

-23.15
-1.16

-27.99
-10.42

-35.72
-53.49

-38.12
-55.08

-31.07
-86.89

-26.41
-68.27

Net Cash Flow

5.41

-4.55

-1.80

7.07

-3.07

-4.02

4.49

Opening Balance
Closing Balance

3.62
9.03

9.03
4.48

4.48
2.68

2.68
10.07

10.07
7.00

7.00
2.98

2.98
7.47

Dividend and Interest Paid

CF from Financing Activities

(Source: Company, HDFC Sec)

Financial Ratios - Consolidated:

Particulars
No of Equity Shares-cr
Market Capitalization-cr
Enterprise Value-cr

FY11
3.24
138.9
138.9

FY12
3.24
123.4
123.4

FY13
3.24
123.2
123.2

FY14
3.24
125.2
125.2

FY15
3.24
264.2
264.2

FY16E
3.24
528.1
528.1

FY17E
3.24
528.1
528.1

8.2
10.8
34.7

11.0
14.2
44.8

9.6
13.5
52.9

10.3
15.4
62.1

10.2
16.4
70.3

12.6
18.5
81.3

16.0
23.0
95.3

5.2
1.2
0.4
2.2

3.5
0.9
0.3
1.5

4.0
0.7
0.2
1.5

3.7
0.6
0.2
1.4

8.0
1.2
0.4
2.6

12.9
2.0
0.8
5.1

10.2
1.7
0.7
4.6

EBITDAM (%)
EBITM (%)
PATM (%)

18.2%
15.8%
7.7%

17.9%
15.6%
7.9%

15.7%
13.2%
6.1%

14.9%
12.2%
5.5%

16.4%
13.2%
5.4%

16.0%
13.1%
6.3%

16.1%
12.9%
7.2%

ROCE (%)
RONW (%)

21.7%
23.6%

21.4%
24.6%

18.7%
18.2%

18.1%
16.7%

19.0%
14.6%

20.6%
15.5%

22.5%
16.8%

Current Ratio
Quick Ratio

1.2
0.8

1.2
0.7

1.1
0.8

1.0
0.7

1.1
0.6

1.1
0.7

1.2
0.8

Debt-Equity

1.3

1.4

1.2

1.1

1.0

0.6

0.4

EPS
Cash EPS (PAT + Depreciation)
Book Value Per Share(Rs.)
PE(x)
P/BV (x)
Mcap/Sales(x)
EV/EBITDA

(Source: Company, HDFC Sec)

RETAIL RESEARCH

Page | 16

1 year forward P/E chart

(Source: HDFC Sec)

1 Year daily closing price chart

(Source: HDFC Sec)

RETAIL RESEARCH

Page | 17

Fundamental Research Analyst: Abdul Karim, abdul.karim@hdfcsec.com

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website:
www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com
Disclosure:
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match or may be contrary with those of the other Research teams (Institutional, PCG) of HDFC Securities Ltd.

RETAIL RESEARCH

Page | 18