20 April 2012 -...

INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Automobiles Opportunity in adversity

INDIA | AUTOMOBILES | SECTOR UPDATE

9 April 2020

Covid-19 disruption to have far reaching consequences Industry was recovering from BS6 transition, weak economic growth and channel financing issues. Covid-19 is likely to derail that recovery and set the industry further back. We attempt to assess (and predict) its impact on the Indian Auto industry assuming a base case of partial lifting of lockdown in April and end of it by mid-May. We are lowering FY21/22 volumes and margin estimates leading to downward FY21 EPS revision of 20-80% across coverage. We anticipate a much greater impact in FY21 given the direct impact due to 1) lockdowns, 2) labour shortage/unavailability disrupting supply side. We also expect the demand to remain subdued at least for the first half of FY21. However, we could witness shift from shared to personal mobility. In our view, the sharp correction in stock prices offers attractive buying opportunities selectively. We remain bullish on Maruti, Escorts and upgrade Mahindra and Hero (all rated Buys). We downgrade Apollo Tyres due to concerns related to domestic CV.

Volume growth in FY21 unlikely Auto volumes were ambling back to normalcy with a good festive season and retails were growing at a healthy rate in the first couple of weeks in March as well. However, spread of Covid-19 and ensuing lockdown led to volumes virtually drying up. Lockdown (in some form) is likely to continue for the whole of April, at least, in our view. Even after lockdown is lifted, production is unlikely to pick up hastily, primarily due to labour shortage, especially at small tier 2 vendors. We expect FY21 domestic CV, PV and 2W industry volumes to decline in high single digits (c.8%), while Tractor volumes are expected to fare better with a decline of 2%. Additionally, exports are also expected to remain weak due to the widespread nature of this pandemic, especially to the commodity (oil) driven economies. As a result we are lowering our volumes expectations for FY21 by 8-18%; FY22 to be materially better.

Margins to be under even more pressure We expect margins for all covered companies to decline from already low levels of FY20 on account of negative operating leverage. Additionally, OEMs would need to offer greater discounts/promotions as well as support dealers given the low turnover anticipated. That said, lower commodity prices could absorb some of the negative impact. We expect FY21 EBITDA margins to be 20-300 bps lower vs our earlier estimates. Additionally, most OEMs would be supporting their full time and part time employees through this tough period, which, although, is much appreciated, will burden the margins.

Not all’s doom and gloom Most of the Auto companies are debt free and cash rich, which should serve them well in these difficult times. We believe that this pandemic could turn the tide in favour of personal mobility over shared (even if temporarily) which could benefit entry level PVs and 2Ws. Additionally, given the essential nature of the rural economy (agri and others), we expect it to be at a lower risk and to pick up earlier than rest of the market. Hence, we prefer businesses with greater rural exposure like Mahindra, Escorts, Maruti, Hero and Bajaj. These companies are trading near their long term lows rendering the risk reward to be favourable.

Volumes FY17 FY18 FY19 FY20E FY21E FY22E

PV 3,046,663 3,287,396 3,392,913 2,802,546 2,578,342 2,836,177

Growth 9.2% 7.9% 3.2% -17.4% -8.0% 10.0%

CV 711,643 852,520 1,006,845 737,011 678,050 806,879

Growth 4.2% 19.8% 18.1% -26.8% -8.0% 19.0%

2W 17,588,604 20,191,879 21,172,885 17,467,630 16,070,220 17,677,242

Growth 6.9% 14.8% 4.9% -17.5% -8.0% 10.0%

Tractors 582,844 711,478 786,912 704,286 718,372 804,577

Growth 18.0% 22.1% 10.6% -10.5% 2.0% 12.0%

Saksham Kaushal, Research Analyst (+ 91 22 6246 4126) Amar Kant Gaur, Research Analyst (+ 91 22 6246 4110) Rating Current Previous

Maruti Buy Buy Escorts Buy Buy Mahindra Buy Neutral Hero Buy Neutral Bajaj Neutral Neutral Ashok Leyland Neutral Neutral Bharat Forge Neutral Neutral Apollo Tyres Neutral Buy CEAT Neutral Neutral Tata Motors Neutral Neutral

Target

Price Current

Price Up /

Down -side

Maruti 6,015 5,350.0 12% Escorts 825 690.4 19% Mahindra 476 383.5 24% Hero 2,230 1,994.3 12% Bajaj 2,676 2,444.3 9% Ashok Leyland 48 45.7 5% Bharat Forge 259 245.1 5% Apollo Tyres 86 89.5 -4% CEAT 826 797.0 4% Tata Motors 77 74.5 3%

Source: PhillipCapital India Research

Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

AUTOMOBILES SECTOR UPDATE

Company-wise commentary: Maruti Suzuki Maruti Suzuki remains well positioned post the transition to BS6 with no diesel. Since, they began the transition much earlier than the industry, they had limited risk of being left with BS4 inventory. However, production, at least for the first quarter is expected to be materially lower and would pick up closer to the festive season. We expect Maruti to provide additional support to its dealers and also offer greater incentives to buyers in order to boost volumes as demand remains weak for most of FY21. However, we expect the latent demand to kick in towards the end of FY21 and into FY22. We are lowering our volume, margin and EPS estimates for FY21/22 by -18%/-16%, -270 bps/-160 bps and -35%/-28% respectively. Maintain Buy.

Maruti Change (vs. earlier)

FY20 FY21 FY22 FY20 FY21 FY22

Volume 1,563,171 1,460,120 1,635,169 -3% -18% -16% Revenue 762,432 745,749 851,568 -3% -15% -13% EBITDA 75,309 67,405 95,467 -7% -34% -24% EBITDA Margin 9.9 9.0 11.2 (0.4) (2.7) (1.6) PAT 56,438 52,799 72,675 -9% -35% -28% EPS 187 175 241 -9% -35% -28%

Escorts We expect covid-19 impact on tractor industry to be relatively lower, given the “essential” nature of rural (agri) economy. Shortage of labour should also aid farm mechanization trends which would ultimately benefit tractor industry. Additionally, any steps by the govt. to revive the economy post covid-19 will likely include focus on infrastructure development which directly benefits Escorts. Partnership with Kubota will open new markets for Escorts as well as aid development of farm implements, which would be incremental to earnings. We are lowering our volume, margin and EPS estimates for FY21/22 by -8%/-5%, -170 bps/-90 bps and -28%/-18% respectively. Maintain Buy

Escorts Change (vs. earlier)


Volume 86,018 88,617 101,057 -6% -8% -5% Revenue 54,648 55,638 65,921 -9% -16% -12% EBITDA 5,935 6,104 8,224 -15% -27% -18% EBITDA Margin 10.9 11.0 12.5 (0.7) (1.7) (0.9) PAT 4,289 4,373 5,987 -16% -28% -18% EPS 35.9 36.6 50.2 -16% -28% -18%

Mahindra Given its portfolio of SUVs and CVs, demand post BS6 transition remains a challenge for Mahindra’s auto division, which is exacerbated by covid-19. However, we expect Farm division to endure the impact of Covid-19 relatively better with impact on agri economy being relatively lower. Shortage of labour could also aid farm mechanization, which potentially benefits tractor industry. Recent stock price correction has left valuations very attractive at 6x FY22 EPS (adjusting for value of holdings in subsidiaries). Mahindra’s decision to refrain from putting fresh money in Ssangyong also bodes well for the investor sentiment. We are lowering our volume, margin and EPS estimates for FY21/22 by -15%/-13%, -210 bps/-100 bps and -41%/-25% respectively. Upgrade to Buy

Mahindra Change (vs. earlier)






Hero Motocorp Though Hero Motocorp has been able to clear most of its BS4 inventory ahead of deadline, its volumes are at most risk from BS6 given greater price increase. That said, in our view, Hero could benefit from being more rural facing (more than 90% of its volumes coming from mass market motorcycles), as we expect rural economy to be more resilient to covid-19. Additionally, we expect some sort of trend reversal in terms of shift towards share mobility (even if temporary) which would boost mass market motorcycle/scooter volumes. Hero’s valuations are also very inexpensive with it trading at 11x FY21 EPS, well below its historical average of 16x. We are lowering our volume, margin and EPS estimates for FY21/22 by -13%/-9%, -220 bps/-150 bps and -25%/-13% respectively. Upgrade to Buy

Hero Motocorp Change (vs. earlier)


Volume 6,409,723 5,977,922 6,679,272 -6% -13% -9% Revenue 288,253 298,919 339,554 -7% -12% -8% EBITDA 39,799 37,536 46,502 -13% -25% -18% EBITDA Margin 13.8 12.6 13.7 (0.9) (2.2) (1.5) PAT 29,034 27,605 34,256 -20% -25% -13% EPS 145 138 172 -20% -25% -13%

Bajaj Auto Bajaj Auto was able to outperform the industry in recent past as it was able to offset decline in domestic volumes with growth in exports. However, most of Bajaj’s significant export markets have oil dependent economy. Given the low oil prices, export volumes for Bajaj are likely to be significantly impacted. That said, Bajaj could do well domestically in entry level motorcycles (like Hero). However, Bajaj is currently trading at 16x FY21 EPS which is close to its historical average, leaving limited potential upside. We are lowering our volume, margin and EPS estimates for FY21/22 by -18%/-17%, -100 bps/10 bps and -22%/-17% respectively. Maintain Neutral.

Bajaj Auto Change (vs. earlier)


Volume 4,627,522 4,258,299 4,727,513 -5% -18% -17% Revenue 294,454 291,759 336,249 -6% -19% -17% EBITDA 48,614 44,041 58,868 -7% -24% -17% EBITDA Margin 16.5 15.1 17.5 (0.2) (1.0) 0.1 PAT 47,471 44,083 56,015 -7% -22% -17% EPS 164 152 194 -7% -22% -17%

Ashok Leyland Domestic CV industry is struggling with low demand owing to weak economic growth, BS6 transition. Covid-19 has worsened the situation. That said, Ashok Leyland has cleared its entire inventory (BS4), which was a challenge through most of last year. Scrappage policy is unlikely to be introduced in FY21 are slim, in our opinion. That said, it is currently trading at 1.5x FY21 P/B, well below its long term average (2.7x). We expect volume growth to be significantly higher in FY22 after more than 2 years of weak performance on a very low base. We are lowering our volume, margin and EPS estimates for FY21/22 by -17%/-13%, -310 bps/-150 bps and -76%/-35% respectively. Maintain Neutral.

Ashok Leyland Change (vs. earlier)






Bharat Forge We expect Bharat Forge to face challenges to volumes and hence margins in the near term as all of its major end markets face slowdown including 1) US class 8, 2) US Oil and Gas (shale) and 3) Domestic CV. We don’t expect recovery in these end markets at least for a few quarters. There is also some potential Balance Sheet (receivables) risk given the challenging environment. That said, post the recent stock price correction it is trading at 16x FY22 EPS, below its long term average. We are lowering our revenue, margin and EPS estimates for FY21/22 by -9%/-6%, -240 bps/-130 bps and -40%/-19% respectively. Maintain Neutral

Bharat Forge Change (vs. earlier)


Revenue 80,703 79,345 91,748 -4% -9% -6% EBITDA 11,564 10,327 15,595 -5% -24% -12% EBITDA Margin 14.3 13.0 17.0 (0.1) (2.4) (1.3) PAT 5,488 3,989 8,026 -11% -40% -19% EPS 11.8 8.6 17.2 -11% -40% -19%

Apollo Tyres Apollo is expected to witness decline in volumes for FY21 given lower volumes across its end markets, especially CVs which is its largest market (more than 50%). Given the challenges in economy, even the aftermarket volumes are likely to decline with operators likely to opt to retread, rather than buy new tyres. Ramp up of its plants in AP and Hungary could also be impacted by covid-19. Though, favourable raw material (rubber) prices could offset some of the negative impact. Debt/Equity ratio of 0.6 also adds to the risk. However, it currently trades at 10x FY22 EPS, which is in line with its long term average, providing some valuation support. We are lowering our revenue, margin and EPS estimates for FY21/22 by -12%/-9%, -210 bps/-150 bps and -74%/-42% respectively. Downgrade to Neutral.




CEAT CEAT is relatively better positioned given its end markets are relatively diversified. However, volumes would remain weak in the near future as production at OEMs is likely to be significantly lower in FY21. Lower volumes are likely to more than offset the impact of favourable commodity prices. CEAT is currently trading at 13x FY22 EPS, which is close to its long term average. We are lowering our revenue, margin and EPS estimates for FY21/22 by -10%/-7%, -70 bps/-20 bps and -38%/-22% respectively. Maintain Neutral





Tata Motors Tata motors is facing issues on multiple fronts. Domestically, CV business is reeling from weak economy and BS6 transition, which is worsened by the covid-19 breakout. We expect this weakness to persist through the whole of FY21. Chances of



introduction of a scrappage policy are also pretty low in our opinion. JLR volumes are also expected to be subdued in China and other markets owing to covid-19. Given its scale, there is likely to be a significant operating deleverage impacting margins and profits. High HY (high yield) debt (JLR) and recent debt rating downgrades also remains a challenge. We are lowering FY21/22 volume and margin estimates for Tata Motors standalone by -24%/-17% and -350 bps/-210 bps and for JLR by -13%/-12% and -160 bps/-170 bps respectively. Maintain Neutral

Tata Motors Standalone Change (vs. earlier)


Volume 473,377 423,477 485,384 -15% -24% -17% Revenue 432,184 419,289 499,764 -17% -25% -19% EBITDA 7,111 8,321 28,854 -70% -73% -41% EBITDA Margin 1.6 2.0 5.8 (2.9) (3.5) (2.1) Net Profit (34,511) (30,427) (15,072) 91% 180% -405%

JLR (GBP mn) Change (vs. earlier)


Volume FY20 FY21 FY22 FY20 FY21 FY22 Revenue 472,876 444,550 473,802 -5% -13% -12% EBITDA 22,883 21,405 23,498 -7% -17% -13% EBITDA Margin 2,090 2,006 2,390 -19% -29% -26% Net Profit 9.1 9.4 10.2 (1.4) (1.6) (1.7)




Financials - Maruti

Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 830,265 724,112 702,830 804,357

Growth, % 6 -13 -3 14

Other income 29,938 38,321 42,919 47,211

Total income 860,203 762,432 745,749 851,568

Raw material expenses -602,542 -548,189 -542,905 -603,762

Employee expenses -32,549 -34,176 -34,347 -37,095

Other Operating expenses -115,119 -104,758 -101,092 -115,245

EBITDA (Core) 109,993 75,309 67,405 95,467

Growth, % (8.8) (31.5) (10.5) 41.6

Margin, % 12.8 9.9 9.0 11.2

Depreciation -30,189 -35,472 -33,698 -34,709

EBIT 79,804 39,837 33,706 60,757

Growth, % (14.2) (50.1) (15.4) 80.3

Margin, % 9.6 5.5 4.8 7.6

Interest paid -758 -1,270 -1,295 -1,321

Other Non-Operating Income 24,373 33,790 36,159 34,947

Pre-tax profit 104,656 72,357 68,570 94,383

Tax provided -29,650 -15,918 -15,771 -21,708

Profit after tax 75,006 56,438 52,799 72,675

Others (Minorities, Associates) 0 0 0 0

Net Profit 75,006 56,438 52,799 72,675

Growth, % (2.9) (24.8) (6.4) 37.6

Net Profit (adjusted) 75,006 56,438 52,799 72,675

Unadj. shares (m) 302 302 302 302

Wtd avg shares (m) 302 302 302 302

Balance Sheet Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Cash & bank 6,276 3,649 15,398 6,276

Debtors 13,973 13,667 15,607 13,973

Inventory 31,518 31,214 34,713 31,518

Loans & advances 15,011 15,011 15,011 15,011

Total current assets 66,779 63,541 80,729 66,779

Investments 395,492 407,492 432,492 395,492

Gross fixed assets 454,885 500,332 544,779 454,885

Less: Depreciation -293,062 -326,761 -361,470 -293,062

Add: Capital WIP 16,001 16,001 16,001 16,001

Net fixed assets 177,824 189,572 199,310 177,824

Non-current assets 21,263 21,263 21,263 21,263

Total assets 661,358 681,869 733,794 661,358

Current liabilities 127,297 126,288 137,908 127,297

Non-current liabilities 48,948 48,948 48,948 48,948

Total liabilities 176,245 175,236 186,856 176,245

Paid-up capital 1,510 1,510 1,510 1,510

Reserves & surplus 486,156 507,676 547,981 486,156

Shareholders’ equity 487,666 509,186 549,491 487,666

Total equity & liabilities 663,911 684,422 736,348 663,911

Source: Company, PhillipCapital India Research Estimates

Cash Flow Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Pre-tax profit 104,656 72,357 68,570 94,383

Depreciation 30,189 35,472 33,698 34,709

Chg in working capital -19,525 19,212 -399 6,182

Total tax paid -29,650 -15,918 -15,771 -21,708

Other operating activities 758 1,270 1,295 1,321

Cash flow from operating activities 86,428 112,392 87,393 114,887

Capital expenditure -47,447 -46,447 -45,447 -44,447

Other investing activities -9,663 -30,000 -3,115 -3,115

Cash flow from investing activities -57,110 -76,447 -48,562 -72,562

Free cash flow 29,318 35,945 38,831 42,325

Equity raised/(repaid) 0 0 0 0

Debt raised/(repaid) 0 0 0 0

Other financing activities -29,854 -31,457 -32,574 -33,691

Cash flow from financing activities -29,854 -31,457 -58,553 -60,576

Net chg in cash -536 4,487 -19,722 -18,251

Valuation Ratios

FY19 FY20e FY21e FY22e

Per Share data

EPS (INR) 186.8 174.8 240.6 186.8

Growth, % (24.8) (6.4) 37.6 (24.8)

Book NAV/share (INR) 1,614.4 1,685.6 1,819.0 1,614.4

FDEPS (INR) 186.8 174.8 240.6 186.8

CEPS (INR) 304.3 286.3 355.5 304.3

CFPS (INR) 256.0 165.3 260.3 256.0

DPS (INR) 83.0 86.0 89.0 83.0

Return ratios Return on assets (%) 8.9 8.0 10.4 8.9

Return on equity (%) 11.6 10.4 13.2 11.6

Return on capital employed (%) 10.9 9.8 12.7 10.9

Turnover ratios Asset turnover (x) 9.9 9.3 9.7 9.9

Sales/Total assets (x) 1.1 1.0 1.1 1.1

Sales/Net FA (x) 4.2 3.8 4.1 4.2

Working capital/Sales (x) (0.1) (0.1) (0.1) (0.1)

Fixed capital/Sales (x) 0.2 0.2 0.2 0.2

Receivable days 7.0 7.1 7.1 7.0

Inventory days 15.9 16.2 15.8 15.9

Payable days 55.6 55.8 55.7 55.6

Working capital days (33.7) (34.5) (32.9) (33.7)

Liquidity ratios

Current ratio (x) 0.5 0.5 0.6 0.5

Quick ratio (x) 0.3 0.3 0.3 0.3

Total debt/Equity (%) 0.3 0.3 0.3 0.3

Net debt/Equity (%) (1.0) (0.4) (2.5) (1.0)

Valuation

PER (x) 28.6 30.6 22.2 28.6

PEG (x) - y-o-y growth (1.2) (4.7) 0.6 (1.2)

Price/Book (x) 3.3 3.2 2.9 3.3

Yield (%)

EV/Net sales (x) 2.2 2.3 2.0 2.2

EV/EBITDA (x) 21.4 23.9 16.8 21.4

EV/EBIT (x) 40.4 47.9 26.4 40.4



Financials – M&M

Income Statement Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Net sales 528,482 444,051 427,189 482,952

Growth, % 11 -16 -4 13

Other Operating income 0 0 0 0

Total income 528,482 444,051 427,189 482,952




EBITDA (Core) 75,301 60,632 50,330 64,545

Growth, % 6.9 (19.5) (17.0) 28.2

Margin, % 14.2 13.7 11.8 13.4

Depreciation (20,030) (23,235) (24,797) (25,930)

EBIT 55,271 37,397 25,533 38,615

Growth, % 2.0 (32.3) (31.7) 51.2

Margin, % 10.5 8.4 6.0 8.0


Pre-tax profit 70,106 58,183 37,906 52,308

Tax provided -15,867 -14,145 -12,337 -14,646

Profit after tax 54,239 44,038 25,568 37,662


Net Profit 54,239 44,038 25,568 37,662

Growth, % 29.5 (32.9) (29.7) 47.3


Unadj. shares (m) 1,187 1,187 1,187 1,187

Wtd avg shares (m) 1,187 1,187 1,187 1,187

Balance Sheet Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Cash & bank 38,321 33,365 29,239 47,442

Debtors 38,119 32,029 30,813 34,835

Inventory 47,631 40,022 38,502 43,528

Loans & advances 0 0 0 0


Investments 209,779 218,170 226,897 235,973



Net fixed assets 144,967 156,733 161,936 161,006

Total assets 549,171 557,707 572,514 616,423




Paid-up capital 5,958 5,958 5,958 5,958





Cash Flow Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Pre-tax profit 70,106 50,518 37,906 52,308

Depreciation 20,030 23,235 24,797 25,930

Chg in working capital -36,971 -17,180 -9,765 -1,813

Total tax paid -15,867 -14,145 -12,337 -14,646

Other operating activities -14,836 -5,456 -12,373 -13,693



Other investing activities 52,588 7,428 6,496 7,629


Free cash flow 19,934 9,400 -4,004 21,639

Debt raised/(repaid) -1,841 0 0 0


Cash flow from financing activities -10,550 -14,356 -1,179 -1,214

Net chg in cash 9,383 -4,956 -5,182 20,425

Valuation Ratios


Per Share data

EPS (INR) 45.7 30.6 21.5 31.7

Growth, % 29.5 (32.9) (29.7) 47.3

Book NAV/share (INR) 294.7 320.7 335.8 358.0

FDEPS (INR) 45.7 30.6 21.5 31.7

CEPS (INR) 62.6 43.8 42.4 53.6

CFPS (INR) 19.4 30.8 23.5 40.2

DPS (INR) (13.7) (11.1) (6.5) (9.5)


Return on equity (%) 15.5 9.6 6.4 8.9




Sales/Net FA (x) 4.1 2.9 2.7 3.0

Working capital/Sales (x) 0.0 0.1 0.1 0.1



Inventory days 32.9 32.9 32.9 32.9

Payable days 83.4 82.9 81.1 82.6

Working capital days 4.7 19.8 28.9 26.9

Liquidity ratios

Current ratio (x) 1.3 1.5 1.5 1.6

Quick ratio (x) 1.0 1.1 1.2 1.3

Interest cover (x) 37.7 32.7 21.7 31.8


Net debt/Equity (%) (3.3) (1.7) (0.6) (4.9)

Valuation

PER (x) 11.5 17.1 24.3 16.5

PEG (x) - y-o-y growth 0.4 (0.5) (0.8) 0.3

Price/Book (x) 1.8 1.6 1.6 1.5

Yield (%)

EV/Net sales (x) 1.2 1.4 1.5 1.2

EV/EBITDA (x) 8.1 10.2 12.3 9.3

EV/EBIT (x) 11.0 16.5 24.3 15.6



Financials – Tata Motors

Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 3,019,384 2,531,670 2,481,915 2,763,470

Growth, % 2 -16 -2 11

Other income 29,653 36,227 35,515 39,544

Total income 3,049,037 2,567,897 2,517,430 2,803,014

Raw material expenses -2,927,091 -2,480,641 -2,432,659 -2,673,505

Other Operating expenses 196,596 128,395 125,871 140,151

EBITDA (Core) 318,542 215,650 210,642 269,660

Growth, % (18.6) (32.3) (2.3) 28.0

Margin, % 10.5 8.5 8.5 9.8

Depreciation -235,906 -189,896 -194,767 -201,898

EBIT 82,636 25,754 15,876 67,762

Growth, % (53.0) (68.8) (38.4) 326.8

Margin, % 2.7 1.0 0.6 2.5

Interest paid -57,586 -35,519 -36,646 -37,357

Non-recurring Items -296,516 0 0 0

Pre-tax profit -313,712 -43,148 -53,497 -6,035

Tax provided 24,375 13,807 17,119 1,931

Profit after tax -289,337 -29,340 -36,378 -4,103

Others (Mino., Associates) 5,808 -9,907 -5,307 10,333

Net Profit -283,529 -39,247 -41,685 6,230

Growth, % (82.1) (402.2) 6.2 (114.9)

Net Profit (adjusted) (283,529) (39,247) (41,685) 6,230

Unadj. shares (m) 3,219 3,219 3,219 3,219

Wtd avg shares (m) 3,219 3,219 3,219 3,219


Cash & bank 326,488 306,691 72,613 24,105

Debtors 189,962 124,460 122,015 135,481

Inventory 390,137 258,112 252,784 279,746

Loans & advances 12,687 6,746 6,613 7,363

Other current assets 225,654 230,167 234,771 239,466

Total current assets 1,144,928 926,176 688,795 686,161

Investments 444,323 482,514 524,525 570,736

Gross fixed assets 2,991,643 3,361,643 3,721,643 4,101,643

Less: Depreciation -1,567,939 -1,757,835 -1,952,602 -2,154,500

Net fixed assets 1,423,704 1,603,808 1,769,042 1,947,143


Total assets 3,071,945 3,071,489 3,041,352 3,263,030

Current liabilities 1,151,104 1,130,765 1,016,103 1,002,844

Provisions 101,968 87,841 86,114 95,883

Total current liabilities 1,253,072 1,218,606 1,102,217 1,098,727

Non-current liabilities 1,231,599 1,294,425 1,416,480 1,645,119

Total liabilities 2,484,671 2,513,031 2,518,697 2,743,846

Paid-up capital 6,792 6,792 6,792 6,792



Total equity & liabilities 3,091,697 3,091,240 3,061,103 3,282,782



Pre-tax profit -313,712 -43,148 -53,497 -6,035

Depreciation 235,906 189,896 194,767 201,898

Chg in working capital 37,337 164,489 -113,086 -49,363

Total tax paid -31,897 34,595 17,733 2,524

Other operating activities 57,586 35,519 36,646 37,357

Cash flow from operating activities -14,779 381,351 82,563 186,381


Other investing activities 30,331 -32,513 -36,177 -40,215


Debt raised/(repaid) 131,832 36,883 116,182 222,682


Cash flow from financing activities -285,417 1,364 79,536 185,325

Net chg in cash -316,167 -19,797 -234,078 -48,508

Valuation Ratios


Per Share data

EPS (INR) (69.8) (12.2) (12.9) 1.9

Growth, % (82.1) (402.2) 6.2 (114.9)


FDEPS (INR) 4.0 (12.2) (12.9) 1.9

CEPS (INR) 169.4 46.8 47.6 64.7

CFPS (INR) (4.9) 123.8 26.6 56.2

Return ratios Return on assets (%) (8.0) (0.3) (0.5) 0.6

Return on equity (%) 2.2 (6.9) (7.8) 1.2

Return on capital employed (%) (12.4) (0.4) (0.7) 0.8



Sales/Net FA (x) 2.0 1.7 1.5 1.5




Inventory days 47.2 37.2 37.2 36.9

Payable days 91.6 95.9 95.9 97.2


Liquidity ratios

Current ratio (x) 1.0 0.8 0.7 0.7

Quick ratio (x) 0.7 0.6 0.4 0.4

Interest cover (x) 1.4 0.7 0.4 1.8


Net debt/Equity (%) 101.8 116.9 190.2 242.6

Valuation

PER (x) 43.8 (14.5) (13.7) 91.4

PEG (x) - y-o-y growth (0.5) 0.0 (2.2) (0.8)

Price/Book (x) 0.9 1.0 1.1 1.1

EV/Net sales (x) 0.4 0.5 0.6 0.7

EV/EBITDA (x) 3.7 5.7 7.5 6.9

EV/EBIT (x) 14.3 48.1 100.1 27.5



Financials – Ashok Leyland

Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 286,140 165,972 161,272 198,000

Growth, % 12 (42) (3) 23

Other income 4,409 4,373 4,810 5,291

Total income 290,550 170,344 166,082 203,291

Raw material expenses (206,796) (120,815) (119,121) (144,995)

Employee expenses (21,014) (16,181) (15,857) (16,491)

Other Operating expenses (31,409) (22,771) (22,088) (23,193)

EBITDA (Core) 31,331 10,577 9,016 18,612

Growth, % 14.4 (66.2) (14.8) 106.4

Margin, % 10.9 6.4 5.6 9.4

Depreciation (6,210) (6,446) (6,768) (7,107)

EBIT 25,121 4,131 2,248 11,505

Growth, % 15.0 (83.6) (45.6) 411.9

Margin, % 8.8 2.5 1.4 5.8

Interest paid (704) (1,056) (1,087) (1,120)


Pre-tax profit 25,517 4,373 2,587 11,955

Tax provided (5,136) (1,181) (647) (2,989)

Profit after tax 20,381 3,192 1,941 8,966

Net Profit 20,381 3,192 1,941 8,966

Growth, % 29.4 (84.3) (39.2) 362.0


Unadj. shares (m) 2,936 2,936 2,936 2,936

Wtd avg shares (m) 2,936 2,936 2,936 2,936


Cash & bank 9,506 7,158 7,896 18,071

Debtors 25,055 11,176 10,860 13,333

Inventory 26,847 15,461 15,024 18,445

Loans & advances 17,132 17,132 17,132 17,132


Investments 63,026 56,026 47,026 36,026


Less: Depreciation (48,958) (55,404) (62,173) (69,279)

Add: Capital WIP 2,129 2,129 2,129 2,129

Net fixed assets 39,913 39,098 38,961 37,486

Total assets 181,479 146,053 136,899 140,493


Provisions 10,524 10,524 10,524 10,524

Total current liabilities 91,472 64,178 63,530 68,597



Paid-up capital 2,936 2,936 2,936 2,936






Pre-tax profit 24,968 3,502 2,587 11,955

Depreciation 6,210 6,446 6,768 7,107

Chg in working capital (21,395) (2,029) 106 (828)

Total tax paid (3,176) (1,024) (482) (2,816)


Capital expenditure 7,631 (5,631) (6,631) (5,631)

Chg in investments (5,000) 7,000 9,000 11,000

Cash flow from investing activities 2,631 1,369 2,369 5,369

Free cash flow 9,638 8,978 15,168 20,257

Equity raised/(repaid) (1,902) (2,225) (1,346) (1,338)

Debt raised/(repaid) (1,187) 0 0 0

Dividend (incl. tax) (9,100) (9,100) (9,100) (9,100)

Cash flow from financing activities (12,189) (11,325) (10,446) (10,438)

Net chg in cash (2,551) (2,347) 4,721 9,819

Valuation Ratios


Per Share data

EPS (INR) 6.9 1.1 0.7 3.1

Growth, % 29.0 (84.3) (39.2) 362.0


FDEPS (INR) 6.9 1.1 0.7 3.1

CEPS (INR) 9.1 3.3 3.0 5.5

CFPS (INR) 2.1 2.2 2.6 4.7

DPS (INR) 3.1 3.1 3.1 3.1


Return on equity (%) 25.2 4.4 3.0 14.4




Sales/Net FA (x) 6.1 4.2 4.1 5.2



Liquidity ratios

Current ratio (x) 0.9 0.8 0.8 1.0

Quick ratio (x) 0.6 0.6 0.6 0.7

Interest cover (x) 35.7 3.9 2.1 10.3

Dividend cover (x) 2.2 0.4 0.2 1.0


Net debt/Equity (%) (6.8) (4.4) (6.1) (22.6)

Valuation

PER (x) 15.8 101.2 166.4 36.0

Price/Book (x) 4.0 4.4 5.1 5.2

Yield (%) 2.8 2.8 2.8 2.8

EV/Net sales (x) 1.1 1.9 2.0 1.6

EV/EBITDA (x) 10.1 30.2 35.4 16.6

EV/EBIT (x) 12.6 77.4 141.9 26.8



Financials - Escorts Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 61,964 54,648 55,638 65,921

Growth, % 24 -12 2 18

Other income 0 0 0 0

Total income 61,964 54,648 55,638 65,921




EBITDA (Core) 7,333 5,935 6,104 8,224

Growth, % 31.6 (19.1) 2.8 34.7

Margin, % 11.8 10.9 11.0 12.5

Depreciation -854 -1,051 -1,089 -1,127

EBIT 6,479 4,884 5,016 7,097

Growth, % 33.7 (24.6) 2.7 41.5

Margin, % 10.5 8.9 9.0 10.8

Interest paid -185 -148 -118 -95

Other Non-Operating Income 809 889 934 981

Non-recurring Items 109 -92 0 0

Pre-tax profit 7,212 5,534 5,831 7,983

Tax provided -2,375 -1,245 -1,458 -1,996

Profit after tax 4,837 4,289 4,373 5,987


Net Profit 4,837 4,289 4,373 5,987

Growth, % 34.5 (7.3) (0.2) 36.9


Unadj. shares (m) 119 119 119 119

Wtd avg shares (m) 119 119 119 119


Cash & bank 2,301 6,574 10,721 15,616

Debtors 9,320 8,219 8,368 9,915

Inventory 8,219 7,132 7,240 8,540




Investments 8,797 8,797 8,797 8,797



Add: Capital WIP 765 765 765 765

Net fixed assets 16,839 16,788 16,699 16,572


Total assets 49,969 52,005 56,320 63,934


Provisions 1,200 1,200 1,200 1,200




Paid-up capital 1,226 1,226 1,226 1,226






Pre-tax profit 7,212 5,534 5,831 7,983

Depreciation 854 1,051 1,089 1,127

Chg in working capital -6,258 144 -104 -1,009

Total tax paid -2,375 -1,245 -1,458 -1,996

Other operating activities 185 148 118 95

Cash flow from operating activities -383 5,631 5,476 6,199


Other investing activities 0 0 0 0


Dividend (incl. tax) -351 -210 -210 -210

Other financing activities -185 -148 -118 -95

Cash flow from financing activities -735 -358 -329 -305

Net chg in cash -2,118 4,273 4,147 4,894

Valuation Ratios


Per Share data

EPS (INR) 39.6 36.7 36.6 50.2

Growth, % 34.5 (7.3) (0.2) 36.9


FDEPS (INR) 39.6 36.7 36.6 50.2

CEPS (INR) 45.9 46.3 45.8 59.6

CFPS (INR) (21.8) 38.5 37.1 42.9

DPS (INR) 2.9 1.8 1.8 1.8

Return ratios

Return on assets (%) 10.7 8.6 8.2 10.0

Return on equity (%) 15.6 12.8 11.4 13.5


Turnover ratios

Asset turnover (x) 3.5 2.5 2.6 3.0


Sales/Net FA (x) 3.7 3.3 3.3 4.0


Inventory days 48.4 47.6 47.5 47.3

Payable days 81.0 75.5 75.4 76.4


Liquidity ratios

Current ratio (x) 1.6 2.0 2.3 2.5

Quick ratio (x) 1.0 1.4 1.7 1.9


Net debt/Equity (%) 1.9 (10.8) (20.4) (28.8)

Valuation

PER (x) 16.1 17.4 17.4 12.7

PEG (x) - y-o-y growth 0.5 (2.4) (102.1) 0.3

Price/Book (x) 2.5 2.2 2.0 1.7

Yield (%) 0.2 0.2 0.2 0.2

EV/Net sales (x) 1.2 1.3 1.2 1.0

EV/EBITDA (x) 10.4 12.2 11.2 7.7

EV/EBIT (x) 11.8 14.8 13.6 8.9



Financials – Hero Motocorp


Net sales 331,245 282,782 293,010 332,759

Growth, % 5 (15) 4 14

Other income 5,260 5,471 5,908 6,794

Total income 336,505 288,253 298,919 339,554




EBITDA (Core) 49,301 39,799 37,536 46,502

Growth, % (6.6) (19.3) (5.7) 23.9

Margin, % 14.7 13.8 12.6 13.7

Depreciation (6,020) (8,428) (8,512) (8,768)

EBIT 43,281 31,371 29,023 37,734

Growth, % (8.4) (27.5) (7.5) 30.0

Margin, % 13.1 11.1 9.9 11.3

Interest paid (86) (86) (86) (86)


Non-recurring Items 0 6,774 0 0

Pre-tax profit 50,107 46,009 36,807 45,675

Tax provided (16,259) (10,201) (9,202) (11,419)

Net Profit 33,849 35,808 27,605 34,256

Growth, % (8.5) (14.2) (4.9) 24.1


Unadj. shares (m) 200 200 200 200

Wtdavg shares (m) 200 200 200 200


Cash & bank 1,365 11,418 9,774 5,218

Debtors 28,216 24,170 25,064 28,471

Inventory 10,724 9,146 9,664 10,978




Investments 28,015 38,015 48,015 66,015



Add: Capital WIP 5,419 5,419 5,419 5,419

Net fixed assets 51,604 55,176 56,664 57,896


Total assets 144,741 162,743 173,999 193,395


Provisions 590 590 590 590




Paid-up capital 400 400 400 400




Source: Company, PhillipCapitalIndia Research Estimates


Pre-tax profit 33,849 35,808 27,605 34,256

Depreciation 6,020 8,428 8,512 8,768

Chg in working capital (19,189) 688 208 (610)

Total tax paid (20,515) (10,201) (9,202) (11,419)

Other operating activities (6,634) 86 86 86

Cash flow from operating activities (6,468) 34,808 27,210 31,081

Capital expenditure (9,220) (12,000) (10,000) (10,000)

Other investing activities 22,432 0 (9,000) (18,000)

Cash flow from investing activities 13,212 (12,000) (19,000) (28,000)


Other financing activities (86) (86) (86) (86)

Cash flow from financing activities (19,060) (19,056) (19,056) (19,056)

Net chg in cash (12,315) 3,752 (10,846) (15,975)

Valuation Ratios


Per Share data

EPS (INR) 169.5 145.4 138.2 171.6

Growth, % (8.5) (14.2) (4.9) 24.1


FDEPS (INR) 169.5 145.4 138.2 171.6

CEPS (INR) 199.7 153.7 180.9 215.5

CFPS (INR) 48.6 185.2 142.5 172.2

DPS (INR) 95.0 95.0 95.0 95.0

Return ratios

Return on assets (%) 26.5 23.3 16.4 18.7

Return on equity (%) 26.3 20.0 17.9 20.2


Turnover ratios



Sales/Net FA (x) 6.5 5.3 5.2 5.8


Inventory days 11.8 11.8 12.0 12.0

Payable days 42.6 42.0 42.2 42.8


Liquidity ratios

Current ratio (x) 1.3 1.6 1.5 1.4

Quick ratio (x) 1.0 1.3 1.3 1.1


Net debt/Equity (%) 0.7 (6.3) (4.9) (1.8)

Valuation

PER (x) 10.5 12.2 12.9 10.4

PEG (x) - y-o-y growth (1.2) (0.9) (2.6) 0.4

Price/Book (x) 2.8 2.4 2.3 2.1

Yield (%) 3.9 3.9 3.9 3.9

EV/Net sales (x) 1.1 1.2 1.2 1.1

EV/EBITDA (x) 7.2 8.7 9.3 7.6

EV/EBIT (x) 8.2 11.0 12.0 9.3



Financials – Bajaj Auto

Income Statement Y/E Mar, Rs mn FY19 FY20E FY21e FY22e

Net sales 295,673 286,603 283,516 327,346

Growth, % 20 -3 -1 15

Other income 6,827 7,851 8,244 8,903

Total income 302,500 294,454 291,759 336,249




EBITDA (Core) 49,820 48,614 44,041 58,868

Growth, % 4.2 (2.4) (9.4) 33.7

Margin, % 16.8 17.0 15.5 18.0

Depreciation -2,657 -2,444 -2,567 -2,721

EBIT 47,163 46,170 41,474 56,147

Growth, % 5.5 (2.1) (10.2) 35.4

Margin, % 16.0 16.1 14.6 17.2

Interest paid -45 -30 0 0


Non-recurring Items 3,420 0 0 0

Pre-tax profit 67,032 61,491 57,132 72,588

Tax provided -20,280 -14,020 -13,019 -16,543

Profit after tax 46,752 47,471 44,113 56,045

Growth, % 5.7 9.6 (7.1) 27.0


Unadj. shares (m) 289 289 289 289

Wtd avg shares (m) 289 289 289 289

Balance Sheet Y/E Mar, Rs mn FY19 FY20E FY21e FY22e

Cash & bank 9,228 16,080 14,012 24,963

Debtors 25,597 12,896 12,778 14,726

Inventory 9,615 10,383 10,462 11,991

Loans & advances 1,193 1,193 1,193 1,193



Investments 179,367 209,367 239,367 269,367



Add: Capital WIP 481 481 481 481

Net fixed assets 18,121 17,312 16,380 15,295


Total assets 273,805 297,914 324,877 368,219


Provisions 1,552 1,552 1,552 1,552




Paid-up capital 2,894 2,894 2,894 2,894





Cash Flow Y/E Mar, Rs mn FY19 FY20E FY21e FY22e

Pre-tax profit 67,032 61,491 57,132 72,588

Depreciation 2,657 2,444 2,567 2,721

Chg in working capital -7,443 5,936 282 1,214

Total tax paid -20,280 -14,020 -13,019 -16,543

Other operating activities -4,361 30 30 30



Chg in investments -30,000 -30,000 -30,000 -30,000

Other investing activities 4,406 0 0 0


Dividend (incl. tax) 0 -17,364 -17,364 -17,364

Other financing activities -45 -30 -30 0

Cash flow from financing activities -45 -17,394 -17,394 -17,364

Net chg in cash 10,330 6,852 -2,037 11,011

Valuation Ratios

FY19 FY20E FY21e FY22e

Per Share data

EPS (INR) 149.7 164.0 152.4 193.7

Growth, % 5.7 9.6 (7.1) 27.0

Book NAV/share (INR) 752.6 856.6 948.9 1,082.5

FDEPS (INR) 149.7 164.0 152.4 193.7

CEPS (INR) 147.1 172.5 161.3 203.1

CFPS (INR) 89.6 139.9 108.2 150.4

DPS (INR) 0.0 60.0 0.0 0.0

Return ratios

Return on assets (%) 18.3 16.6 14.2 16.2

Return on equity (%) 19.9 19.1 16.1 17.9


Turnover ratios

Asset turnover (x) 30.2 24.9 37.6 56.7


Sales/Net FA (x) 15.8 16.2 16.8 20.7



Inventory days 11.9 13.2 13.5 13.4

Payable days 54.7 47.3 47.3 48.4


Liquidity ratios

Current ratio (x) 1.2 1.2 1.2 1.3

Quick ratio (x) 1.0 1.0 0.9 1.1

Interest cover (x) n/a 1,539.0

Dividend cover (x) 2.7


Net debt/Equity (%) (4.2) (6.5) (5.1) (8.0)

Valuation

PER (x) 16.3 14.9 16.0 12.6

PEG (x) - y-o-y growth 2.9 1.6 (2.3) 0.5

Price/Book (x) 3.2 2.9 2.6 2.3

Yield (%) 0.0 2.5 0.0 0.0

EV/Net sales (x) 2.4 2.4 2.4 2.1

EV/EBITDA (x) 14.0 14.2 15.7 11.6

EV/EBIT (x) 14.8 15.0 16.7 12.2



Financials – Bharat Forge

Statement Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Net sales 101,457 80,703 79,345 91,748

Growth, % 21 (20) (2) 16


Total income 101,457 80,703 79,345 91,748




EBITDA (Core) 20,556 11,564 10,327 15,595

Growth, % 19.3 (43.7) (10.7) 51.0

Margin, % 20.3 14.3 13.0 17.0

Depreciation (5,208) (5,364) (5,579) (5,802)

EBIT 15,348 6,199 4,748 9,793

Growth, % 22.2 (59.6) (23.4) 106.3

Margin, % 15.1 7.7 6.0 10.7

Interest paid (1,272) (1,717) (1,752) (1,577)


Non-recurring Items 0 0 0 0

Pre-tax profit 16,217 6,652 5,318 10,701

Tax provided (5,664) (1,164) (1,330) (2,675)

Profit after tax 10,553 5,488 3,989 8,026


Net Profit 10,553 5,488 3,989 8,026

Growth, % 24.2 (48.0) (27.3) 101.2


Unadj. shares (m) 466 466 466 466

Wtd avg shares (m) 466 466 466 466

Balance Sheet Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Cash & bank 9,247 18,668 18,911 19,685

Debtors 21,478 17,085 16,797 19,423

Inventory 18,447 15,289 15,385 16,892

Loans & advances 3,324 2,644 2,600 3,006


Investments 15,240 19,740 24,240 28,740



Add: Capital WIP 8,307 5,828 5,828 5,828

Net fixed assets 40,058 36,215 34,136 31,834

Total assets 116,423 118,269 120,698 128,209


Provisions 726 726 726 726









Cash Flow Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Pre-tax profit 16,217 6,652 5,318 10,701

Depreciation 5,208 5,364 5,579 5,802

Chg in working capital (19,463) 5,892 307 (3,423)

Total tax paid (4,793) (1,164) (1,330) (2,675)

Cash flow from operating activities (2,831) 16,744 9,874 10,405

Capital expenditure (6,274) (1,521) (3,500) (3,500)

Chg in investments (4,202) (4,500) (4,500) (4,500)

Chg in marketable securities 0 0 0 0

Cash flow from investing activities (10,363) (6,021) (8,000) (8,000)

Free cash flow (13,194) 10,723 1,874 2,405

Debt raised/(repaid) 19,244 57 0 0


Cash flow from financing activities 9,322 (1,302) (1,631) (1,631)

Net chg in cash (3,872) 9,421 243 774

Valuation Ratios

FY19 FY20E FY21E FY22E

Per Share data

EPS (INR) 22.7 11.8 8.6 17.2

Growth, % 24.2 (48.0) (27.3) 101.2


FDEPS (INR) 22.7 11.8 8.6 17.2

CEPS (INR) 33.8 23.3 20.5 29.7

CFPS (INR) (2.5) 32.0 17.0 17.8

DPS (INR) 2.5 2.5 3.0 3.0

Return ratios

Return on assets (%) 10.7 5.6 4.2 7.2

Return on equity (%) 19.6 9.5 6.6 12.0


Turnover ratios



Sales/Net FA (x) 2.6 2.1 2.3 2.8

Inventory days 66.4 69.1 70.8 67.2


Liquidity ratios

Current ratio (x) 2.3 2.7 2.6 2.8

Quick ratio (x) 1.5 1.9 1.9 2.0


Dividend cover (x)


Net debt/Equity (%) 53.0 33.0 31.3 27.2

Valuation

PER (x) 10.2 19.7 27.1 13.5

PEG (x) - y-o-y growth 0.4 (0.4) (1.0) 0.1

Price/Book (x) 2.0 1.9 1.8 1.6

Yield (%) 1.1 1.1

EV/Net sales (x) 1.3 1.6 1.6 1.4

EV/EBITDA (x) 6.6 11.0 12.3 8.1

EV/EBIT (x) 8.9 20.5 26.7 12.9



Financials – Apollo Tyres


Net sales 172,734 160,684 156,836 176,201

Growth, % 18 -7 -2 12

Other income 2,755 2,774 2,829 2,971

Total income 175,488 163,458 159,665 179,172




EBITDA (Core) 19,586 17,175 15,466 20,423

Growth, % 18.6 (12.3) (10.0) 32.1

Margin, % 11.3 10.7 9.9 11.6

Depreciation -8,127 -11,011 -11,609 -12,240

EBIT 11,460 6,164 3,857 8,183

Growth, % 8.2 (46.2) (37.4) 112.2

Margin, % 6.6 3.8 2.5 4.6

Interest paid -1,811 -2,535 -2,586 -2,637

Other Non-Operating Income 1,231 800 808 816

Non-recurring Items -2,000 0 0 0

Pre-tax profit 8,880 4,430 2,080 6,362

Tax provided -2,083 -664 -478 -1,463

Net Profit 6,797 3,765 1,601 4,899

Growth, % 21.5 (57.2) (57.5) 205.9


Unadj. shares (m) 572 572 572 572

Wtdavg shares (m) 572 572 572 572


Cash & bank 5,627 15,535 23,977 32,232

Debtors 11,547 10,755 10,506 11,789

Inventory 34,841 31,227 30,213 33,890




Investments 60 60 60 60



Add: Capital WIP 15,393 15,393 15,393 15,393

Net fixed assets 130,940 142,929 145,320 149,079


Total assets 200,437 217,929 227,498 244,474


Provisions 2,517 2,517 2,517 2,517










Pre-tax profit 8,880 4,430 2,080 6,362

Depreciation 8,127 11,011 11,609 12,240

Chg in working capital -4,572 9,275 375 -1,740

Total tax paid -2,083 -664 -478 -1,463

Other operating activities 1,811 2,535 2,586 2,637



Other investing activities 0 0 0 0


Dividend (incl. tax) 0 -1,144 -1,144 -1,144


Cash flow from financing activities 8,189 6,321 6,270 6,219

Net chg in cash -2,580 9,908 8,442 8,255

Valuation Ratios


Per Share data

EPS (INR) 15.4 6.6 2.8 8.6

Growth, % 21.5 (57.2) (57.5) 205.9


FDEPS (INR) 15.4 6.6 2.8 8.6

CEPS (INR) 33.1 25.8 23.1 30.0

CFPS (INR) 13.7 40.6 22.3 25.5

DPS (INR) - 2.0 2.0 2.0


Return on equity (%) 8.8 3.7 1.5 4.6




Sales/Net FA (x) 1.3 1.2 1.1 1.2


Inventory days 73.6 70.9 70.3 70.2

Payable days 52.6 68.2 67.0 68.3


Liquidity ratios

Current ratio (x) 1.6 1.6 1.8 2.0

Quick ratio (x) 0.6 0.8 1.0 1.2


Net debt/Equity (%) 39.6 38.7 40.0 40.3

Valuation

PER (x) 5.5 12.8 30.0 9.8

PEG (x) - y-o-y growth 0.3 (0.2) (0.5) 0.0

Price/Book (x) 0.5 0.5 0.5 0.4

Yield (%) 3.0 3.0 3.0 3.0

EV/Net sales (x) 0.5 0.5 0.6 0.5

EV/EBITDA (x) 4.5 5.1 5.8 4.5

EV/EBIT (x) 7.7 14.3 23.2 11.1



Financials - Ceat

Income Statement Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Net sales 69,845 67,813 65,426 72,073

Growth, % 12 (3) (4) 10


Total income 69,845 67,813 65,426 72,073




EBITDA (Core) 6,425 6,499 6,181 7,434

Growth, % 4.5 1.1 (4.9) 20.3

Margin, % 9.2 9.6 9.4 10.3

Depreciation (1,927) (2,698) (2,752) (2,889)

EBIT 4,498 3,801 3,429 4,544

Growth, % 0.8 (15.5) (9.8) 32.5

Margin, % 6.4 5.6 5.2 6.3

Interest paid (880) (1,497) (1,527) (1,542)

Other Non-Operating Income 390 429 472 519

Non-recurring Items 0 0 0 0

Pre-tax profit 4,210 2,925 2,558 3,724

Tax provided (1,251) (644) (645) (938)

Profit after tax 2,959 2,282 1,914 2,786


Net Profit 2,959 2,282 1,914 2,786

Growth, % 10.7 (22.9) (16.1) 45.6


Unadj. shares (m) 40 40 40 40

Wtd avg shares (m) 40 40 40 40

Balance Sheet Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Cash & bank 735 811 1,129 1,833

Debtors 7,064 8,270 7,979 8,789

Inventory 10,056 4,657 4,439 4,903

Loans & advances 2,100 2,100 2,100 2,100


Investments 1,875 1,875 1,875 1,875



Add: Capital WIP 8,329 8,329 8,329 8,329

Net fixed assets 40,124 45,426 48,675 51,785


Total assets 61,378 62,563 65,621 70,709










Cash Flow Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Pre-tax profit 4,210 2,925 2,558 3,724

Depreciation 1,927 2,698 2,752 2,889

Chg in working capital (541) 1,581 139 (486)

Total tax paid (968) (644) (645) (938)

Other operating activities 0 0 0 0


Other investing activities 0 0 1,000 1,000

Cash flow from investing activities (10,871) (7,808) (10,816) (10,797)

Free cash flow (6,244) (1,247) (6,012) (5,608)

Debt raised/(repaid) 8,000 2,000 1,000 1,000

Other financing activities (1,366) (1,982) (2,012) 0

Cash flow from financing activities 6,634 1,814 416 3,300

Net chg in cash 390 567 (5,596) (2,308)

Valuation Ratios

FY19 FY20E FY21E FY22E

Per Share data EPS (INR) 73.1 56.4 47.3 68.9

Growth, % 10.7 (22.9) (16.1) 45.6


CEPS (INR) 120.8 123.1 115.3 140.3

CFPS (INR) 113.9 146.8 102.5 110.4


Return on equity (%) 10.7 7.7 6.2 8.4




Sales/Net FA (x) 2.0 1.6 1.4 1.4

Working capital/Sales (x) 0.0 (0.0) (0.0) (0.0)


Inventory days 52.6 25.1 24.8 24.8

Payable days 60.6 47.1 46.5 47.1

Working capital days 3.3 (5.1) (6.0) (3.0)

Liquidity ratios

Current ratio (x) 1.1 1.0 1.0 1.1

Quick ratio (x) 0.5 0.7 0.7 0.8



Net debt/Equity (%) 49.6 53.2 52.9 50.1

Valuation

PER (x) 13.1 17.0 20.3 13.9

PEG (x) - y-o-y growth 1.2 (0.7) (1.3) 0.3

Price/Book (x) 1.4 1.3 1.3 1.2

EV/Net sales (x) 0.8 0.8 0.8 0.8

EV/EBITDA (x) 8.2 8.4 8.9 7.5

EV/EBIT (x) 11.7 14.3 16.1 12.2



Stock Price, Price Target and Rating History - Maruti

Stock Price, Price Target and Rating History – M&M

Stock Price, Price Target and Rating History – Tata Motors

N (TP 7200)

N (TP 8150)

N (TP 10000)

B (TP 10000)

B (TP 8000) B (TP 7600)

N (TP 6764) N (TP 6012) n (TP 6012) B (TP 8110)

B (TP 8275)

B (TP 8275)

3000

4000

5000

6000

7000

8000

9000

10000

11000

A-17 M-17 J-17 A-17 O-17 N-17 J-18 F-18 A-18 M-18 J-18 A-18 O-18 N-18 J-19 F-19 A-19 M-19 J-19 A-19 O-19 N-19 J-20 F-20

N (TP 800)

N (TP 755) N (TP 775) B (TP 800)

B (TP 960) B (TP 1030)

N (TP 405)

N (TP 750) N (TP 736)

n (TP 583) N (TP 628)

N (TP 568)

0

200

400

600

800

1000

1200

F-17 A-17M-17 J-17 A-17 O-17N-17 J-18 F-18 A-18M-18 J-18B (TP 1030)S-18 N-18 D-18 F-19M-19M-19 J-19 A-19 S-19 N-19 D-19 J-20 M-20

B (TP 540)

N (TP 455) N (TP 455) N (TP 440)

N (TP 440)

B (TP 400) B (TP 400) B (TP 400) B (TP 350)

B (TP 210)

B (TP 200) B (TP 237) B (TP 237)

N (TP 161) N (TP 135)

N (TP 169)

0

100

200

300

400

500

600

A-17 J-17 J-17 A-17 O-17 N-17 J-18 F-18 A-18 M-18 J-18 A-18 S-18 N-18 D-18 B (TP200)

M-19M-19 J-19 A-19 S-19 N-19 D-19 F-20 M-20



Stock Price, Price Target and Rating History – Ashok Leyland

Stock Price, Price Target and Rating History - Escorts

Stock Price, Price Target and Rating History - Hero

B (TP 105)

N (TP 110) N (TP 110) S (TP 100)

S (TP 110)

N (TP 150) N (TP 150)

N (TP 110) N (TP 110)

N (TP 107)

n (TP 66) N (TP 82) N (TP 77)

0

20

40

60

80

100

120

140

160

180


B (TP 800) B (TP 800) B (TP 800)

N (TP 800) B (TP 950) B (TP 1050)

B (TP 1050) B (TP 1100)

B (TP 1100)

B (TP 950) B (TP 950) N (TP 716)

N (TP 422)

N (TP 558)

B (TP 920)

0

200

400

600

800

1000

1200

A-17 J-17 J-17 S-17 O-17 N-17 J-18 F-18 A-18 M-18 J-18 A-18 O-18 N-18 J-19 F-19 M-19M-19 J-19 A-19 S-19 N-19 D-19 F-20 M-20

B (TP 3900)

B (TP 4000) B (TP 4200)

B (TP 4300) B (TP 4300)

N (TP 3000) N (TP 2700)

N (TP 2811)

N (TP 2811)

n (TP 2273)

N (TP 2605)

N (TP 2574)

1300

1500

1700

1900

2100

2300

2500

2700

2900

3100

3300

3500

3700

3900

4100

4300

A-17M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20



Stock Price, Price Target and Rating History – Bajaj Auto

Stock Price, Price Target and Rating History – Bharat Forge

Stock Price, Price Target and Rating History - Ceat

B (TP 3330) B (TP 3150)

B (TP 3550) B (TP 3550) B (TP 3900)

B (TP 3550) N (TP 2850) N (TP 2700) B (TP 2550)

N (TP 2994)

n (TP 2502)

N (TP 2980) N (TP 3400)

1000

1500

2000

2500

3000

3500

4000


B (TP 1200) B (TP 1250)

N (TP 700) B (TP 800)

B (TP 800) B (TP 700)

B (TP 600) N (TP 548)

N (TP 420) N (TP 402)

N (TP 473)

0

100

200

300

400

500

600

700

800

900

A-17 M-17 J-17 A-17 O-17 N-17 J-18 F-18 A-18 M-18 J-18 A-18 O-18 N-18 J-19 F-19 A-19 M-19 J-19 A-19 O-19 D-19 J-20 F-20

B (TP 1800)

B (TP 2000) B (TP 2100)

B (TP 2300)

B (TP 2200)

B (TP 2000) B (TP 1800) B (TP 1800)

B (TP 1700) B (TP 1600) B (TP 1232)

N (TP 787) N (TP 1011)

N (TP 1150)

0

500

1000

1500

2000

2500

A-17 M-17 J-17 A-17 O-17B (TP 2100)D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20



Stock Price, Price Target and Rating History – Apollo Tyres

Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. We have different threshold for large market capitalisation stock and Mid/small market capitalisation stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large cap stocks Rating Criteria Definition

BUY >= +10% Target price is equal to or more than 10% of current market price

NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%

SELL <= -10% Target price is less than or equal to -10%.

Mid cap and Small cap stocks Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

This report is issued by PhillipCapital (India) Pvt. Ltd., which is regulated by the SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only, and neither the information contained herein, nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives. The information and opinions contained in the report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication of future performance.

This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.

B (TP 310)

B (TP 345)

B (TP 290) B (TP 325)

B (TP 340) B (TP 340)

B (TP 340)

B (TP 320)

B (TP 285)

N (TP 176) B (TP 191)

30

80

130

180

230

280

330

A-17 M-17 J-17 A-17 O-17 N-17 J-18 M-18 A-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19 M-19 J-19 A-19 S-19 N-19 D-19 F-20 M-20



Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.

Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this

research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No

4 PCIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the company(ies) covered in the Research report

No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

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Kindly note that past performance is not necessarily a guide to future performance.

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