22032016115700JK Tyre Intiating Coverage

8/18/2019 22032016115700JK Tyre Intiating Coverage

1/19

JK Tyre IndustriesBUY

- 1 - Tuesday, 22nd

March, 2016

This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

Target Price 153 CMP 84 FY18E P/E 3.29X

Index Details JK Tyre & Industries Ltd. (JK Tyre), a part of the JK Group of

Companies, is a leading tyre manufacturer in India. It enjoys a

leadership position in the domestic radial tyres segment with a marketshare of 31% (as at end FY15). It has 9 manufacturing plants -- 6 in India

and 3 in Mexico, through its subsidiary Tornel, which it acquired in 2008.

JK Tyre is in a sweet spot with the fall in crude oil prices and vehicle

sales showing signs of a recovery. We are optimistic about the company

given that:

i) Volume kicker through capacity expansions: JK Tyre is expanding its

capacity from 20.5 mn to 23.1 mn units. The incremental capacity, 2.6

mn units at the Chennai plant, is expected to come on-stream by FY17.

While realizations are dwindling due to a partial pass through of the fall

in input prices, volumes are expected to receive a boost through theexpansion. Overall, we expect revenues to expand at a 3 year CAGR of

3.4% to Rs 8,156 crore by FY18.

ii) Margin expansion to drive earnings growth: Prices of crude oil and its

derivative, i.e. rubber (key input), have slumped in the past one year

owing to subdued demand and excess inventory. Correspondingly, JK

Tyre reported an EBITDA margin of ~16.8% in 9MFY16, a jump of 460

bps YoY. We believe that the sharp slump in crude oil prices is over-

done and a rebound is likely, given the output caps being put in place.

However, the three digit prices of crude are a distant reality given the

weak global economy. Prices could rebound to the $40 range andaccordingly margins would dip too. We have factored in an EBITDA

margin in the range of 15-15.5% over our forecast period.

iii) Increasing proportion of radialisation: The proportion of JK Tyre’s

revenue that comes from radial tyres has increased to 52% in FY15 from

35% in FY13. It plans to further increase the proportion to 65% in the

coming 2-3 years. Higher sales from value added radial tyres provide a

cushion to margins even if raw material prices reverse their downtrend.

We initiate coverage on JK Tyre as a BUY with a Price Objective of Rs

153 over a period of 18 months. The target price is arrived at by

assigning a PE of 6x to the FY18E EPS of Rs 25.5. The target pricetranslates to an upside of 82% from the CMP of Rs 84.

Sensex 25,285

Nifty 7,704Industry Tyres

Scrip Details

MktCap (

cr) 1916.6

BVPS (

) 61.7

O/s Shares (Cr) 22.6

AvVol(Cr) 0.25

52 Week H/L 133/77

Div Yield (%) 1.8

FVPS (

) 2.0

Shareholding Pattern

Shareholders %

Promoters 52.3

DIIs 1.7

FIIs 10.5

Public 35.5

Total 100.0

JK Ty res vs. Sensex

60

70

80

90

100

110

120

2 - F e b - 1 5

2 3 - F e b - 1 5

1 6 - M a r - 1 5

6 - A p r - 1 5

2 7 - A p r - 1 5

1 8 - M a y - 1 5

8 - J u n - 1 5

2 9 - J u n - 1 5

2 0 - J u l - 1 5

1 0 - A u g - 1 5

3 1 - A u g - 1 5

2 1 - S e p - 1 5

1 2 - O c t - 1 5

2 - N o v - 1 5

2 3 - N o v - 1 5

1 4 - D e c - 1 5

4 - J a n - 1 6

2 5 - J a n - 1 6

JK T yres Sensex

Key Financials ( in Cr)

Y/E MarNet

SalesEBITDA PAT

EPS

(

)

EPS

Growth (%)

RONW

(%)

ROCE

(%)

P/E

(x)

EV/EBITDA

(x)

2015 7384 931 329.66 14.54 -33.4 18% 18% 7.3 5.6

2016E 6948 1,081 439.22 19.36 27.1 18% 20% 4.3 4.0

2017E 7555 1,135 496.41 21.89 13.4 20% 20% 3.8 3.7

2018E 8156 1,223 579.13 25.53 35.3 20% 21% 3.3 2.7


2/19

- 2 - Tuesday, 22nd

March, 2016


Company Background

JK Tyre & Industries (JK Tyre), incorporated in 1974 is engaged in the manufacture

of automotive tyres (passenger car, commercial, farm and off-the-road), tubes andflaps. It enjoys a leadership position in the domestic radial tyres segment, with a

market share of 31% (as on FY15). It has 9 manufacturing plants -- 6 in India and 3

in Mexico (after acquisition of Tornel in 2008). It has a wide distribution network with

143 selling points and 4000+ dealers across India.

JK Tyre’s Business Structure

Mexican Operation

Revenue - Rs 1258 CroreRevenue Share - 16%Net Profit -Rs 71 Crore

Indian Operation

Revenue - Rs 6784 CroreRevenue Share - 84%Net Profit -Rs 253 Crore

Customer WiseRevenue

Replacement - 58%

OEMs - 23%

Exports -19%

Segment wise Revenue

Commercial - 84%

Passengers -14 %

Others - 2%

Total Revenue of JK Tyre

FY 15- Rs 8042 Crore

Source: JK Tyre , Ventura Research


3/19

- 3 - Tuesday, 22nd

March, 2016


JK Tyre’s Manufacturing Location

Source: JK Tyre , Ventura Research

Banmore, MadhyaPradesh

Chennai,Tamil Nadu

Mysore,Karnataka

Kakroli, Rajasthan(3 plants)

JK Tyre client base

Source: JK Tyre Ventura Research


4/19

- 4 - Tuesday, 22nd

March, 2016


Key Investment Highlights

Expect modest revenue growth, robust margin expansion

JK Tyre’s revenues have grown at a 5-year CAGR of 10% to Rs 7,383 crore inFY15, backed by healthy demand, the launch of new premium products in the

passenger and commercial categories and an increasing proportion of radial

product sales. Going forward, we expect revenues to grow at a CAGR of 3.4% to

Rs 8,156 crore by FY18E. The higher proportion of radialisation and capacity

expansion are expected to be the key revenue drivers. However, due to a partial

pass-through of the sharp fall in crude oil prices, lower realizations will limit growth

in revenues.

JK Tyre’s EBITDA and PAT have grown at a 5 year CAGR of 11% and 8% to Rs948 crore and 324 crore respectively in FY15. During the period FY10-FY15, the

EBITDA margin has averaged at 9-10%, while the PAT margin has averaged at

~3-4%. With the softening of crude oil prices, its key input, the EBITDA margin

touched 16.8% in 9MFY16, a jump of 460 bps YoY. Going forward, we expect

crude oil prices to settle at $40/barrel and have factored in EBITDA margins of

15%-15.5% over our forecast period of FY16-18.

Revenue Growth trend

-20%

-10%

0%

10%

20%

30%

40%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Rs cr

Revenue Revenue Growth (RHS)


Revenue growth: 31%Demand: StrongCrude Prices: Sharprecovery from $30 to $96/barrel as global economystarted to pick-up

Revenue growth: 6.2%Demand: Started to slowdownowing to policy logjam and halt incapex cycleCrude Prices: Consolidatedbetween $100-$110/barrel

Revenue growth: 3.4%Demand: RecoveringCrude Prices: Sharp slump back to $30/barrel;expected to settle at around $40/barrel


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- 5 - Tuesday, 22nd

March, 2016


Capacity expansion to drive volumes

JK Tyre currently has a capacity of ~20.6 mn units per annum, of which 6.6 mn

units are based in its Mexican subsidiary – Tornel (acquired in 2008).

The capacity of JK Tyre’s Indian operations has grown at a 3 year CAGR of 11%.

The average capacity utilization is around 100% in the Truck/Bus radials (TBR)

category and around 85-90% in the Passenger Car Radials (PCR) category. Going

forward, the company plans to enhance its Indian capacity (Chennai plant) by 2.6

mn at a total cost of Rs 1,430 crore, which is expected to be commissioned by

FY17. With existing capacities operating at optimum utilization levels, coupled with

improvement in demand, we believe the expansion will yield higher volumes with aminimal lag, post commissioning. This is likely to offset the impact of lower

realizations on account of the partial pass-through of reduced crude oil prices and

lead to an overall revenue CAGR of 3.4% over FY16-FY18.

Profitability trend

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

(200)

-

200

400

600

800

1,000

1,200

1,400


in Rs crore

EBITDA PAT EBITDA margin (RHS) PAT margin (RHS)


RM as a % of revenuesincreased from 62% to 71%in FY11; as crude pricescould not be entirely passedon, EBITDA margin fell from13% to 6% in FY11

RM as a % of revenues reduced from76% to 64% in FY14;strong demandand stable crude prices helpedrecovery in EBITDA margin from 5% inFY12 to 12% in FY14

RM as a % of revenues to remain in the range of 60-61%; slump in

crude oil prices resulted in a jump in EBITDA margins in 9MFY16,we expect crude oil prices to stabilize at $40/barrel and EBITDAmargin to remain at 15-15.5% over the forecast period.


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- 6 - Tuesday, 22nd

March, 2016


There have been no expansions in the Mexican subsidiary, Tornel, since its

acquisition. The Tornel plant is operating at a utilization of 60%-70% in the PCR

category. The company is planning to increase the capacity in Tornel by 1.65 mn

units going forward. However, since the expansion is only in the planning phase,

we have not considered the same into our projections.

Acquisition of Cavendish Industries gets CCI nod

In September 2015, JK Tyre and its wholly owned subsidiary, JK Asia Pacific – Singapore, entered into an agreement with Kesoram Industries to acquire a 100%

stake in Cavendish Industries (CIL) (a 99% subsidiary of Kesoram) for Rs 2,200

crore. In February 2016, the deal received the CCI nod. CIL, with a capacity of ~5

mn tyres, manufactures a range of tyres, tubes and flaps at its plant located in

Haridwaar. The acquisition will be funded by a combination of debt and equity by

JK Tyre and its group companies; JK Tyre is to have the largest shareholding with

an investment of Rs 450 crore. The acquisition will:

i) help the company expand its presence in the TBR market

ii) provide an entry point into the fast growing two and three wheeler tyre market

iii) and help earn marketing and distribution margins

Domestic Plant Capacity and Utilization trend

60%

62%

64%

66%

68%

70%

72%

74%

76%78%

80%

0

20

40

60

80

100

120

140

160

2011-12 2012-13 2013-14 2014-15

Annual Capacity Effective Capacity Capacity Utilisation (%)

Tyres in lakhs %

Source: JK T re Ventura Research


7/19

- 7 - Tuesday, 22nd

March, 2016


Radialisation and soft commodity prices to boost margins

JK Tyre’s EBITDA margin has increased from 9% in FY13 to 12.8% in FY15 with a

higher proportion of revenues stemming from value-added radial tyres. Themanagement expects radialisation penetration to increase to 65% in the coming

years. With the higher radialisation coupled with softening of rubber prices (crude

oil derivative), we expect EBITDA margins to expand to 15.2% by FY18 from FY 15

levels.

Higher Proportion of Radialisation

The proportion of JK Tyre’s revenue that comes from radial tyres has increased to

52% in FY15 from 35% in FY13. It plans to further increase the proportion to 65%

in the coming 2-3 years. Radial tyres enjoy high margins and a higher proportion of

the same in the revenue mix is likely to boost JK Tyre’s profitability , going forward.

In the tyre industry, both in the global and domestic markets, radial technology has

caught up at a quick pace, with the usage of cross ply being strictly restricted to

trucks and buses. This is because of the lower price of cross ply and the poor

quality of roads in India which limits the benefit of radial tyres.

EBITDA and EBITDA margin trend

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0

200

400

600

800

1000

1200

1400

FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Rs cr

EBITDA EBITDA margin (RHS)



8/19

- 8 - Tuesday, 22nd

March, 2016


I

In India, radialisation in the TBR (truck and bus radial) segment is ~18%, much

lower than the world average of ~68%, signifying huge growth potential. Going

forward, we expect demand for radial tyres, especially in the TBR segment, to pick

up given:

Increasing push from OEMs for new launches

Radial tyres, which offer higher life and fuel efficiency, are being pushed by

the OEMs for new launches. Radial tyres enjoy relatively higher margins

viz. 300-400 bps than cross ply tyres. JK Tyre, being the market leader in

radial tyres in India, will be the biggest beneficiary of the increasing shift of

the industry towards radial tyres.

.

Improvement in road infrastructure

The Modi government has placed high importance on upgrading the road

infrastructure in India. For instance, the government will convert eight

According to the Automotive Tyre Manufacturers’ Association (ATMA),

radialisation is touted as perhaps the ‘most important innovation in tyre

technology,’ and its future in India depends on user education, overload control,

road development, retreading infrastructure and the cost-benefit ratio. Although

India’s passenger vehicle segment has adopted radial technology, a large part of

the country continues to use cross-ply as the level of radial penetration is rather

dismal in the commercial vehicle segment. The advantages of radial tyres remains

undisputed. Radial tyres:

Are susceptible to fewer punctures,

Have a shorter braking distance and flexible sidewalls, and hence offer

better control

Save fuel and show greater resistance to wear

Despite the cost and operational benefits these tyres offer, Indian fleet operators

are hesitant to adopt this technology because of the state of Indian road

infrastructure, which is often well below standard norms.

In India, the radial tyre market is growing at the rate of 5%-6% annually due to high

demand from OEMs. Demand from OEMs stands at 70% in the TBR segment and 30% in

the aftermarket segment. According to a study conducted by Continental, the Indian truck

tyre replacement market has a volume of approximately 14 million units per year, out ofwhich almost 4 million units are radial tyres, whereas the other 10 million are bias tyres.


9/19

- 9 - Tuesday, 22nd

March, 2016


national highways into world-class expressways; a total cost of Rs 16,800

crore has been ear-marked for construction of 1000 kms of expressways.

Revival of stalled road projects

New roads will pep-up demand for radial tyres, which offer better

performance, speed and durability.

Penalty on overloading

Radial tyres are not preferred for unscrupulous practice of over-loading of

trucks. The government has imposed stringent penalties on over-loading –

10 times the toll rates and immediate off-loading of the excess luggage.

Adequate penalties on over loading will ensure higher penetration.

Commercial Vehicle segments to recover

With the pick-up in industrial activity, growth in the MHCV (medium-heavycommercial vehicle) space is expected to result in 8.3% growth in the CV

segment in FY16. The growth will be driven by:

i) Union Budget 2016-17 has spelled out a number of agri-oriented

measures, including higher allocations for irrigation and soil testing, thrust

to organic farming along with adequate physical and digital infrastructure

support. With higher spends on agriculture, demand for tractors and trucks

will revive.

ii) In order to curb air pollution, the Government is seeking to ban

commercial vehicles older than 15 years and will force all such trucks off-

road effective April 2016. This is likely to pep-up CV demand.

iii) Declining fuel prices and expected recovery in industrial sectors such as

coal, cement and steel will boost CV sales.

iv) Sales of buses are also expected to remain healthy, led by the

replacement of buses under the Jawaharlal Nehru National Urban Renewal

Mission (JNNURM) phase II.


10/19

- 10 - Tuesday, 22nd

March, 2016


Soft commodity prices

JK Tyre clocked an EBITDA margin of 16.8% in 9MFY16, a jump of 460 bps YoY,led by lower raw material costs – which fell from 62% in FY15 to 56% in H1FY16.

Prices of crude oil have slumped below $30/barrel from $103/barrel in April 2014.

Crude oil is the key input in the manufacturing of synthetic rubber used in tyre

manufacturing. Prices of rubber, (45% of the raw material cost), are hovering at

$157/100kg, down 46% from April 2014. Rubber prices are expected to remain

soft, owing to weak demand and surplus global inventory. The company is only

passing on the benefit of low prices partially and thereby enjoying high margins in

the current environment.

Commercial Vehicle sales expected to grow at a 5 year CAGR of 12%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2 0 0 9 - 1 0

2 0 1 0 - 1 1

2 0 1 1 - 1 2

2 0 1 2 - 1 3

2 0 1 3 - 1 4

2 0 1 4 - 1 5

2 0 1 5 - 1 6

2 0 1 6 - 1 7

2 0 1 7 - 1 8

2 0 1 8 - 1 9

2 0 1 9 - 2 0

in units

Total Sales Growth (RHS)

Source: CMIE, JK Tyre Ventura Research


11/19


March, 2016


We believe that the sharp slump in crude oil prices are over-done and a rebound is

likely, given the output caps being put in place. However, the three digit prices of oil are

a distant reality given the weak global economy. Prices could rebound to the $40/barrel

range and accordingly, margins would dip too. We have factored in EBITDA margins inthe range of 15-15.5% over our forecast period.

Slump in domestic and global rubber prices…

239

185 191

126

109

292

9596

-

50

100

150

200

250

300

350

J an-1 0

A pr -1 0

J ul -1 0

O c t -1 0

J an-1 1

A pr -1 1

J ul -1 1

O c t -1 1

J an-1 2

A pr -1 2

J ul -1 2

O c t -1 2

J an-1 3

A pr -1 3

J ul -1 3

O c t -1 3

J an-1 4

A pr -1 4

J ul -1 4

O c t -1 4

J an-1 5

A pr -1 5

J ul -1 5

O c t -1 5

J an-1 6

Domestic Price International Price

Rubber INR/100kg

Source JK T res Ventura Research

…and crude oil prices

0

20

40

60

80

100

120

140

160

M ar - 0 8

J ul - 0 8

N ov- 0 8

M ar - 0 9

J ul - 0 9

N ov- 0 9

M ar -1 0

J ul -1 0

N ov-1 0

M ar -1 1

J ul -1 1

N ov-1 1

M ar -1 2

J ul -1 2

N ov-1 2

M ar -1 3

J ul -1 3

N ov-1 3

M ar -1 4

J ul -1 4

N ov-1 4

M ar -1 5

J ul -1 5

N ov-1 5

Prices in $

Source JK T res Ventura Research


12/19


March, 2016


Key Risks

Volatile crude prices

Crude prices may have already bottomed out and there is the possibility that the low

cost environment may become a thing of the past. Global oil supplies are likely to be

maintained at January levels. This deal has the support of 15 OPEC and non-OPEC

members (the notable exclusion being Iran), which together account for 73% of

international output. The deal is to be finalized in a meeting scheduled in April 2016.

Controlled supply could lead to a bounce back in crude oil to around $40/barrel and

result in a rise in raw material costs, given that 45% of raw material costs are linked to

crude.

Curbs on rubber imports to inflate costs marginally

To protect the domestic rubber plantations the import of cheap natural rubber from

China has been banned from Jan 21, 2016 to March 31, 2016. Further continuation of

this ban could lead to higher raw material costs.


13/19


14/19


March, 2016


Financial Outlook:

We expect JK Tyres revenues to grow at a 3 years CAGR of 3.4% to Rs 8,156crore by FY18, driven by an expansion of the existing capacity in radialisation,

which will help boost volumes. The acquisition of CIL, which has not been

factored in, is an upside trigger to our estimates. The EBITDA is expected to

grow at a CAGR of 9.5% by FY 18 to Rs 1,223 crore from Rs 931 crore in

FY15. At the PAT level, the company is expected to grow at a CAGR of 21% by

FY 18 to clock a PAT of Rs 579 crore.

Consolidated Revenue, Gross & PAT margins

(2)

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2

4

6

8

10

12

14

16

18

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000


Net Sales Operating Margin PAT Margin

Rs in Cr %

Source: JK Tyre, Ventura Research

Strong RoCE & RoE margins

-10%

0%

10%

20%

30%

40%

M ar -1 0

M ar -1 1

M ar -1 2

M ar -1 3

M ar -1 4

M ar -1 5

F Y 1 6 E

F Y 1 7 E

F Y 1 8 E

ROE ROCE

Source: JK Tyre, Ventura Research

Net working capital days

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

M a r - 0 9

M a r - 1 0

M a r - 1 1

M a r - 1 2

M a r - 1 3

M a r - 1 4

M a r - 1 5

F Y

1 6 E

F Y 7 E

F Y

1 8 E

Inventory Days Sundry Debtors Days

Trade Payables Days No. of Days

No. of days

Source: Jk Tyre, Ventura Research

D/E ratio expected to be around 0.7x

-0.51.01.52.02.53.03.5

M a

r -1 0

M a

r -1 1

M a

r -1 2

M a

r -1 3

M a

r -1 4

M a

r -1 5

F Y 1 6 E

F Y 1 7 E

F Y 1 8 E

Debt/Equity(x)

Source Jk Tyre , Ventura Research


15/19


March, 2016


Valuation

We initiate coverage on JK Tyre as a BUY with a price objective of Rs 153, representing apotential upside of 82% from the CMP of Rs 84 over a period of 18 months. We have used

the PE multiple approach to value JK Tyre and assigned a multiple of 6x on FY18 EPS of Rs

25.53 to arrive at the target price. We are upbeat on the prospect of the company due to the

following aspects:

Capacity expansion to drive volume growth

Softening of rubber and oil prices

Change in product mix with a greater focus on radialisation.

CV cycle on the verge of a turn around

JK Tyre P/E Trend

-50

0

50

100

150

200

Sep-13 Mar-14 Sep-14 Mar-15 Sep-15

CMP 2X 4X 6X 8X 10X

Source : JK Tyres, Ventura Research

JK Tyre P/BV Trend

0

50

00

50

00

Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-1

CMP 0.5X 1X 1.5X 2X 2.5X

ource : JK Tyres, Ventura Research

JK Tyre EV/EBITDA Trend

0

500

1000

1500

2000

2500

3000

Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 S

EV 3.5X 6X 8.5X 11X 13.

Source : JK T res, Ventura Research


16/19


March, 2016


Historically, JK Tyre has traded at a median PE multiple of 4.3x, at a discount of ~30% to Ceat’s median PE multiple.

However, this discount has widened to more than 100% currently, with JK Tyre trading at 4.2x, while Ceat is trading at

.3x. Ceat enjoys a premium multiple over JK Tyre considering:

Substantially less geared – The FY15 DE of Ceat was 0.48x v/s JK Tyre’s 2.12x, and) Better RoCe – Ceat’s FY15 RoCE was 26.4% v/s JK Tyre’s 18.1%

However, with a higher sales and margin profile and a comparable RoE, we believe the steep discount to JK Tyre’s

multiple is unwarranted. Our assigned multiple of 6x is at a discount of 20% to Ceat’s FY18 multiple.

JK Tyre v/s CEAT P/E Trend

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

J a n - 1 3

M a r - 1 3

M a y - 1 3

J u l - 1 3

S e p - 1 3

N o v - 1 3

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M a y - 1 4

J u l - 1 4

S e p - 1 4

N o v - 1 4

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M a

- 1 5

J u l - 1 5

S e p - 1 5

N o v - 1 5

J a n - 1 6

M a r - 1 6

CEAT PE JK Tyre PE CEAT median PE JK Tyre Median PE



17/19


March, 2016


Peer Comparison

Y/E Marc Sales EBITDA PAT

EBITDA

Margin(%)

PAT

Margin(%) ROE(%) P/E P/BV

EV/EBITDA

JK Tyre

2015 7,383.7 930.8 329.7 12.6% 4.5% 17.6% 7.3 1.7 5.6

2016E 6,947.6 1,081.2 439.2 15.6% 6.3% 18.2% 4.4 1.0 4.1

2017E 7,554.8 1,135.4 496.4 15.0% 6.6% 19.7% 3.9 0.8 3.7

2018E 8,155.7 1,222.5 579.1 15.0% 7.1% 20.4% 3.4 0.7 2.8

Apollo

2015 12,725.7 1,930.0 977.6 15.2% 7.7% 20.3% 7.7 1.5 3.6

2016E 11,944.0 1,990.0 1,085.7 16.7% 9.1% 19.0% 7.0 1.2 3.6

2017E 12,980.2 2,078.3 1,104.7 16.0% 8.5% 16.2% 6.8 1.1 3.5

2018E 14,672.5 2,320.5 1,179.4 15.8% 8.0% 15.4% 6.4 0.9 3.1

CEAT

2015 5,754.8 797.0 317.2 13.8% 5.5% 23.4% 11.5 2.2 4.9

2016E 5,867.0 834.7 414.6 14.2% 7.1% 22.0% 8.5 1.7 4.7

2017E 6,567.8 890.3 465.9 13.6% 7.1% 19.8% 7.9 1.5 4.4

2018E 7,263.0 965.8 520.7 13.3% 7.2% 18.7% 7.5 1.3 4.1

TVS Srichakra ( Standalone)

2015 1,881.5 294.7 103.8 15.7% 5.5% 43.3% 16.5 6.2 5.5

2016E 2,115.3 286.2 190.0 13.5% 9.0% 44.6% 10.3 4.2 6.0

2017E 2,350.8 315.2 207.0 13.4% 8.8% 36.1% 9.4 3.1 5.4

2018E NA NA NA NA NA NA NA NA NAMRF (Standalone) Sept Closing

2015 13,525.5 2,008.0 1,563.7 14.8% 11.6% 29.5% 8.6 2.2 5.6

2016E 20,452.2 4,361.1 2,331.9 21.3% 11.4% 32.4% 6.5 1.9 3.6

2017E 15,519.2 2,944.2 1,529.1 19.0% 9.9% 20.3% 8.8 1.6 5.5

2018E 17,612.0 2,976.4 1,558.6 16.9% 8.8% 17.4% 8.7 1.4 5.7



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Financials and Projections

Y/E March, Fig in Cr FY15 FY16E FY17E FY18E Y/E March, Fig in Cr FY15 FY16E FY17E FY1

Profit & Loss Statement Per Share Data (Rs)

Net Sales 7383.7 6947.6 7554.8 8155.7 Adj. EPS 14.5 19.4 21.9

% Chg. -3.5 -5.9 8.7 8.0 Cash EPS 21.2 26.4 29.3

Total Expenditure 6453.0 5866.4 6419.5 6933.1 DPS 1.1 1.1 1.2

% Chg. -4.8 -9.1 9.4 8.0 Book Value 61.8 82.3 105.4

EBDITA 930.8 1081.2 1135.4 1222.5 Capital, Liquidity, Returns Ratio

EBDITA Margin % 12.6 15.6 15.0 15.0 Debt / Equity (x) 2.1 1.5 1.1

Other Income 16.9 16.8 17.3 18.6 Current Ratio (x) 0.9 0.9 1.0

PBDIT 947.6 1097.9 1152.6 1241.2 ROE (%) 26% 27% 23%

Depreciation 157.8 171.9 175.1 163.7 ROCE (%) 18% 20% 20%

Interest 257.4 247.8 231.9 207.1 Dividend Yield (%) 0.0 0.0 0.0

Exceptional items -46.9 -39.9 0.0 0.0 Valuation Ratio (x)PBT 485.6 638.3 745.7 870.4 P/E 7.3 4.3 3.8

Tax Provisions 161.7 210.9 257.3 300.3 P/BV 1.7 1.0 0.8

Reported PAT 323.9 427.4 488.4 570.1 EV/Sales 0.7 0.6 0.6

Minority Interest EV/EBIDTA 5.6 4.0 3.7

PAT 323.9 427.4 488.4 570.1 Efficiency Ratio (x)

PAT Margin (%) 4.4 6.2 6.5 7.0 Inventory (days) 44.2 45.0 44.2

Share of Associate 5.8 11.8 8.0 9.0 Debtors (days) 67.5 71.9 70.6

Conso lidated Net pro f it 329.7 439.2 496.4 579.1 Creditors (days) 53.3 51.5 50.0

Balance Sheet Cash Flow Statement

Share Capital 45.4 45.4 45.4 45.4 Profit Before Tax 485.6 638.3 745.7

Reserves & Surplus 1355.7 1820.9 2344.3 2950.4 Depreciation 157.8 171.9 175.1

Minority Interest 0.0 0.0 0.0 0.0 Working Capital Changes -50.6 34.6 48.9

Long Term Borrowings 1503.6 1646.0 1474.0 1274.0 Others 141.4 90.5 -117.8

Deferred Tax Liability 319.8 298.8 272.1 290.1 Operating Cash Flow 734.2 935.4 851.9 1

Other Non Current Liabilities 410.7 411.0 426.0 491.0 Capital Expenditure -799.6 -308.7 -1.0

Total Liabilities 3635.1 4222.0 4561.7 5050.9 Other Investment Activities -0.3 10.0 -435.7

Gross Block 4827.8 5566.8 5667.8 5747.8 Cash Flow from Investing -799.9 -298.6 -436.7

Less: Acc. Depreciation 2126.5 2298.4 2473.5 2637.2 Changes in Share Capital 0.0 0.0 0.0

Net Block 2701.3 3268.4 3194.3 3110.6 Changes in Borrowings 252.9 -223.0 -172.8 -

Capital Work in Progress 830.3 400.0 300.0 300.0 Dividend and Interest -267.2 -273.8 -258.9 -

Other Non Current Assets 216.1 228.0 691.0 681.0 Cash Flow from Financing -7.2 -496.7 -431.7 -

Net Current Assets -299.1 138.7 176.4 769.3 Net Change in Cash -72.9 140.0 -16.5

Long term Loans & Advances 186.5 187.0 200.0 190.0 Opening Cash Balance 235.6 162.8 302.9

Total Assets 3635.2 4222.0 4561.7 5050.9 Closing Cash Balance 162.8 302.9 286.3


19/19


March, 2016

Disclosures and Disclaimer

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