Equity | India | Electrical Equipment Havells India Ltd ... · Equity | India | Electrical...

Equity | India | Electrical Equipment

Havells India Ltd.( Havells)

Growing with technology…… September 07, 2018

BUY

Analyst

Omkar Tanksale

+91-22- 6614 2692 [email protected] Institutional Research 1

Initiating Coverage

CMP (`) Target (`)

661 809

Potential Upside Absolute Rating

22% BUY

Market Info (as on September 06, 2018)

BSE Sensex 38,018

Nifty S&P 11,477

Stock Detail

BSE Group A

BSE Code 517354

NSE Code HAVELLS

Bloomberg Code HAVL IN

Market Cap (`bn) 415.34

Free Float (%) 38%

52wk Hi/Lo 728.95 / 454.00

Avg. Daily Volume (NSE) 555,063

Face Value / Div. per share (`) 1.00 / 3.00

Shares Outstanding (mn) 625

Promoters Public Others

59.55 40.45 0.01

Financial Snapshot (`mn)

Y/E Mar FY17 FY18 FY19E FY20E

Net Sales

61,558

81,464

97,757

1,17,308

EBITDA

8,182

10,434

12,708

15,954

PAT

4,941

6,735

8,232

10,631

EPS

7.91

10.77

13.16

17.00

ROE (%) 15% 18% 20% 22%

ROCE (%) 20% 23% 25% 29%

P/E 58.1 66.5 54.4 42.1

EV/EBITDA 34.4 42.7 34.9 27.7

Share Price Performance

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Havell's (i) Adj SENSEX Adj

Rel. Perf. 1Mth 3 Mths 6Mths 1Yr

Havells (%) 3.04 25.2 30.6 34.1

Sensex (%) (4.7) 2.1 5.1 25.0

Source: Company data, Institutional Research

Company Snapshot

Havells India Ltd. (Havells) is the leading manufacturer of fast moving electrical goods and

major power distribution equipment. The company is head quartered in Noida and having

presence across geographies. Havells enjoys enviable market dominance across a wide spectrum

of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors,

Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power

Capacitors, CFL Lamps, and Luminaires for Domestic, Commercial and Industrial Applications.

The company has very strong distribution network not only in India but also across the

geographies. The company has 12 state-of-the-art manufacturing plants in India located at

Haridwar, Baddi, Sahibabad, Faridabad, Assam, Alwar and Neemrana, manufacturing globally

acclaimed products, synonymous with excellence and precision in the electrical industry.

Investment Rationale

Favorable market conditions and strong demand will help them to grow

Indian economy is improving with the higher momentum. It is one of the fastest growing

economies in the world. This growth helps to create greater per capita income and also the

stronger demand. With the increasing robustness of the market, there is huge opportunity for

the electrical goods and consumption businesses. Total domestic market size of electrical

segment is approximately Rs.45, 000crs. According to the company and the industry resources

the electrical segment vertical likely to grow by 12% CAGR for next 5 years. The home

appliances vertical is also having great demand for from the domestic market. The market size

has increase with the higher momentum and will also likely in the upcoming future. Total

market size of the home appliances is at Rs.70,000 Crs. And will likely to grow by 15% CAGR in

the next 5 years.

Robust business structure gives edge over its peers

Havells owns some of the most prestigious brands like Havells, Lloyd, Crabtree, Standard and

Promptec. Its network constitutes of 4000 professionals, over 7575 dealers and 40 branches in

the country. Its products are available in 40 countries. The company has 12 state-of-the-art

manufacturing plants in India located at Haridwar, Baddi, Sahibabad, Faridabad, Assam, Alwar

and Neemrana, manufacturing globally acclaimed products, synonymous with excellence and

precision in the electrical industry. Havells along with its brands have earned the distinction of

being the preferred choice of electrical products for discerning individuals and industrial

consumers both in India and abroad. Havells offers same quality products for both Indian and

International markets. It is committed to keep powering the world with its state-of-the-art

innovations and energy-efficient solutions. Currently over 90% of its product offerings are energy

efficient and manufactured in-house.

Valuation

At the CMP of `661, Havells is trading at 50.4x, and 39.06x its FY19E, and FY20E EPS of `13.16

and `17.00. Compared to its peers; Havells is trading at a discount P/E multiple, although its

margins are better than or comparable to peers. We initiate coverage on Havells India Ltd with

a BUY rating and attach a multiple of 47.6 xs to Havells’ FY20E earnings (EPS) to arrive at the

target price of `809, indicating a potential upside of 22%.


Havells India Ltd.( Havells) September 07, 2018

BUY

Institutional Research | Initiating Coverage 2

Index & Content

Sr. No. Topic Page No.

1 Company Background......................................... 3

2 Business Model................................................. 4

3 Key Management Personnel.................................. 6

4 Investment Rationale......................................... 7

5 Financial Overview........................................... 10

6 Key Risks........................................................ 14

7 SWOT Analysis.................................................. 15

8 Michael Porter’s Five Force Analysis........................ 16

9 Valuation & Outlook........................................... 17

10 Financials........................................................ 18

11 Disclaimer....................................................... 19



BUY


Company Background Havells India Ltd. (Havells) is the leading manufacturer of fast moving electrical goods and

major power distribution equipment. The company is head quartered in Noida and having

presence across geographies. Havells enjoys enviable market dominance across a wide spectrum

of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors,

Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power

Capacitors, CFL Lamps, and Luminaires for Domestic, Commercial and Industrial Applications.

The company has very strong distribution network not only in India but also across the

geography’s. The company has 12 state-of-the-art manufacturing plants in India located at

Haridwar, Baddi, Sahibabad, Faridabad, Assam, Alwar and Neemrana, manufacturing globally

acclaimed products, synonymous with excellence and precision in the electrical industry. Historical Journey of Havells

Source: Company, Institutional Research

1958

1971

1976

1979

1980

1983

1987

1990

1993

2000

2001

2003

2004

2006

2007

2010

2011

2015

2016

2017

Commenced trading operation in Delhi.

Brought Havells brand

Set up 1st manufacturing plant switches

Set up 1st manufacturing plant of HBC fuses at Badli

Started manufacturing high quality energy meter at Tilak Nagar.

Acquired Tower & transformer Ltd.

Started manufacturing MCBC at Badli

Started manufacturing plant at Sahibabad

Set up another manufacturing plant at Faridabad. Listed on BSE, NSE

Acquired controlling stake in Duke Arnics Electronics Ltd. Acquired standard electricals.

Acquired Business of Havells, MCCB of Cabtree India Ltd.

Launch of Fans, CFL, Lightings

Set up manufacturing plant at Baddi, Noida

Added CFL production in Haridwar unit

Acquiring Sylvania

Launched Havells brand in US & Maxico

Launch of control gear, Appliances

Launched electric water heater

Entered in Solar business.

Launched personal grooming business.



BUY


Business Model

Havells have robust business structure with strong market presence and higher brand value

which makes Havells lucrative and safer bet. The Havells has two business verticals consumer

and Industrial.

Consumer vertical: - Under the vertical company has complete range of modern electrical

equipment. The company has lighting, switches, electrical circuitry and wiring to home &

kitchen appliances, fans, air coolers and water heaters. The eco-friendly and power saving,

Havells consumer products provide great functionality and durability, and look chic to suit the

needs of your living spaces.

Fans: - The Company has complete range of the fans like ceiling fans, table fans, exhaust and

personal fans. A producer of numerous types of fans including exquisite, antique finishes to fans

specially designed for kids to dual color fans and High Speed Fans. Havells has successfully been

able to capture the essence of the customers' needs and gained substantial market share.

Lightings: - Havells brings to you a wide range of energy efficient lighting solutions with the

state-of-the-art products to choose from. The range of lighting product includes LED Panels, LED

Down lighters, LED surface fitting, LED lamps, Portable lightings, Home décor lighting products,

LED strips, LED battens.

Switches: - Switches are inventively designed to last long and augment your walls. Refined

engineering is incorporated with the finest technology to provide top notch quality, reliability

and longevity. Be it in design or performance, company provide you with the best modular

switches for home, office as well as industrial use.

Switch Gears: - The Company is leading manufacturer of switch gears in India The company

manufactures range of switch gears like circuit breaker, Energy saver, Distribution boards, surge

protection device.

Appliances: - The Company manufactures range of appliances with the better quality and design

which help them to gain better market share in the domestic market. The company

manufactures cooking appliances, brewing appliances, irons, Air purifiers, water purifiers, water

heaters, pumps etc.

Industrial vertical: - Havells is the strong product portfolio in the vertical. The company has

better quality and range of product portfolio which makes them a better player in the segment.

The company has range of industrial electrical solutions from Havells - from circuit protection

and surge protection devices, reactive power solutions, HT & LT cables, induction motors, to

professional lighting and heavy duty fans. In-house manufacturing and quality certifications give

them complete control over quality and consistency.



BUY


Havells

Consumer Industrial

Switches Cables

Switch Gears Switch Gears

Personal Grooming

Air Circulator

Air Purifier, Water Purifier

Reactive Power Solution

Pumps PFC Components

Fans, Lightings

Appliance



BUY


Key Management Personnel

Havells India Ltd. is blessed with credible management that takes Havells on the path of the

growth.

Late Mr. Qimat Rai Gupta (Founder Chairman):

Mr. Qimat rai Gupta founded the company. His partnership with a 20,000 strong network of

dealers, distributors, and retailers has propelled Havells’ profits while also benefiting its

stakeholders.

Mr. Anil Rai Gupta (Managing Director and chairman):

Heading one of the most prominent electrical and consumer durable companies in India, Mr. Anil

Rai Gupta is the Chairman and Managing Director of Havells, and is the son of Late Mr. Qimat Rai

Gupta. He has been a constant support to his father for 22 years.

Mr. Ameet Kumar Gupta

Mr. Ameet Kumar Gupta is an ardent member of the Promoter Group and is actively involved in

new business development activities along with Mr. Anil Rai Gupta. He is authorized to make

new product introduction and development along with setting up of new plants and

manufacturing facilities for the QRG group. Gupta’s functions include spearheading new

projects being under taken by the organization

Mr. Rjesh Kumar Gupta (Director & CFO):

Mr. Rajesh Gupta is the Whole-time Director (Finance) and Group CFO of Havells Company. He

has been long associated with the QRG group since the beginning of his career and has helped

shape up the finance sector and simultaneously played a multi-dimensional role in creating the

culture, systems and processes across the organization.



BUY


Investment Rationale

Favorable market conditions and strong demand will help them to grow

Indian economy is improving with the higher momentum. It is one of the fastest growing

economies in the world. This growth helps to create greater per capita income and also the

stronger demand. With the increasing robustness of the market, there is huge opportunity for

the electrical goods and consumption businesses. Total domestic market size of electrical

segment is approximately Rs.45, 000crs. According to the company and the industry resources

the electrical segment vertical likely to grow by 12% CAGR for next 5 years. The home

appliances vertical is also having great demand for from the domestic market. The market size

has increase with the higher momentum and will also likely in the upcoming future. Total

market size of the home appliances is at Rs.70,000 Crs. And will likely to grow by 15% CAGR in

the next 5 years.

FAVOURABLE MACRO LEVERS

Young

Demography

Growing middle class across urban, semi urban.

Brand aspiration, better standard of living and global exposure

UrbanizationTo be 40% by 2030 from 31% currently

Investment on infrastructure and housing will be key focus area

Low to medium penetration in most of the categories

Large presence of unorganized sector

Organized

Penetration

High degree of focus on electrification, presently 78% population electrified,

low quality and regular supply are key issuesElectrification

From the above diagram, we can say that at macro levels conditions are favorable for Havells.

Growing urbanization and per capita income will help to grow the electrical consumption.

Higher infrastructure spending and real estate development will also help to have higher

demand for appliances and equipment. Initiatives taken by Indian government like every home

should have electricity will help to increase the demand and exploring the new geographies.

Central government is also providing subsidy for the LED lights so demand for LED products will

also have huge increased demand in the near future. Havells with strong brand value and higher

distribution will have higher probability for the higher near future growth.



BUY


Robust business structure gives edge over its peers.



the country. Their products are available in 40 countries. The company has 12 state-of-the-art








efficient and manufactured in-house

AN EFFICIENT INTERPLAY

Higher Profitability Free Cash Flow Superior Return to shareholdersHigher Market Share

From the above diagram we can say that, The company has strategic play for the Indian

domestic market which helps them to play ahead of their peers. The company has strong brand

value with good market share. The company also helping the to increase the reach and

penetration with strong distribution network. This also allowed having higher penetration in the

Indian markets. The company also has state of art manufacturing facilities to fulfill the demand.

Havells have better product portfolio which help them to get higher sustainable operating

margins. The better product mix also help to achieve high revenue growth and make business

structure more robust. This makes Havells a safer bet even for longer term perspective.



BUY


Brands that enjoy high recall and loyalty



the country. Our products are available in 40 countries. The company has 12 state-of-the-art








efficient and manufactured in-house002E

MARKET SHARE: TOP 3 ACROSS CATEGORIES

Product

Indicative Market

Size(Rs. in crores)

Indicative

MarketShare

Indicative

Rank

Organized

PenetrationLevel

Peers

Sw

itchgears MCB 2,200 27-28% # 1 High Legrand, Schneider

Switches* 2,200 14-15% # 3 MediumPanasonic (Anchor),

Legrand

Cable

Domestic 8,000 16% # 3 Low Finolex, Polycab

Industrial 12,000 10% # 3 Medium Polycab, KEI

LED

Lig

hti

ng

Lighting & Fixtures 6,500 10-14% # 2-4 MediumPhilips, Crompton,

Bajaj, Wipro

EC

D

Fans 6,900 16% # 3 High Crompton, Orient, Usha

Water Heaters 1,400 15% # 2 Low Racold, AO Smith

Other Appliances 5,200 2-3% - Low Bajaj, Philips



BUY


Financial Overview

Pretax Margin

EBITDA Margins

As shown in the graph below, Havells has shown consistent EBITDA growth over the past few

quarters. This shows that Havells has been successful in managing the operating expenses

efficiently with the rise in the top line. After the slight decline in the EBITDA margins in 1QFY18

company has started regaining the desire operating efficiency over last two quarters and will

also likely to continue in the upcoming period.

EBITDA Margins

0%

2%

4%

6%

8%

10%

12%

14%

16%

-

500

1,000

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EBITDA EBITDA Margin


Operating Margins

As shown in the graph below, Havells has become successful in increasing the operating margins

over past few years. Consistent rise in the operating profit indicates that, Havells has become

successful in transferring the operating cost to its customers. This also indicates rising efficiency

in the business. We believe that Havells will deliver better operating margins as they focus more

on the segments where they have higher realizations.

Operating Margins

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18%

-

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Operating profit Operating margin




BUY


Net Profit Margin

Havells has become successful in delivering consistent and high growth in the net profit and also

margins are showing consistent growth. This shows that the business of the company has

become more robust over the period of time. Strong product profile, robust distribution channel

makes company more lucrative. We believe that Havells will likely to report higher bottom line

growth in the upcoming future. This also makes Havells a safer bet.

NPAT Margin

0%

5%

10%

15%

20%

25%

30%

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500

1,000

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FY1

9

Net Profit NPAT margin


Return Margin

ROE performance

As shown in the diagram below, we can see that ROE of the company has increasing consistently

over last two years. This shows that Havells has produced better results on the invested equity.

This shows that, Havells is a better investment opportunity and can produce better return in the

future.

RoE

0%

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40%

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50%

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2,000

4,000

6,000

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10,000

12,000

14,000

FY14 FY15 FY16 FY17 FY18

Net profit ROE




BUY


Return on the capital Employed (ROCE)

Return on the capital employed (ROCE) is also one of the major important aspect while

investing. Havells has zero or marginal debt on their balances sheet. So that the company has

produce the strong growth in terms of ROCE as net profit is growing. We believe that Havells

will show a strong growth for the upcoming period.

RoCE

18%

19%

20%

21%

22%

23%

24%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000


Net profit ROCE


Payout Ratio

Dividend Payout Ratio

Havells is one of the highly dividend paying company. As shown in the graph below Havells has

strong payout ratio. This also makes stock very lucrative. We believe that in the upcoming

period Havells will likely to maintain the payout ratio of 32% in the upcoming period.

Dividend Payout Ratio

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Divident paid Dividend Payout ratio




BUY


Net Profit to Payout Ratio

Havells has history of paying dividend to its shareholder. As shown in the diagram below we can

see that company had given dividends as proportion to the net profit. We believe that payout

ratio to net profit ratio will likely to remain same. This also makes stock more lucrative.

Investor can also take privilege of higher payout ratio.

Net Profit to Payout Ratio

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Net Profit Dividend Payout ratio




BUY


Key Risks

Investment Risk :

• Higher competition and better product mix from the peers or international player may

affect the business negatively.

• Any new launch of the technology in the segment will replace the product completely

that impact company on the negative side. The company needs to either do capital

spending or loss in the business.

• Any change in the policy from the central government will impact LED pricing

negatively. This may also impact the demand for the product on negative side.

• The company have industrial vertical as well loss of one client will impact loss of

significant revenue. This states that depending on the client is higher.

• Higher competitive market always regulates the competitive prices. These market

scenarios may affect the realization negatively.



BUY


SWOT Analysis

Source: Institutional Research

Havells India Ltd.

Strengths

• Strong distribution Network.

• High manufacturing capacity.

• Strong Brand value.

Opportunities

• Further rural penetration.

• Increasing healthy sustainable product

mix.

• Increasing market share.

Weakness

• Low margin.

• Focus on specific product portfolio.

• Weaker brand value than market

Leaders.

Threats

• Cut throat competition puts negative

impact on market share .

• Higher competition also leads to

Pricing pressure.



BUY


Michael Porter’s Five Force Analysis

Inter-firm Rivalry–High

Lower Entry barriers in

the industry have led to

high concentration in

the industry.

Threat of new entrants –

Increasing

• MNCs are entering the ‘offshore’

business heavily.

Bargaining Power of

Suppliers – High

• Intense competition in the

recruitment market puts higher

wage pressure and increasing

trend of attrition is witnessed.

Bargaining Power of Buyers –

Increasing

• With availability of multiple

vendors, Buyers have a lot of

choice and this has led to

pressures on the billing rates.

Threat from Substitutes -

Increasing

• Emerging economies like China,

Brazil and Russia can be the

substitute places for ‘offshoring’

taking away the India advantage

to certain extent.

Source: Institutional Research

Interfirm rivalry high

Threat to new entrant increasing

• MNCs are entering to appliances

business with strong brand value.

Bargaining power of supplier High

• Intense completion in the industry puts

higher pricing pressure.

• Lower entry barriers in the

industry have.

• Led to high concentration in

the industry.

Bargaining power of buyers increasing

• With availability or venders, buyer has

lot of choice this has led to pressure on

products.

Threats from substitutes increasing

• Emerging economy and other

international Players taking the

advantage to certain extent.



BUY


Valuation & Outlook

At the CMP of `661, Havells is trading at 50.4x, and 39.06x its FY19E, and FY20E EPS of `13.16

and `17.00. Compared to its peers; Havells is trading at a discount P/E multiple, although its

margins are better than or comparable to peers. We initiate coverage on Havells India Ltd with

a BUY rating and attach a multiple of 47.6 xs to Havells’ FY20E earnings (EPS) to arrive at the

target price of `809, indicating a potential upside of 22%.

1 year forward P/E Chart

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PE Band - Havells India Ltd.

Price

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Source: Capitaline, Institutional Research

1 year forward P/ BV Chart

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Price-To-Book Band - Havells India Ltd.

Price

6x

7x

8x

9x

Source: Capitaline, Institutional Research



BUY


Income Statement

Y/E Mar (`mn) FY15 FY16 FY17 FY18 FY19E FY20E

Net revenues 85,694 76,126 61,558 81,464 97,757 1,17,308

Raw material cost 48,292 43,749 36,532 49,699 59,143 70,972

EBITDA 7,211 7,580 8,182 10,434 12,708 15,954

EBITDA Margin (%) 8% 10% 13% 13% 13% 14%

Depreciation 1,387 1,344 1,205 1,405 1,955 1,877

Other Income 505 866 1,382 1,179 1,257 1,360

Interest (Net) 640 544 133 248 250 250

Exceptional Items - 8,621 (1,068) (187) - -

PBT 5,690 6,559 8,225 9,960 11,760 15,187

PBT Margin (%) 7% 9% 13% 12% 12% 13%

Tax 1,836 2,193 2,288 3,038 3,528 4,556

Reported PAT 3,854 13,005 4,941 6,735 8,232 10,631

Balance Sheet Y/E Mar (`mn) FY15 FY16 FY17 FY18 FY19E FY20E

Equity capital 624 625 625 625 625 625

Reserves & Surplus 17,557 29,652 32,143 36,667 41,214 46,874

Net worth 18,182 30,277 32,768 37,292 41,840 47,499

Total debt 6,521 172 129 1,112 825 925

Deferred Tax Liability 434 909 1,184 2,117 2,000 2,000

Total Liabilities & Equity 25,138 31,507 35,941 40,775 44,890 50,699

Net block 11,585 11,860 11,987 12,540 14,421 15,719

Investments - - 559 538 600 650

Long Term Loans & Advances 581 166 140 176 150 175

Other Non Current Assets 1,754 308 888 402 450 450

Total Non-Current Assets 18,700 14,814 15,781 29,009 31,871 34,294

Debtors 6,232 2,357 2,307 3,278 3,500 4,000

Cash & bank 7,775 1,420 5,919 3,365 4,768 6,180

Loans & advances 1,723 140 63 284 150 200

Other Current Assets 219 824 776 1,389 1,300 1,250

Total Current Assets 29,612 26,344 32,344 36,896 39,718 42,630

Creditors 11,207 5,845 8,418 16,744 18,050 17,625

Provisions 11,967 6,524 7,334 8,556 8,800 8,750

Current Liab. & Prov. 23,174 12,369 15,752 25,300 26,850 26,375

Total Assets 25,138 31,507 35,941 40,775 44,890 50,699

Key Ratio

Y/E Ma r (`mn) FY15 FY16 FY17 FY18 FY19 E FY2 0 E

Pe r Sha re Ra tios

Fully diluted E P S 6.17 20.82 7.91 10.77 13.16 17.00

Book Value 29 49 53 60 67 76

Dividend per share 2.34 6.00 3.00 3.50 4.11 6.07

Va lua tion Ra tio

P/E 49.68 14.93 58.14 61.65 50.44 39.06

P/BV 29.11 48.71 52.60 59.76 67.03 76.08

EV/EBITDA 25.79 25.43 34.39 39.56 32.34 25.68

EV/Sales 2.17 2.53 4.57 5.07 4.20 3.49

Growth Ra tios

Sales Growth 5% - 11% - 19% 32% 20% 20%

EBITDA Growth - 3% 5% 8% 28% 22% 26%

Net Profit Growth - 14% 237% - 63% 40% 22% 29%

Common size Ra tios

EBITDA Margin 8% 10% 13% 13% 13% 14%

EBIT margin 7% 8% 11% 11% 11% 12%

PAT margin 4% 17% 8% 8% 8% 9%

Re turn ra tios

RoNW 21% 43% 15% 18% 20% 22%

RoCE 24% 20% 20% 23% 25% 29%

Turnove r ra tios (da ys)

Debtors ( Days) 27 11 14 15 13 12

Creditors ( Days) 103 70 94 120 105 90

Inventory (Days) 45 24 38 73 65 53

Solve nc y Ra tios

Total Debt/Equity 0.36 0.01 0.00 0.03 0.02 0.02


Cash Flow

Y/E Mar (`mn) FY15 FY16 FY17 FY18 FY19E FY20E

PBT 5,690 6,559 8,225 9,960 11,760 15,187

Add: Depreciation 1,387 1,344 1,205 1,405 1,955 1,877

Chg. in working capital 6,438 7,538 2,617 (4,997) 1,272 3,387

Taxes paid 1,836 2,193 2,288 3,038 3,528 4,556

CF from operations 11,678 13,248 9,760 3,330 11,460 15,895

Capex (1,739) (2,171) (2,427) (15,968) (1,881) (1,298)

Purchase of investment 0 (8,429) (666) 1,359 62 50

Other Adjustments (3,478) 0 (48) 69 (6,230) (10,835)

CF from Investing acti. (4,864) 353 (2,160) (9,441) (8,049) (12,083)

Share application money received 99 29 93 147 154 198

Debt Charges (332) 370 1,188 (2,449) 26 (25)

Other changes 0 0 0 0 (2,187) (2,573)

CF from Financing acti. (7,538) (6,213) (975) (4,091) (2,007) (2,400)

Chg. in cash (2,776) (726) 4,535 (2,532) 1,404 1,412

Opening cash 6,553 3,707 1,420 5,919 3,365 4,768

Closing cash 3,707 1,420 5,919 3,365 4,768 6,180

Du-Pont Analysis

(%) FY16 FY17 FY18 FY19E FY20E

PAT/ PBT 198% 60% 68% 70% 70%

PBT/ PBIT 105% 118% 110% 109% 108%

PBIT / Sales 8% 11% 11% 11% 12%

Sales / Assets 174% 119% 123% 136% 152%

Assets/ Equity 144% 157% 177% 171% 162%

ROE 43% 15% 18% 20% 22%



BUY


NOTES

Recommendation Rationale

Recommendation Expected Absolute Return (%) over 12 months

BUY >15%

ACCUMULATE <10% and >15%

NEUTRAL <-10% and <10%

REDUCE >-10% and <-20%

SELL >-10

Expected absolute returns are based on share price at market close unless otherwise stated. Stock recommendations are based on absolute upside (downside) and have a 12-month

horizon. Our target price represents the fair value of the stock based upon the analyst’s discretion. We note that future price fluctuations could lead to a temporary mismatch

between upside/downside for stock and our recommendation.

GEPL CAPITAL Pvt Ltd

Reg Office: D-21 Dhanraj mahal, CSM Marg, Colaba, Mumbai 400001

Analyst Certification

The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or

indirect compensation in exchange for expressing specific recommendations or views in this report:

Name : Omkar Tanksale

Sector : IT Services

Disclaimer:

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