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MARICO LTD.

INDUSTRY CMP Recommend Add on

Dips to Sequential

Targets Time

Horizon

DATE 16thJuly 2018

Personal

Products Rs. 354.9

Buy at CMP

and add on

declines

Rs.320-324 Rs.396-412 3-4

Quarters

Value-added hair oils to drive premiumisation Focus on rural market could aid medium-term growth

Softening copra prices could result in better

earnings

Distribution initiatives to aid market share gains

Investors may sell 60-65% of their holdings on first target being achieved and later keep a stoploss of first target for the balance holdings, in case the second target takes time to be achieved.

Investors may also maintain Rs.301 as level below which investment position needs to be reviewed, including the possibility to exit

Rs 301

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HDFC Scrip Code MARINDEQNR

BSE Code 531642

NSE Code MARICO

Bloomberg MRCO IN

CMP (13-July-18) Rs. 354.9

Equity Capital (Cr) 129.1

Face Value (Rs) 1.0

Eq- Share O/S( Cr) 129.1

Market Cap(Rs Cr) 45814.0

Book Value FY17 (Rs) 19.5

Avg.52 Wk Volume 1212305

52 Week High 366.3

52 Week Low 284.1

Shareholding Pattern % (31-Mar-18)

Promoters 59.7

Institutions 33.9

Non Institutions 6.4

Total 100.0

FUNDAMENTAL ANALYST

Abdul Karim Abdul.karim@hdfcsec.com

Company profile Marico Ltd is one of India's leading consumer products companies, operating in the beauty and wellness space. Marico is engaged in India in four key categories: Coconut oil, value-added hair oil (VAHO), premium refined edible oils, nutritional/healthy foods, and a male-grooming portfolio (youth focus).Marico's India business markets household brands such as Parachute, Parachute Advanced, Saffola, Hair & Care, Nihar, Set Wet and others. It demerged its Kaya Skin Clinic business in 2013, to focus on the domestic as well as the international consumer business. Marico secures 22% of total revenues from the international business, with Bangladesh being the largest contributor. Some of the brands in its international portfolio include Parachute, Hair Code, Fiancee, Caivil, Hercules, BlackChic, Code 10, Ingwe, X-Men, L'Ovite and ThuanPhat. The company is headquartered in Mumbai and owns nine manufacturing facilities across India and five overseas.

Investment rationale •Focus on rural market could aid medium-term growth. •Value-added hair oils to drive premiumisation. •Softening copra prices could result in healthy earnings, going forward. •Distribution initiatives will continue to aid market share gains. •International business is recovering, and will grow going forward.

Concerns •Higher raw material prices, including that of copra. •Macro-economic headwinds, inflation and currency volatility. •Higher advertising & sales promotion spends. •Competition.

View and valuation: A substantial increase in minimum support prices (MSP) of Kharif crops, expectations of farm loan waivers and a better monsoon could bolster the rural economy going forward. Marico has been increasing its rural sales over the last few years. We believe that the weakness in FY18 was more on account of feebleness in the Saffola franchise, and expect FY19E to be a good year. The company could benefit from a favourable base, and a likely correction in copra prices. Marico's domestic revenue growth might remain healthy, given sharp price hikes. Limited MNC competition in core portfolio imparts higher pricing power. Marico remains one of the key beneficiaries of the revival in urban demand (urban is ~65-70% of sales). Recovery in rural growth will further help Marico, as it has initiated steps to enhance penetration in rural areas through the launch of price-point packs in various product segments. However, in the short term, margins could be under pressure, and sustained growth remains a concern, barring that of Parachute. We feel investors could buy the stock at the CMP, and add on dips to the Rs 320-324 band (30x FY20E EPS) for sequential targets of Rs 396 (37x FY20E EPS) and Rs 412 (38.5x FY20E EPS). At a CMP of Rs 354.9, the stock trades at 33.3x FY20E EPS.

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Financial Summary

Particulars (Rscr) Consolidated

Q4FY18 Q4FY17 YoY-% Q3FY18 QoQ-% FY17 FY18 FY19E FY20E

Net Sales 1,480.1 1,314.6 12.6% 1,624.3 -8.9% 5,904.9 6,322.3 7,312.0 8,359.0

EBITDA 252.3 258.6 -2.5% 302.0 -16.5% 1,146.4 1,137.7 1,434.2 1,813.4

PAT 183.2 170.9 7.2% 220.6 -17.0% 795.9 824.8 1,067.7 1,374.9

Diluted EPS (Rs) 1.4 1.3 0.1 1.7 -0.2 6.2 6.4 8.3 10.7

P/E (x) 57.5 55.5 42.9 33.3

EV / EBITDA (x) 39.9 40.3 31.7 24.9

Core RoCE (%) 48.4% 41.0% 50.5% 70.4%

Key Highlights

Marico Ltd is one of India's leading consumer products companies, operating in the beauty and wellness space. Marico provides products and solutions in categories like hair care, health care, skincare and male grooming.

Substantial increase in minimum support

prices (MSP) of Kharif crops, expectation of farm loan waivers and a better-than-expected monsoon could bolster the rural economy, going forward.

We believe the weakness witnessed in FY18 was more on account of feebleness in the Saffola franchise, and expect FY19E could be good year. The company could benefit from a favourable base, and there is the likelihood of a correction in copra prices. Marico's domestic revenue growth might remain healthy, given sharp price hikes.

Limited MNC competition in core portfolio imparts higher pricing power. Marico remains one of the key beneficiaries of the revival in urban demand (urban is ~65-70% of sales). Recovery in rural growth will further help Marico, as it has initiated steps to enhance penetration in rural areas through the launch of price-point packs in various product segments.

Company profile

Marico Ltd is one of India's leading consumer products companies, operating in the beauty and wellness space. It provides products and solutions in the hair care, health care, skincare and male grooming categories. Marico is engaged in India in four key categories: Coconut oil, Value-added hair oil (VAHO), premium refined edible oils and nutritional/healthy foods, and male grooming portfolio (focus on youth).Marico's India business comprises household brands such as Parachute, Parachute Advanced, Saffola, Hair & Care, Nihar, Set Wet, among others.

Marico demerged its Kaya Skin Clinic business in 2013 to focus on its domestic as well as international consumer business. Marico currently operates in 25countries, across emerging markets in Asia and Africa. As on 31-Mar-18, Marico secured 22% of its total revenues from the international business, with Bangladesh (45% of international business) being the largest contributor.

Market share (volume) in key categories (as on 31-Mar-18)

Brand & Territory Market Share Rank

Coconut oil (India) 59.0% 1st

Saffola (India) 69.0% 1st

Value-added hair oil (India) 34.0% 1st

Value-added hair oil (Bangladesh) 21.0% 2nd

Post-wash leave-on serums (India) 82.0% 1st

Parachute coconut oil (Bangladesh) 87.0% 1st

Hair creams/Gels (India)* 63.0% 1st

X-Men male shampoo (Vietnam)* 39.0% 1st

X-Men male aerosol deodorants (Vietnam)* 28.0% 2nd

Saffola Oats (India)* 28.0% 2nd

* Value Market Share (Source: Company, HDFC sec)

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Investment rationale

Focus in rural market could aid medium-term growth Marico derives 32% of its sales from rural markets – one of the lowest among FMCG peers in India (compared to 52% for Emami, 42% for Dabur and HUL, and 38% for Britannia), given its focus on large packs in the past. However, it plans to increase its rural reach through Low Unit Packs (LUPs) that now comprise a mere 5% of revenue. In Q4FY18, rural growth outpaced urban growth for the third straight quarter. In Q4FY18, Marico’s rural sales grew by 12%, while urban sales grew by 5% in value terms. In FY18, Marico’s rural sales (32% of the India turnover in FY18) grew by 8%, while urban sales grew by 7% in value terms.

The Government’s decision (announced on 6-Jul-18) to hike the minimum support price (MSP) for 14 kharif crops could boost farmers’ income, resulting in a huge rural demand push to the Indian economy. We expect the Government's spending plans to bolster rural development, and the raising of the MSP of crops and farm loan waiver should help Marico regain momentum in rural demand in the medium term.

As on 31-Mar-18, Marico has been tracking the rural business on a daily basis, with 140 super distributors and 4694 stockists across 53,000+ towns and 52 sales territories. A scale-up in rural markets can be a key driver of volumes in the medium term.

Value-added hair oils to drive premiumisation Value-added hair oils are underpenetrated products, and offers headroom for growth via market development. Marico’s flagship brand Parachute has high recall value and enjoys a leadership position in the category, which enables Marico to launch value-added hair oils by extending this brand.

In Q4FY18, a broad-based recovery was witnessed in Value-added hair oils (VAHO)- 11% volume growth and 9% value growth in Q4FY18, and 4% volume growth and value growth in FY18 on the back of broad-based growth in the franchise. A strong offtake in growth led to the company to consolidate its market leadership with a volume share of ~34% and value share of ~26%.

The company has increased its volume market share in hair oil from29% in FY15-end to 34% by FY18-end. Its value share also increased from 22%to 26% during the same period. Considering the rising demand of value-added hair oils across all classes and geographies on the back of driving premiumisation and the scaling up of new launches, ~10% volume CAGR is expected over the next few years for this category. This category could also drive a sustainable improvement in margins through premiumisation. Nihar Shanti Amla and Nihar Naturals SarsonKesh Tel are expected to extend its lead in market share in India going forward, and growth in the value-added products is expected in the Bangladesh market, led by healthy growth in the company’s flagship brand Parachute Advanced Beliphool. Volume market share details

Categories & Territory Brands Market Share Rank

Coconut oil (India) Parachute &Nihar 58% 1st

Value-added hair oil (India) Hair & Care, Parachute Advanced, Nihar 32% 1st (Source: Company, HDFC sec)

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Softening copra prices could result in healthy earnings going forward Copra is the main raw material for Marico, and is responsible for 40% of the company’s material costs. Copra prices have witnessed a hyper-inflationary phase since Jun- 16, with prices increasing by 59% from Rs 8635/per 100 kg in end-Mar-18 to Rs 13,700/per 100 kg in Feb-18.However, Marico increased Parachute prices by only ~30% during the same period. Copra prices have corrected ~19% since Feb-18, fromRs13,700 to Rs11,100/per 100 kg currently. Stable and soft copra prices could help to push gross margins upwards from existing levels. Further, during the time of soft copra prices sales of coconut oil rise, leading to volume growth for Marico.

(Source: Bloomberg, HDFC sec)

The coconut oil segment is likely to post robust growth in the medium term on consolidation-led opportunities under the GST (Goods & Services Tax) regime- unbranded forms 30%-35% of the market. Rising preference for this brand by consumers is expected to help as well. Distribution initiatives to continue to aid market share gains Marico sells over 152mn packs every month, through about 4.7mn retail outlets services by its nationwide distribution network comprising four Regional Offices (RO), 31 carrying & forwarding agents (CFAs), and about 5,600 distributors and stockists. Marico’s distribution network covers almost every Indian town with a population over 10,000.Marico has increased its retail outlet reach by 30% between FY16-FY18. Over the years, Marico has initiated various distribution programmes. Its distribution strategies have helped to expand its market share and growth better than its peers. Its distribution projects – Project One, Project Vikas Daud and Geo tagging and analytics have not only improved sales but also reduced manpower by 13%.

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Marico’s Distribution Initiatives Marico’s Distribution Network in India

Project One

Initiated in FY14-FY15 for increasing its direct distribution in the Top -6 metros to increase its direct reach.

Direct reach increased by 60% within the first year of its launch.

In end-FY17, it added 86,000 outlets across 34 cities to its total direct reach since the time of its launch.

Yielded additional turnover of Rs 880mn/year from the time of launch.

Project VikasDaud

Project Vikas-Daud using the van route to increase its direct distribution in the rural areas.

Increased direct rural reach by 25% to 50,000 villages in FY15 over a span of two years.

Geo Tagging Project

Project on geo-tagging and analytics was launched for route optimisation.

It was extended to 26 distributors across eight cities, enabling coverage of more outlets with less manpower.

In this project, all the outlets with direct reach are mapped and the route is optimised

It helped to avoid overlap and help minimisation of route conflict.

It has helped in improving efficiency in sales’ beats, and reduced manpower by 13%. (Source: Company, HDFC sec)

Apart from the above-mentioned initiatives, the company’s Go-To-Market strategy will focus on improving the width and depth of its distribution – both direct and wholesale. Strategic initiatives in sales and the supply chain will aim at ushering in efficiency in selling and go-to-market. International business is recovering and expects to grow going forward Marico’s international business contributes 22% to its revenue, as on 31-Mar-18. Its International business has witnessed some recovery, with a healthy constant currency growth of 16% (volume growth of 5%) in Q4FY18.In the full year, the business grew by 9% in constant currency terms (volume growth of 1%) over FY17. All international regions except for Vietnam posted double-digit constant currency growth. Bangladesh continued its good run, posting 17% constant currency growth in Q4FY18 and MENA staged a much-awaited comeback on a low base. Moderate growth is expected in the Middle East and Africa, with double-digit constant currency growth in Bangladesh. Due to macro economic uncertainties in markets like Vietnam, Saudi Arabia, Egypt, growth has been muted in the last two years. Over the past three years, the company has systematically invested in core international markets to strengthen both the brands and organisational capability to handle growth. The company is confident that each of these markets is well-poised to capitalise on market opportunities. The business in Bangladesh witnessed a promising year, and is likely to continue the momentum as the medium-term macro prospects look promising. As a market leader, the Vietnam business will invest in reigniting the male grooming category, and excellence in sales and distribution systems. Myanmar and the rest of South-east Asia are the new growth engines in the future. In the MENA region, the company could focus on getting its basics right by judiciously investing in brands and Go-to-Market initiatives. The South African business could leverage the new acquisition of Isoplus to gain scale and increase profitably. We expect the international business to report an organic topline growth of 12-15% in constant currency in the near to medium term, and 16-17% operating margins in the medium term.

Particulars Urban Rural

Sales Territories 253 52

Town’s covered 600 53,000

Distributor 740 -

Super Distributor - 140

Stockists - 4,694

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(Source: Company, HDFC sec)

Concerns

Seasonality: Q1 and Q3 are better quarters for Marico, as compared to the other two.

Higher raw material prices Marico’s key raw materials like Copra and LLP (Light Liquid Paraffin) have witnessed a price rise over the last year, though they have softened lately. A further rise in copra and LLP prices could impact revenue growth and margins, going forward.

Macro-economic headwinds and currency volatility Marico derives 22% of its revenues from the international markets. Owing to macroeconomic uncertainties in markets like Vietnam, Saudi Arabia, Egypt, growth has been muted in the last two years. Presence in these markets exposes Marico to political as well as currency risks. Currency volatility could also impact the company’s interest payments on foreign currency debt.

Higher advertising &sales promotion spends Advertising &sales promotions spend was up 14% in Q4FY18, on a comparable basis. In the medium term, ASP will be stepped up to support forthcoming innovations.

Competition Company faces severe competition from organised and unorganised players. Competition is expected to increase in the coming years, with larger FMCG players in the Indian market like ITC Limited, L'Oréal, Emami, Dabur India and Adani Wilmer. Apart from this, the Indian market also imports a host of products from overseas markets, which has increased the competition, apart from that between the organised and the local unorganised sector.

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Demand is likely to come down because of a rise in inflation in India There are fears that an economic slowdown could hamper demand in India, especially for discretionary products. Rising food prices, inflation and interest rates are already impacting demand. Mixed outcome of innovations/M&A initiatives in the past Marico has an active acquisition track record in the past. The portfolio it built from acquisitions like Paras has not scaled up as expected earlier. This can lead to acquisition-led risks. Marico’s innovations outside of its core portfolio have met with mixed results in the past. While new launches like Saffola Oats have done well, its personal care range under the Parachute brand and the portfolio acquired from Paras continue to struggle.

View and valuation A substantial increase in minimum support prices (MSP) of Kharif crops, expectations of farm loan waivers and a better monsoon could bolster the rural economy going forward. Marico has been increasing its rural sales over the last few years. We believe that the weakness in FY18 was more on account of feebleness in the Saffola franchise, and expect FY19E to be a good year. The company could benefit from a favourable base, and a likely correction in copra prices. Marico's domestic revenue growth might remain healthy, given sharp price hikes. Limited MNC competition in core portfolio imparts higher pricing power. Marico remains one of the key beneficiaries of the revival in urban demand (urban is ~65-70% of sales). Recovery in rural growth will further help Marico, as it has initiated steps to enhance penetration in rural areas through the launch of price-point packs in various product segments. However, in the short term, margins could be under pressure, and sustained growth remains a concern, barring that of Parachute. We feel investors could buy the stock at the CMP, and add on dips to the Rs 320-324 band (30x FY20E EPS) for sequential targets of Rs 396 (37x FY20E EPS) and Rs 412 (38.5x FY20E EPS). At a CMP of Rs 354.9, the stock trades at 33.3x FY20E EPS.

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Particulars (Rs Cr) Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%) FY18 FY17 YoY (%)

Net Revenue 1,480.1 1,314.6 12.6 1,624.3 -8.9 6,322.3 5,904.9 7.1

Material Expenses 789.6 628.9 25.6 868.8 -9.1 3,351.0 2,831.0 18.4

Employee Expenses 103.5 98.1 5.4 102.6 0.8 422.2 404.2 4.5

ASP Expenses 117.5 111.6 5.3 143.9 -18.4 582.8 657.9 -11.4

Other Expenses 217.2 217.4 -0.1 207.0 5.0 828.6 865.5 -4.3

EBITDA 252.3 258.6 -2.5 302.0 -16.5 1,137.7 1,146.4 -0.8

Depreciation 23.1 26.5 -12.9 21.3 8.3 89.1 89.9 -1.0

EBIT 229.2 232.1 -1.3 280.7 -18.4 1,048.6 1,056.5 -0.7

Other Income 22.9 22.3 2.7 17.4 31.4 84.6 97.2 -13.0

Interest Cost 5.3 4.7 11.6 3.9 36.3 16.2 16.6 -2.3

PBT 246.8 249.7 -1.2 294.2 -16.1 1,117.1 1,137.1 -1.8

Tax 64.2 78.4 -18.0 70.9 -9.4 289.6 337.7 -14.3

PAT 183.2 170.9 7.2 220.6 -17.0 824.8 795.9 3.6

EPS 1.4 1.3 7.2 1.7 -17.0 6.4 6.2 3.6

Year End March (Rs Cr) FY16 FY17 FY18 FY19E FY20E

Net Revenues 6,017.3 5,904.9 6,322.3 7,312.0 8,359.0

Growth (%) 5.0 -1.9 7.1 15.7 14.3

Material Expenses 3,070.6 2,831.0 3,351.0 3,790.0 4,136.9

Employee Expense 373.4 404.2 422.2 480.1 543.6

ASP Expense 692.7 657.9 582.8 696.1 835.3

Distribution Expense 254.1 249.4 267.0 292.5 334.4

Other Expenses 575.2 616.1 561.6 619.1 695.4

EBITDA 1,051.4 1,146.4 1,137.7 1,434.2 1,813.4

EBITDA Growth (%) 20.8 9.0 -0.8 26.1 26.4

EBITDA Margin (%) 17.5 19.4 18.0 19.6 21.7

Depreciation 94.9 89.9 89.1 96.1 104.7

EBIT 956.5 1,056.5 1,048.6 1,338.2 1,708.7

Other Income (Including EO Items) 93.2 97.2 84.6 129.6 171.3

Interest 20.6 16.6 16.2 11.5 5.5

PBT 1,029.2 1,137.1 1,117.1 1,456.3 1,874.4

Total Tax 305.3 337.7 289.6 385.9 496.7

Minority Interest 0.5 3.5 2.8 2.7 2.8

RPAT 723.3 795.9 824.8 1,067.7 1,374.9

Adjusted PAT 723.3 795.9 824.8 1,067.7 1,374.9

APAT Growth (%) 26.1 10.0 3.6 29.5 28.8

Adjusted EPS (Rs) 5.6 6.2 6.4 8.3 10.7

Quarterly Financials

Annual Financial Statement

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Year End March (Rs Cr) FY16 FY17 FY18 FY19E FY20E

SOURCES OF FUNDS

Share Capital - Equity 129.0 129.1 129.1 129.1 129.1

Reserves 1,888.4 2,196.6 2,388.5 2,637.1 3,044.1

Total Shareholders Funds 2,017.4 2,325.7 2,517.5 2,766.2 3,173.1

Minority Interest 14.3 13.3 16.1 18.8 21.6

Long Term Debt - - - - -

Short Term Debt 152.8 238.8 238.8 88.8 68.8

Total Debt 152.8 238.8 238.8 88.8 68.8

Net Deferred Taxes -42.1 12.5 20.2 20.2 20.2

Non Current Liabilities 12.8 15.9 18.2 21.0 24.1

TOTAL SOURCES OF FUNDS 2,155.2 2,606.2 2,810.8 2,914.9 3,307.8

APPLICATION OF FUNDS

Net Block 1,081.1 1,084.7 1,130.5 1,105.9 1,126.2

CWIP 36.7 11.2 26.8 26.8 26.8

LT Loans & Advances 17.5 19.4 20.8 24.1 27.5

Other Non Current Assets 42.6 30.7 30.7 30.7 30.7

Total Non-current Assets 1,177.9 1,146.0 1,208.8 1,187.5 1,211.2

Inventories 925.6 1,253.4 1,510.9 1,690.5 1,707.3

Debtors 252.4 247.0 340.6 393.9 450.3

Non Current Assets 129.9 108.1 113.1 130.5 148.9

Cash & Equivalents 830.3 835.5 699.5 1,014.9 1,516.1

Total Current Assets 2,138.2 2,444.0 2,664.0 3,229.8 3,822.5

Creditors 1,056.1 875.4 937.2 1,352.7 1,546.4

Current Liabilities 104.9 108.4 124.7 149.6 179.6

Total Current Liabilities 1,161.0 983.8 1,061.9 1,502.4 1,726.0

Net Current Assets 977.2 1,460.2 1,602.0 1,727.4 2,096.6

TOTAL APPLICATION OF FUNDS 2,155.2 2,606.2 2,810.8 2,914.9 3,307.8 (Source: Company, HDFC sec)

Consolidated Balance Sheet

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Year End March (Rs Cr) FY16 FY17 FY18 FY19E FY20E

Reported PBT 1,033.8 1,137.1 1,117.1 1,456.3 1,874.4

Non-operating & EO Items -43.3 - - - -

Interest Expenses -13.5 16.6 16.2 11.5 5.5

Depreciation 101.8 89.9 89.1 96.1 104.7

Working Capital Change -0.1 -541.5 -230.1 40.1 -18.0

Tax Paid -246.2 -337.7 -289.6 -385.9 -496.7

OPERATING CASH FLOW ( a ) 832.6 364.4 702.7 1,218.0 1,469.9

Capex -85.6 -68.0 -122.0 -100.0 -125.0

Free Cash Flow (FCF) 746.9 296.4 580.7 1,118.0 1,344.9

Investments -117.9 -31.3 18.9 - -

Non-operating Income -32.1 65.0 6.3 -3.3 -3.4

INVESTING CASH FLOW ( b ) -235.7 -34.3 -96.9 -103.3 -128.4

Debt Issuance/(Repaid) - 86.0 - -150.0 -20.0

Interest Expenses -20.4 -16.6 -16.2 -11.5 -5.5

FCFE 576.5 399.5 589.6 953.2 1,316.0

Share Capital Issuance 0.5 33.6 -0.0 -0.0 -

Dividend -502.5 -521.2 -632.9 -819.1 -968.0

Others -58.9 3.1 2.4 2.7 3.1

FINANCING CASH FLOW ( c ) -581.3 -415.1 -646.7 -977.8 -990.3

NET CASH FLOW (a+b+c) 15.6 -85.0 -40.9 136.9 351.1

EO Items, Others -96.6 - - - -

Closing Cash & Equivalents 317.1 227.3 157.8 323.3 674.4 (Source: Company, HDFC sec)

Cash Flow

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Year ending March FY16 FY17 FY18 FY19E FY20E

PROFITABILITY (%)

GPM 49.0 52.1 47.0 48.2 50.5

EBITDA Margin 17.5 19.4 18.0 19.6 21.7

EBIT Margin 15.9 17.9 16.6 18.3 20.4

APAT Margin 12.0 13.5 13.0 14.6 16.4

RoE 37.7 36.7 34.1 40.4 46.3

RoIC (or Core RoCE) 44.7 48.4 41.0 50.5 70.4

RoCE 34.1 34.1 31.5 38.4 45.2

EFFICIENCY

Tax Rate (%) 29.7 29.7 25.9 26.5 26.5

Fixed Asset Turnover (x) 5.6 5.0 4.9 5.3 5.5

Inventory (days) 56.1 77.5 87.2 84.4 74.5

Debtors (days) 15.3 15.3 19.7 19.7 19.7

Other Current Assets (days) 7.9 6.7 6.5 6.5 6.5

Payables (days) 64.1 54.1 54.1 67.5 67.5

Other Current Liab&Provns(days) 6.4 6.7 7.2 7.5 7.8

Cash Conversion Cycle (days) 8.9 38.6 52.1 35.6 25.3

Net D/E (x) -0.3 -0.3 -0.2 -0.3 -0.5

Interest Coverage (x) 0.0 0.0 0.0 0.0 0.0

PER SHARE DATA (Rs)

EPS 5.6 6.2 6.4 8.3 10.7

CEPS 6.3 6.9 7.1 9.0 11.5

Dividend 3.4 3.5 4.3 5.5 6.5

Book Value 15.6 18.0 19.5 21.4 24.6

VALUATION

P/E (x) 63.3 57.5 55.5 42.9 33.3

P/BV (x) 22.7 19.7 18.2 16.6 14.4

EV/EBITDA (x) 43.4 39.9 40.3 31.7 24.9

EV/Revenues (x) 7.6 7.7 7.2 6.2 5.4

OCF/EV (%) 1.8 0.8 1.5 2.7 3.3

FCF/EV (%) 1.3 0.7 1.3 2.4 3.0

FCFE/Mkt Cap (%) 1.3 0.9 1.3 2.1 2.9

Dividend Yield (%) 1.0 1.0 1.2 1.5 1.8 (Source: Company, HDFC sec)

Ratio

14

Page

(Source: Company, HDFC sec)

Daily Closing Price Chart

15

Page

Fundamental Research Analyst: Abdul Karim (abdul.karim@hdfcsec.com) HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:hdfcsecretailresearch@hdfcsec.com. Compliance Officer: Binkle R. Oza Email: complianceofficer@hdfcsec.com Phone: (022) 3045 3600

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