CRISIL IERIndependentEquityResearch

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1 MAKING MARKETS FUNCTION BETTER YEARS CRISIL IERIndependentEquityResearch Ashiana Housing Ltd Apollo Hospitals Enterprise Ltd Detailed Report Q1FY13 Results Update Enhancing investment decisions

2 CRISIL IERIndependentEquityResearch Explanation of CRISIL Fundamental and Valuation (CFV) matrix The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a fivepoint scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP). CRISIL Fundamental Grade Assessment CRISIL Valuation Grade Assessment 5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP) 4/5 Superior fundamentals 4/5 Upside (1-25% from CMP) 3/5 Good fundamentals 3/5 Align (+-1% from CMP) 2/5 Moderate fundamentals 2/5 Downside (negative 1-25% from CMP) 1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP) About CRISIL Limited CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations. About CRISIL Research CRISIL Research is India's largest independent and integrated research house. We provide insights, opinions, and analysis on the Indian economy, industries, capital markets and companies. We are India's most credible provider of economy and industry research. Our industry research covers 7 sectors and is known for its rich insights and perspectives. Our analysis is supported by inputs from our network of more than 4,5 primary sources, including industry experts, industry associations, and trade channels. We play a key role in India's fixed income markets. We are India's largest provider of valuations of fixed income securities, serving the mutual fund, insurance, and banking industries. We are the sole provider of debt and hybrid indices to India's mutual fund and life insurance industries. We pioneered independent equity research in India, and are today India's largest independent equity research house. Our defining trait is the ability to convert information and data into expert judgments and forecasts with complete objectivity. We leverage our deep understanding of the macro economy and our extensive sector coverage to provide unique insights on micro-macro and cross-sectoral linkages. We deliver our research through an innovative web-based research platform. Our talent pool comprises economists, sector experts, company analysts, and information management specialists. CRISIL Privacy CRISIL respects your privacy. We use your contact information, such as your name, address, and id, to fulfill your request and service your account and to provide you with additional information from CRISIL and other parts of The McGraw-Hill Companies, Inc. you may find of interest. For further information, or to let us know your preferences with respect to receiving marketing materials, please visit You can view McGraw-Hill s Customer Privacy Policy at Last updated: April 3, 212 Analyst Disclosure Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company. Disclaimer: This Company-commissioned CRISIL IER report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose.

3 MAKING MARKETS FUNCTION BETTER YEARS Ashiana Housing Ltd Timely approvals to ensure growth momentum Fundamental Grade Valuation Grade Industry 4/5 (Superior fundamentals) 5/5 (CMP has strong upside) Real Estate Management & Development Ashiana Housing Ltd s (Ashiana s) Q1FY13 results were in line with CRISIL Research s expectations. Revenues de-grew by 24% y-o-y to Rs 37 mn due to the company s transition to the contract completion method from the percentage of completion method. Reported PAT declined by 32% to Rs 89 mn. Since we had already factored in the impact of shift in accounting methodology on revenues and earnings, we maintain our earnings estimates. We also maintain our fundamental grade of 4/5. Growth in area constructed and realisations but booking levels decline Ashiana s equivalent area constructed grew by 3% y-o-y to.28 mn sq.ft. Lower growth was due to non-availability of buildable inventory and was not a surprise as we had already factored in the same in our projections. With no new project launches during the quarter and near-booked status of one of the big projects - Ashiana Aangan (total project size of 2.6 mn sq.ft; booked 2.2 mn sq.ft. by FY12 and 2.4 mn sq.ft. by Q1FY13), bookings declined by 22% y-o-y to.3 mn sq.ft. Average realisation grew by 13% y-o-y and 7% q-o-q to Rs 2,474 per sq.ft. partly due to increase in contribution from high-value projects. The company was successful in increasing prices in most of the projects, reflecting its ability to pass on the rise in input costs. Strong project pipeline but approval delays play spoilsport Ashiana has a strong project pipeline of 9.6 mn sq.ft. but delay in approvals has impacted new launches. Of the total land bank of 148 acres (9.6 mn sq.ft.), 85% is in Rajasthan. The land conversion process in Rajasthan has been in limbo for the past one year as the Rajasthan High Court has put a stay on it and has instructed the government to introduce a transparent process. Ashiana is also awaiting approvals for Halol and Kolkata land parcels totaling a saleable area of 1.4 mn sq.ft. Hence, approvals for future projects is a key monitorable. Pre-tax operating cash flows remain strong Shift in the accounting methodology is expected to impact revenues and earnings in the near term. However, there will be no impact on cash flows given the strong booking across ongoing projects. Ashiana s pre-tax operating cash flows in the ongoing projects, a reflection of its financial health, have been strong in the past one year. Pre-tax operating cash flows increased from Rs 535 mn in FY11 to Rs 1,97 mn in FY12 and remained healthy at Rs 278 mn in Q1FY13. We expect the momentum to continue and anticipate Rs 1,9 mn cash from operations over the next two years. Reiterate our fair value estimate of Rs 25; CMP has strong upside We continue to use the net asset value method to value Ashiana and reiterate our fair value of Rs 25 per share. At the current market price of Rs 16, the valuation grade is 5/5. KEY FORECAST (Rs mn) FY1 FY11 FY12 FY13E FY14E Operating income 1,14 1,396 2,417 1,372 1,497 EBITDA Adj Net income Adj EPS-Rs EPS growth (%) (38.8) 13.9 Dividend Yield (%) RoCE (%) RoE (%) PE (x) P/BV (x) EV/EBITDA (x) NM: Not meaningful; CMP: Current market price estimates July 3, 212 Fair Value Rs 25 CMP Rs 16 CFV MATRIX KEY STOCK STATISTICS NIFTY/SENSEX 52/17144 NSE/BSE ticker ASHIANA/ASHIHOU Face value (Rs per share) 1 Shares outstanding (mn) 18.6 Market cap (Rs mn)/(us$ mn) 2,978/54 Enterprise value (Rs mn)/(us$ mn) 2,427/44 52-week range (Rs)/(H/L) 185/123 Beta 1.4 Free float (%) 33.9% Avg daily volumes (3-days) 5,121 Avg daily value (3-days) (Rs mn).9 SHAREHOLDING PATTERN* 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Excellent Fundamentals Fundamental Grade PERFORMANCE VIS-À-VIS MARKET Returns 1-m 3-m 6-m 12-m Ashiana -5% -8% 7% 5% NIFTY -1% -1% 2% -5% ANALYTICAL CONTACT Poor Fundamentals Strong Downside Valuation Grade.2%.2%.4%.6% Strong Upside 33.7% 33.7% 33.5% 33.3% 66.1% 66.1% 66.1% 66.1% Sep-11 Dec-11 Mar-12 Jun-12 Promoter FII Others Mohit Modi (Director) mohit.modi@crisil.com Ravi Dodhia ravi.dodhia@crisil.com Prateek S Chauhan prateek.chauhan@crisil.com Bhaskar Bukrediwala bhaskar.bukrediwala@crisil.com Client servicing desk clientservicing@crisil.com For detailed initiating coverage report please visit: CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters. 1

4 CRISIL IERIndependentEquityResearch Q1FY13 Result Summary (Rs mn) Q1FY13 Q4FY12 Q1FY12 q-o-q (%) y-o-y (%) Net sales (66.) (23.7) Raw materials cost (67.5) (19.6) Raw materials cost (% of net sales) 51.5% 53.9% 48.9% -243bps 263bps Employees cost (24.8) (.5) Other expenses (46.9) (24.7) EBITDA (71.7) (34.4) EBITDA margin 3.1% 36.2% 35.% -611bps -488bps Depreciation EBIT (73.2) (36.4) Interest and finance charges (5.5) 37.2 Operating PBT (74.) (38.6) Other Income PBT (67.3) (31.1) Tax (7.1) (27.2) PAT (66.6) (31.8) Adj PAT (66.6) (31.8) Adj PAT margin 29.% 29.5% 32.4% -54bps -341bps No of equity shares (mn) Adj EPS (Rs) (66.6) (31.8) Area constructed grew marginally y-o-y however, area booked declined significantly (lakh sq.ft.) % % 21% 21% 18% -11% -4% -41% % 3% 2% 1% % -1% -2% -3% -4% -5% -6% (lakh sq.ft.) 6 24% 27% 5 18% 4% 1% 4-1% -12% 3 2-4% % 3% 1% -1% -3% -5% -7% Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Equivalent area constructed q-o-q growth (RHS) Area booked q-o-q growth (RHS) 2

5 MAKING MARKETS FUNCTION BETTER Ashiana Housing Ltd YEARS Jaipur, Bhiwadi contributed 75% to total bookings 1% 1% 9% 8% 38% 36% 34% 35% 37% 3% 3% 12% 7% 13% 9% 9% 3% 6% 1% 13% 16% 14% 1% 1% 14% 5% 11% 7% 4% 7% 5% 5% 6% 2% 1% 3% 4% 3% 62% 2% 37% 38% 43% 44% 47% 51% 44% 1% % Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Jaipur Lavasa Jodhpur Jamshedpur Bhiwadi Active senior living segment s contribution rose in Q1FY13 1% 5% 1% % 1% 1% 9% 8% 7% 6% 88% 86% 92% 5% 91% 95% 98% 94% 91% 4% 3% 2% 1% % 12% 14% 8% 4% 4% 2% 5% 8% Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Active senior living Group housing Hotel & Retail Revenues declined due to shift in accounting methodology... (Rs mn) 1, (%) Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun leading to lower PAT (Rs mn) Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 (%) Revenue EBITDA margin (RHS) PAT PAT margin (RHS) Share price movement Fair value movement since initiation (Rs) (') Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 May-9 Aug-9 Nov-9 Feb-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Oct-11 Jan-12 Apr-12 Jul-12 Nov-1 Dec-1 Feb-11 Mar-11 May-11 Jun-11 Jul-11 Sep-11 Nov-11 Dec-11 Feb-12 Mar-12 May-12 Jun-12 Jul-12 -indexed to 1 ASHIANA Source: NSE, CRISIL Research NIFTY Total Traded Quantity(RHS) CRISIL's Fair Value Ashiana Source: NSE, BSE, CRISIL Research 3

6 CRISIL IERIndependentEquityResearch Valuation Grade: 5/5 We continue to value Ashiana by the net asset value method and retain our fair value of Rs 25 per share. At the current market price of Rs 16, the valuation grade is 5/5. We continue to value the land parcels at cost where projects are not yet conceptualised due to approval delays. One-year forward P/E band One-year forward EV/EBITDA band (Rs) 25 (Rs mn) 4,5 2 4, 3,5 15 3, 2,5 1 2, 1,5 5 1, 5 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Ashiana 2x 3x 4x 5x 6x Source: NSE, CRISIL Research EV 2x 3x 4x 5x Source: NSE, CRISIL Research P/E premium / discount to NIFTY P/E movement % -1% (Times) 14-2% 12-3% -4% -5% -6% std dev -7% -8% -9% -1% Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11-1 std dev Oct-11 Jan-12 Apr-12 Jul-12 Premium/Discount to NIFTY Median premium/discount to NIFTY 1yr Fwd PE (x) Median PE Source: NSE, CRISIL Research Source: NSE, CRISIL Research 4

7 MAKING MARKETS FUNCTION BETTER Ashiana Housing Ltd YEARS CRISIL IER reports released on Ashiana Housing Ltd Fundamental Valuation CMP Date Nature of report grade Fair value grade (on the date of report) 3-Nov-1 Initiating coverage 3/5 Rs 22 5/5 Rs Feb-11 Q3FY11 result update 3/5 Rs 22 5/5 Rs Jun-11 Q4FY11 result update 3/5 Rs 22 5/5 Rs Aug-11 Q1FY12 result update 3/5 Rs 195 5/5 Rs Nov-11 Q2FY12 result update 3/5 Rs 195 4/5 Rs Dec-11 Detailed report 4/5 Rs 25 5/5 Rs Feb-12 Q3FY12 result update 4/5 Rs 25 5/5 Rs Jul-12 Q4FY12 result update 4/5 Rs 25 4/5 Rs Jul-12 Q1FY13 result update 4/5 Rs 25 5/5 Rs 16 5

8 CRISIL IERIndependentEquityResearch Annexure: Consolidated Financials Income statement Balance Sheet (Rs mn) FY1 FY11 FY12 FY13E FY14E (Rs mn) FY1 FY11 FY12 FY13E FY14E Operating income 1,14 1,396 2,417 1,372 1,497 Liabilities EBITDA Equity share capital EBITDA margin 35.% 31.6% 34.2% 38.8% 37.9% Reserves 1,117 1,564 2,211 2,6 3,43 Depreciation Minorities EBIT Net worth 1,298 1,75 2,397 2,786 3,229 Interest Convertible debt Operating PBT Other debt () Other income Total debt () Exceptional inc/(exp) 5 9 () - - Deferred tax liability (net) PBT Total liabilities 1,389 1,789 2,646 2,965 3,261 Tax provision Assets Minority interest Net fixed assets PAT (Reported) Capital WIP Less: Exceptionals 5 9 () - - Total fixed assets Adjusted PAT Investments Current assets Ratios Inventory ,24 1,646 1,651 FY1 FY11 FY12 FY13E FY14E Sundry debtors Grow th Loans and advances Operating income (%) (43.2) 9.1 Cash & bank balance ,969 EBITDA (%) (35.6) 6.7 Marketable securities Adj PAT (%) (38.8) 13.9 Total current assets 1,51 1,385 2,423 3,143 4,477 Adj EPS (%) (38.8) 13.9 Total current liabilities ,141 2,177 Net current assets ,78 2,2 2,3 Profitability Intangibles/Misc. expenditure EBITDA margin (%) Total assets 1,389 1,789 2,646 2,965 3,261 Adj PAT Margin (%) RoE (%) Cash flow RoCE (%) (Rs mn) FY1 FY11 FY12 FY13E FY14E RoIC (%) Pre-tax profit Total tax paid (7) (19) (15) (141) (162) Valuations Depreciation Price-earnings (x) Working capital changes (198) 83 (639) (31) 974 Price-book (x) Net cash from operations ,486 EV/EBITDA (x) Cash from investments EV/Sales (x) Capital expenditure (14) (13) (45) (52) (25) Dividend payout ratio (%) Investments and others (92) (269) (221) 76 - Dividend yield (%) Net cash from investments (195) (282) (266) 24 (25) Cash from financing B/S ratios Equity raised/(repaid) Inventory days Debt raised/(repaid) 68 (73) 211 (71) (147) Creditors days Dividend (incl. tax) (33) (38) (49) (48) (54) Debtor days Others (incl extraordinaries) Working capital days (22) Net cash from financing 4 (5) 163 (18) (189) Gross asset turnover (x) Change in cash position (23) 339 1,272 Net asset turnover (x) Closing cash ,969 Sales/operating assets (x) Current ratio (x) Quarterly financials Debt-equity (x) (.) (Rs mn) Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Net debt/equity (x) (.1) (.3) (.3) (.3) (.7) Net Sales Interest coverage Change (q-o-q) -25% 41% -5% 68% -66% EBITDA Per share Change (q-o-q) -39% 25% -1% 88% -72% FY1 FY11 FY12 FY13E FY14E EBITDA margin 35% 31% 32% 36% 3% Adj EPS (Rs) PAT CEPS Adj PAT Book value Change (q-o-q) -23% 12% 5% 75% -67% Dividend (Rs) Adj PAT m argin 32% 26% 28% 3% 29% Actual o/s shares (mn) Adj EPS Note: Financials are not strictly comparable with that of the previous years due to the new format of disclosure under Schedule VI of the Companies Act Source: CRISIL Research 6

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10 CRISIL IERIndependentEquityResearch CRISIL Research Team President Mukesh Agarwal CRISIL Research Analytical Contacts Tarun Bhatia Senior Director, Capital Markets Prasad Koparkar Senior Director, Industry & Customised Research Binaifer Jehani Director, Customised Research Manoj Mohta Director, Customised Research Sudhir Nair Director, Customised Research Mohit Modi Director, Equity Research Jiju Vidyadharan Director, Funds & Fixed Income Research Ajay D'Souza Director, Industry Research Ajay Srinivasan Director, Industry Research Rahul Prithiani Director, Industry Research Business Development Siddharth Arora Director, Customised Research Vinaya Dongre Director, Industry & Customised Research Sagar Sawarkar Associate Director, Equity Research Deepak Mittal Associate Director, Funds & Fixed Income Research Prosenjit Ghosh Associate Director, Industry & Customised Research Business Development Equity Research Ahmedabad / Mumbai Vishal Shah Regional Manager, Business Development vishal.shah@crisil.com I Phone : Delhi Arjun Gopalkrishnan Regional Manager, Business Development arjun.gopalakrishnan@crisil.com I Phone : Bengaluru / Mumbai Shweta Adukia Regional Manager, Business Development Shweta.Adukia@crisil.com I Phone : Kolkata Priyanka Murarka Regional Manager, Business Development priyanka.murarka@crisil.com I Phone : Chennai / Hyderabad Urmil Shah Regional Manager, Business Development urmil.shah@crisil.com I Phone :

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