INGERSOLL RAND (INDIA) LTD (IRIL)

Transcription

1 1-INGERRAND.Ingersoll Rand Ltd..NSE - 03/03/14 D D 22 D 26 J13 25 F 26 M A 16 M 20 J 19 J 19 A 22 S 24 O 28 N 28 D 31 J14 30 F D Trend Daily RETAIL RESEARCH STOCK NOTE March 04, 2014 INGERSOLL RAND (INDIA) LTD (IRIL) Scrip Code Industry CMP Recommendation Target Time Horizon INGSEREQNR ENGINEERING Rs Buy at CMP and add on dips Rs 326 Rs 338 Rs 428 & Rs quarters Price Chart Stock Details BSE Code NSE Code INGERRAND Bloomberg INGR IN Price (Rs) as on Mar 03, Equity Capital (Rs Cr) 31.6 Face Value (Rs) 10 Eq. Shares O/s (cr) 3.16 Market Cap (Rs.) Book Value (Rs) Avg. Volume (52 Week) wk H/L (Rs) (436.8/295.3) Shareholding Pattern (As on Dec 31, 2013) % Holding Promoters 74.0 Institutions 7.6 Non Institutions 18.4 Total Siji A Philip Research Analyst Banks, Capital Goods, Power, Midcaps siji.philip@hdfcsec.com Ingersoll Rand (IRIL) is a global diversified industrial company, engaged in the business of providing solutions for infrastructure development, industrial solutions, residential solutions and security technologies. IRIL manufactures a wide range of air compressors of various capacities with complete air solutions that span the entire compressed air system. The company has emerged as being amongst the largest exporters of engineered goods in India. The company's manufacturing facility is located in Gujarat, NCR and a new one in Chennai. IRIL has rolled out an aggressive plan for growth in India. The foundation of this growth will be customer driven innovation, a robust infrastructure to support after sales services, a significant investment in the facilities to transform them into world class manufacturing operations and a Customer First and Solutionizing mindset. In FY13, IRIL entered High end split Air Conditioner (ACs) & Electronic Door Locking Systems market and commenced operations at their Greenfield plant at Chennai. This new plant would manufacture a range of equipments catering to Bus and Truck Air Conditioners, and Heating, Ventilation and Air Conditioning (HVAC) markets. Going forward, IRIL plans to introduce (1) higher efficiency air compressors and packages, (2) large sized centrifugal compressors, and (3) wide range of stationary screw compressors for Industrial use. Traction from the Chennai plant is getting delayed owing to economic slow down. Despite bleak macro economic scenario, after taking in to account (1) IRIL s strategy to increase exports to parent entity in USA, (2) roll out new products in FY14 and FY15 and (3) possible higher utilization of Chennai plant leading to higher sales and better margins, we feel IRIL could report a better top line and bottom line in FY15. At CMP of Rs , IRIL is quoting at ~16x FY15E EPS of Rs 22.5.Given the company s high cash per share, zero debt status and consistent dividend payout we feel investors could look to buy the stock at CMP and average at band of Rs 326 Rs338 ( xFY15E) for sequential targets of Rs 428 and Rs 495 (19x FY15E 22xFY15E) in the next 2 3 quarters. Financial Summary Particulars FY11 FY12 FY13 FY14E FY15E Net Sales (Rs. Cr.) Operating Profit (Rs. Cr.) OPM (%) 12.7% 10.1% 8.5% 5.6% 6.8% PAT (Rs. Cr.) PAT Margin (%) 12.5% 12.5% 12.0% 9.4% 9.5% EPS (Rs.) PE (x) ( S o (Source: Company, HDFC sec Research) RETAIL RESEARCH Page 1

2 Company Overview Ingersoll Rand (India) Ltd (IRIL), a 74% subsidiary of Ingersoll Rand Company, U.S., has its presence in India since The company established its first manufacturing plant in India in 1965 and became a public limited company in IRIL has three world class manufacturing facilities (ISO 9001 and ISO certified) at Naroda Ahmedabad, Sahibabad NCR, Chennai and Two Engineering and Technology Centers at Bangalore and Chennai. It is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. It also manufactures Air Conditioner package for buses under contract manufacturing arrangement for its fellow subsidiary in India. It sells air compressors primarily in India and also exports to other SAARC countries and United States. IRIL has started operations in its new manufacturing plant at Chennai, Tamil Nadu for manufacture of Heating, Ventilation & Air Conditioning (HVAC) equipments and Transport Refrigeration products in Phase 1 from May In 2012, it launched interactive technologies in air conditioners and locks through its Trane Brand in India. IRIL is a pioneer in bringing centrifugal technology into India and started manufacturing CENTACS (Centrifugal Compressors) way back in 1989 when centrifugal technology was hardly known and accepted. In recent times, with the focus shifting to energy efficient compressor technology, IRIL launched the award winning Nirvana energy saving rotary compressors. The company continues to bring latest technologies to India and launch localized products keeping in mind the requirements of the Indian market. Business: The Indian arm has basically one vertical Industrial Technologies which includes compressors, tools, material handling, pumps and electric vehicles. Lately it has also introduced residential solutions through its Trane brand of interactive technology. Broadly company has classified into has two segments: Air Solutions (AS) and Others. Air Solutions segment includes reciprocating compressors, centrifugal compressors and system components. Others segment comprises of contract manufacturing for associate companies. Its products are primarily sold to industries in the automotive, metals, pharmaceutical and textile sectors. Its business units include Commercial Business Unit, which include products, such as air distribution, air treatment and audit solutions; Industrial Business Unit, which include air receivers, air distribution piping system and condensate drains, and Process Business Unit, which offers process solutions for compressed air systems under brands, such as CENTAC & PET Compressors. RETAIL RESEARCH Page 2

3 Breakup of Sales (Rs cr) FY10 FY11 FY12 FY13 Air Compressors Complete Machine &Acc Air Conditioner Package for Buses Spare Parts & Components Trane solutions optimize indoor environments with a broad portfolio of energy efficient heating, ventilating and air conditioning systems, building and contracting services, parts support and advanced control. None of the IRIL s fellow subsidiaries in India are into compressor manufacturing and are mostly into allied activities like trading, distribution, servicing etc. Parent Ingersoll Rand The promoter of the company, Ingersoll Rand Inc. (NYSE: IR) is an Irish global diversified industrial company founded in Ingersoll Rand is a ~$123 billion global business and the group constitutes of nearly 32 companies spread across the globe. The Indian arm contributed ~ 92 million to the global revenues. With the current rate of growth, management expects the Indian market to become the fourth largest by overtaking the Latin American market in the next 3 4 years. For Ingersoll Rand, the US and Europe are the top two markets, followed by China. The global business of Ingersoll also includes Climate Solutions and Security Technologies besides Industrial Technologies and Residential Solutions Climate Solutions: This newly formed Climate Solutions sector aligns Trane Commercial Systems and Thermo King Businesses under one sector to offer integrated solutions to customers to improve energy efficiency and sustainability. e Climate Solutions sector includes the industry leading heating, ventilation, air conditioning and refrigeration (HVAC R) commercial brands Security Technologies: The sector's market leading products include electronic and biometric access control systems, timeand attendance and personnel scheduling systems; mechanical locks, portable security; door closers, exit devices, architectural hardware and other technologies and services for global security markets. Company s family of brands including Club Car, Ingersoll Rand, Schlage, Thermo King and Trane work together to enhance the quality and comfort of air in homes and buildings; transport and protect food and perishables; secure homes and commercial properties; and increase industrial productivity and efficiency. Ingersoll is one of the leading players in air conditioning systems and services (Trane), transport refrigeration (Thermo King), door hardware (Schlage) and industrial technologies (Club Car) markets. Shareholding pattern Particulars (%) Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Foreign Promoters FIIs Insurance Cos MFs Non-promoter (Others) Total RETAIL RESEARCH Page 3

4 Foreign Promoters Ingersoll Rand Co holds 74% in the company. FIIs have steadily bought down its stake from 3% to 2.8% over the last one year till Sep 13 but the stake has come down to 1.4% in Dec Mutual funds hold 2.4% in the company up from 1.8% from a year ago period. Insurance companies hold 3.8%. Among the top shareholders holding more than 1% in the company, include GIC 1.8%, IDFC Premier Equity Fund 1.10% and Pine bridge Investments Asia 1.8% Industry Overview The global market for compressed air equipment and aftermarket is characterized by a diversified customer base. Air compressors are used in wide spectrum of applications in which compressed air is used as a source of power or as an integrated part of industrial process. Gas compressors find use in any industry where gases are handled as part of the manufacturing process, such as vanaspati, fertilizers, refineries, etc. apart from usage in gas purification and bottling plants including LPG bottling. Some of the applications of air compressors other than mining and construction are stated below: Industry Applications Utility for Compressed Air Textile Spinning, Weaving, Processing etc Pneumatic operations Chemicals Dyes & Intermediaries Filter pres, Spray driers, Material transfer Pharmaceuticals Blister pack machines Pneumatic operations Plastics Blow Moulding Machines, Injection Pneumatic operations, Blowing Moulding Machines Dairy FFS Machines Pneumatic operations Automobiles Pneumatic operations, tyres, tubes Railways Electrical locomotives, diesel loco, Tap changers, contractors, brakes etc auxilliary compressors Availability of technically skilled manpower, coupled with cheap unskilled labor has been drawing many multinational companies to either establish manufacturing facilities into the country directly or through joint ventures with indigenous suppliers. Also, given the economic downturn in the Western countries, several global companies are looking at India as a viable destination for business. Since the beginning of the establishment of the compressor industry in India, Air and Gas compressors have been manufactured with foreign technical collaboration. Most of the established manufacturers continue to enter into foreign collaborations for producing new types of compressors or for updating and expanding the present range. The industry has huge entry barrier with respect to technology and initial capital outlay. Indian compressor industry size is estimated at ~Rs 30 bn. Compressors of power rating up to 5 hp has been dominated by small scale sector. It is estimated that there are around manufacturers of these small compressors spread all over the country. These small compressors are mainly used for garage type applications and the technology involved is very simple and does not require sophisticated machinery. Government initiatives on infrastructure have led to a healthy growth in heavy industries in India. Considering the possibility of 4 5% percent economic growth over the coming years, steady growth can be anticipated in the majority of the heavy industries like metals and mining, hydrocarbons, cement and power. The planning commission s infrastructurerelated investment projection for the 12th five year plan of USD 1025 billion and its impact on the growth of heavy industries is expected to spur the growth of pumps, valves and compressors over the next couple of years. RETAIL RESEARCH Page 4

5 Buyer preference for compressors has also witnessed a shift over the last few years. End user emphasis on efficiency and energy saving has resulted in preference for integrated solution providers who offer equipment along with necessary spares, services and support. Only a few indigenous suppliers along with multinational companies are able to offer desired cost effective solutions to the customers. This is one of the major challenges for most of the small and medium scale manufacturers who lack the required capital and technical expertise. As a consequence, this is likely to reduce growth prospects for small participants and eventually will lead to consolidation in the industry. Overseas Markets While US markets witnesses some signs of revival, resurrection in European demand remains a concern. Leveraging on the low cost and skilled manpower base in India, domestic compressor manufacturers have started to focus on export markets. IRIL, Elgi Equipment etc have been very successful in their export efforts. USA, UK, USSR, Belgium and Italy are the major countries to which compressors are exported from India. Currently US markets have been witnessing revival in the infrastructure spending generating significant demand for compressors. Europe along with emerging markets such as China, Brazil, India etc are likely to witness pick up in demand driven mainly by 1) continued momentum in mining segment and 2) pick up in construction sector. Investment Rationale New Facility at Chennai starts operations in FY13 IRIL had acquired acres of industrial land on lease from Mahindra World City Developers Limited for setting up a new green field manufacturing plant. This land is located at Chengalpattu Taluk in Kancheepuram district in the state of Tamil Nadu. The lease is for a period of 99 years. The Company has invested about Rs.135 cr in this project. This amount is a part of the $ 100 million investment plan, which was announced earlier by the company. The $ 100 million investment plan was spread over five years to roll out new range of products and to increase the localization. The Chennai plant is a multi product factory and will manufacture products for the climate solutions business. This has been a major landmark for IRIL which has now expanded its manufacturing footprint in the southern region of India. The supplier base has also been consolidated to increase the scale of operations of its quality vendors. The company continues to work towards enhancing productivity in all areas of operation. The new manufacturing facility is designed to manufacture a wide range of equipment including Bus and Truck air conditioners and Commercial Heating, Ventilation and Air conditioning products. The delivery of products manufactured and distributed from the new facility has begun in Q1FY14. Products and solutions manufactured at the facility, will be for both domestic and global markets. The new facility is a part of the company's overall growth strategy to drive technology innovation and product development. The Chennai facility reinforces Ingersoll Rand's overall growth strategy to drive innovation, technology and product development specifically catering to markets such as industrial efficiency, transportation, food security, environmental control in buildings and energy management. IRIL also has two manufacturing facilities at Naroda Ahmedabad, Sahibabad NCR, Chennai and Two Engineering and Technology Centers at Bangalore and Chennai. With a workforce of close to 2,000, IRIL has a presence in more than 18 locations in India. Additionally, the plant has recently started manufacturing products for the Climate Solutions business. RETAIL RESEARCH Page 5

6 Impetus in interactive technology through Trane brand In 2007, the parent had acquired Trane which is a global leader in heating, ventilation and air conditioning systems (HVAC). In 2012, the Indian arm launched roll out of its unique interactive residential solutions for the India market. After announcing the entry of the Trane brand into the residential solutions market in India, the company has unveiled its products for Indian consumers desiring new levels of security and comfort. The company has an aggressive plan to expand across 30 key cities covering 9 states by 2013 and targets to be one of the most preferred brands in the premium segment Interactive technology was developed by collaborative effort of Ingersoll Rand s engineering centers across US, India and China The Trane product portfolio consists of range of interactive Air Conditioners from 3 to 5 * (star) in capacities ranging from 1, 1.5 and 2 Tons and the Trane interactive Electronic 2 Lock. The products can interact with each other through a new generation technology called ZigBee that allows two way communications between multiple devices and a single controller. The Trane interactive controller therefore allows the consumer to control the Trane interactive AC and the interactive Lock together, without having to be in their direct line of sight with either device. Furthermore, a single Trane interactive controller can control multiple devices and that too from any part of the home, thereby delivering unparalleled convenience, comfort and control. The Trane 3 star 1.0 ton AC was priced at Rs 37,000, 1.5 ton at 42,000; and the 5 star 1.0 tons would cost Rs 42,300 and 1.5 ton Rs. 52,500. The main door electronic mortise lock was priced at Rs 24,500. A strong, national distribution network will facilitate the national rollout; enabled through a network of exclusive Trane Solution Partners (TSPs). These TSPs will directly serve the customers and also cater to Trane Authorized Dealers in their respective areas. By , the company intends to expand its distribution reach to 250 partners and dealers across 30 cities in the country. Trane is the most preferred home air conditioning brand in the U.S. and the company is confident that the response in India will be good. Targeting entry and gaining market share in premium air conditioners market According to company estimates, the residential AC market in India in 2011 constitutes 80% of the total AC market and stood at over 2.5 million units. IRIL is looking to target 5 per cent of the residential market in the next 2 3 years. Trane aims to be one of the most preferred brands in the premium segment in India within the next few years. In 2012 IRIL had launched China made Trane brand premium split air conditioners and said it is targeting a market share of five percent in the domestic market. The company would start making the product at the Chennai plant once the volumes pick up. Given the severe competition from South Korean and Indian brands the air conditioners are targeted at premium end, and not the first time buyers, and going forward, products for mid segment would be launched. The air conditioners would be marketed through dedicated Trane and multi brand retail outlets. In addition, IRIL would sell the air conditioners through lifestyle stores like those vending modular kitchens and others. The unique selling proposition (USP) of the air conditioners is that one can operate multiple air conditioners in a residence without moving an inch. It is also launching an interactive electronic door lock which could be operated with the air conditioner s remote. To develop Nano homes IRIL is in process to develop new concept called Nano like for houses that will be small, affordable and sustainable. It is building houses where the convergence concept comes to fruition. The company will be developing the 250 sq ft homes that will be designed for five different climatic zones will typically be priced at Rs 2 lakh each. The industrial technology major aims to introduce these homes for public viewing within a year. It will embed multiple technologies on each singlefloor, which includes use of cloud computing for knowledge needs, use of solar or biomass for energy. Constant technology innovation and product development keeping in mind the Indian market Product localization that caters to the needs of local customers is a key focus area for IRIL. Over , IRIL innovated RETAIL RESEARCH Page 6

7 and developed 'Evolution', a new brand of contact cooled rotary screw air compressor for the Indian market. Evolution is a brand developed for the India market, by the India team at manufacturing plant in Naroda. This new product has been designed specifically to meet industry requirements while delivering energy efficiency and superior performance. Adding to the existing portfolio of industrial products, the Evolution range is specially developed and customized for the Indian market to ensure the best level of performance and reliability in creating productive manufacturing environments locally. Aimed at providing value to customers in auto components, textiles and Agricultural industries in B and C towns in India, the product Evolution is a result of local innovation that is expected to capture market share in the value segment. Designed with the latest technology, the Evolution range of compressors provide key benefits including low maintenance cost and more air flow (CFM) with less power consumption (kw); hence, delivering greater productivity and energy efficiency. Utilizing excess cash to reward shareholders; Decent OPMs. Zero Debt, High cash per share, Positive Free cash flows and Consistent dividends IRIL has been maintaining a consistent dividend policy of 60% for the past decade with payouts ranging above 25% of profits. In 2012 it declared a special dividend with dividend per share of Rs 24. Company has zero debt on its balance sheet using internal accruals to fund its capex plans. Cash per share has ranged between ~Rs 170 Rs 140 per share while EPS has ranged between ~ Rs 14 Rs 25 per share. IRIL has been generating positive free cash flows with free cash of Rs 66 cr, Rs 39 cr, Rs 4 cr and Rs 45 cr in FY10, FY11, FY12 and FY13. In FY12, when IRIL posted highest profit company declared a special dividend of Rs 24 per share and used Rs 24 cr for fixed asset purchases. In FY13, it has utilized Rs 51 cr in capital work in progress and is still left with a free cash of Rs 44.7 cr. OPM have remained in the range of 10 13% in the last three years with the exception of FY13 when OPM have fallen to 8.5%. EBITDA margins (including other income) has been in the range of 20 18% aided by high other income. Other income has cushioned PAT margins which have not fallen in tandem with operating performance. Quarterly Review For Q3FY14, company reported muted growth of Rs cr, up 0.4% y o y and 11.4% q o q. Operating margins have been under stress with RMC cost as percentage cost to sales increasing from 66.5% in Q3FY13 and 65.3% in Q2FY14 to 70% in Q3FY14. OPMs stood at 3% compared to 9.8% in Q3FY13 and 8% in Q2FY14. EBITDA margins stood at 12.2% compared to 17.7% y o y and 17.9% q o q. Interest costs have gone up from Rs 0.07 cr to Rs 0.56 cr in Q3FY14 while Depreciation costs RETAIL RESEARCH Page 7

8 are up 48.4% to Rs 1.8 cr. Other income was up 10.6% to Rs 17.6 cr. PAT is down 35.4% y o y and 29.5% q o q to Rs 13.2 cr. Poor margins also reflect inability of the company to absorb higher fixed cost base post commencement of the Chennai plant. For the nine month ended FY14, company reported Net Sales of Rs cr, down 1.6% y o y. Operating margins have come down to 5.3% from 10.2% while EBITDA margins have come down from 19.2% to 15.1% y o y.. Reported PAT stood at Rs 45.5 cr, down 23.6% y o y. Risks/Concern: The primary threat continues to be price pressures by competition. However, superior product quality and strong brand image have helped company secure customer orders despite these price pressures. Low HP (< 20 HP) compressor segment is highly fragmented and there exists stiff competition between various players both from unorganized sector and organized players. In large HP category, company faces competition mainly from multinational players. The weakening of the Rupee has increased the cost of imports. Localization of components has helped to an extent but company remains a net importer. Sharp increase in the raw material prices especially steel and aluminum would negatively affect company's profitability. Compressor segment growth is highly correlated with the overall economic activity mainly mining, hydrocarbon, transport, power, oil, railways etc. Any slowdown in the industrial capex program would imply lower off take of company's products. Company s PAT has a major component of Other income. On a Net Sales of Rs cr in FY13, company has generated a net profit of Rs 77.9 cr of which Rs 67.9 cr is other income (mostly interest income). Considering this, company operations are generating just ~ Rs 10 cr. While the high cash component is acting as a buffer during tough economic environmental conditions we feel company s operations need to start contributing more in the coming years to sustain profitability. Further the high cash and low OPM has resulted in low RONW/ROCE. IRIL has three fellow subsidiaries in India and also does a lot of business (purchase, sale, expenses paid/recovered, loans given, interest received) with other IRIL group companies. This raises concerns about protection of the minority shareholder interests in IRIL. Conclusion: IRIL is a global diversified industrial company, engaged in the business of providing solutions for infrastructure development, industrial solutions, residential solutions and security technologies. IRIL manufactures a wide range of air compressors of various capacities with complete air solutions that span the entire compressed air system. The company has emerged as being amongst the largest exporters of engineered goods in India. The company's manufacturing facility is located in Gujarat, NCR and a new one in Chennai. In FY13, IRIL entered High end split Air Conditioner (ACs) & Electronic Door Locking Systems market and commenced operations at their Greenfield plant at Chennai. This new plant would manufacture a range of equipments catering to Bus and Truck Air Conditioners, and Heating, Ventilation and Air Conditioning (HVAC) markets. RETAIL RESEARCH Page 8

9 IRIL has rolled out an aggressive plan for growth in India. The foundation of this growth will be customer driven innovation, a robust infrastructure to support after sales services, a significant investment in the facilities to transform them into world class manufacturing operations and a Customer First and Solutionizing mindset. Company is yet to report a loss due even in tough economic conditions due to high cash in books resulting in high other income and other cost rationalization measures. Besides focusing on specific sectors such as power, pharma and textiles to grow revenue through value added services cost reduction will continue to be a focus area to ensure sustainability in profits. Despite the slow growth in economy there is confidence of creating new markets through innovations in purchases and products and enhanced focus on services as well as collaboration and partnering. Over Rs 135 cr has been invested in the Chennai plant which would accrue once economic cycle picks up Going forward, IRIL plans to introduce (1) higher efficiency air compressors and packages, (2) large sized centrifugal compressors, and (3) wide range of stationary screw compressors for Industrial use. Traction from the Chennai plant is getting delayed owing to economic slow down. Despite bleak macro economic scenario, after taking in to account (1) IRIL s strategy to increase exports to parent entity in USA, (2) roll out new products in FY14 and FY15 and (3) possible higher utilization of Chennai plant leading to higher sales and better margins, we feel IRIL could report a better top line and bottom line in FY15. At CMP of Rs , IRIL is quoting at ~16x FY15E EPS of Rs Given the company s high cash per share, zero debt status and consistent dividend payout we feel investors could look to buy the stock at CMP and average at band of Rs 326 Rs338 ( xFY15E) for a target of Rs 428 and Rs 495 (19x FY15E 22xFY15E) in the next 2 3 quarters. Particulars FY10 FY11 FY12 FY13A FY14 (E) FY15 (E) Total Operating Income Operating Profit OPM% 13.4% 12.7% 10.1% 8.5% 5.6% 6.8% Other Income Reported PAT Adjusted PAT PATM% 10.9% 12.5% 12.5% 12.0% 9.4% 9.5% EPS PE (x) Financials Quarterly Particulars (Rs cr) Q3FY14 Q3FY13 % chg Q2FY14 % chg 9MFY14 9MFY13 % chg Net Sales % % % Other Op income % % % Total Operating % % % Income Total Expenditure % % % Chg in Stock % % % RETAIL RESEARCH Page 9

10 Raw material % % % Employees cost % % % Other expenditure % % % Operating Profit % % % Other income % % % EBIDTA % % % Interest % % % PBDT % % % Depreciation % % % PBT % % % Tax % % % Adjusted PAT % % % Reported PAT % % % EPS % % % Equity % Face Value % OPM % 3.0% 9.8% 8.0% 5.3% 10.2% EBIDTA % 12.2% 17.7% 17.9% 15.1% 19.2% NPM % 7.2% 11.2% 11.1% 9.2% 11.9% Tax % 34.5% 34.2% 33.2% 33.3% 35.4% Profit & Loss (Rs in cr) FY10 FY11 FY12 FY13 FY14 (E) FY15 (E) Sales Other Operating Income Total Operating Income Input Cost Purchases Staff Cost Marketing expenses Other Expenses Operating profit Other Income EBIDTA(inc other income) Depreciation PBIT Interest PBT Current Tax Reported Net Profits Adjusted Net Profits Cash Profits RETAIL RESEARCH Page 10

11 Dividend per share (Rs.) EPS (Rs.) CEPS (Rs.) Operating Margin 13.4% 12.7% 10.1% 8.5% 5.6% 6.8% PATM 10.9% 12.5% 12.5% 12.0% 9.4% 9.5% EBIDTA(%) 20.0% 19.8% 19.5% 18.1% 15.4% 15.5% Key Ratios FY11 FY12 FY13 FY14 (E) FY15 (E) Dividend Payout 28% 92% 24% 31% 27% Dividend % 60% 240% 60% 60% 60% Capital Employed Net Worth RoCE 12.9% 15.1% 13.3% 10.7% 11.8% RoNW 8.5% 10.1% 9.3% 7.0% 7.7% Book Value (Rs.) Forward PE Chart RETAIL RESEARCH Page 11

12 Analyst: Siji A Philip Banks, Capital Goods, Power & Midcaps ID: siji.philip@hdfcsec.com RETAIL RESEARCH Tel: (022) Fax: (022) Corporate Office HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai Phone: (022) Fax: (022) Website: hdfcsecretailresearch@hdfcsec.com Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-institutional Clients RETAIL RESEARCH Page 12