MAITHAN ALLOYS LTD Result Update (PARENT BASIS): Q4 FY16

Index Details MAITHAN ALLOYS LTD Result Update (PARENT BASIS): Q4 FY16 Stock Data Sector Iron & Steel/Interm. Products BSE Code 590078 Face Value 10.00 52wk. High / Low (Rs.) 313.80/72.25 Volume (2wk. Avg.) 11000 Market Cap (Rs. in mn.) 7817.30 Annual Estimated Results(A*: Actual / E*: Estimated) YEARS FY16A FY17E FY18E Net Sales 11507.95 13349.22 14951.13 EBITDA 1312.50 1710.05 2006.41 Net Profit 790.29 1030.48 1224.61 EPS 27.14 35.39 42.06 P/E 9.89 7.59 6.38 Shareholding Pattern (%) As on Mar 2016 As on Dec 2015 Promoter 72.46 72.46 Public 27.54 27.54 Others -- -- 1 Year Comparative Graph CMP: 268.50 JULY 2 nd, 2016 Overweight SYNOPSIS ISIN: INE683C01011 Maithan Alloys Limited incorporated in 1985 manufactures, exports, and trades ferro alloys in India and internationally. During the quarter, the company achieved a turnover of Rs. 5216.45 mn as against Rs. 2086.60 mn in Q4 FY15, up by 150.00%. During Q4 FY16, Net profit stood at Rs. 463.32 mn as against Rs. 100.43 mn in the Q4 FY15, up by 361.33%. During the quarter, EBIDTA is Rs. 851.06 mn as against Rs. 89.41 mn in the corresponding period of the previous year. During Q4 FY16, PBT increased by 612.70% to Rs. 541.58 mn from Rs. 75.99 mn in Q4 FY15. EPS of the company stood at Rs. 15.91 during the quarter, as against Rs. 6.90 over previous year period. Revenues for FY2015-16 increased by 30% to Rs. 11507.95 mn from Rs. 8847.57 mn in FY2014-15. During the year ended 2015-16, Net Profit stood at Rs. 790.29 mn as compared to Rs. 515.34 mn in the previous year ended FY2014-15, up by 53%. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 52% over 2015 to 2018E respectively. MAITHAN ALLOYS LTD S&P BSE SENSEX PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Maithan Alloys Ltd 268.50 7817.30 27.14 9.89 1.98 20.00 Tata Sponge Iron Ltd 624.25 9613.50 20.02 31.18 1.19 100.00 Kalyani Steels Ltd 188.60 8233.00 26.02 7.25 1.40 0.00 Beekay Steel Industries Ltd 70.25 1339.80 10.13 6.93 0.68 10.00

QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q4 FY16, Months Mar-16 Mar-15 % Change Revenue 5216.45 2086.60 150.00 Net Profit 463.32 100.43 361.33 EPS 15.91 6.90 130.69 EBIDTA 851.06 89.41 851.86 The company achieved a turnover of Rs. 5216.45 million for the 4 th quarter of the financial year 2015-16 as against Rs. 2086.60 millions in the corresponding quarter of the previous year, up by 150%. Net profit stood at Rs. 463.32 million as against Rs. 100.43 million in the corresponding quarter ending of previous year, up by 361.33%. Reported earnings per share of the company stood at Rs. 15.91 during the quarter, as against Rs. 6.90 over previous year period. Profit before interest, depreciation and tax is Rs. 851.06 million as against Rs. 89.41 million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Q4 FY16 Q4 FY15 % CHNG Cost of materials and utilities consumed Employees benefits expense 2952.32 686.49 330 115.20 32.87 250 Power Cost 1922.79 486.77 295 Depreciation and amortisation expenses 202.51 8.45 2296 Other expenses 569.86 110.69 415

Segment Revenue COMPANY PROFILE Maithan Alloys Limited was incorporated in 1985 and is based in Burdwan, Maithan Alloys Limited is a manufacturer and exporter of ferro-alloys (ferro manganese, ferro-silicon and silico manganese). It is also engaged in the generation and supply of wind power. The Company operates through two segments, including Ferro Alloys and Wind Mill. The Company s subsidiaries include AXL Exploration (P) Ltd., Anjaney Alloys Ltd. and Anjaney Minerals Ltd. It has presence in nearly half of the states in India, including Haryana, Chhattisgarh, Andhra Pradesh, Karnataka, Orissa, West Bengal, Jharkhand, Gujarat, Punjab, Meghalaya, Madhya Pradesh and Maharashtra. The Company s international customers include a number of traders and downstream steel manufacturers in Asia, Europe and Latin America.

FINANCIAL HIGHLIGHT (PARENT BASIS) Balance Sheet as of March 31, 2015-2018E (A*- Actual, E* -Estimations & Rs. In Millions) FY15A FY16A FY17E FY18E SOURCES OF FUNDS Shareholder's Funds Share Capital 145.59 291.12 291.12 291.12 Reserves and Surplus 3201.60 3655.63 4386.76 5351.84 1. Sub Total - Net worth 3347.19 3946.75 4677.88 5642.96 Non Current Liabilities Long term borrowing 0.00 816.52 653.21 555.23 Deferred Tax Liabilities [Net] 73.10 182.43 282.77 359.12 Other Long Term Liabilities 0.00 0.00 0.00 0.00 Long Term Provisions 8.29 12.29 15.85 18.70 2. Sub Total - Non Current Liabilities 81.39 1011.24 951.83 933.05 Current Liabilities Short term borrowings 247.97 173.16 133.33 109.33 Trade Payables 856.53 1331.81 1784.62 2177.24 Other Current Liabilities 894.33 1496.20 2079.71 2578.84 Short Term Provisions 78.51 10.41 8.33 7.33 3. Sub Total - Current Liabilities 2077.35 3011.58 4006.00 4872.74 Total Liabilities (1+2+3) 5505.92 7969.56 9635.71 11448.76 APPLICATION OF FUNDS Non-Current Assets a) Fixed Assets 559.18 2598.33 3361.54 4435.63 b) Non Current Investments 911.55 131.92 85.75 64.31 c) Long Term loans and advances 14.05 192.63 240.79 284.13 1. Sub Total - Non Current Assets 1484.78 2922.88 3688.07 4784.07 Current Assets Current Investment 340.94 340.94 340.94 340.94 Inventories 1182.79 1507.93 1809.52 2080.94 Trade receivables 1878.52 1986.92 2066.39 2107.72 Cash and Bank Balances 166.21 536.53 777.97 949.13 Short-terms loans & advances 344.50 500.11 700.15 875.19 Other current assets 108.19 174.25 252.66 310.78 2. Sub Total - Current Assets 4021.14 5046.68 5947.64 6664.70 Total Assets (1+2) 5505.92 7969.56 9635.71 11448.76

Annual Profit & Loss Statement for the period of 2015 to 2018E Value(Rs.in.mn) FY15A FY16A FY17E FY18E Description 12m 12m 12m 12m Net Sales 8847.57 11507.95 13349.22 14951.13 Other Income 30.65 40.06 48.07 55.29 Total Income 8878.21 11548.02 13397.30 15006.42 Expenditure -8167.74-10235.52-11687.25-13000.01 Operating Profit 710.47 1312.50 1710.05 2006.41 Interest -34.24-122.31-168.79-200.86 Gross profit 676.23 1190.18 1541.26 1805.55 Depreciation -33.80-232.92-300.47-348.54 Profit Before Tax 642.43 957.26 1240.79 1457.00 Tax -127.09-166.96-210.31-232.39 Net Profit 515.34 790.29 1030.48 1224.61 Equity capital 145.59 291.15 291.15 291.15 Reserves 3201.60 3655.63 4386.76 5351.84 Face value 10.00 10.00 10.00 10.00 EPS 35.40 27.14 35.39 42.06 Quarterly Profit & Loss Statement for the period of 30 th Sep, 2015 to 30 th June, 2016E Value(Rs.in.mn) 30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16E Description 3m 3m 3m 3m Net sales 2773.93 1639.55 5216.45 4694.80 Other income 5.14 3.22 27.69 22.15 Total Income 2779.07 1642.77 5244.14 4716.95 Expenditure -2597.96-1478.28-4393.08-3899.03 Operating profit 181.11 164.49 851.06 817.92 Interest -4.76-4.42-106.97-120.88 Gross profit 176.35 160.07 744.09 697.04 Depreciation -10.74-10.11-202.51-222.77 Profit Before Tax 165.61 149.96 541.58 474.28 Tax -35.59-31.60-78.26-95.09 Net Profit 130.02 118.36 463.32 379.19 Equity capital 291.15 291.15 291.15 291.15 Face value 10.00 10.00 10.00 10.00 EPS 4.47 4.07 15.91 13.02

Ratio Analysis Particulars FY15A FY16A FY17E FY18E EPS (Rs.) 35.40 27.14 35.39 42.06 EBITDA Margin (%) 8.03 11.41 12.81 13.42 PBT Margin (%) 7.26 8.32 9.29 9.75 PAT Margin (%) 5.82 6.87 7.72 8.19 P/E Ratio (x) 7.59 9.89 7.59 6.38 ROE (%) 15.40 20.02 22.03 21.70 ROCE (%) 20.70 31.31 36.79 37.34 Debt Equity Ratio 0.07 0.25 0.17 0.12 EV/EBITDA (x) 5.14 6.04 4.38 3.58 Book Value (Rs.) 229.91 135.56 160.67 193.82 P/BV 1.17 1.98 1.67 1.39 Charts

OUTLOOK AND CONCLUSION At the current market price of Rs.268.50, the stock P/E ratio is at 7.59 x FY17E and 6.38 x FY18E respectively. Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 35.39 and Rs. 42.06 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 52% over 2015 to 2018E respectively. On the basis of EV/EBITDA, the stock trades at 4.38 x for FY17E and 3.58 x for FY18E. Price to Book Value of the stock is expected to be at 1.67 x and 1.39 x for FY17E and FY18E respectively. Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment. INDUSTRY OVERVIEW India is the world s third-largest producer of crude steel (up from eighth in 2003) and is expected to become the secondlargest producer by 2016. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India s manufacturing output. The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels. Market Size India s crude steel capacity reached 109.85 Million Tonnes (MT) in 2014-15, a growth of 7.4 per cent. Production of crude steel grew by 8.9 per cent to 88. 98 MT. Total finished steel production for sale increased by 5.1 per cent to 92.16 MT. Consumption of total finished steel increased 3.9 per cent to 76.99 MT.

India produced 7.34 MT of steel in the month of September 2015, which was nearly equal to the country's steel production in September 2014. The steel sector in India contributes nearly two per cent of the country s gross domestic product (GDP) and employs over 600,000 people. The per capita consumption of total finished steel in the country has risen from 51 Kg in 2009-10 to about 59 Kg in 2014-15. India's steel consumption for FY 2015-16 is estimated to increase by 7 per cent, higher than 2 per cent growth last year, due to improving economic activity, as per E&Y's 'Global Steel 2015-16' report. Government Initiatives The Government of India is aiming to scale up steel production in the country to 300 MT by 2025 from 81 MT in 2013-14. the crude steel production capacity in the current phase from 12.8 MTPA to 21.4 MTPA and from 3.0 MTPA to 6.3 MTPA respectively. To increase domestic value addition and improve iron ore availability for domestic steel industry, duty on export of iron ore has been increased to 30 per cent. Road ahead India is expected to become the world's second largest producer of crude steel in the next 10 years, moving up from the third position, as its capacity is projected to increase to about 300 MT by 2025. Huge scope for growth is offered by India s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.

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