53 Consumer Post Conf 19 Mar 2014

Anand Rathi Shares and Stock Brokers Limited (hereinafter ARSSBL) is a full service brokerage and equities research
ities research firm and the views expressed therein are solely of
ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within
India and to no countries outside India. Disclosures and analyst certifications are present in Appendix.

Anand Rathi Research India Equities
Aniruddha Joshi
+9122 6626 6732
aniruddhajoshi1@rathi.com
Manish Valecha
+9122 6626 6552
girishsolanki@rathi.com
Girish Solanki
+9122 6626 6712
Shilpi Taparia
shilpitaparia@rathi.com
Company * P C Jewellers Rupa V Mart Zodiac
Price (`) 100 216 289 196
M. Cap ($m) 289 277 84 60
Revenues 40,184 8,290 3,831 3,600
EBITDA 4,825 1,258 388 310
PAT 2,913 677 174 140
EBITDA Margin (%) 12.0 15.2 10.1 8.6
PAT Margin (%) 7.3 8.2 4.5 3.9
RoE (%) 40.8 27.6 18 5.9
RoCE (%) 42.4 27.1 22.5 7.2
Net Debt/Equity (%) (0.6) 0.8 -0.1 0.152
Source : Companies, Anand Rathi Research *FY13
Consumer
Post-Conference Note
India I Equities

19 March 2014
India Consumer story
Healthy growth momentum ahead
Anand Rathi Institutional Equities hosted In Focus The India
consumption story A Re-look corporate day at Trade Tower, D-wing,
10
th
flr., opp. Times Tower, Kamala Mills Compound, Senapati Bapat
Road, Lower Parel, Mumbai 400 013. The conference showcased four
major companies in retail: P C Jewellers (jewellery), Rupa & Co
(innerwear), V-Mart Retail (apparel retail) and Zodiac Clothing
(apparel).
India retail story painted modern. In the past six years, Indias retail
industry has registered a 14% CAGR and is likely to continue growing at the
same pace in the foreseeable future (in line with nominal GDP growth).
Modern trade, especially, has tremendous growth potential considering it
comprises just 6% of the overall retail market at present. Because of
consistent investments by major retailers such as Future Retail, Shoppers Stop
and Reliance Retail as well as foreign direct investment in modern trade, we
expect this segment of retail to record healthy growth rates ahead.
Lingerie, innerwear growing steadily. The innerwear and lingerie segment
has registered a 13% CAGR over the past five years. This segment has done
well through modern trade outlets due to greater consumer involvement. Also
realizations her have improved through the introduction of premium
products in modern trade. We expect that companies such as Rupa which
have been investing insistently in brand building as well in launching premium
products would benefit from this trend.
Hopes intact for organised jewellery. Jewellery companies are passing
through a difficult phase due to the import duty hike as well as import curbs.
With the improving current-account-deficit situation, we expect some relief
over the next 2-3 quarters. However, we believe that organised jewellers such
as PC Jewellers are poised to gain market share given their strong brands,
distribution networks, greater exports as well as healthy balance sheets.
BSE FMCG: 6820
Sensex: 21833
Nifty: 6517
Relative price performance
FMCG
Sensex
80
85
90
95
100
105
110
115
120
M
a
r
-
1
3
A
p
r
-
1
3
M
a
y
-
1
3
J
u
n
-
1
3
J
u
l
-
1
3
A
u
g
-
1
3
S
e
p
-
1
3
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4

Source: Bloomberg

Anand Rathi Shares and Stock Brokers Limited (hereinafter ARSSBL) is a full service brokerage and equities research firm and the views expressed therein are solely of

Manish Valecha
+9122 6626 6552
manishvalecha@rathi.com
Jewellery Retail

India I Equities
Year end 31 Mar FY09 FY10 FY11 FY12 FY13
Sales (`m) 6,227 9,848 19,771 30,419 40,184
Net profit (`m) 310 664 1,452 2,313 2,913
EPS (`) 14 17 33 17 16
Growth (%) 138.8 18.2 96.7 (46.9) (5.8)
PE (x) 7.2 6.0 3.1 5.8 6.1
PBV (x) 3.0 2.3 1.5 2.4 2.1
RoE (%) 55.0 53.0 60.4 53.9 40.8
RoCE (%) 25.7 35.4 55.0 41.2 42.4
Dividend yield (%) - - - - 1.0
Net gearing (%) 263.3 23.9 39.9 90.0 (56.3)
Source: Company, Anand Rathi Research

`

Key data PCJL IN / PCJE.BO
52-week high / low `128 / `66
Sensex / Nifty 21833 / 6517
3-m average volume US$1m
Market cap `17.9/bn / US$289m
Shares outstanding 179m
Shareholding pattern (%) Dec 13 Sep 13 Jun 13
Promoters 70.0 70.0 70.0
- of which, Pledged - - -
Free Float 30 30 30
- Foreign Institutions 13.6 14.0 12.9
- Domestic Institutions 3.0 3.0 3.5
- Public 13.5 12.9 13.6
19 March 2014
PC Jewellers
Key highlights
Established position. A leading jewellery company in India, PC Jewellers
manufactures, retails and exports a wide range of jewelled products including
in gold, diamond and other jewels, as well as silver articles, though chiefly
focusing on diamond jewellery and jewellery for weddings.
Sound business model. Domestic sales comprised 74% of its sales in FY13,
exports 26%. In domestic sales, 74% was of gold jewellery, 25.5% diamond
and 0.5% others. Further, the company is in a sweet spot with respect to the
new RBI 80:20 scheme, as ~26% of its revenues arises from exports.
Broadening retail footprint. The jeweller is among the fastest-growing and
most-profitable jewellery retailers in India, with 41 showrooms across 28
cities in 10 states. It has a strong reputation and brand recall in northern and
central India. Not a single store has closed till now. High street locations,
location visibility and strong customer traffic are key factors in the
showroom-selection process. It has various large format stores in north and
central India chiefly in high street areas. It is focused on tier I/II markets
where unorganised jewellers still command the major market share.
Professional management. Promoters Balram Garg and Padam Chand
Gupta have over two decades of experience in the business of jewellery. They
are further supported by a professional management team consisting of
various divisional and functional heads, including COO and CFO.
Improved performance. In FY10-13, PC Jewellers registered CAGRs of
55% in revenue and 64% in PAT. The gross margin in diamond jewellery (30-
35%) is significantly higher against that in gold (9-10%).

PCJL
Sensex
60
70
80
90
100
110
120
130
140
M
a
r
-
1
3
A
p
r
-
1
3
M
a
y
-
1
3
J
u
n
-
1
3
J
u
l
-
1
3
A
u
g
-
1
3
S
e
p
-
1
3
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4

Source: Bloomberg
Sensex: 21833
Nifty: 6517
Share Price: `100

19 March 2014 PC Jeweller Key highlights
Anand Rathi Research 3
Quick Glance Financials and Valuations
Fig 1 Income statement (` m)
Year-end: Mar FY09 FY10 FY11 FY12 FY13
Net revenues 6,227 9,848 19,771 30,419 40,184
Revenue growth (%) 93.8 58.1 100.7 53.9 32.1
- Op. expenses 5,738 8,875 17,808 27,107 35,360
EBIDTA 489 974 1,963 3,312 4,825
EBITDA margins (%) 7.9 9.9 9.9 10.9 12.0
- Interest 210 367 458 772 1,275
- Depreciation 12 19 30 66 100
+ Other income 72 182 168 176 202
PBT 339 770 1,639 2,650 3,645
Income taxes 30 106 191 341 785
Extra-ordinary items - - 3 - 7
Reported net profit 310 664 1,449 2,313 2,907
Adjusted net profit 310 664 1,452 2,313 2,913
PAT growth (%) 138.8 114.3 118.7 59.3 26.0
Adj. FDEPS (`/share) 14.0 16.5 32.5 17.3 16.3
Adj. FDEPS growth (%) 138.8 18.2 96.7 (46.9) (5.8)

Fig 3 Cash-flow statement (`m)
PAT 310 664 1,452 2,313 2,913
+Non-cash Items (19) 52 33 66 54
Cash profit 291 715 1,485 2,379 2,967
- Incr./(Decr.) in WC 1,734 (566) 2,150 5,888 (1,683)
Operating cash-flow (1,443) 1,281 (665) (3,509) 4,651
-Capex 41 178 141 275 162
Free cash-flow (1,484) 1,103 (806) (3,784) 4,488
-Dividend - - - - 210
+ Equity raised 19 387 24 (9) 5,626
+ Debt raised 1,582 (1,274) 565 4,375 (3,452)
-Investments - - - 0 4,429
-Misc. items - - - - -
Net cash-flow 117 216 (217) 582 2,024
+Opening cash 74 191 408 191 772
Closing cash 191 408 191 772 2,796

Fig 5 Revenue and EBITDA margins
-
5
10
15
20
25
30
35
40
45
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
(`bn)
7.0
8.0
9.0
10.0
11.0
12.0
13.0
Revenue EBITDA Margin (RHS)
(%)
Source: Company
Fig 2 Balance sheet (` m)
Share capital 222 402 447 1,340 1,791
Reserves & surplus 506 1,377 2,807 4,218 12,097
Net worth 727 1,778 3,029 5,558 8,706
Total debt 2,107 833 1,398 5,773 2,321
Minority interest - - - - -
Def. tax liab. (net) (40) (7) (4) (4) (50)
Capital employed 2,794 2,604 4,648 11,327 16,159
Net fixed assets 96 255 366 576 638
Investments - - - 0 4,429
- of which, Liquid
Working capital 2,507 1,941 4,091 9,979 8,295
Cash 191 408 191 772 2,796
Capital deployed 2,794 2,604 4,648 11,327 16,159
Net debt/equity (%) 2.6 0.2 0.4 0.9 (0.1)
W C turn (days) 96 82 56 84 83
Book value (`/sh) 33 44 68 41 49

Fig 4 Ratio analysis @ `100
P/E (x) 7.2 6.0 3.1 5.8 6.1
Cash P/E (x) 6.9 5.9 3.0 5.6 6.0
EV/EBITDA (x) 8.4 4.6 2.9 5.6 2.7
EV/Sales (x) 0.7 0.5 0.3 0.6 0.3
P/B (x) 3.0 2.3 1.5 2.4 2.1
RoAE (%) 55.0 53.0 60.4 53.9 40.8
RoACE (%) 25.7 35.4 55.0 41.2 42.4
Dividend yield (%) - - - - 1.0
Dividend payout (%) - - - - 6.2
Debt/Equity (x) 2.6 0.2 0.4 0.9 (0.6)
Receivable days 95 92 78 82 61
Inventory days 120 140 102 141 156
Payable days 4 2 3 10 12
Working capital days 96 82 56 84 83
Fixed asset T/O (x) 64.6 54.0 61.9 55.9 51.5

Fig 6 Return ratios
25
30
35
40
45
50
55
60
65
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
RoCE RoE
(%)

Source: Company


Aniruddha Joshi
+9122 6626 6732
Aniruddhajoshi1@rathi.com
Shilpi Taparia
shilpitaparia@rathi.com
Key financials (YE Mar) FY09 FY10 FY11 FY12 FY13
Sales (`m) 4,211 5,325 6,500 7,110 8,290
Net profit (`m) 143 252 337 436 677
EPS (`) 1.8 3.2 4.2 5.5 8.5
Growth (%) (31.7) 76.7 33.8 29.2 55.5
PE (x) 125.7 71.1 53.2 41.1 26.4
PBV (x) 13.8 11.9 10.0 8.5 6.9
RoE (%) 15.6 18.0 20.5 22.4 27.6
RoCE (%) 16.4 17.9 20.0 22.3 27.1
Dividend yield (%) 0.2 0.3 0.4 0.7 0.9
Net gearing (%) 20.2 74.4 98.6 84.4 85.0
Consumer
India I Equities

19 March 2014
Rupa & Co.
Key highlights
Premiumization driving margins up. Rupa has sharpened its focus on
premium products. As a result the proportion of revenue of its M-series (its
super-premium brand) has expanded from 4% to 9% over FY09-13. Also,
the company has increased ad-spend from 7.7% of net sales in FY09 to 9.9%
in FY13, increasing its pricing power. Average realizations have registered a
15% CAGR, whereas COGS per piece is just 10%. This has helped it expand
its profit margin from 7.5% in FY09 to 15.2% in FY13.
Healthy distribution network. Rupas distribution network comprises
110,000 retail outlets, which is five times that of most of its competitors. As
the brand is available across India, the company stands to greatly benefit from
any increase in spending of advertising. It intends to introduce its products
into modern trade channels, as also in south India, in FY15.
Strong range of products. The company has created strong brands in the
innerwear/lingerie arena. Its major brands are Rupa, Euro and M-series. It
has developed a range of products (sub-segmented) under each of these
brands, aiming at consumers across widely disparate income levels.
Steady raw material prices. Prices of cotton, the companys key raw
material, have been steady, yoy. This could help it expand its gross margin as
well as increase its brand-building and promotional activity.
Niche player in a growing segment. In the past five years the innerwear
market overall has registered a 13% CAGR. Within this, the regulated
segment constitutes 16%. Within the same time the proportion of premium
products has doubled. We believe that, considering its widespread distribution
network as well as its range of products, Rupa has a healthy chance of gaining
market share in this growing but fragmented market.

Key data RUPA IN / RUPA.BO
52-week high / low `250 / `146
3-m average volume US$0.1m
Market cap `20bn / US$36M
RUPA
Sensex
150
160
170
180
190
200
210
220
230
M
a
r
-
1
3
A
p
r
-
1
3
M
a
y
-
1
3
J
u
n
-
1
3
J
u
l
-
1
3
A
u
g
-
1
3
S
e
p
-
1
3
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4

Source: Bloomberg
Shareholding pattern (%) Dec 13 Sep 13 Mar 13
Promoters 74.9 74.9 74.9
Free Float 25.1 25.1 25.1
- Foreign Institutions - - -
- Public 24.7 24.7 24.9
Sensex: 21833
Nifty: 6517
Share Price: `216

19 March 2014 Rupa & co. Key highlights
Net revenues 4,211 5,325 6,500 7,110 8,290
Revenue growth (%) 13.1 26.4 22.1 9.4 16.6
- Op. expenses 3,895 4,880 5,814 6,207 7,032
EBIDTA 316 445 686 903 1,258
EBITDA margin (%) 8 8 11 13 15
- Interest expenses 80 58 148 217 210
+ Other income 17 34 13 7 10
- Tax 79 133 168 196 313
Effective tax rate (%) 35.7 34.5 33.3 31.1 31.6
Reported PAT 143 252 337 436 677
+/- Extraordinary items - - - - (30)
+/- Minority interest - - - - -
Adjusted PAT 143 252 337 436 677
Adj. FDEPS (`/sh) 1.8 3.2 4.2 5.5 8.5
Adj. FDEPS growth (%) (31.7) 76.7 33.8 29.2 55.5

Fig 3 Cash-flow statement (` m)
Consolidated PAT 143 252 337 436 648
+Depreciation 31 36 47 61 67
Cash profit 173 288 384 497 715
- Incr./(Decr.) in WC (54) (588) (713) (258) (705)
Operating cash-flow 143 (283) (296) 278 60
- Capex (133) (343) (290) (138) (306)
Free cash-flow 10 (625) (586) 140 (246)
- Dividend (19) (47) (60) (92) (139)
+ Equity raised 675 - - - -
+ Debt raised (600) 702 592 (69) 392
- Investments (50) (9) 60 - -
- Misc. items - - - - -
Net cash-flow 16 20 5 (22) 7
+ Opening cash 33 49 69 74 53
Closing cash 49 69 74 53 60

Fig 5 Geographical revenue break-up (FY13)

Source: Company
Share capital 80 80 80 80 80
Reserves & surplus 1,155 1,353 1,597 1,894 2,356
Net worth 1,235 1,432 1,677 1,974 2,436
Total debt - - - - -
Minority interest 512 1,248 1,840 1,828 2,257
Def. tax liab. (net) 66 71 114 129 150
Net fixed assets 571 883 1,126 1,202 1,438
Investments 199 60 0 123 175
- of which, Liquid 199 60 0 123 175
Net working capital 993 1,739 2,430 2,554 3,169
Cash and bank balance 49 69 74 53 60
Net debt 263 1,118 1,765 1,776 2,197
WC days 23.6 32.7 37.4 35.9 38.2
Book value (`/sh) 16.3 18.9 22.5 26.4 32.5

P/E (x) 125.7 71.1 53.2 41.1 26.4
P/B (x) 13.8 11.9 10.0 8.5 6.9
EV/sales (x) 4.8 3.8 3.1 2.8 2.4
EV/EBITDA (x) 63.6 45.2 29.3 22.3 16.0
RoAE (%) 15.6 18.0 20.5 22.4 27.6
RoACE (%) 16.4 17.9 20.0 22.3 27.1
Dividend yield (%) 0.2 0.3 0.4 0.7 0.9
Dividend payout (%) 27.9 20.6 23.6 27.4 23.5
RM to sales (%) 56.9 55.8 53.9 52.4 49.9
Ad spend to sales (%) 7.7 8.1 8.0 9.9 9.9
EBITDA growth (%) 4.1 40.7 54.3 31.6 39.2
EPS growth (%) (31.7) 76.7 33.8 29.2 55.5
PAT margin (%) 3.4 4.7 5.2 6.1 8.2
Tax rate (%) 35.7 34.5 33.3 31.1 31.6
Staff cost to sales (%) 6.9 (248.4) (174.0) 32.2 (36.3)

Fig 6 Revenue break-up (FY13)
Jon
32.4%
Frontline
25.7%
Macroman
10.2%
M' Series
8.6%
Thermocot
7.3%
Kidline
1.0%
Footline
0.9%
Softline
4.3%
Bumchums
4.4%
Euro Jeans
0.2%
Air
0.2%
Euro
4.9%
Source: Company


Aniruddha Joshi
+9122 6626 6732
Aniruddhajoshi1@rathi.com
Manish Valecha
+9122 6626 6552
manishvalecha@rathi.com
Key financials (YE Mar) FY12 FY13 FY14e FY15e FY16e
Sales (`m) 2,811 3,831 5,814 8,145 10,881
Net profit (`m) 106 174 280 457 620
EPS (`) 7.6 9.7 15.6 25.4 34.5
Growth (%) 69.4 27.1 61.0 63.4 35.7
PE (x) 38.0 29.9 18.6 11.4 8.4
PBV (x) 7.5 3.5 3.0 2.4 1.9
RoE (%) 21.8 18.0 17.5 23.5 25.2
RoCE (%) 24.6 22.5 22.9 28.3 31.7
Dividend yield (%) 0.1 0.3 0.3 0.3 0.3
Net gearing (%) 72.4 (13.9) 4.8 12.0 11.1
Consumer
India I Equities

19 March 2014
V-Mart Retail
Key highlights
On track to roll out 25 stores. By end-FY14, V-Mart Retail could have 92
retail stores, including the 25 to be rolled out this year. It has maintained its
strategy of introducing stores in tier 2 and 3 cities and focusing more on the
high-margin apparel business.
Expanding in tier 2 and 3 cities. The company intends to continue to focus
on tier 2 and tier 3 cities/towns, as competition is less intense here, and
hence, revenues and margins are higher. At present, most of its stores are in
north and east India. It has so far avoided the highly competitive south and
west India (~70% of outlets in modern trade).
Lower cost structure than most of its peers. V-Mart has a lower cost
structure than most of its competitors such as Shoppers Stop and Future
Retail. As it enters into long-term leases for its retail stores, its rental costs are
lower than those of its peers are held in check. Also, as it follows a cluster-
based strategy in opening stores, inventory losses are low. Owing to the use
of the local media, advertising and promotion costs are also lower than those
of its peers.
Rising focus on apparel segment. Initially, the company focused on both
apparel and kirana segments. Kirana was important to drive footfalls, whereas
apparels had higher profit margins. However, with rising brand consciousness
and expanding reach of V Mart, the focus is now more on the apparel
segment.
No plans of aggressive investment in private labels, supply chain. The
company has strategically decided not to commence manufacturing units for
private labels (This requires not only capital, but also brand-building and raw-
material-sourcing abilities.) Also, it does not plan to invest aggressively in
supply chains. We believe this would result in lower capex and strong cash
flows and help expand its return ratios.
VMART
Sensex
100
150
200
250
300
M
a
r
-
1
3
A
p
r
-
1
3
M
a
y
-
1
3
J
u
n
-
1
3
J
u
l
-
1
3
A
u
g
-
1
3
S
e
p
-
1
3
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4

Source: Bloomberg
Key data VMART IN / VMART.BO
52-week high / low `300 / `104
Market cap `5bn / US$87m
Shareholding pattern (%) Dec13 Sep13 Jun13
Promoters 58.8 58.8 58.8
Free Float 41.2 41.2 41.2
- Public 18.5 19.3 25.7
Rating: Buy
Target Price: `285
Share Price: `289

19 March 2014 V-Mart Retail Key highlights
Year-end: Mar FY12 FY13 FY14e FY15e FY16e
Net revenues 2,811 3,831 5,814 8,145 10,881
Revenue growth (%) 31.3 36.3 51.8 40.1 33.6
- Op. expenses 2,536 3,443 5,264 7,349 9,796
EBIDTA 275 388 550 796 1,085
EBITDA margin (%) 9.8 10.1 9.5 9.8 10.0
- Interest expenses 67 57 43 45 48
- Depreciation 58 76 102 139 178
+ Other income 8 6 6 60 53
- Tax 51 86 132 215 292
Reported PAT 106 180 280 457 620
+/- Extraordinary items - 6 - - -
+/- Minority interest - - - - -
Adjusted PAT 106 174 280 457 620
Adj. FDEPS (`/sh) 7.6 9.7 15.6 25.4 34.5
Adj. FDEPS growth (%) 69.4 27.1 61.0 63.4 35.7

+Depreciation 58 76 102 139 178
Cash profit 164 256 382 596 798
- Incr./(Decr.) in WC (58) (234) (334) (400) (472)
Operating cash-flow 113 57 47 196 326
- Capex (136) (222) (313) (351) (351)
Free cash-flow (23) (164) (266) (155) (25)
- Dividend (3) (3) (21) (21) (21)
+ Equity raised - 770 - - -
+ Debt raised 25 (57) - 25 25
- Investments (2) (402) 200 150 -
- Misc. items - - - - -
Net cash-flow (4) 143 (87) (1) (21)
+ Opening cash 15 11 158 71 70
Closing cash 11 153 71 70 49

Fig 5 Return ratios
-
5
10
15
20
25
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
(%)
RoE RoCE
Source: Bloomberg, Anand Rathi Research
Share capital 73 180 180 180 180
Reserves & surplus 469 1,297 1,556 1,991 2,591
Net worth 542 1,477 1,735 2,171 2,770
Total debt 407 360 360 385 410
Minority interest - - - - -
Def. tax liab. (net) (6) (7) (7) (7) (7)
Capital employed 943 1,830 2,088 2,549 3,173
Net fixed assets 343 488 698 910 1,083
Investments 66 493 293 143 143
- of which, Liquid 66 493 293 143 143
Net working capital 514 692 1,026 1,426 1,899
Cash and bank balance 19 158 71 70 49
Capital deployed 943 1,830 2,088 2,549 3,173
Net debt 315 (297) (10) 166 212
WC days 18.3 18.1 17.6 17.5 17.5
Book value (`/sh) 38.4 81.8 96.2 120.5 153.8

P/E (x) 38.0 29.9 18.6 11.4 8.4
P/B (x) 7.5 3.5 3.0 2.4 1.9
EV/sales (x) 1.4 1.3 0.9 0.6 0.5
EV/EBITDA (x) 14.1 12.9 9.1 6.3 4.6
RoAE (%) 21.8 18.0 17.5 23.5 25.2
RoACE (%) 24.6 22.5 22.9 28.3 31.7
Dividend yield (%) 0.1 0.3 0.3 0.3 0.3
Dividend payout (%) 5.3 10.3 6.4 3.9 2.9
RM to sales (%) 70.4 69.6 69.6 69.4 69.4
Ad spend to sales (%) 1.8 2.1 2.4 2.4 2.4
EBITDA growth (%) 47.0 41.2 41.9 44.6 36.4
EPS growth (%) 69.4 27.1 61.0 63.4 35.7
PAT margin (%) 3.8 4.5 4.8 5.6 5.7
Tax rate (%) 32.6 33.1 32.0 32.0 32.0
Staff cost to sales (%) 6.1 6.5 6.5 6.5 6.5

Fig 6 Share of modern trade is lowest in India
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
U
S
A
T
a
i
w
a
n
M
a
l
a
y
s
i
a
T
h
a
i
l
a
n
d
I
n
d
o
n
e
s
i
a
C
h
i
n
a
I
n
d
i
a
Organised Unorganised

Source: Companies


Girish Solanki
+9122 6626 6712
Key financials (YE Mar) FY09 FY10 FY11 FY12 FY13
Sales (`m) 3,211 3,133 3,571 3,775 3,600
Net profit (`m) 250 264 332 177 140
EPS (`) 13.0 13.7 17.2 9.2 7.2
Growth (%) (22.9) 5.5 25.9 (46.5) (21.5)
PE (x) 15.4 14.6 11.6 21.7 27.7
PBV (x) 1.9 1.7 1.5 1.4 1.3
RoE (%) 16.3 15.2 16.7 8.0 5.9
RoCE (%) 9.8 10.7 13.1 7.3 7.2
Dividend yield (%) 1.7 1.8 2.0 1.2 1.2
Net gearing (%) (0.1) 1.6 13.3 14.8 15.2
Textiles
India I Equities

19 March 2014
Zodiac Clothing
Key highlights
Sales break up. Brand-named closthing contributes 47% and international
53% of Zodiac Clothings sales; India accounts for 46%, followed by North
America at 28%, Europe at 12%, the Middle East at 10% and the UK at 4%.
Robust distribution network. In retailing, the company has 1,500
independent retailers (MBOs), which contribute 33% to sales; national chains
contribute 10% to sales and its own 109 stores 56%. It has an annual capex
outlay of `150m for 30 stores.
Own retail, design-driven business. The company retails through 109 or its
own stores and one web store, whereas its design-driven business is for
leading brands and retailers in the US, the UK, the EU, Latin America and the
Middle East.
De-risked business model. The company is vertically integrated from
design to retail, and is highly de-risked and powered by three outstanding
mens clothing brands at the premium end of the segment: Zodiac, ZOD and
Z3. These brands are supported by a strong distribution network and brand
and product extensions. 75% of the produce is pre-sold (advance cheques)
and 25% is for captive consumption. Sourcing of its raw materials is 50:50
international and domestic.
Extensive brand basket. Its branded products comprise super-fine,
lightweight suits, jackets and trousers in pure wool and 100% linen, jodhpuris
in pure wool, premium shirts in long-staple Egyptian cotton, woven silk ties
and mens fine accessories such as cufflinks, belts, wallets, handkerchiefs and
socks and leather shoes. In the brand-named, the Zodiac brand brings in 75%
of sales, with Zod and Z3 bringing in the rest. The company has launched
suits in the range of `22,000-29,000.
Poor economy mars prospects. The company has maintained its dividend
record. Its financials have been hit chiefly by lower demand due to dull
economic growth. Also, since it has been increasing the number of its outlets,
higher interest costs are hurting its bottom line.
ZDC
Sensex
150
160
170
180
190
200
210
220
230
M
a
r
-
1
3
A
p
r
-
1
3
M
a
y
-
1
3
J
u
n
-
1
3
J
u
l
-
1
3
A
u
g
-
1
3
S
e
p
-
1
3
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4

Source: Bloomberg
Key data ZDC IN / ZCCL.BO
52-week high / low `227 / `147
Market cap `3.9bn / US$63m
Shareholding pattern (%) Dec13 Sep13 Jun13
Promoters 59.44 59.37 59.34
Free Float 40.56 40.63 40.66
- Domestic Institutions - - 0.01
- Public 31.42 31.54 31.59
Sensex: 21833
Nifty: 6517
Share Price: `196

19 March 2014 Zodiac Clothing Pre-Conference Note
Net sales 3,211 3,133 3,571 3,775 3,600
Sales growth (%) 13.3 (2.4) 14.0 5.7 (4.7)
- Op. expenses 2,978 2,851 3,189 3,495 3,290
EBIDTA 233 282 382 280 310
EBITDA margins (%) 7.3 9.0 10.7 7.4 8.6
- Interest 28 28 27 35 42
+ Other income 198 198 49 48 30
- Tax 95 125 86 43 61
PAT growth (%) (22.9) 5.5 25.9 (46.5) (21.1)
Adjusted PAT 250 264 264 177 140
FDEPS (`/sh) 13.0 13.7 17.2 9.2 7.2
CEPS (`/sh) 16.0 17.0 20.9 13.4 12.3
DPS (`/share) 2.8 3.0 3.3 2.0 2.0

+Non-cash Items 59 64 84 80 108
Cash profit 309 328 416 257 248
- Incr./(Decr.) in WC (50) 187 135 185 36
Operating cash-flow 359 141 281 72 212
-Capex 281 124 324 200 (57)
Free cash-flow 78 16 (44) (127) 269
-Dividend 64 69 75 48 50
+ Equity raised 7 21 25 50 22
+ Debt raised 21 52 109 120 (16)
-Investments (125) - 161 (68) 266
-Misc. items (0) (0) - - -
Net cash-flow 168 21 (144) 62 (42)
+Opening cash 103 271 292 148 209
Closing cash 271 292 148 209 167

Fig 5 Revenue and EBITDA margins
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
F
Y
0
8
F
Y
0
9
F
Y
1
0

F
Y
1
1

F
Y
1
2

F
Y
1
3

(`m)
0
2
4
6
8
10
12
14
(%)
Net sales OPM (RHS)
Source: Company
Share capital 84 84 128 193 194
Reserves & surplus 1,531 1,764 2,002 2,117 2,228
Shareholders fund 1,632 1,848 2,131 2,310 2,422
Debt 269 322 431 551 534
Deferred Tax Liab (net) - - - - -
Minority interests - - - - -
Fixed assets 946 1,007 1,259 1,377 1,221
Investments 102 102 263 196 462
Working capital 600 787 923 1,108 1,144
Cash 271 292 148 209 167
No. of shares (m) 8.4 8.4 12.8 19.3 19.4
Net Debt/Equity (%) (0.1) 1.6 13.3 14.8 15.2
W C turn (days) 71.1 80.8 87.4 98.2 114.2
Book Value (`/sh) 85 96 111 120 125

P/E (x) 15.4 14.6 11.6 21.7 27.7
Cash P/E (x) 12.5 11.7 9.6 14.9 16.2
EV/EBITDA (x) 5.5 4.7 5.6 11.9 10.0
EV/Sales (x) 0.4 0.4 0.6 0.9 0.9
P/B (x) 1.9 1.7 1.5 1.4 1.3
RoAE (%) 16.3 15.2 16.7 8.0 5.9
RoACE (%) 9.8 10.7 13.1 7.3 7.2
Dividend yield (%) 1.7 1.8 2.0 1.2 1.2
Dividend payout (%) 25.5 26.1 22.5 27.1 35.8
Debt/Equity (x) 0.2 0.2 0.2 0.2 0.2
Receivable days 37.2 39.1 34.7 32.8 36.5
Inventory days 59.3 63.4 65.9 71.9 76.4
Payable days 109.7 109.0 91.4 85.5 94.2
Working capital days 71.1 80.8 87.4 98.2 114.2
Fixed asset T/O (x) 3.9 3.2 3.2 2.9 2.8

Fig 6 Sales, geographically
Middle East, 10%
India, 46%
Europe, 12%
UK, 4%
North America,
28%

Source: Company

Appendix

Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by
stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter SEBI) and the analysts compensation are completely
delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report.

The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors,
including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Anand Rathi Ratings Definitions
Analysts ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table
below:
Ratings Guide
Buy Hold Sell
Large Caps (>US$1bn) >15% 5-15% <5%
Mid/Small Caps (<US$1bn) >25% 5-25% <5%

Anand Rathi Research Ratings Distribution (as of 4 March 2014)
Buy Hold Sell
Anand Rathi Research stock coverage (185) 64% 27% 9%
% who are investment banking clients 4% 0% 0%

Other Disclosures
This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance.
The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may
include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of
ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated,
connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory
requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report
bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor
any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities
(hereinafter referred to as Related Investments). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the
companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL
and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in
Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly
mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of
Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific
financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any
securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized,
and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should
note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance.
Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
Other Disclosures pertaining to distribution of research in the United States of America
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or
made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and
elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the Affiliates). This document
does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein
has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or
responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of
the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment,
company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information
quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive
compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or
options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they
are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain
investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any
securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
2014 Anand Rathi Shares and Stock Brokers Limited. All rights reserved. This report or any portion thereof may not be reprinted, sold or redistributed without the prior written consent of
Anand Rathi Shares and Stock Brokers Limited.
Additional information on recommended securities/instruments is available on request.

53 Consumer Post Conf 19 Mar 2014

Diunggah oleh

Informasi Dokumen

Deskripsi Asli:

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

53 Consumer Post Conf 19 Mar 2014

Diunggah oleh

Hak Cipta:

Format Tersedia

Anand Rathi Shares and Stock Brokers Limited (hereinafter ARSSBL) is a full service brokerage and equities research

Anda mungkin juga menyukai