Result Update

June 1, 2016
Rating matrix
Rating Matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Buy
| 1560
12 - 15 months
32%

Bharat Electronics (BHAELE)

| 1185

Attacking performance, defensive play

Bharat Electronics (BEL) reported strong Q4FY16 numbers, which were

above our estimates on the operational front. On a standalone basis,
Target
Changed from | 1552 to | 1560
the company reported revenues of | 3215 crore, up 9.8% YoY (our
EPS FY17E
Changed from | 58.4 to | 57.8
estimate: | 3519 crore for the quarter). For full year FY16, BEL reported
EPS FY18E
Changed from | 62.1 to | 62.4
revenues of | 7295 crore, up 6.6% YoY
Rating
Unchanged
EBITDA came in at | 998.8 crore up 26% YoY (our estimates | 800.2
Quarterly performance
crore for the quarter). EBITDA margins came in at 31.1% vs. 27.1% for
Q4FY16 Q4FY15 YoY (%) Q3FY16 QoQ (%)
Q4FY15 (our estimate: 22.7% for the quarter). Margins for FY16 came
Revenue
3214.9 2928.2 9.79079 1517.2
111.9
in at 20% vs. 16.7% for FY15. We estimated 16.3% margins for FY16
EBITDA
998.8
792.6
26.0
292.6
241.4
PAT came in | 794.5 up 9.9% YoY (our estimate: | 778.7 crore for the
EBITDA (%)
31.1
27.1 400 bps
19.3 1178 bps
quarter). For FY16, PAT increased 16.4% YoY to | 1357.7 crore, higher
PAT
794.5
722.9
9.9
295.7
168.7
than our estimate of | 1321 crore for the full year
EPS (|)
33.1
30.1
9.9
12.3
168.7
The company declared a final dividend of | 14.5/share. This dividend is
in addition to the interim dividend of | 2.5 per equity share declared in
Key financials
the last quarter
| Crore
FY15
FY16
FY17E
FY18E
Revenue
6,843
7,295
8,851
10,350
On a consolidated basis, revenues came in at | 7548.5 crore for FY16,
EBITDA
1,143
1,461
1,475
1,674
up 6.4% YoY. EBITDA margins for FY16 were at 20.4% vs. 16.6% for
EBITDA (%)
16.7
20.0
16.7
16.2
FY15. PAT for FY16 came in at | 1387 crore vs. | 1197 crore for FY15,
Net Profit
1,167
1,358
1,386
1,498
up 15.8% YoY
EPS (|)
48.6
56.6
57.8
62.4
Strong moat, healthy order inflows to drive growth
Valuation summary
BEL has developed strong competency in the area of defence electronics,
(x)
FY15
FY16
FY17E
FY18E
which is one of the most critical areas for capability building of armed
P/E
24.4
20.9
20.5
19.0
forces. Historically, a large part of defence capital spends (45-60%) has
Target P/E
32.1
27.6
27.0
25.0
been in this segment. High-end technologies in the electronics segment,
EV / EBITDA
19.7
14.4
14.5
12.3
long gestation periods, heavy capital requirements, specific requirements
P/BV
3.6
3.3
3.0
2.7
of armed forces and secrecy related to defence projects act as key entry
RoNW (%)
15
15.5
14.5
14.3
barriers in this segment. This gives companies like BEL a strong
RoCE (%)
19.6
22.0
19.9
19.6
competitive advantage over any upcoming local and foreign completion.
Order inflows in the defence segment have embarked on a new growth
Stock data
trajectory. This is visible in order inflows of | 17, 094 crore in FY16 for
Stock Data
BEL, which is a huge 79% increase over last year (order backlog | 21,617
Average Volumes (shares)
34,000
Market Capitalization
| 28440 Crore
crore in FY15). We believe this momentum will continue in FY17E also as
Total Debt (FY16)
| 6.2 Crore
the company has mentioned some large orders like Akash Missile
Cash and Investments (FY16)
| 7332 crore
Systems and Tactical communication systems in its expected order book.
EV (FY16)
| 21114.3 Crore
With a planned capex of over | 1500 crore in FY17E-19E, BEL is well
52 week H/L (|)
1416 / 974
placed to capitalise on the fledgling defence sector.
Equity capital
| 240 Crore
Strong exports, healthy balance sheet to help sustain momentum
Face value
| 10
With the governments increasing focus on exports, BEL has set up a
MF Holding (%)
8.7
FII Holding (%)
3.4
dedicated business unit and marketing group to become a key supply
Promoter Holding (%)
75.0
chain partner of global defence contractors. Exports for FY16 were at $85
mn (~8.0% of total revenue), highest in the history of the company. We
Price performance
believe the same is likely to continue in F17E-18E. BEL also has a strong
Return (%)
1M
3M
6M
12M
balance sheet with near nil debt and cash balance of | 7332 crore.
Bharat Electronics
(8.3)
(0.7)
(1.4)
12.6
Accelerated order inflows and BELs consistent performance over the past
Centum Electronics
(13.5)
(4.2)
5.5
(5.0)
10 years, gives us reasonable confidence on the robust prospects of the
Astra Micro Wave
1.1
(10.1)
(15.9)
(10.2)
company. With moderate capital expenditure of | 1500 crore over the
next three years (FY17E-19E), we believe BEL is a quality play and is on a
Research Analyst
strong footing. Accordingly, we expect BEL to deliver sales and PAT
Chirag J Shah
CAGR of 19.1% and 5%, respectively, in FY16-18E. We value BEL at
chirag.shah@icicisecurities.com
| 1560 (earlier TP | 1552) i.e. 25x P/E on standalone FY18E EPS of | 62.4.
Sagar K Gandhi
We maintain our BUY recommendation on the company.
sagar.gandhi@icicisecurities.com
Whats changed?

ICICI Securities Ltd | Retail Equity Research

Variance analysis
Q4FY16 Q4FY16E

Q4FY15

YoY (%)

Q3FY16 QoQ (%)

Total Revenues

3,214.9

7,599.3

2,928.2

9.8

1,517.2

111.9

Raw materials costs

Employees Expenses

1,498.6
352.9

4,164.0
1,524.3

1,505.9
366.5

-0.5
-3.7

761.1
307.9

96.9
14.6

Other Expenses

364.5

669.2

263.2

38.5

155.7

134.2

2,216.0

6,357.6

2,135.6

3.8

1,224.6

81.0

998.8

1,241.8

792.6

26.0

292.6

241.4

31.1

16.3

4.1

2.4

1.1

264.9

0.1

46.8

175.5

42.6

9.7

41.4

12.9

Tax

279.9

351.1

164.5

70.1

90.8

208.4

Other Income

133.6

608.1

138.6

-3.5

135.5

-1.3

PAT
794.5 1,320.9
Source: Company, ICICIdirect.com Research

722.9

9.9

295.7

168.7

Total Expenditure
EBITDA
EBITDA margins (%)
Interest
Depreciation

27.1 400 bps

Comments
Strong Q4FY16 on account of higher execution. Execution for FY16 was at 30.5% of
the order backlog vs. 28.9% in FY15

Sharp increase in margins as BEL witnessed an overall reduction in material

consumption mostly due to commodity correction and indigenisation

19.3 1178 bps

2,854.4

Change in estimates
(| Crore)

Old

FY17E
New

% Change

Old

FY18E
New % Change

Revenue

8,863.2

8,851.0

-0.1

10,002.7

10,349.5

3.5

EBITDA

1,274.8

1,475.2

15.7

1,389.8

1,674.2

20.5

14.7

16.7

197 bps

14.2

16.2

198 bps

1,401.1

1,386.1

-1.1

1,489.8

1,498.1

0.6

58.4

57.8

-1.1

62.1

62.4

0.5

EBITDA Margin (%)

PAT
EPS (|)

Comments
Revenue for FY17E revised marginally downwards despite high order
backlog. This is because of large orders in its order book. Execution
period for large orders is 36-48 months

Margins revised upwards to reflect commodity correction in input prices

Source: Company, ICICIdirect.com Research

Company Analysis
ICICI Securities Ltd | Retail Equity Research

Page 2

Key takeaways for Q4FY16

ICICI Securities Ltd | Retail Equity Research

Strong order book provides visibility: Order book at the end of

Q4FY16 was at | 32,022 crore, up 48% YoY

The export order book was at ~US$120 million. Order inflow for
Q4FY16 was at | 3100 crore, up 12% YoY while for FY16 it was at
| 17,094 crore (| 5112 crore in FY15)

Major orders acquired during FY16 include Integrated Air Command

Control System (| 7900 crore), Weapon Locating Radars, Hand held
thermal Imager, Ground based Electronic intelligence (ELINT), USHUS
sonar, etc

Major orders expected to be finalised in FY17 could also include

orders like Akash Missile (~| 4700 crore), 3D Tactical control radar,
fire control systems, low level light weight radar, Integrated Sonar
Suite, passive night vision devices, etc

Radars, missile systems, communication and network centric

systems, tank electronics, gun upgrades, electro-optic systems,
electronic warfare and avionics systems are key areas that will drive
BELs growth in the medium term

Page 3

Company Analysis
Revenue growth of 19.1% CAGR in FY16-18E to be driven order inflows
and strong execution
We expect standalone revenues to increase from | 7295 crore in FY16 to
| 10350 crore in FY18E at a CAGR of 19.1%, mainly on the back of strong
order inflows and execution of backlog orders over the next two years.
Order backlog as on FY16 stands at | 32022 crore. We expect order
inflows of | 14,000 crore in FY17E and FY18E. Assuming, execution rate
of 23% for backlog orders and 10% execution rate for current year order
inflows, we estimate BEL will post revenues of | 8851 crore in FY17E and
| 10350 crore in FY18E.
Exhibit 1: Revenue trend
12,000

10,350

10,000

8,851

| crore

8,000

6,276

6,843

7,295

FY15

FY16

6,000
4,000
2,000
FY14

FY17E

FY18E

Source: Company, ICICIdirect.com Research

Order book growth to keep ticking

Order backlog for BEL has historically grown at 6.3%CAGR in FY11-16.
However, with the governments Make in India campaign gaining steam,
we expect order backlog for BEL to increase at 13.2% CAGR in FY16-18E.

| crore

Exhibit 2: Order backlog trend

45000
40000
35000
30000
25000
20000
15000
10000
5000
0

13.2%
37257

41008

32022
25748

24949

FY12

FY13

23200

21617

FY14

FY15

FY16

FY17E

FY18E

Order Backlog

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Strong order inflows over next five to seven years

BEL is expected to receive significant orders over the next five to seven
year. Major orders expected to be finalised in FY17 include orders like
Akash Missile (~| 4700 crore), 3D Tactical control radar, Fire control
systems, Low level light weight radar, Integrated Sonar Suite, passive
night vision devices, etc. Apart from the above-mentioned orders, the
company is also contender for large orders like battlefield management
system (BMS), the order size of which is ~| 35000 crore. Also, with
Hindustan Aeronautics (HAL) commencing its production line for
indigenous aircraft Tejas, BEL is expected to receive significant orders for
its electronic components and systems. Thus, we expect the order
pipeline for BEL to remain strong in FY16-20E. For FY17E and FY18E, we
estimate order inflows of | 14,000 crore each year for the company.

| crore

Exhibit 3: Order inflows to significantly over FY16-18E

18000
16000
14000
12000
10000
8000
6000
4000
2000
0

17094
14000

14000

FY17E

FY18E

7916
5305

FY12

FY13

4527

FY14

5260

FY15

FY16

Orders Inflows

Source: Company, ICICIdirect.com Research

EBIDTA margins to stabilise to 16.2% in FY18E

BEL reported strong EBITDA margins of 20% in FY16 vs. 16.7% for FY15.
The sharp increase in margins was due to an overall reduction in material
consumption mainly because of commodity correction and indigenisation
initiatives of the company. However, we believe the same is
unsustainable, going forward. Also, BEL has transformed itself from a
pure product-selling company to one that takes the contract as a system
integrator. For instance, BEL used to win 25-30% of the contract for Akash
missiles to supply its radars and related electronics but now BEL receives
turnkey orders to supply Akash missiles. From just supplying the product,
it now purchases equipment i.e. missiles from HAL and launchers from
L&T, assembles the product and then supplies it to the air force. Though
this has increased revenues and order inflows for the company, margins
are expected to come off as profitability on purchased equipment is not
as high as its own product.
EBITDA has grown at 8.1% CAGR in FY11-16. Going ahead, we expect
EBITDA to grow at 7% CAGR in FY16-18E. Due to higher inflow of large
orders in coming years, we expect EBITDA margins for the company to
moderate from 20% in FY16 to 16.2% in FY18E.

ICICI Securities Ltd | Retail Equity Research

Page 5

Exhibit 4: EBITDA and EBITDA margin trend

12,000
10,000
6,276

14.2

6,000

6,843 16.7

20.0

8,851

16.2
16.7

20
15
10

4,000
2,000

7,295

| crore

8,000

25

10,350

891

1,143

1,461

1,475

1,674

5
0

FY14

FY15

Revenues

FY16

FY17E

FY18E

EBITDA

EBITDA margin (%)

Source: Company, ICICIdirect.com Research

PAT to grow at 5% CAGR in FY16-18E

In FY11-FY16, PAT grew at 9.5% CAGR. This was mostly due to healthy
topline growth and improvement in execution in FY16. Going forward, we
expect the bottomline to grow at 5% CAGR for FY16-18E.

1,600
1,400
1,200
| crore

1,000

1,167
17.1

932

800

1,358
18.6

1,386

1,498

15.7

14.8

14.5

600
400
200
FY14

FY15
Net Profit

FY16

FY17E

20
19
18
17
16
15
14
13
12
11
10

Exhibit 5: Consolidated PAT to grow 26% CAGR in FY15-17E

FY18E

Margins (%)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoE, RoCE of 14.3% and 19.6% in FY18E

Return ratios have exhibited a declining trend with RoCEs and RoEs
declining from 20.4% and 15% in FY12 to 19.6% and 14.8% in FY15,
respectively, for similar reasons of lower margins and large orders with
long execution cycles. With moderate capex plans (| 1000 crore over
FY17E and FY18E) and demand growth revival, capacity utilisation levels
are expected to improve leading to stable return ratios. BEL has been a
consistent debt-free company with a cash balance of | 7332 crore in
FY16. Thus, we estimate stable return ratios with RoE and RoCE of 14.3%
and 19.6%, respectively, in FY18E.
Exhibit 6: RoE, RoCE trend
25.0
20.0

17.7

15.0

22.0

19.6

15.5

14.8

13.3

19.9

19.6

14.5

14.3

10.0
5.0
FY14

FY15

FY16
RoCE (%)

FY17E

FY18E

RoE (%)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Outlook and valuation

BEL has a very sound history among large Indian public
sector enterprises. The company has delivered topline and
bottomline CAGR of 10.5% and 17.2%, respectively, over
the past 15 years (FY00-15), with average RoCEs and RoEs
of 22.5% and 21.6%, respectively. BEL is characterised by
a consistent dividend payout of 20% (30% from FY16
onwards), clean corporate governance, efficient working
capital management, adequate R&D spend, ability to
absorb latest technologies, timely execution of large
projects, strong cash flow generation and prudent capital
allocation

ICICI Securities Ltd | Retail Equity Research

BEL has one of the soundest track records among large Indian public
sector enterprises. The company has delivered a topline and bottomline
CAGR of 10.5% and 17.2% over the past 15 years (FY00-15), with average
RoCEs and RoEs of 22.5% and 21.6%, respectively. The company is
characterised by consistent dividend payout of 20%, clean corporate
governance, efficient working capital management, adequate R&D spend,
ability to absorb latest technologies, timely execution of large projects,
strong cash flow generation and prudent capital allocation.
Despite the consistent history of BEL, the market has always valued the
stock at 13x (10 year average of two year forward earnings). We believe
this is because of the nature of the business in which BEL is engaged.
Lumpy orders, routine delays in decision making by armed forces,
bureaucratic inertia, sensitive technologies and a variety of other factors
like movement in policy reforms, corruption and capital market conditions
have always led market participants to view the business of BEL with
suspicion. Credible defence initiatives, a large upcoming opportunity and
sound balance sheet strength, accelerated order inflows and BELs
consistent performance over the past 10 years, give us reasonable
confidence on the robust prospects of the company. With moderate
capital expenditure of | 1500 crore over the next three years (FY17E-19E),
we believe BEL is a quality play and is on a strong footing. Accordingly,
we expect BEL to deliver sales and PAT CAGR of 19.1% and 5%
respectively, in FY16-18E. We value BEL at | 1560 (earlier target price of
| 1552) i.e. 25x P/E on standalone FY18E EPS of | 62.4. We maintain BUY
recommendation on the company.

Page 8

Company snapshot
1,800
1,600

Target Price 1560

1,400
1,200
1,000
800
600
400
200
Jul-17

Jan-17

Jul-16

Jan-16

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date/Year
Dec-12

Event
BEL signs an MoU with Israel Aerospace Industries (IAI) for cooperation on future Long Range Surface to Air Missile (LRSAM) Ship-defence Systems

Sep-14

BEL establishes a Joint Venture Company (JVC) with M/s. Thales Air Systems SA, France and M/s. Thales India Pvt. Ltd in Radar Business Area.

Nov-15

BEL delivers L70 upgraded guns to Indian Army

Feb-15

Ministry of Defence selects BEL - Rolta consortium as a Development Agency for the Battlefield Management System Project

Mar-15

BEL issues bonus shares in the ratio of 2:1

Oct-15

BEL signs | 8000 crore IACCS (Integrated Air Command and Control System) deal with Indian Air Force

Mar-16

BEL, Rosoboronexport sign defence offset partnership agreement

May-16

BEL and HAL sign deal to co-develop avionics

May-16

BEL registers highest-ever order inflow of | 17,094 for FY16.

Source: Company, ICICIdirect.com Research
[

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Name
Government of India
Life Insurance Corporation of India
HDFC Asset Management Co., Ltd.
Reliance Capital Asset Management Ltd.
UTI Asset Management Co. Ltd.
The Vanguard Group, Inc.
Tata Asset Management Limited
ICICI Prudential Asset Management Co. Ltd.
SBI Funds Management Pvt. Ltd.
BNP Paribas Investment Partners Asia Ltd.

Shareholding Pattern
Latest Filing Date
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
30-Apr-16
30-Apr-16
30-Apr-16
31-Mar-16
31-Jan-16

% O/S
0.75
0.05
0.02
0.01
0.01
0.01
0.01
0.01
0.00
0.00

Position (m)
180.04M
12.74M
4.15M
2.43M
1.82M
1.63M
1.51M
1.24M
1.10M
1.08M

Position Change (m)

0.0
0.0
+0.19M
-0.25M
+0.05M
0.0
-0.05M
+0.00M
+0.00M
+0.05M

(in %)
Promoter
FII
DII
Others

Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

75.0
75.0
75.0
75.0
75.0
3.4
3.9
4.0
4.1
4.0
15.4
15.5
14.7
14.7
14.7
6.2
5.6
6.3
6.2
6.3

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
HDFC Asset Management Co., Ltd.
Norges Bank Investment Management (NBIM)
Capital Investment Trust Corporation
Harding Loevner LP
BNP Paribas Investment Partners Asia Ltd.
Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Value
+3.46M
+3.47M
+2.95M
+0.97M
+0.86M

Shares
+0.19M
+0.17M
+0.14M
+0.05M
+0.05M

Sells
Investor name
Reliance Capital Asset Management Ltd.
Franklin Templeton Asset Management (India) Pvt. Ltd.
Driehaus Capital Management, LLC
Capital International, Inc.
PGGM Vermogensbeheer B.V.

Value
-4.60M
-3.01M
-1.44M
-1.18M
-1.07M

Shares
-0.25M
-0.16M
-0.10M
-0.06M
-0.05M

Page 9

Financial summary (Standalone)

Profit and loss statement

| Crore

(| Crore)
Net Sales
Other operating income
Total Revenue
Other income
Total

FY15
6,675.5
167.1
6,842.6
477.9
7,320.6

FY16
7,154.1
141.1
7,295.2
532.2
7,827.3

FY17E
8,677.4
173.5
8,851.0
587.6
9,438.6

FY18E
10,146.6
202.9
10,349.5
581.0
10,930.6

Total Raw Material Costs

Employee Expenses
other expenses
Total Operating Expenditure

3,780.6
1,263.5
655.3
5,699.3

3,790.8
1,301.8
741.1
5,833.7

4,859.3
1,605.3
911.1
7,375.8

5,682.1
1,927.9
1,065.4
8,675.3

Operating Profit (EBITDA)

Interest
PBDT
Depreciation
PBT before Exceptional Items
Total Tax
PAT before MI
Minority Interest
PAT

1,143.3
1.4
1,619.9
154.0
1,465.9
299.4
1,166.5
1,167.2

1,461.4
4.5
1,989.1
168.9
1,820.2
455.3
1,364.9
1,357.7

1,475.2
6.0
2,056.8
196.3
1,860.5
474.4
1,386.1
1,386.1

1,674.2
7.5
2,247.7
223.3
2,024.5
526.4
1,498.1
1,498.1

48.6

56.6

57.8

62.4

EPS

Cash flow statement

FY15
1,167.2
154.0
1.4
1,322.6
(70.7)
342.4
464.4
12.8
748.8
(363.2)
177.2
(186.0)

FY16
1,357.7
168.9
4.5
1,531.1
(798.5)
74.2
152.9
(4.6)
(575.9)
1,590.5
385.1
1,975.6

FY17E
1,386.1
196.3
6.0
1,588.3
(197.0)
(1,744.2)
(197.5)
(12.7)
(2,151.3)
1,581.3
(191.8)
1,389.5

FY18E
1,498.1
223.3
7.5
1,728.9
(739.0)
(923.8)
(31.4)
(12.0)
(1,706.2)
1,642.3
164.2
1,806.5

Net CF from Operating activities

1,885.4

2,930.8

826.5

1,829.2

Changes in deferred tax assets

(Purchase)/Sale of Fixed Assets
Net CF from Investing activities

(38.3)
(217.0)
(263.9)

(34.5)
(646.2)
(964.2)

(500.0)
(495.0)

(500.0)
(495.0)

Dividend and Dividend Tax

Net CF from Financing Activities

(281.0)
(304.3)

(489.6)
(516.2)

(507.3)
(305.2)

(543.8)
(556.3)

1,317.1
4,564.4
5,881.5

1,450.4
5,881.5
7,332.0

26.3
7,332.0
7,358.3

777.9
7,358.3
8,136.2

FY15

FY16

FY17E

FY18E

48.6
245.1
328.5
9.7
0.2

56.6
305.5
363.9
17.0
0.3

57.8
306.6
399.0
17.6
0.3

62.4
339.0
437.6
18.9
0.3

17.1
17.5

20.4
19.0

17.0
16.0

16.5
14.8

14.8
19.6
68.4

15.5
22.0
242.4

14.5
19.9
83.7

14.3
19.6
87.7

19.7
24.4
3.3
0.9
4.2
3.6

14.4
20.9
2.9
0.8
3.9
3.3

14.5
20.5
2.4
0.9
3.2
3.0

12.3
19.0
2.0
1.0
2.7
2.7

3.4
1.7
1.0

5.2
1.9
1.0

3.2
1.9
1.0

3.5
1.7
1.0

0.0

0.0

0.0

0.0

1.1
0.6

0.9
0.5

1.0
0.6

1.0
0.6

Net Cash flow

Opening Cash/Cash Equivalent
Closing Cash/ Cash Equivalent

Source: Company, ICICIdirect.com Research

| Crore

(| Crore)
Profit after Tax
Depreciation
Interest
Cash Flow before WC changes
Changes in inventory
Changes in debtors
Changes in loans & Advances
Changes in other current assets
Net Increase in Current Assets
Changes in creditors
Changes in provisions
Net Increase in Current Liabilities

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(| Crore)
Equity Capital
Reserve and Surplus
Total Shareholders funds
Minority Interest
Other Non Current Liabilities
Total Debt

FY15
80.0
7,805.0
7,885.0
1.1
9.1

FY16
240.0
8,493.8
8,733.8
2.1
6.2

FY17E
240.0
9,337.0
9,577.0
7.1
250.0

FY18E
240.0
10,261.3
10,501.3
12.1
275.0

Total Liabilities

7,895.2

8,742.1

9,834.0

10,788.4

2,485.2
1,714.0
771.1
139.8
910.9
427.1
3,369.4
3,786.1
752.0
53.5
5,881.5
13,842.6
6,527.8
776.7
6,538.1

2,841.4
1,883.0
958.4
429.7
1,388.1
447.3
4,167.9
3,711.9
599.1
58.1
7,332.0
15,868.9
8,118.3
1,161.8
6,588.8

3,271.1
2,079.2
1,191.9
500.0
1,691.9
447.3
4,364.9
5,456.1
796.6
70.8
7,358.3
18,046.6
9,699.7
970.0
7,377.0

3,721.1
2,302.5
1,418.6
550.0
1,968.6
447.3
5,103.9
6,379.9
828.0
82.8
8,136.2
20,530.7
11,342.0
1,134.2
8,054.6

7,895.2

8,742.2

9,834.0

10,788.4

Gross Block
Acc: Depreciation
Net Block
Capital WIP
Total Fixed Assets
Non Current Assets
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Current Liabilities
Provisions
Net Current Assets
Total Assets

(Year-end March)
Per Share Data
EPS
Cash per Share
BV
Dividend per share
Dvidend payout ratio
Operating Ratios
EBITDA Margin
PAT Margin
Return Ratios
RoE
RoCE
RoIC
Valuation Ratios
EV / EBITDA
P/E
EV / Net Sales
Sales / Equity
Market Cap / Sales
Price to Book Value
Turnover Ratios
Asset turnover
Debtors Turnover Ratio
Creditors Turnover Ratio
Solvency Ratios
Debt / Equity
Current Ratio
Quick Ratio

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Key ratios

Source: Company, ICICIdirect.com Research

Page 10

Financial summary (Consolidated)

Profit and loss statement

| Crore

(| Crore)
Net Sales
Other Operating Income
Total Operating Income
Other Income
Total Revenue

FY15
6,895.3
197.3
7,092.6
506.7
7,599.4

FY16
7,382.7
165.8
7,548.5
533.5
8,082.0

FY17E
9,653.1
193.1
9,846.2
616.2
10,462.4

FY18E
11,294.1
237.2
11,531.3
625.7
12,157.0

Total Raw Material Costs

Employee Expenses
other expenses
Total Operating Expenditure

3,934.7
1,281.0
702.3
5,918.0

3,916.4
1,322.5
768.7
6,007.6

5,405.7
1,756.9
1,013.6
8,176.2

6,381.2
2,089.4
1,174.6
9,645.2

Operating Profit (EBITDA)

Interest
PBDT
Depreciation
PBT before Exceptional Items
Total Tax
PAT before MI
Minority Interest
PAT

1,174.6
2.7
1,678.7
166.2
1,512.5
316.2
1,196.3
(0.2)
1,197.2

1,541.0
6.2
2,068.3
199.6
1,868.7
475.0
1,393.7
(0.6)
1,387.1

1,670.0
8.0
2,278.2
226.6
2,051.6
533.4
1,518.2
1,518.2

1,886.1
10.0
2,501.8
255.8
2,246.0
584.0
1,662.0
1,662.0

49.9

57.8

63.3

69.3

EPS

Cash flow statement

FY15
1,197.2
166.2
2.7
1,366.0
(84.5)
350.6
496.1
14.5
776.7
(328.3)
180.6
(147.6)

FY16
1,387.1
199.6
6.2
1,592.9
(788.6)
64.6
157.1
(4.8)
(571.7)
1,557.8
392.1
1,949.9

FY17E
1,518.2
226.6
8.0
1,752.8
(547.7)
(2,209.8)
(263.5)
(18.1)
(3,039.1)
2,431.0
(119.9)
2,311.1

FY18E
1,662.0
255.8
10.0
1,927.9
(809.3)
(1,011.6)
(34.8)
(13.1)
(1,868.7)
1,798.4
179.8
1,978.2

Net CF from Operating activities

1,995.1

2,971.1

1,024.8

2,037.3

Changes in deferred tax assets

(Purchase)/Sale of Fixed Assets
Net CF from Investing activities

(36.9)
(226.5)
(263.5)

(32.9)
(650.7)
(912.1)

(500.0)
(252.8)

(500.0)
(495.0)

Dividend and Dividend Tax

Net CF from Financing Activities

(281.6)
(298.2)

(489.6)
(544.1)

(507.3)
(472.4)

(543.8)
(562.1)

1,433.4
4,604.6
6,038.0

1,514.9
6,038.0
7,552.9

299.6
7,552.9
7,852.5

980.3
7,852.5
8,832.8

FY15

FY16

FY17E

FY18E

49.9
251.6
338.2
9.7
0.2

57.8
314.7
374.4
17.0
0.3

63.3
327.2
415.3
17.6
0.3

69.3
368.0
460.5
18.9
0.3

16.6
16.9

20.4
18.4

17.0
15.4

16.4
14.4

14.7
19.1
57.8

15.4
21.4
174.8

15.2
21.0
99.0

15.0
20.6
105.7

19.3
23.8
3.3
0.8
4.1
3.5

13.7
20.5
2.9
0.8
3.9
3.2

12.5
18.7
2.2
1.0
2.9
2.9

10.6
17.1
1.8
1.0
2.5
2.6

2.7
1.8
1.1

4.0
2.0
1.0

3.6
2.0
1.1

4.0
1.8
1.0

0.0

0.0

0.0

0.0

1.1
0.6

0.9
0.5

1.0
0.6

1.0
0.6

Net Cash flow

Opening Cash/Cash Equivalent
Closing Cash/ Cash Equivalent

Source: Company, ICICIdirect.com Research

| Crore

(| Crore)
Profit after Tax
Depreciation
Interest
Cash Flow before WC changes
Changes in inventory
Changes in debtors
Changes in loans & Advances
Changes in other current assets
Net Increase in Current Assets
Changes in creditors
Changes in provisions
Net Increase in Current Liabilities

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(| Crore)
Equity Capital
Reserve and Surplus
Total Shareholders funds

FY15
80.0
8,036.9
8,116.9

FY16
240.0
8,746.1
8,986.1

FY17E
240.0
9,727.2
9,967.2

FY18E
240.0
10,812.2
11,052.2

Minority Interest
Other Non Current Liabilities
Total Debt
Total Liabilities

6.1
1.1
226.0
8,350.0

4.8
2.2
206.0
9,199.0

4.8
7.2
278.6
10,257.8

4.8
12.2
303.6
11,372.8

Gross Block
Acc: Depreciation
Net Block
Capital WIP
Total Fixed Assets

2,894.4
1,821.4
1,073.0
140.3
1,213.3

3,054.3
1,821.4
1,232.9
431.5
1,664.5

3,485.8
2,048.0
1,437.9
500.0
1,937.9

3,935.8
2,303.8
1,632.0
550.0
2,182.0

428.0
3,424.2
3,805.3
762.4
54.3
6,038.0
14,084.3
6,589.9
785.7
6,708.7

447.1
4,212.8
3,740.7
605.3
59.1
7,552.9
16,170.8
8,147.7
1,177.8
6,845.3

447.1
4,760.4
5,950.5
868.8
77.2
7,852.5
19,509.5
10,578.7
1,057.9
7,872.9

447.1
5,569.7
6,962.1
903.5
90.4
8,832.8
22,358.5
12,377.1
1,237.7
8,743.7

8,350.1

9,199.0

10,257.8

11,372.8

Non Current Assets

Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Current Liabilities
Provisions
Net Current Assets
Total Assets

Source: Company, ICICIdirect.com Research

Key ratios
(Year-end March)
Per Share Data
EPS
Cash per Share
BV
Dividend per share
Dvidend payout ratio
Operating Ratios
EBITDA Margin
PAT Margin
Return Ratios
RoE
RoCE
RoIC
Valuation Ratios
EV / EBITDA
P/E
EV / Net Sales
Sales / Equity
Market Cap / Sales
Price to Book Value
Turnover Ratios
Asset turnover
Debtors Turnover Ratio
Creditors Turnover Ratio
Solvency Ratios
Debt / Equity
Current Ratio
Quick Ratio

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 11

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 12

Disclaimer
ANALYST CERTIFICATION

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views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

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ICICI Securities Ltd | Retail Equity Research

Page 13