coal india iifl dec13

8/18/2019 Coal India Iifl Dec13

1/10

Sector: Metals & Mining

Sector view: Neutral

Sensex: 21,194

52 Week h/l (Rs): 374 / 238

Market cap (Rscr) : 178,563

6m Avg vol (‘000Nos): 2,739

Bloomberg code: COAL IB

BSE code: 533278

NSE code: COALINDIA

FV (Rs): 10

Price as on Dec 27, 2013

Company rating grid

Low High

1 2 3 4 5

Earnings Growth

Cash Flow

B/S Strength

Valuation appeal

Risk

Share price trend

40

60

80

100

120

Dec ‐12 Apr‐13 Aug‐13 Dec‐13

Coal India Sensex

Share holding pattern

‐

50

100

Dec ‐12 Mar‐1 3 J un‐13 Sep‐13

P ro mo te rs In st it ut io ns O th ers

%

Change in Estimates Rating Target

Rating: BUYTarget: Rs323

CMP: Rs283

Upside: 14.2%

Company Report December 30, 2013

Research Analyst:

Tarang Bhanushali [email protected]

At inflexion point

The overhang of Government’s Follow on Public Offer (FPO), the Presidential

directive to sign FSAs with power producers and lower market linked prices

have resulted in Coal India underperforming the indices over the last one

year. We believe the impact of the above is already factored in the

underperformance of the stock. Realisations under e‐auction sales and

washed coal sales are near their bottom, and any increase in global coal

prices would lead to higher realisations for CIL. The recent price hikes

announced by the company indicates its ability to pass on the increased costs

to maintain profitability. With a dividend yield of 4.9% (dividend expected to

increase yoy), downside for the stock would be limited. Earnings are expected

to improve FY15 onwards on the back of higher volumes, marginal increase in

e‐auction prices and price hikes taken by the company during the year. At the

CMP, company trades at 5.2x FY15 EV/EBIDTA, lower than its historical

average of 7.8x. We value the company at 6.5x FY15 EV/EBIDTA and arrive at

a price target of Rs323.

Recent price hikes to offset cost increase

CIL has witnessed an increase in costs due to the deregulation of diesel and

an increase in employee costs. To mitigate the increase in costs, CIL over the

last one year has announced price rationalization exercises, thereby

protecting margins. On account of the price hikes and an increase in volumes,

we expect EBIDTA/ton to increase from Rs318/ton in FY14 to Rs377/ton in

FY15.

The

hike

indicates

CIL’s

ability

to

increase

prices

to

protect

its

margins

and contradicts the markets’ reservations about its pricing power.

Offtake growth expected at 3% yoy in FY14E

Coal India managed to produce 274.7mn tons (+3.7% yoy) and offtake stood

at 298.6mn tons (2% yoy) for the period April‐November ’13. This is below

management guidance due to few one‐offs like high temperature in Q1 FY14

and Cyclone Phailin in Q3 FY14. We expect CIL to end the year with a

production volume growth of 3.9% yoy and an offtake volume growth of 3%

yoy to 480mn tons. We estimate production growth to pick up on the back of

commissioning of new mines from H2 FY15.

Financial summary

Y/e 31 Mar (Rs m) FY13 FY14E FY15E FY16E

Revenues 683,027 706,805 754,914 794,190

yoy growth (%) 9.4 3.5 6.8 5.2

Operating profit 180,836 171,957 201,991 217,305

OPM (%) 26.5 24.3 26.8 27.4

Reported PAT 173,563 165,959 190,659 205,939

yoy growth (%) 17.4 (4.4) 14.9 8.0

EPS (Rs) 27.5 26.3 30.2 32.6

P/E (x) 10.3 10.8 9.4 8.7

Price/Book (x) 3.7 3.3 2.9 2.5 EV/EBITDA (x) 6.5 6.6 5.2 4.5

RoE (%) 39.0 32.3 32.8 31.0

RoCE (%) 54.7 47.4 48.3 46.0

Source: Company, India Infoline Research

Coal India Ltd


2/10

Coal India Ltd

2

CIL to miss its coal offtake target of 492mn tons in FY14Coal India managed to report a strong volume growth of 6.1% in FY13 after

registering flat volumes in the previous two years. The strong sales volume

growth was largely led by liquidation of inventory on the back of higher

availability of railway rakes and a 3.8% yoy increase in production. The

company

has

guided

for

a

production

target

at

482mn

tons

and

offtake

at

492mn tons in FY14 on expectations of higher rake availability. We believe the

company would continue to miss both its target as H1 FY14 volumes were not

encouraging.

Coal India managed to produce 200.5mn tons and offtake for the half stood at

224.4mn tons in H1 FY14. Coal India’s production and dispatch grew by 4.7%

yoy and 4.5% yoy, respectively, in H1 FY14 and are lower than the target

production and dispatch by 2.9% and 1.2%. Coal production in Q1 FY14 was hit

due to restriction on movement of explosives, high temperature in May and

early arrival of monsoons. Coal production in May fell on account of reduced

working hours imposed by the Odisha state government due to a heat wave

during the month. This impact was offset to some extent by the strong

performance in Q2 FY14. Production in Q2 FY14 jumped by 10% yoy and

dispatch growth too remained strong at 7.2% yoy. However, numbers have not

been encouraging over the last two months.

Production in October was lower by 2.3% yoy to 35mn tons and dispatches

declined sharply by 8% yoy to 38.8mn tons. The company had suffered

production loss in October due to Cyclone Phailin, which affected the key coal

producing states of Odisha, Jharkhand and West Bengal. Though production

growth resumed in November to 4.3% yoy, dispatches degrew by 1.8% yoy.

Overall production growth for the period April‐November ’13 stands at 3.7%

yoy at 274.7mn tons and that of sales stands at 2% yoy at 298.6mn tons over

the same period.

CIL has guided for a production target

at 482mn tons and offtake at 492mn

tons in FY14 on expectations of

higher rake

availability

Coal India’s production and dispatch

grew by 4.7% yoy and 4.5% yoy,

respectively, in H1 FY14 and are

lower than

the

target

production

and

dispatch by 2.9% and 1.2%

Overall production growth for the

period April ‐November ’13 stands at

3.7% yoy at 274.7mn tons and that of

sales stands at 2% yoy at 298.6mn

tons over the same period

Monthly coal production volumes has been lower

than target for the first six months of FY14

Dispatches have been 3.8% lower than the target for

the period Apr‐Nov ‘13

20

30

40

50

60

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

(mn

tons)

FY13 FY14 FY14 target

20

30

40

50

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

(mn tons)

FY13 FY14 FY14 target

Source: Company,

India

Infoline

Research


3/10

Coal India Ltd

3

With the company missing its target for the first eight months, CIL has reduced

its production target for FY14 from 482mn tons to 475mn tons. But we still

expect CIL to miss its new production growth target of 5% yoy and offtake

target of 5.7% yoy for FY14. We expect coal production to increase by 3.9% yoy

to 470mn tons against the company’s target of 475mn tons and offtake to

increase by 3.1% yoy to 480mn tons against the target of 492mn tons. The company has already liquidated coal inventory of 23.9mn tons in the first eight

months and hence the jump from liquidation of coal would be lower for the

rest of the year.

Increase in realisations restricted by lower e-auction prices

Coal India’s average realisation topped out in Q4 FY12 and has been declining

over the last one year despite the price hikes taken in Q4 FY12. The decline in

ASPs has been largely due to the decline in prices of e‐auction and washed coal

prices. With a sharp correction in international thermal coal prices, prices of

Coal India’s market linked sales have declined. E‐auction prices have gradually

declined from Rs2,852/ton in Q4 FY12 to Rs2,307/ton in Q4 FY13. Washed coal

prices too have been lower on a yoy basis. Adjusted for year‐end incentives

from power companies, ASPs have declined by 5% over the last one year. FY13

realisations were higher by 3.1% yoy against the 10% price hike taken for FSA

sales.

Coal India has witnessed an increase in costs due to the deregulation of diesel.

As a result, the company in May ’13 has announced an increase in its prices. It

also decided to rationalise its prices according to the market conditions. The

company increased prices of lowest grade (G17) coal, with Gross Calorific Value

(GCV) between 2,200Kcal/Kg and 2,500Kcal/Kg, by 11.1% from existing

Rs360/ton to Rs400/ton. Prices of Grade 6 coal, with GCV between 5,500 and

5,800Kcal/Kg, were increased 10.3% from Rs1,450/ton to Rs1,600/ton. For

premium‐grade or high‐grade coal there will be a reduction in prices by 12.5%.

As a result of this rationalisation, average price realisation would increase by 4.7% and would add Rs25bn to the company’s revenue in FY14.

We expect coal production to

increase by 3.9% yoy to 470mn tons

against the company’s target of

475mn tons and offtake to increase

by 3.1% yoy to 480mn tons against

the target of 492mn tons

FY13 realisations were higher by 3.1%

yoy against the 10% price hike taken

for FSA sales

Production to grow to 3.9% yoy to 470mn tons in

FY14

Offtake to increase by 3.1% yoy to 480mn tons

300

350

400

450

500

FY09 FY10 FY11 FY12 FY13 FY14E FY15E

(mn tons)

300

350

400

450

500

550

FY0 9 FY1 0 FY1 1 FY1 2 FY1 3 FY1 4E F Y1 5E F Y1 6E

(mn tons)



4/10

Coal India Ltd

4

Further in December, the company increased prices for coal produced by its

Subsidiary, Western Coal Fields (WCL) and revised prices of raw non‐coking

coal sizing charges and rapid loading charges. CIL currently charges Rs39‐

77/ton for sizing and Rs20/ton for usage of rapid loading system. CIL has hiked

these charges by Rs12‐25/ton for sizing and Rs6/ton for rapid loading. Due to

this revision, CIL will earn additional revenue of approximately Rs1.97bn for the balance period of FY14. In addition, WCL has hiked its prices by 10%. This

will be applicable for thermal coal of band G‐6 to G‐17 under the gross calorific

value (GCV) mechanism. Due to this increase, WCL will earn additional revenue

of ~Rs1.4bn for the balance period of FY14. These hikes are likely aimed at

neutralizing the impact of costlier fuel. The impact of the above hikes, when

annualized, could further add ~1.7% to CIL revenues.

The impact of the above rationalisation exercise on overall ASPs would be

lowered by a decline in its e‐auction sales. We believe that e‐auction and

washed coal prices would continue to remain weak in the near term. In our

view, global coal prices are likely to remain in a narrow range from current

levels and therefore, e‐auction coal prices should witness a similar trend.

Though a significant decline in e‐auction ASPs from current levels is unlikely,

we do not expect any upward movement too. E‐auction prices declined 2% yoy in FY13 and we expect it to decline further by 14.5% yoy to Rs2,175/ton in FY14

before a minor rebound of 2% in FY15. We also expect beneficiated coal prices

to decline by 5% yoy in FY14 and then rebound by 2% in FY15. As a result of the

above, ASPs for Coal India would increase marginally by 0.3% in FY14 to

Rs1,473/ton and 3.5% in FY15 to Rs1,525/ton.

WCL has hiked its prices by 10%, due

to this increase, it will earn additional

revenue of ~Rs1.4bn for the balance

period of FY14

ASPs for Coal India would increase

marginally by 0.3% in FY14 to

Rs1,473/ton and 3.5% in FY15 to

Rs1,525/ton

ASP increase curtailed at 0.3% yoy in FY14E due to

weak market linked realisations

ASP topped out in Q4 FY12 due to higher e‐auction

prices and incentives for the year

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600 1,700

FY0 9 FY1 0 FY1 1 FY1 2 FY1 3 FY1 4E FY1 5E FY1 6E

(Rs/ton)

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

Q 2 F

Y 1 2

Q 3 F

Y 1 2

Q 4 F

Y 1 2

Q 1 F

Y 1 3

Q 2 F

Y 1 3

Q 3 F

Y 1 3

Q 4 F

Y 1 3

Q 1 F

Y 1 4

Q 2 F

Y 1 4

(Rs/ton)



5/10

Coal India Ltd

5

Share of market linked sales volume to declineOver the last one year, Coal India has reduced its e‐auction sales volume and

has been more focused on meeting the requirements of power companies.

Share of e‐auction sales of total sales volume declined from 11.8% in FY12 to

10.6% in FY13. The management has guided for flat growth in e‐auction sales

at 48

‐50mn

tons

in

FY14,

reducing

the

share

to

10.2%.

The

growth

in

washed

coal sales, which has been stagnant over the last few years, witnessed a 16.5%

yoy decline in FY13. We expect growth in sales of beneficiated coal to be flat

over the next two years at 14mn tons and its share to reduce from 3.9% in

FY12 to 2.8% in FY15.

Signing of new FSAs would reduce incentives in the near termTo increase the investments and a revival of the power sector, a Presidential

Directive was issued by the Ministry to CIL on 17th

June ‘13 for signing of FSAs

for a total capacity of 78,000MW during the remaining four years of 12th

Plan

subject to fulfillment of all formalities. Actual coal supplies would, however, be

available when the required long‐term Power Purchase Agreements (PPAs) are

tied up. Supply of domestic coal to these projects has been restricted to 65%,

65%, 67% and 75% during these four years, keeping in view the availability of

coal. To meet its balance FSA obligations, CIL may import coal and supply the

same to the willing power plants on cost plus basis. Power plants may also directly import coal themselves, if they so opt.

CIL had kept a deadline of 31st

August ’13 to sign the FSAs with the concerned

parties. However, with pressure from the Government it continued to sign

FSAs after that. Out of the total 173 FSAs pending, 157 FSAs have been signed

so far for a capacity of 71,145MW, in addition to FSAs signed in respect of

power plants commissioned before 31st

March ‘09. The company has been

focused on supplying coal to power plants to boost power production in the

country. The cumulative off ‐take to the power sector during the period April‐

Sept

‘13

stood

at

195mn

tons.

The management has guided for flat

growth in e‐auction sales at 48‐50mn

tons in FY14, reducing the share to

10.2%.

E‐auction volumes to remain stagnant due to

increase in supplies to power companies

… washed coal sales volume to remain flat over the

next two years

8

9

10

11

12

13

14

0

10

20

30

40

50

60

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

(%)(mn tons)

Volume % share of total volumes

2

3

4

5

12

14

16

18

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

(%)(mn tons)

Volume % share of total volumes



6/10

Coal India Ltd

6

Supply of coal to power companies

Year

Committed qty

under FSA (mn tons)

Despatched

(mn tons)

Achievement

(%)

FY11 334.5 304.2 91

FY12 344.4 312.1 91

FY13 375.8 344.4 92

H1 FY14 222.8 194.5 87 Source: Company, India Infoline Research

Coal India earns incentives from power companies for supplying coal more

than the trigger level of the annual contracted amount. According to the old

format for FSA, CIL is eligible for incentives if it supplies more than 90% of the

annual contracted quantity and under the new format, prepared in 2012, CIL

will be eligible for incentives if it supplies more than 80% of the contracted

quantity. Over the last two years, CIL has managed to collect Rs10bn in FY12

and Rs13bn in FY13 as incentives from the power players. Incentives accounted

for 6.8%

of

PAT

in

FY12

and

7.5%

of

PAT

in

FY13.

Coal

India’s

supply

has

already

been lower than the target set in H1 FY14 at 87%, which is below the 92%

achieved in FY13. We believe going ahead incentives would reduce as the

threshold limit to earn incentives would be quite high compared to the

previous two years.

EBIDTA/ton to jump yoy in FY15E

CIL’s costs have risen sharply over the last one year due to an increase in diesel

costs and contractual mining costs. Diesel costs have jumped as the

Government has deregulated bulk diesel sales. Stores and spares per ton of

coal sold jumped 6% yoy in FY13 and is expected to increase further by 9% yoy

in FY14. We expect diesel price for bulk buyers to increase marginally in FY15

and expect stores cost per ton to increase by 4% yoy. Contractual expenses too

increased by 14% in FY13 and we expect it to be higher by 10% yoy in FY14 and

5% yoy each over the next two years.

Coal India’s supply has already been

lower than the target set in H1 FY14

at 87%, which is below the 92%

achieved in

FY13.

Stores and contractual expenses to jump in FY14 Employee head count would continue to reduce

over the next three years due to retirement

30

50

70

90

110

130

150

170

FY09 FY10 FY11 FY12 FY13 FY14E FY15E

(Rs/ton)

Stores Contractual

275,000

300,000

325,000

350,000

375,000

400,000

425,000

FY1 0 FY1 1 FY1 2 FY1 3 FY1 4E F Y1 5E F Y1 6E



7/10

Coal India Ltd

7

The impact of higher wage cost would be marginally offset by an increase in

sales volume. We expect costs per ton to increase by 4.1% yoy to Rs1,155/ton

in FY14 and remain flat in FY15. EBIDTA/ton is expected to decline yoy in FY14

as the impact of price hikes taken by CIL would be offset by lower market

linked sales revenue, lower incentives from power players and an increase in

costs. We expect EBIDTA/ton to decline to Rs318/ton in FY14 and then to jump to Rs377/ton in FY15. The increase in margins is on account of the full impact

of the price hikes announced and higher volumes.

Debtor days to peak out in Q3 FY14

CIL’s debtor days have been constantly rising over the last four years due to

delay in payments from debt‐ridden power companies. Debtors further jumped

in H1 FY14 due to the altercation between CIL and NTPC over the quality of the

coal. Debtor days increased from 25 days in FY11 to 56 days in FY13 and are

expected to rise further in FY14. Debtors increased from Rs34bn in FY11 to

Rs105bn in FY13 and further to Rs113bn in Q2 FY14. To counter the rising

debtors CIL has started to recover from its major debtors. CIL has started

deducting up to 15‐25% of the upfront payments for new supplies by its

consumers to recover the dues. As a result, total outstanding has come down

from a high of about Rs130bn in August ’13 to ~Rs110bn in November ’13. The

company expects to reduce the total outstanding to Rs90bn by end‐FY14. We

expect debtors to account for Rs113bn by end‐FY14 and to decrease marginally

over the next two years.

We expect EBIDTA/ton to decline to

Rs318/ton in FY14 and then to jump

to Rs377/ton in FY15

Total outstanding has come down

from a high of about Rs130bn in

August ’13 to ~Rs110bn in November

’13. The company expects to reduce

the total outstanding to Rs90bn by

end ‐FY14

Costs per ton to increase 4.1% yoy in FY14 due to

high diesel costs

… Impact of higher costs would be marginally offset

by the price hikes announced; but EBIDTA/ton to

decline 12% yoy in FY14E

(15)

(10)

(5)

0

5

10

15

20

25

30

700

800

900

1,000

1,100

1,200

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

(%)(Rs/ton)

Cost per ton yoy chng

‐

50

100

150

200

250

300

350

400

FY10 FY11 FY12 FY13 FY1 4E FY15E FY16E

(Rs/ton)



8/10

Coal India Ltd

8

Negatives priced in; Valuations attractiveCoal India has underperformed the indices over the last year due to the

overhang of Government’s Follow on Public Offer (FPO), the presidential

directive to sign FSAs with power producers and lower market linked prices.

We believe the impact of the above is already factored in the

underperformance of

the

stock.

CIL

has

witnessed

an

increase

in

costs

due

to

the deregulation of diesel and an increase in employee costs. To mitigate the

increase in costs CIL over the last one year has announced price rationalization

exercise, thereby protecting margins. On account of the price hikes announced

and the increase in volumes, we expect EBIDTA/ton to increase from

Rs318/ton in FY14 to Rs382/ton in FY15. The hike indicates CIL’s ability to

increase prices to protect its margins and contradicts the markets’ reservations

about its pricing power.

CIL managed to produce 274.7mn tons (+3.7% yoy) and offtake stood at

298.6mn tons (2% yoy) for the period April‐November ’13. This has been below

the management guidance due to few one‐offs like high temperature and

Cyclone Phailin. We expect CIL to end the year with a production volume

growth of 3.9% yoy and an offtake volume growth of 3% yoy to 480mn tons.

We estimate production growth to pick up on the back of commissioning of

new mines from H2 FY15.

Realisations under e‐auction sales and washed coal sales are near their bottom,

and any increase in global coal prices would lead to higher realisations for CIL.

The recent price hikes announced by the company indicates the company’s

ability to pass on the increased costs to maintain profitability. With a dividend

yield of 4.9% (dividend expected to increase yoy), downside for the stock

would be limited. Earnings are expected to improve FY15 onwards on the back

of higher volumes, marginal increase in e‐auction prices and price hikes taken

by the company during the year. At the CMP, company trades at 5.2x FY15

EV/EBIDTA, lower than its historical average of 7.8x. We value the company at

6.5x FY15 EV/EBIDTA and arrive at a price target of Rs323.

Trading below its average 1‐year forward EV/EBIDTA

0

2

4

6

8

10

12

14

Nov‐10 Apr‐11 Sep‐11 Mar‐12 Aug‐12 Jan‐13 Jul‐13 Dec‐13

EV/EBIDTA (x) Average EV/EBIDTA (x)


To mitigate the increase in costs CIL

over the last one year has announced

price rationalization

exercise,

thereby

protecting margins

We estimate production growth to

pick up

on

the

back

of

commissioning

of new mines from H2 FY15

Realisations under e‐auction sales

and washed coal sales are near their

bottom, and any increase in global

coal prices would lead to higher

realisations for CIL

With a dividend yield of 4.9%

(dividend expected to increase yoy),

downside for the stock would be

limited.


9/10

Coal India Ltd

9

Financials

Income statement Y/e 31 Mar (Rs mn) FY13 FY14E FY15E FY16E

Revenue 683,027 706,805 754,914 794,190

Operating profit 180,836 171,957 201,991 217,305

Depreciation (18,130) (20,012) (22,037) (24,215)Interest expense (452) (461) (470) (479)

Other income 87,467 96,216 105,083 114,761

Profit before tax 249,722 247,700 284,566 307,371

Taxes (76,227) (81,741) (93,907) (101,432)

Adj. profit 173,495 165,959 190,659 205,939

Exceptional items 69 0 0 0

Net profit 173,563 165,959 190,659 205,939

Balance sheet Y/e 31 Mar (Rs mn) FY13 FY14E FY15E FY16E

Equity capital 63,164 63,164 63,164 63,164

Reserves 421,556 479,134 557,733 642,631

Net worth 484,720 542,298 620,897 705,794

Minority interest 636 636 636 636

Debt 10,778 8,778 6,778 4,778

Total liabilities 496,134 551,712 628,311 711,208

Fixed assets 169,617 179,601 192,564 203,348

Investments 23,950 23,950 23,950 23,950

Deff tax liab (net) 22,550 22,550 22,550 22,550

Net working capital (342,343) (339,598) (345,841) (347,868)

Inventories 56,178 49,414 52,777 55,523

Sundry debtors 104,802 113,873 103,380 97,883

Other current assets 216,190 223,716 238,944 251,375 Sundry creditors (203,601) (210,689) (225,029) (236,737)

Other current liabilities (515,913) (515,913) (515,913) (515,913)

Cash 622,360 665,209 735,088 809,228

Total assets 496,134 551,712 628,311 711,208

Cash flow statement Y/e 31 Mar (Rs mn) FY13 FY14E FY15E FY16E

Profit before tax 249,722 247,700 284,566 307,371

Depreciation 18,130 20,012 22,037 24,215

Tax paid (76,227) (81,741) (93,907) (101,432)

Working capital ∆ (16,477) (2,745) 6,243 2,028

Operating cashflow 175,148 183,227 218,939 232,181Capital expenditure (24,310) (29,996) (35,000) (35,000)

Free cash flow 150,837 153,230 183,939 197,181

Equity raised 11,625 (0) ‐ ‐

Investments (4,136) ‐ ‐ ‐

Debt financing/

disposal (2,555) (2,000) (2,000) (2,000)

Dividends paid (104,999) (108,381) (112,061) (121,041)

Other items (10,441) ‐ ‐ ‐

Net ∆ in cash 40,332 42,849 69,879 74,140

Key ratios Y/e 31 Mar FY13 FY14E FY15E FY16E

Growth matrix (%)

Revenue growth 9.4 3.5 6.8 5.2

Op profit growth 15.4 (4.9) 17.5 7.6

EBIT growth 17.8 (0.8) 14.9 8.0

Net profit growth 18.1 (4.3) 14.9 8.0

Profitability ratios (%)

OPM 26.5 24.3 26.8 27.4

EBIT margin 36.6 35.1 37.8 38.8

Net profit margin 25.4 23.5 25.3 25.9

RoCE 54.7 47.4 48.3 46.0

RoNW 39.0 32.3 32.8 31.0

RoA 15.2 13.3 14.4 14.5

Per share

ratios

EPS 27.5 26.3 30.2 32.6

Dividend per share 14.0 14.5 14.9 16.1

Cash EPS 30.3 29.4 33.7 36.4

Book value per share 76.7 85.9 98.3 111.7

Valuation ratios

P/E 10.3 10.8 9.4 8.7

P/CEPS 8.1 8.3 7.3 6.7

P/B 3.7 3.3 2.9 2.5

EV/EBIDTA 6.5 6.6 5.2 4.5

Payout (%)

Dividend payout 60.5 65.3 58.8 58.8

Tax payout 30.5 33.0 33.0 33.0

Liquidity ratios

Debtor days 56 59 50 45

Inventory days 30 26 26 26

Creditor days 109 109 109 109

Du‐Pont Analysis Y/e 31 Mar FY13 FY14E FY15E FY16E

Tax burden (x) 0.69 0.67 0.67 0.67

Interest burden (x) 1.00 1.00 1.00 1.00EBIT margin (x) 0.37 0.35 0.38 0.39

Asset turnover (x) 0.60 0.57 0.57 0.56

Financial leverage (x) 2.57 2.43 2.28 2.14

RoE (%) 39.0 32.3 32.8 31.0


10/10

Recommendation parameters for fundamental reports:

Buy – Absolute return of over +10%

Market Performer – Absolute return between ‐10% to +10%

Sell – Absolute return below ‐10%

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