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Emkay

V i s i t N o

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Emkay Global Financial Services Ltd. 1

Financial Snapshot (Consolidated) (Rsmn)

YE- Net EBITDA EPS EPS RoE EV/

Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV

FY10A 25,725 7,067 27.5 3,259 56.2 0.0 32.4 2.6 2.5 0.7FY11A 35,077 9,351 26.7 4,846 83.6 48.7 35.9 1.8 1.7 0.6FY12A 40,044 8,348 20.8 3,832 66.1 -20.9 23.3 2.2 2.2 0.5FY13A 37,851 6,164 16.3 2,381 41.1 -37.9 12.9 3.6 3.4 0.4

SRF Ltd.At the Lower End of Valuations Cycle

September 11, 2013

Rating

Not Rated

Previous Reco

Not Rated

CMPRs151

Target PriceNA

EPS Chg FY14E/FY15E (%) NA

Target Price change (%) NA

Nifty 5,913

Sensex 19,997

Price Performance(%) 1M 3M 6M 12M

Absolute 15 -4 -20 -32

Rel. to Nifty 8 -8 -22 -39Source: Bloomberg

Relative price chart

0

50

100

150

200

250

J an -1 2 M ar -1 2 M ay -1 2 J ul -1 2 S ep -1 2 N ov -1 2 J an -1 3

Rs

-100

-80

-60

-40

-20

0%

SRF Ltd (LHS) Rel to Nif ty (RHS) Source: Bloomberg

Stock DetailsSector Miscellaneous

Bloomberg SRF IB

Equity Capital (Rs mn) 574

Face Value(Rs) 10

No of shares o/s (mn) 57

52 Week H/L 240/ 126

Market Cap (Rs bn/USD mn) 9/ 137

Daily Avg Volume (No of sh) 46,692

Daily Avg Turnover (US$mn) 0.1

Shareholding Pattern (%)Jun'13 Mar'13 Dec'12

Promoters 51.8 50.7 50.7

FII/NRI 7.1 7.6 7.8

Institutions 13.0 12.8 12.7

Private Corp 3.4 4.7 5.0

Public 24.8 24.1 23.8 Source: Bloomberg

Tejas [email protected]+91-22-66242482

n Strong cash generation base from tyre-cord & refrigerantbusiness segments, while a promising growth opportunityfrom flouro specialty chemicals

n SRFs core growth is linked to the economys growth. Rupeedepn mitigates the business risks by making competingimports expensive and exporting products attractive

n SRF is in the middle of a high capex cycle, with Phase-1beginning to pay off. High capex to continue with rise in debtin FY14E, which should start paying off fully FY15 onwards

n At CMP, SRF trades at P/BV of 0.4x & P/E of 4x. No cashflowsfrom CERs sale & economic concerns in the CMP, return onnew investments would drive the next wave of valuations

SRFs core business segments in oligopoly market, dominated by thecompany

SRFs revenues are driven by two business segments: nylon tyre-cord fabric (used inthe manufacture of tyres for commercial vehicles) and refrigerants (used in industrialcooling, commercial air-conditioning and passenger car cooling). Both segments havelimited Indian suppliers and are dominated by SRF, with a market share of over 40%.The end-usage of these segments is mainly in B2B. Hence, it has strong linkage tobusiness performances in Indias economy, though the base requirement forreplacement demand continues to remain.

Rupee depreciation to benefit SRF across business segments

Pricing of goods sold by SRF in India is linked to import pricing, while its new

investments are in export-oriented products. Depreciation of the rupee has a positiveimpact on both these segments, wherein its Indian sales obtain higher pricing, whileexport-oriented specialty chemicals become price attractive. Although raw materialsrequired for the businesses are also linked to the currency, the rise in pricing will still behigher than the increase in costs.

Capex of over Rs 20bn should reap yields FY15 onwards

SRF has incurred a capex of Rs14bn over last 2 years, of which Rs7bn is capitalized. Ithas planned a capex of Rs6bn for FY14E. The capex was incurred towards buildingpackaging capacities in Thailand and South Africa, besides a chemical complex in India.These capital expenditures would start accruing cashflows beginning FY15, consideringthat completion and initial lag towards smooth operations.

Valuations at lower end of the investment cycle,

At P/BV of 0.45x & P/E of 3.6x on FY13 financials, we believe, SRF is trading at thelower end of the valuations cycle. The return ratios are in single-digit post adjusting thenon-recurring income from CERs monetizing. We believe the high capex incurred wouldhelp the company to reap full benefits in FY15, which should revive return ratios andalso valuation multiples.

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Emkay Research September 11, 2013 2

Strong Legacy, High Industry Dominance

SRF, the erstwhile Shri Ram Fibres, was incorporated in 1970 as a tyre-cord manufacturingcompany, with its first plant in Manali, near Chennai. In late 1980s, the company began tomanufacture refrigerants, which is currently its second-largest business segment. It alsoventured into manufacturing of packaging films, commonly known as BOPET and BOPP.

Recently, it has ventured into research and development of fluorine-based specialtychemicals, which have usage in pharmaceuticals and agro chemicals.

At present, SRF has operations in India, wherein its manufactures technical fabrics, fluorine-based chemicals and packaging films. Recently, it has set up shops in South Africa andThailand to manufacture BOPP and BOPET, respectively. The company is also setting up ahuge chemical complex in Dahej, which will have a plant for manufacturing R134A (arefrigerant) and fluorine-based specialty chemical.

Exhibit 1: SRF Business Structure

Source: Company, Emkay Research

Exhibit 2: SRF Business Segments

PRODUCT APPLICATION MKT. STAND KEY COMPETITORS CAPACITY ENTRY BARRIER

Technical Fabrics

Nylon Tyre Cord M&HCV Tyre 38% Domestic Century Enka 40,000 MT High

2nd Largest Globally

Belting Fabic Mining, Cement 60% Domestic Mkt. Share

2nd Largest Globally

Coated & Laminated Fabrics Hoardings NA NA

Industrial Yarn Business

Chemicals

Fluorochemicals Refrigeration 40% Domestic Mkt. Share Gujarat Fluorochemicals 1,15,000 MT High

Fluorospecialities Agro & Pharma NA NA High

Engineering Plastics Automobiles parts Supreme Industries Medium

Packaging Films FMCG Packaging Jindal Polyfilms, Polyplex LowSource: Company, Emkay Research

Technical Fabrics

SRF

Chemicals Packaging Films

Tyre Cord

Belting Fabrics

Laminated & CoatedFilms

Flourochemicals(Refrigerants)

Flouro Specialities

BOPP

BOPET

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Technical Textiles Steady Cash Generator

SRF started its business as a manufacturer of Nylon Tyre Cord Fabrics (NTCF), now partof the Technical Textiles segment. The company is the oldest and the largest manufacturerof NTCF in India, with the segment contributing nearly 40% of its topline. Over the years,SRF also added more product lines to this segment, viz., belting fabrics, laminated and

coated fabrics.

Nylon Tyre Cord Fabric (NTFC)

NTCF are synthetic fabrics used in the manufacture of tyres, which provide strength andreinforce the tyres shape in motion. Without this a tyre would be weak and flexible.

Indias current market size is 110,000 tons, of which 25% is imported, mainly from China.The balance 75% is supplied from Indian manufacturers, of whom 42% (~44,000 tons) issupplied by SRF and the rest by its competitor Century Enka. Pricing of the product is onimport parity of landed goods, though the billing is in INR.

Demand for NTFC is directly linked to production and demand of commercial vehicle tyresin India, considering that more than 95% NTFC produced in the country is used in tyremanufacturing. Demand for Medium & Heavy Commercial Vehicles (M&HCV) has a directlinkage to the performance of the economy, leading to more trade, increased transport,higher demand for new M&HCVs and more wear and tear of tyres, which result inreplacement demand.

Exhibit 3: Tyre Production Trend in India (000s)

5000

10000

15000

20000

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2


Exhibit 4: SRFs Tyre Cord Sales Trend (in Mts)

0

15000

30000

45000

60000

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3


The major raw material for NTCF is caprolactum, a derivative of benzene, which, in turn, isa derivative of crude oil. Hence, the price of caprolactum is dependent on oil pricemovements, though the same is passed on to buyers (industry norm). However, despite theincrease in oil prices, the price of caprolactum has remained stable due to hugeoversupply.

Exhibit 5: Caprolactum CIF China (USD / Ton)

0

1000

2000

3000

4000

J a n - 0

8

A p r - 0 8

J u l - 0 8

O c t - 0 8

J a n - 0

9

A p r - 0 9

J u l - 0 9

O c t - 0 9

J a n - 1

0

A p r - 1 0

J u l - 1 0

O c t - 1 0

J a n - 1

1

A p r - 1 1

J u l - 1 1

O c t - 1 1

J a n - 1

2

A p r - 1 2

J u l - 1 2

O c t - 1 2

J a n - 1

3

A p r - 1 3

Source: Industry, Company

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Chemicals High Investment, High Expected Growth

SRFs chemicals division has been a prominent contributor to growth, with huge cashgeneration from the monetization of Certified Emission Reduction (CERs) under KyotoProtocol. We believe the Chemicals business segment is the star in the pack consideringthat the future delta growth would come from this segment, and that is where the company

has incurred and is incurring a huge capex.SRFs chemical segment is broadly categorized into: the old Refrigerants and the newSpecialty Chemicals. Both categories are the fluorine-based side of the broad chemicalpack.

Refrigerants

SRF is one of the largest manufacturers of refrigerant in India, which has application in theindustrial refrigeration, home and commercial premises, air-conditioning and automobilecooling. The company manufactures chloroflouro carbons (CFCs) and hydro-chloroflourocarbons (HFCFs) at Bhiwadi in Rajasthan, which meets 40% of Indias demand.

Due to the slowdown in the economy, this segment is not witnessing much growth indemand. Refrigerants imports are regulated in India, but we believe a lot of the same isimported through wrong representation of contents. Depreciation of the rupee would helpthe company indirectly considering higher costs of imports. The company expects the nextwave of growth to come from growth in temperature-controlled logistics, wherein the needfor cold storages and reefer vehicles would lead to greater requirement of refrigerants.

Due to the Kyoto Protocol and Montreal Treaty, manufacturing of these chemicals were tobe phased out, as they affect the ozone layer. SRF was the first company in India to adhereto the protocol, and has earned handsome cashflows by monetizing Certified EmissionReductions (CERs) / carbon credits by phasing out over the 2006-12 period. Since 2013the market for CERs has ceased as European Union disallowed use of CERs forcompliance purposes with effect from January 2013. In FY13, revenues from CERs stoodat Rs 2.6bn (7% of total) as against Rs4.4bn in FY12 (11% of total).

Specialty Chemicals

SRF has entered a specialty chemicals business, wherein it intends to developorganofluorine compounds customized to customers requirements, which entails a strongR&D base. The developed chemicals will cater to agro and pharma chemicals. The biggestconcern with this sub-segment is the predictability of the business trajectory, though thesegment has grown 100% in FY14.

Exhibit 8: Revenue Trend of Specialty Chemicals Sub-Segment (Rs mn)

0

750

1500

2250

3000

FY10 FY11 FY12 FY13


The organofluorine compounds or carbon-fluorine bond is commonly found inpharmaceuticals and agrochemicals. An estimated one-fifth of the pharmaceuticals containfluorine, including several top drugs.

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Large Chemical Complex

SRF is setting up a large chemical complex in Dahej, Gujarat, which is the hub of chemicalmanufacturing in India. The company has entailed 300 acres of land from the Gujaratgovernment, of which it plans to utilise 100 acres for its Phase-1 development, which willinvolve a capex of Rs11bn.

Phase-1 of this new complex will have plants to manufacture HCFCs, multi-purposespecialty chemicals and generate power of 17.5MW for capital consumptions. The Rs4.0bnof investment will add capacity of 12,500 tons to HCFCs, which will have revenuegenerating capability of around Rs4.0bn. The company expects an asset turnover of 2.5xon the capital employed towards the specialty chemicals manufacturing complex, withoperating margins of 30-35%. This leads to a payback period of 1.5 years for theinvestments made in this business.

Exhibit 9: CapEx break-up at Dahej plant (Rs bn)

Particulars Amount

HCFCs 4.0

Specialty Chemicals 5.0

17.5 MW Power Plant 1.1Infrastructure Development 0.7

Total 10.8


Of these planned investments, SRF has already expended and capitalized Rs2.5bn, whichinvolves a 4MW power plant, some infrastructure development and a plant of specialtychemicals. The company intends to spend additional Rs6bn in FY14, which will involve a13.5MW power plant,

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Packaging Films Tough Times, New Destinations

SRF entered the packaging films business in 1995, with an investment in a plant tomanufacture Bi-axially Oriented Poly-Ethylene Terephthalate (BOPET) films, which haveapplications in small flexible packaging of FMCG products in sachets. The company has aplant with a total capacity of 60,000 tons.

The BOPET and BOPP films market is going a through rough patch due to the curb inmanufacturing and selling of chewing tobacco and mouth-fresheners in several states. Thishas led to a fall in demand, while several new plants in this segment led to huge capacitiesbuilt-up, leading to huge pressure on pricing. During the 2008-09 period when demandoutnumbered supply, the price was Rs 200/kg, which has since fallen to Rs100/kgcurrently. In FY13, the packaging films business segment contributed Rs6.7bn (19%) tototal revenues with EBIT margins of 1%.

SRF has set up a BOPET plant in Thailand at an outlay of $65mn, which becameoperational in Q2FY14, with a total capacity of 25600 tons. The company is also setting upa BOPP plant in South Africa at a cost of $62mn, which will commence operations inQ3FY14. The Thailand plant will have a total capacity of 25600 tons and an A/TO ratio of1.2x, while South African plant will have total capacity of 27000 tons. Currently, South

Africa has a total capacity of 10,000 tons of BOPP, while the market size is 30000 tons,which SRF intends to capture

Of the total investment of $127mn, IFC has agreed to provide finance for $85mn (LIBOR +2.8% rate).

Exhibit 10: Packaging Segment Capacity

Country ProductCapacity

MTsInvestment

USD Mn OperationalIndia BOPET 60000 NA 1995

Thailand BOPET 25600 65 2013

South Africa BOPP 26000 62 2013Source: Company, Emkay Research

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Key Financials

Planned Capex to peak debt to Rs 18bn in FY14E

As stated above, SRF is into a capex spree in the chemicals segment in India and thepackaging segment overseas. The capex is funded through a mix of operating cashflowsand borrowings. Gross debt has increased from Rs9.7bn in FY11 to Rs15.9bn in FY13.Debt is expected to rise by additional Rs2bn in FY14E on the back of a capex of Rs6bn. Asthese investments start yielding returns, management expects debt to taper off beginningFY15.

Exhibit 11: CapEx Trend

0

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10000

FY10 FY11 FY12 FY13 FY14E


Exhibit 12: Gross Debt Expected to Peak in FY14E

7500

10000

12500

15000

17500

20000

FY10 FY11 FY12 FY13 FY14E


RoCEs in single digits owing to high capex and lower income from CERs

SRF has incurred a capex of Rs17.1bn over the last 3 years, of which Rs6.1bn gotcapitalized in FY13 and Rs 5.7bn is in CWIP. Hence, a large portion of the capex is still notyielding returns, which have affected the companys return ratios. Also, due to lowermonetization of CERs in FY13, revenue and profitability have also taken a hit YoY. InFY14, we understand that return ratios would be in single-digits on account of continuedcapex in FY14 and steep fall in profitability due to lack of revenues from CERs. However,FY15 should see return ratios in double-digits, as the capex starts yielding returns.

Exhibit 13: RoCEs Trend

0%

10%

20%

30%

40%

FY11 FY12 FY13

Reported RoCEs Adj. RoCEs

Source: Company, Emkay Research, Adj. RoCEs is adjusted for CERs Income & CWIP

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Valuations Compelling and at Bottom of the Cycle

SRF is trading at compelling valuations considering that its investments in the business willreap growth in FY15. At the CMP of Rs150, the stock is trading at P/BV of 0.45x, P/E of3.7x and adjusted P/E of 15x (adjusting CERs Income net of tax) on FY13.

Going forward, we understand the gap in revenues due to nil CER monetization would befilled in by growth in the high-margin specialty chemical business. Both core businesses ofSRF are at the bottom of the investment curve with higher sustainability considering thereplacement demand for its products, dominant position in the industry and rising costs ofcompeting imports.

We believe FY15 would be the year when all capital expenditures of the company wouldbegin to accrue cashflows, and hence would report better cashflows and profitability.

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Exhibit 14: Standalone Quarterly SummaryRs mn Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 YoY (%) QoQ (%)

Revenue 8,122 8,037 8,889 8,182 8,249 1.6 0.8

Expenditure 6,776 6,924 6,735 6,850 6,973 2.9 1.8

as % of sales 83.4% 86.1% 75.8% 83.7% 84.5%

Cost of Operations 5,731 5,753 5,377 5,506 5,780 0.8 5.0

as % of sales 70.6% 71.6% 60.5% 67.3% 70.1%

Employee Cost 442 525 515 543 544 23.2 0.2

as % of sales 5.4% 6.5% 5.8% 6.6% 6.6%

Other expenditure 603 646 843 800 649 7.6 (18.9)

as % of sales 7.4% 8.0% 9.5% 9.8% 7.9%

EBITDA 1,346 1,114 2,155 1,332 1,276 (5.2) (4.2)

Depreciation 422 463 478 480 484 14.7 0.9

EBIT 924 651 1,676 852 792 (14.2) (7.0)

Other Income 73 40 28 292 87 19.3 (70.1)

Interest 239 247 208 152 203 (15.2) 33.4

PBT 758 443 1,496 992 677 (10.7) (31.8)

Total Tax 81 105 400 355 76 Adjusted PAT 677 338 1,096 637 601 (11.2) (5.6)

(Profit)/loss from JV's/Ass/MI 0 0 0 0 0

APAT after MI 677 338 1,096 637 601 (11.2) (5.6)

Extra ordinary items -457 415 -203 82 -164

Reported PAT 220 754 893 719 438 98.7 (39.1)

Reported EPS 11.7 5.8 18.9 11.0 10.4

Margins (%) (bps) (bps)

EBIDTA 16.6 13.9 24.2 16.3 15.5 (110) (81)

EBIT 11.4 8.1 18.9 10.4 9.6 (177) (81)

PBT 9.3 5.5 16.8 12.1 8.2 (113) (392)PAT 8.3 4.2 12.3 7.8 7.3 (105) (50)

Effective Tax rate 10.6 23.7 26.7 35.8 11.2 54 (2,462)

Revenue - Segment Wise Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 YoY (%) QoQ (%)

Technical Textiles Business 4291 4345 3972 4100 4362 1.6 6.4

Chemicals & Polymers Business 2135 2063 3516 2640 2297 7.6 (13.0)

Packaging Films Business 1699 1637 1410 1463 1600 (5.8) 9.4

Inter-Segment -3 -9 -8 -21 -9

Total 8122 8037 8889 8182 8249 1.6 0.8

EBIT- Segment Wise Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 YoY (%) QoQ (%)Technical Textiles Business 347 326 255 195 383 10.5 96.3

Chemicals & Polymers Business 645 421 1563 836 526 (18.5) (37.1)

Packaging Films Business 44 57 -49 -20 48 8.6 (342.4)

Total 1036 804 1770 1012 957 (7.6) (5.4)

EBIT Margin (%) Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 YoY (%) QoQ (%)

Technical Textiles Business 8.1 7.5 6.4 4.8 8.8 70 403

Chemicals & Polymers Business 30.2 20.4 44.5 31.7 22.9 (733) (879)

Packaging Films Business 2.6 3.5 (3.5) (1.4) 3.0 40 435

Total 12.8 10.0 19.9 12.4 11.6 (116) (76)


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Key Financials (Consolidated)

Income Statement Y/E Mar (Rsmn) FY10A FY11A FY12A FY13A

Net Sales 24,987 33,914 39,809 37,689

Growth (%) 0.0 35.7 17.4 -5.3

Expenditure 18,658 25,726 31,696 31,687Employee Cost 1,624 2,045 2,211 2,664Other Exp 0 0 0 0SG&A 4,115 5,376 6,364 7,460EBITDA 7,067 9,351 8,348 6,164

Growth (%) 0.0 32.3 -10.7 -26.2

EBITDA marg in (%) 27.5 26.7 20.8 16.3

Depreciation 1,590 1,701 1,837 2,089EBIT 5,477 7,650 6,511 4,076

EBIT mar gin (%) 21.3 21.8 16.3 10.8

Other Income 68 111 277 398Interest expenses 777 897 1,172 998

PBT 4,768 6,864 5,616 3,476Tax 1,509 2,018 1,784 1,094

Effective tax rate (%) 31.7 29.4 31.8 31.5Adjusted PAT 3,259 4,846 3,832 2,381

Growth (%) 0.0 48.7 -20.9 -37.9

Net Marg in (%) 12.7 13.8 9.6 6.3

(Profit)/loss from JVs/Ass/MI 0 0 0 0Adj. PAT After JVs/Ass/MI 3,259 4,846 3,832 2,381

E/O items -15 -10 -45 148Reported PAT 3,244 4,836 3,787 2,529

PAT after MI 3,259 4,846 3,832 2,381

Growth (%) 0.0 48.7 -20.9 -37.9

Balance Sheet Y/E Mar (Rsmn) FY10A FY11A FY12A FY13A

Equity share capital 615 615 584 584Reserves & surplus 12,123 16,365 17,931 19,105

Net worth 12,739 16,980 18,515 19,689Minority Interest 0 0 0 0

Secured Loans 8,385 7,716 7,179 7,179Unsecured Loans 1,933 2,016 5,117 8,708Loan Funds 10,318 9,731 12,296 15,887

Net deferred tax liability 1,911 2,007 2,128 2,503Total Liabilities 24,967 28,718 32,939 38,079

Gross Block 34,824 37,912 41,493 47,595Less: Depreciation 15,389 17,554 20,713 24,197Net block 19,435 20,358 20,780 23,398

Capital work in progress 1,325 1,131 4,175 5,654Investment 71 1,162 1,405 1,512

Current Assets 9,403 12,835 13,321 15,181Inventories 3,073 5,041 4,877 5,632Sundry debtors 3,610 4,918 4,837 5,087Cash & bank balance 902 903 1,401 1,910Loans & advances 1,818 1,938 2,159 2,447Other current assets 0 35 47 105Current lia & Prov 5,267 6,766 6,741 7,666

Current liabilities 4,966 6,554 6,488 7,393Provisions 302 213 253 273Net current assets 4,135 6,068 6,580 7,515

Misc. exp 0 0 0 0Total Assets 24,967 28,718 32,939 38,079

Cash Flow Y/E Mar (Rsmn) FY10A FY11A FY12A FY13A

PBT (Ex-Other income) 3,947 5,580 5,060 3,064

Depreciation 1,590 1,701 1,837 2,089Interest Provided 777 897 1,172 998Other Non-Cash items 0 0 0 0Chg in working cap -132 -1,836 108 -51Tax paid -1,509 -2,018 -1,784 -1,094Operating Cashflow 4,673 4,325 6,391 5,005

Capital expenditure -3,904 -1,950 -5,870 -6,908Free Cash Flow 770 2,374 521 -1,903

Other income 806 1,274 512 560Investments 354 -1,091 -244 -107Investing Cashflow -2,744 -1,767 -5,602 -6,455

Equity Capital Raised 875 -86 -740 43Loans Taken / (Repaid) -224 -587 2,565 3,591Interest Paid -777 -897 -1,172 -998Dividend paid (incl tax) -991 -988 -944 -678Income from investments 0 0 0 0Others 0 0 0 0Financing Cashflow -1,117 -2,558 -291 1,959

Net chg in cash 812 0 499 509

Opening cash position 90 902 903 1,401

Closing cash position 902 902 1,401 1,910

Key Ratios Y/E Mar FY10A FY11A FY12A FY13A

Profitability (%)

EBITDA Margin 27.5 26.7 20.8 16.3Net Margin 12.7 13.8 9.6 6.3ROCE 25.0 30.4 23.0 12.8ROE 32.4 35.9 23.3 12.9RoIC 28.2 33.6 26.6 15.2Per Share Data (Rs)

EPS 56.2 83.6 66.1 41.1CEPS 83.6 112.9 97.7 77.1

BVPS 200.6 265.4 301.7 334.4DPS 14.6 14.6 14.0 10.1Valuations (x)

PER 2.6 1.8 2.2 3.6P/CEPS 1.8 1.3 1.5 1.9P/BV 0.7 0.6 0.5 0.4EV / Sales 0.7 0.5 0.5 0.6EV / EBITDA 2.5 1.7 2.2 3.4Dividend Yield (%) 9.9 9.9 9.5 6.8Gearing Ratio (x)

Net Debt/ Equity 0.8 0.5 0.5 0.6Net Debt/EBIDTA 1.3 0.8 1.1 2.0

Working Cap Cycle (days) 45.9 53.8 47.2 54.0

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DISCLAIMER: Emkay Global Financial Services Limited and its affiliates are a full-service, brokerage, investment banking, investment management, and financing group. We along with our affiliatesare participants in virtually all securities trading markets in India. Our research professionals provide important input into our investment banking and other business selection processes. Investors mayassume that Emkay Global Financial Services Limited and/or its affiliates may seek investment banking or other business from the company or companies that are the subject of this material and that theresearch professionals who were involved in preparing this material may participate in the solicitation of such business. Our salespeople, traders, and other professionals may provide oral or written marketcommentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisionsthat are inconsistent with the r ecommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potentialconflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This report is not directed to,or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or usewould be contrary to law or regulation or which would subject Emkay Global Financial Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, thisdocument does not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any transaction to any U.S. person unlessotherwise stated, this message should not be construed as official confirmation of any transaction. No part of this document may be distributed in Canada or used by private customers in United Kingdom.

All material presented in this report, unless specifically indicated otherwise, is under copyright to Emkay. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to,copied or distributed to any other party, without the prior express written permission of Emkay. All trademarks, service marks and logos used in this report are trademarks or registered trademarks ofEmkay or its Group Companies. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination,distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read Risk Disclosure Document for Capital Market and DerivativesSegments as prescribed by Securities and Exchange Board of India before investing in Indian Securities Market. In so far as this report includes current or historic information, it is believed to be reliable,although its accuracy and completeness cannot be guaranteed.

Emkay Global Financial Services Ltd.7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West, Mumbai - 400028. India

Tel: +91 22 66121212 Fax: +91 22 66121299 Web: www.emkayglobal.com

www.emkayglobal.com

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