Lakshmi Energy and Foods
Initiating Coverage
April 15, 2008
Theme
Key Take Away
Lakshmi Energy and Foods, the leading manufacturer of long grain non-
Recommended
Price
Target Price
Expected Upside
Rs 200
Rs 297
48%
Market Data
Nifty Code
Sensex
Nifty
52 week range (Rs)
Market Cap (Rs
crore)
LAKSHMIEFL
15,807.6
4,777.8
308/150
1200
Shareholding Pattern (%)
As on Dec 2007
Promoters
MFs, FIs & Banks
FIIs
Other Bodies corporate
Public and others
42.1
2.2
37.5
11.1
7.1
Price Performance
(%)
Price (Rs)
Absolute
Rel to
Nifty
3M
6M
12M
276
-38
210
-5
155
23
-15
4
-7
Comparative Price
Movement
300
250
200
150
100
Lakshmi Energy Foods
Nifty (RHS)
6500
5000
3500
2000
7 7 7 7 7 7 7 7 7 8 8 8
r-0r-0y-0n-0 l-0g-0 t-0v-0c-0n-0b-0r-0
MaApMa Ju JuAu OcNoDe Ja Fe Ma
Nisha Harchekar
Analyst - FMCG, Pharma &
Entertainment
basmati white rice and related by-products like rice bran oil, de-oiled cake, and
cattle feed has been reporting consistent financial performance. On the back of
robust industry scenario, capacity expansion and increased revenues from its
ancillary activities, we expect the net sales to grow at a CAGR of 39% over FY07FY10. Operating profits is expected to register a CAGR of 54% driven by
increased realizations from rice, revenues from power generation gaining steam
and PAT is expected to grow with a CAGR of 58% over the same period. At the
CMP of Rs 200, the stock quotes at PE of 7.2x and 5.3x its FY09E and FY10E
earnings of Rs 27.7 and 38. Our fair price based on DCF valuation is Rs 297. At
our target price, the stock will be valued at 6.2x EV/EBIDTA and 10.7x P/E on
the basis of FY09E earnings. Our target price provides an upside of 48%. We
recommend BUY.
Volume-led growth: Though its by-products business is gaining momentum, the
company would continue to derive major portion of the revenues from the rice
processing business. Bulk of the sale is to FCI at the MSP determined by the
Government and as such it is insulated from the fluctuation in the prices of the final
product. Thus, the key to improve the bottom line of the company is to improve the
volumes, which the company is very well aware of. The company is in the process of
expanding its rice processing capacity from 1.35 mtpa to 3 mtpa by FY10.
Margins to get a booster from value-added products: In addition to its core
business, the company is involved in various downstream activities like power, de
oiled cake and rice bran oil. These by-products are instrumental in further
enhancing the margins and the bottom line of the company. Operating margins have
expanded from 9% in FY05 to 16.8% in FY07 and are expected to be 21.5% in FY08
and over 23% in FY09. Such kind of margins is the best in the industry with the peers
having operating margins in the range of 10-15%.
Diversification in power generation: The Company recently commissioned the first
biomass power plant in North India to use rice husk as fuel at a cost of Rs 105
crores. Current plant capacity is 30 MW is divided in two lines of 15 MW each. The
capacity is expected to increase to 105 MW in the next 3 years. Only 15% of the
power generated will be for captive use, the rest will be sold to the state. The
management expects the plant to improve LEAF’s bottom line by 25% after
completion.
Significant expansion plans: The paddy processing capacity is currently 1.35 mtpa,
which will be expanded to 2 mtpa by FY09, and 3 mtpa by FY10. With the increase
in the paddy processing capacity, the company also plans to build corresponding
capacities for various downstream projects and by-products. The Company had
budgeted a capex of Rs 300 crores for FY08, which will be funded equally from
internal accrual and bank loan. The company has planned a capex of Rs 200 crores
per year for the next four years.
Key Financials
Year to March (Rs crore)
Sales
Growth (%)
EBITDA
Growth (%)
PAT
Growth (%)
Equity Capital (FV-Rs 2)
EPS (Rs)
PE (x)
Market cap/sales
EV/EBITDA
RoCE
RoE
FY07
696.3
24.7
116.7
57.0
60.31
43.6
11.4
10.5
19.0
1.7
11.7
29.5
34.7
FY08E
898.2
29.0
193.5
65.8
105.1
74.3
12.0
17.5
11.4
1.3
7.0
28.3
35.3
WAY2WEALTH Securities Pvt. Ltd.,
FY09E
1347.3
50.0
312.2
61.3
174.9
66.4
12.6
27.7
7.2
0.9
4.4
29.3
35.5
FY10E
1859.2
38.0
424.5
36.0
239.3
36.8
12.6
37.9
5.3
0.6
3.2
28.6
33.1
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
email: [email protected] website: www.way2wealth.com
Company Background
Largest
manufacturer of
non-basmati rice
in India
Lakshmi Energy and Foods (LEAF), earlier known as Lakshmi Overseas was incorporated in
1981 by Mr. Balbir Singh Uppal with an initial capacity of 5 tons/hour. Currently it is
amongst the largest manufacturer of non-basmati rice in India with capacity of 225
tons/hour. The company has transformed itself from a rice miller to a fully integrated
processing company with its various by-products such as refined edible oil, de-oiled cake
and cattle feed.
The plants are strategically located in the paddy-growing region of Punjab, which has the
best soil and water quality in India. It is located 1 km away from the Food Corporation of
India warehouse.
Inherent
advantage in
manufacturing
non-basmati rice
A non-basmati rice player
LEAF is mainly into manufacturing of non-basmati rice. Against popular belief basmati rice
has lower margins despite being a premium product. The following table shows that LEAF is
present is the right segment of non-basmati rice which is more of a volume play rather than
a play on realization.
Advantages of focussing on non basmati Rice
Basmati
Non Basmati
• Low Volume, High Price
•
High Volume, Low price
• Fewer by- products, no downstream
Downstream products
• High packaging, marketing and selling cost
•
•
• Consumed by less than 2% of the worldwide
•
Consumed by majority of the population
• Price volatility
Source: Company
•
Steady prices
population
Sustained demand from Govt agencies,
commodity traders and retail customers
Punjab Greenfield Resources
LEAF has a wholly owned subsidiary, Punjab Greenfield Resources which undertakes export
of a part of its produce and import of farm implements/fertilizers, pesticides, harvest and
marketing of farm produce, as well as packaged food products. LEAF distributes the food
grains in the wholesale markets under the brand name Lakshmi Foods. The cattle feed is
sold in the market under the brand name Heera Moti and markets its vegetable oil under
the Gold Crown brand. The Group exports its products to Middle East, Europe, the United
States, Canada, Africa, Nigeria, South Africa, Russia and Asian Countries.
Integrated business model
98% of all byproducts are
converted into
value added
products
LEAF has diversified into various downstream activities and by-products, which will add
significant value to the company in the coming years. It uses husk (a by-product) to
generate power from bio waste. 98% of all by-products are converted into value added
products with wastage of only 2%. Thus, the company enjoys higher margins than its peers
in the basmati rice segment.
By-products processed into value-added products
- Rice bran is used in the manufacture of oil and De-Oiled Cake (DOC)
- Rice bran oil is refined and sold as edible oil
- DOC is converted to cattle feed
- Husk, which is sold presently as a by-product, will be the primary source of fuel for
power generation beginning December 2007
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 2 of 2
Process Flow chart
Rice forms 86%
of revenues
while byproduct forms
the balance
Source: Company
Revenue breakup
9mFY08
O the rs
6%
Bro ke n Rice
1%
De o ile d
ca ke s
2%
Rice Bra n O il
5%
Rice
86%
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 3 of 3
Investment Rationale
Volume-led growth
Around 75% of
sales volume is
to FCI
The company derives 86% of its revenues from rice processing, though its by-products
business is gaining momentum, it would continue to derive major portion of the
revenue from the rice processing business. The company is insulated from fluctuation
in the prices of the final product as around 75% of sales volume is to FCI at a price
determined by the Government (minimum support price). The MSP of paddy and rice
is in up trend as can be seen from the chart below. Thus, the key to improve the
bottom line of the company is to improve the volumes, which the company is very
well aware of. LEAF is continuously expanding the paddy processing capacity. The
capacity is currently 1.35 million tones p.a, which is expected to grow to 2 million
tones by March 2009 and 3 million by 2009-10. The capacity utilization currently is
70%. The company expects to procure 1 million tones of paddy this year and 1.3
million tones in 2009.
Paddy price
Rice price
98
19
98
-9
19
9
99
-2
00
0
20
00
-0
1
20
01
-0
2
20
02
-0
3
20
03
-0
4
20
04
-0
5
20
05
-0
6
20
06
-0
7
20
07
-0
8
97
19
97
-
96
19
96
-
19
95
-
19
94
-
19
93
-
95
1500
1350
1200
1050
900
750
600
450
300
150
0
94
MSP is on the uptrend with
Rs per 100 kgs
Trend in MSP of Paddy and Rice
Margins to get a booster from value-added products
Margins are higher
than peers due to
additional revenue
from by-product
In addition to its core business, the company is involved in various downstream
activities like power, de oiled cake and rice bran oil. These by-products are
instrumental in further enhancing the margins and the bottom line of the company.
Operating margins have expanded from 9% in FY05 to 16.8% in FY07 and are expected
to be 21.5% in FY08 and over 23% in FY09. Such kind of margins is the best in the
industry with the peers having operating margins in the range of 10-15%.
Rs crores
Net sales
Operating margins (%)
PAT
FY04
225.1
2.8
8.9
FY05
407.7
8.1
18.0
FY06
558.4
13.3
42.0
FY07
696.3
16.8
60.3
9mFY08
644.7
21.8
95.3*
* Deferred tax liability to come up in Q4FY08
Packaged rice
contributes 10%
to the revenues
Rice bran oil and de-oiled cake- Rice bran obtained during the milling of rice is a good
source of oil. The present capacity of rice-bran oil is 30 tones per day; it plans to
increase production to 60 MT/day. The company plans to sell rice-bran oil in
packaged form FY09. Rice Bran oil is currently sold at Rs 47,000/MT in crude form
currently which is expected to rise to Rs 55,000/MT by 2009. Similarly, de-oiled cake,
another by-product is used as cattle feed.
Branded Foods- Packaged rice under the brand name Lakshmi Foods currently
contributes 10% to the revenues. With the advent of modern retail formats and
changing customer preference toward packed food, the management expects it to
contribute around 25% in FY09 and close to 50% in FY10. Branded rice commands a
premium is Rs 2-5/kg as compared to rice sold in loose form. The company has plans
to launch wheat flour and rice bran oil to its branded foods category soon.
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 4 of 4
Diversification in power generation
The Company recently commissioned the first biomass power plant in North India to
use rice husk as fuel at a cost of Rs 105 crores. Current plant capacity is 30 MW is
divided in two lines of 15 MW each. The capacity is expected to increase to 105 MW in
the next 3 years. Only 15% of the power generated will be for captive use, the rest
will be sold to the Punjab State Electricity Board. The power will be generated at a
cost of Rs 1.90 per unit and will be sold at Rs 3.59 per unit. The plant is expected to
add substantially to the company’s profitability. The management expects the plant
to improve LEAF’s bottom line by 25% after completion. The plant is expected to
commence from April 2008. Shriram EPC currently manages the plant. The company
also become eligible for carbon credit and encash the benefits for a period of 10
years.
Power generation
business to
improve bottom
line by 25%
Significant expansion plans
The paddy processing capacity is currently 1.35 mtpa after the commissioning of
three new units of 40 tones/hour. The company plans to scrap few oil lines plants and
to add another 165-tonnes/hour capacity at the existing location. This will take the
total capacity to 2 mtpa by FY09. The company will further expand the capacity to 3
mtpa by FY10. With the increase in the paddy processing capacity, the company also
plans to build corresponding capacities for various downstream projects and byproducts. It presently has 300-tonnes/day solvent extraction plant, which will be
doubled to 600 tones/day by FY09. It has already set up a new 100-tonnes/day wheat
flourmill, which is expected to be 300 tones/day in FY09E. The company currently has
biomass power capacity of 30 MW. This is likely to expand to 60 MW by FY11 and
105MW by FY12 as more husk become available post the expansion of paddy
processing capacity (1 mn ton of paddy processing will result in 2,00,000 tons of husk
which can generate 30 MW power plant).
capex estimated to
be Rs 200 crores
per year for the
next four years
TPA
Paddy
Solvent extraction
Refinery
FY07
FY08E
FY09E
FY10E
FY11E
9,72,000
13,50,000
20,00,000
3,00,000
3,00,000
60,000
90,000
1,80,000
1,80,000
2,40,000
9,000
9,000
9,000
12,000
18,000
30,000
90,000
90,000
90,000
24,000
24,000
60,000
60,000
30
60
90
105
Wheat flour
Cattle Feed
24,000
Power Generation (MW)
Source: Company, W2W Research
The Company had budgeted a capex of Rs 300 crores for FY08. Out of which, it has
spent Rs 50 crores on subsidiary, Rs 100 crores on power plant and Rs 150 crores on
expansion and modernisation of plant. The capex is funded equally from internal
accrual and bank loan. The company has planned a capex of Rs 200 crores per year
for the next four years. The company has ruled out any equity dilution to fund the
expansion.
Exemption of market fee to directly add to the bottom line
As an incentive for the biomass power plant, the Punjab Government has exempted
the company from payment of 4% market fees until 2017 on purchase of non-FCI grade
paddy. This would help the company in procuring paddy at lower cost, which will add
to the bottom line growth.
Concerns
•
•
•
The company has chalked out huge expansion plans. Timely execution remains a key
risk for the company.
Due to the commodity nature of the industry, any reversal in the commodity cycle of
rice could affect the future profitability of the company.
The company has a poor dividend policy; at 4.7%, the dividend payout ratio is low.
The company slashed the dividend rate from 40% during 2006 and 30% during 2005 to
25% in 2007. This was inspite of a 43% increase in PAT in FY07.
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 5 of 5
Financial Analysis
Excellent financial performance
LEAF has been reporting consistent financial performance – while topline has registered
45.7% CAGR during FY04-07, EBITDA and PAT have grown at 166% and 88% during the same
period. The operating margins are quite high as compared to the peers as the company
effectively utilizes all its by-products for sale. The margins are in steady uptrend from
13.3% in FY06 to 16.8% in FY07. The return ratios, ROCE and ROW are also quite healthy at
29.5% and 35% respectively.
Backed by aggressive expansion plans and increasing contribution of value adds in the total
revenue, the financial picture for next 3-4 years seems to be very optimistic. For FY07FY11, we expect net sales to grow at a CAGR of 39%, EBITDA and PAT are expected to
chalk an average growth of 54% and 58% respectively during the same period.
(%)
CAGR (FY07-FY10)
Net sales
39
EBITDA
54
PAT
58
800
700
600
500
400
300
200
100
0
PAT
696.3
70
558.4
60.3
60
407.7
225.1
125.1
42.0
50
Rs crores
Rs crores
Net sales
40
30
20.3
20
9.2
10
FY03
FY04
FY05
FY06
0.5
0
FY07
FY03
EBITDA
9.1
6.6
6.3
20
0
FY03
%
13.4
80
%
Rs crores
18
16
14
12
10
8
6
4
2
0
17.1
120
100
40
FY03
FY04
ROCE
Rapid volume growth
Rice
FY06
FY07
45
40
35
30
25
20
15
10
5
0
FY04
FY05
FY06
FY07
EBITDA
margins
Sales Quantity (MT)
FY05
Return ratios
140
60
FY04
FY05
FY06
FY07
RONW
Increase in realizations
2004
2005
2006
2007
170,341 256,002 402,045 500,755
Rice Bran Oil
1,420
2,127
10,884
7,416
Rice Bran De-oiled Cake
5,633
25,888
47,486
32,159
Cattle Feed
1,630
1,725
4,626
Husk-Paddy
8,494
29,797
Nakku
1,571
932
Average realization
(Rs/ton)
2004
2005
2006
2007
Rice
12,661 10,028 11,956 12,141
Rice Bran Oil
35,273 31,124 27,600 35,452
Rice Bran De-oiled Cake
2,876
1,653
3,327
20,880
Cattle Feed
4,110
4,291
4,237
4,933
21,965
50,917
Husk-Paddy
789
967
988
1,006
13,484
6,530
Nakku
318
4,828
5,073
7,213
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
3,470
Page 6 of 6
Valuation
We expect the net sales to grow at a CAGR of 39% to Rs 1,859 crores over FY07-FY10 on the
back of capacity expansion and increased revenues from its ancillary activities. Operating
profits is expected to register a CAGR of 54% to Rs 424 crores over the same period driven
by increased realizations from rice, revenues from power generation gaining steam. The
PAT is expected to grow with a CAGR of 58% to Rs 239 crores in FY10E. At the CMP of Rs
200, the stock quotes at PE of 7.2x and 5.3x its FY09E and FY10E earnings of Rs 27.7 and
38.
Free Cash Flow
Year
2008
2009
2010
2011
2012
Net Sales
898.2
1347.3
1859.2
2417.0
3021.3
Operating expenses
724.9
1068.0
1479.3
1982.0
2477.5
Operating profits (EBIT)
173.3
279.3
379.9
435.1
543.8
52.0
69.8
95.0
65.3
81.6
121.3
209.5
284.9
369.8
462.3
Cash taxes
NOPLAT
Depreciation
20.2
32.9
44.6
27.9
30.2
Gross cash flow
141.5
242.4
329.6
397.7
492.5
Less capital expenditures
190.0
250.0
200.0
195.2
211.5
98.6
129.3
182.4
122.7
139.0
-147.1
-137.0
-52.8
79.8
142.0
Less working capital investments
Free cash flow
DCF Valuation per share
Total FCFF
-146.8
Cost of equity
15%
Continuing Value
2185.8
Value of operations
Plus: value of non operating assets
2039.0
58.7
Post Tax cost of debt
Debt/Equity ratio
7%
0.84
WACC
11%
Value of firm
2097.6
Less: market value of obligations
Shareholder value
223.3
1874.3
Shareholder value per share
296.8
Peer Comparison
Most of the listed rice companies are basmati based and LEAF business model is paddy
based. So, peer comparision in strict sense is not feasible.
Recommendation
Our fair price based on DCF valuation is Rs 297. At our target price, the stock will be
valued at 6.2x EV/EBIDTA and 10.7x P/E on the basis of FY09E earnings. Our target price
provides an upside of 48%. We recommend BUY.
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 7 of 7
W2W Ratings
Quantitative models of valuation are firmly established as well as practiced as taught in Bschools. However as we all know there are severe limitations in conventional quantitative
models. DCF captures time value of money and is as good as its assumptions. Wish a price for
scrip and behold! DCF will give you the desired estimation. P/E does not capture quality of
earnings and rate of growth objectively. What is baffling is that P/E is more like one size fits all
strategy and therefore in the market P/E range is remarkably high from 5 to 50. Even after
discounting growth there is a huge variation in P/E within a sector. Amongst peers P/E vary as
though underlying scrips are as different as oranges and apples. This provide enough evidence
that major qualitative factors, like management quality, strength of business model and
investor perception, any inherent strength etc, which writes the market movements gets
largely ignored in historic valuation techniques.
We pondered over intensely and wondered if we can evolve a research process encompassing
qualitative as well as quantitative factors such that there is more transparency in valuation.
Whilst subjective element cannot be avoided it is possible to assign weightage such that there
is objectivity in assessment. The subjective element is viewed more as an art of evaluation
married with the science of methodology providing 360o perspective of the targeted script.
We hereby introduce this methodology for evaluating Lakshmi Energy & Foods.
W2W Ratings
weightage (%)
Management quality/Promoter background
Business Model
Soft factors
(corporate governance, certification/awards, corporate social
responsibility, employee benefits etc)
Macro Factors
Scorecard
15
10
10
8
5
4
10
7
10
6
20
18
20
15
5
3
Competitive Advantage
Industry Attractiveness
Event Risk
Product - Markets position
Brands/ Market Share
Technology/Capacity
Distribution Reach
Exports
Quality of earnings
Sales Growth
Margin Growth
PBT Growth
EPS Growth
Financial Health
Balance Sheet Strength
Liquidity/Resources
ROCE
ROE
Investor Perception
P/E Relative to Sensex
P/E Relative to Sector
GDR Vs Local
Stock liquidity
FII fancy
Future Prospects
TOTAL
1
2
3
4
W2W Cut Off Criteria
Action
>80%
65-79%
50-64%
<49%
Strong Buy
Buy
Hold
Reduce
5
4
100
75
W2W Recommendation: BUY
* Disclaimer: The above analysis is highly subjective in nature, as the analyst has used his/her judgment in exercising
ratings. Readers and users are cautioned to verify the information before using it for any personal or business purpose
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
Page 8 of 8
Financial Statements
BALANCE SHEET
INCOME STATEMENT
FY06
Revenues
FY07
FY08E
558.4 696.3
Total Expenditure
484.1
Operating Profit
898.2 1347.3 1859.2
704.7
1035.1 1434.7
74.3 116.7
193.5
312.2 424.6
4.9
12.2
20.2
69.4 104.5
Interest
6.5
EBT
FY10E
579.6
Dep. & Amortizations
EBIT
FY09E
173.3
4.5
24.6
62.9 100.0
148.7
Other Income
0.8
2.1
1.5
PBT
63.6 102.1
150.2
Tax
21.6
41.8
45.1
PAT
42.0
60.3
105.1
Revenue Growth %
36.9
24.7
29.0
FY06
32.9
44.6
279.3 379.9
47.8
62.8
231.5 317.1
1.8
2.0
233.3 319.1
58.3
79.8
175.0 239.3
50.0
Equity Share Capital
11.4
12.0
12.6
12.6
367.1
595.1
827.3
Networth
156.1
239.8
379.1
607.7
839.9
Total debt
108.2
223.3
323.3
473.3
573.3
9.4
35.8
55.0
77.7
99.4
Capital Employed
273.8
499.0
Gross Fixed Assets
129.8
253.0
443.0
693.0
893.0
Deferred tax liability
Net Fixed Assets
83.2
190.7
360.5
577.6
733.0
0.0
45.6
45.6
45.6
45.6
Investments
0.5
1.1
1.1
1.1
1.1
Current Assets
263.1
434.8
478.6
38.0
Current Liabilities
163.1
297.6
125.0
205.6
268.8
190.1
261.5
350.2
534.4
741.9
273.8
499.0
757.5 1158.8 1521.6
125.8
57.0
65.8
61.3
36.0
43.6
74.3
66.4
36.8
Total Assets
CASH FLOW
63.6
102.1
150.2
233.3
319.1
4.9
12.2
20.2
32.9
44.6
Interest
5.9
4.1
24.6
47.8
62.8
-82.9
-40.3
-101.9
0.0
0.0
22.5
-14.4
73.6
744.0 1015.9
RATIOS
FY07 FY08E FY09E FY10E
Depreciation
CFO
757.5 1158.8 1512.7
CWIP
133.0
Tax paid
FY10E
228.4
PAT Growth %
Change in WC
FY09E
10.9
Op. Profit Growth %
Operating cash earnings
FY08E
145.3
Reserves & Surplus
Net Current Assets
FY06
FY07
70.5
-130.0 -183.6
35.0
149.0
47.9
195.1
FY06
FY07
FY08E FY09E
FY10E
Gearing (%)
0.7
0.8
0.9
0.8
0.7
Current Ratio
1.6
1.5
3.8
3.6
3.8
Inventory turnover
5.6
2.9
3.1
3.8
3.7
Debtors (sale days)
1
2
6
13
17
1.5
1.2
1.0
1.0
2.5
RONW(%)
32.3
34.7
35.3
35.5
33.1
Asset Turnover
Net Capex
40.1
168.9
190.0
250.0
200.0
ROCE(%)
28.3
29.5
28.3
29.3
28.6
Net Borrowings
31.6
115.1
100.0
150.0
100.0
OPM (%)
13.3
16.8
21.5
23.2
22.8
-17.0
24.3
-19.5
49.0
95.1
NPM(%)
7.5
8.7
11.7
13.0
12.9
FCFE
DuPont Analysis
VALUATION PARAMETERS
(fully diluted for all yrs)
EPS (Rs)
FY06
7.7
P/E Ratio
Book Value
23.9
P/BV
FY07 FY08E FY09E
10.6
17.5
27.7
37.9
19.0
11.4
7.2
5.3
38.0
63.2
96.2
133.0
5.3
3.2
2.1
1.5
CEPS (Rs)
49.5
86.6
123.2
183.1
250.1
Dividend %
40.0
25.0
25.0
27.0
35.0
0.8
0.5
0.5
0.5
0.7
0.2
0.2
0.2
0.3
DPS
Dividend Yield
FY07
FY08
8.7%
11.7%
Total Asset turnover (Sales/TA)
1.4
1.2
1.2
1.2
Equity multiplier (TA/TE)
2.1
2.0
1.9
1.8
25.2%
27.7%
FY10E
Profit margin (PAT/Sales)
RoE
WAY2WEALTH Securities Pvt. Ltd.,
15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900
Email: [email protected] website: www.way2wealth.com
FY09
FY10
13.0% 12.9%
28.8% 28.5%
Page 9 of 9
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