Initiating Coverage | Mining
April 8, 2013
GMDC
BUY
CMP
`161
A virtual monopoly
Target Price
`213
Investment Period
12 Months
Gujarat Mineral Development Corporation (GMDC) is the largest merchant miner
of lignite in India, supplying lignite to industrial units, including textiles, chemicals,
Stock Info
ceramics, bricks, and captive power plants. Currently, it operates 5 lignite mines
Sector
Mining
in Gujarat. Apart from lignite, it also produces bauxite, fluorspar, and manganese
Market Cap (` cr)
5,109
ore and operates a 250MW lignite-based power plant. The company also
Net debt (` cr)
(189)
operates 150MW wind power plants.
Beta
0.6
52 Week High / Low
222/158
Investment arguments
Avg. Daily Volume
38,156
Face Value (`)
2
Volume growth to lead net sales growth: GMDC has increased its lignite volumes
BSE Sensex
18,438
at a CAGR of 7.5% over FY2003-12, much higher compared to its peers.
Nifty
5,543
Although its volumes declined by 3.5% yoy in FY2013, GMDC is expanding its
Reuters Code
GMDC.BO
capacity via brownfield expansion at Mata-no-Madh and Bhavnagar mines, which
Bloomberg Code
[email protected]
are expected to add production capacities by 1mn tonne and 2.0mn tonne,
respectively, during FY2014. Further, GMDC has cleared major regulatory
hurdles for its upcoming Umarsar mine (production capacity -1mn tonne), which
Shareholding Pattern (%)
is expected to start production in the coming few months.
Promoters
74.0
Logistics advantage ensures pricing power: GMDC has exhibited strong pricing
MF / Banks / Indian Fls
13.2
power (realizations have grown at a 9.9% CAGR over FY2006-12) due to the
FII / NRIs / OCBs
7.0
prevalence of a robust demand scenario in the pro-industry state of Gujarat. For
Indian Public / Others
5.8
consumer industries in the state, purchasing coal from Coal India (CIL), or
importing coal, stands to be expensive compared to purchasing lignite from
Abs. (%)
3m
1yr
3yr
GMDC. GMDC intends to raise prices by `100-150/tonne in 1QFY2014.
Sensex
(6.6)
5.5
4.1
GMDC scores over Coal India on operational parameters: We compare GMDC
GMDC
(21.7)
(16.9)
12.8
with CIL on various operational parameters. Over the last 7-10 years, GMDC has been
beating CIL in terms of achieving volume growth and taking price hikes. Moreover,
unlike CIL, GMDC does not have an overhang of having to incur high staff costs.
Outlook and valuation: GMDC beats CIL in terms of efficiency, volume growth
and ability to take price hikes. Despite these factors, GMDC is currently trading at
an EV/EBITDA multiple of 3.3x FY2015E, compared to CIL, which is trading at a
multiple of 4.4x, which is unwarranted in our view. GMDC ticks most boxes for a
long-term view: A virtual monopoly with proven ability to increase sales volume
and prices available at an inexpensive valuation. The key catalysts for the stock
are likely to be: 1) lignite price hikes, 2) regulatory approvals for brownfield
expansions, and 3) commencement of production from Umarsar mines. We value
GMDC at an EV/EBITDA of 4.5x FY2015E with a target price of `213 and initiate
coverage with a Buy rating.
Key Financials (Standalone)
Bhavesh Chauhan
Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Y/E
Tel: 022- 39357600 Ext: 6821
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
[email protected]
FY2013E
1,696
51.3
613
18.7
26.7
8.6
2.1
5.4
2.8
FY2014E
1,944
49.9
681
20.7
24.2
7.8
1.7
4.5
2.3
Vinay Rachh
Tel: 022- 39357600 Ext: 6841
FY2015E
2,317
51.7
842
25.6
24.6
6.3
1.4
3.3
1.7
[email protected]
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
GMDC | Initiating Coverage
Investment arguments
Volume growth to lead net sales growth
GMDC has scaled up its lignite volumes at a CAGR of 7.5% over FY2003-12,
which is a growth rate much higher compared to its peers. However, the
company’s volumes declined by
3.5% yoy due to lower production form
Tadkeshwar and Mata-no-Madh mines. Nevertheless, the company is expanding
its capacity via brownfield expansion at Mata-no-Madh and Bhavnagar mines,
which are expected to add production capacities of 1mn tonne and 2.0mn tonne,
respectively, during FY2014. Further, GMDC has got through regulatory hurdles
for its upcoming Umarsar mine (production capacity -1mn tonne). The company is
not required to acquire any land for this mine. Further, since the mine has very
little overburden, production can be ramped up faster, once the mine goes
operational. We expect the mine to start production from 2HFY2014.
Beyond FY2015, the company’s volume growth is likely to be driven by Lakhpat,
Ghala and Damalai Padal mines, with capacities of 1.5mn tonne, 2.0mn tonne
and 1.5mn tonne, respectively. These mines will increase GMDC’s reserves and
volumes significantly; however, they are currently at early stages of seeking
approval from the Ministry of Environment and Forest (MoEF).
Exhibit 1: Volume growth trend
Exhibit 2: Upcoming mines’ estimated reserves
55
14
50
50
12
45
10
40
35
8
35
30
6
30
4
25
21
20
2
15
-
10
FY2009
FY2010
FY2011
FY2012
FY2013E FY2014E FY2015E
Umarsar
Damalai
Ghala
Lakhpat
Umarsar Panadhro Rajpadi Mata's Math Tadkeshwar Bhavnagar
Source: Company, Angel Research
Source: Company, Angel Research
Logistics advantage backs pricing power, monopoly-like
status
GMDC has exhibited strong pricing power due to the prevalence of a
robust demand scenario in the pro-industry state of Gujarat (realizations have
grown at a 9.9% CAGR over FY2006-12). Moreover, absence of any other
merchant miner in the state makes GMDC a virtual monopoly. For consumer
industries in the state, purchasing coal from CIL (at least 700 km away), or
importing coal, stands to be expensive compared to purchasing lignite from
GMDC (Exhibit 4). Also, a decline in international coal prices has insignificant
impact on GMDC’s lignite realizations as GMDC’s customers mainly comprise of
small to medium players whose boilers are designed to run on domestic lignite.
GMDC intends to raise prices by `100-150/tonne during 1QFY2014 in order to
pass on the recent diesel price hike. However, on a conservative basis, we factor in
a price hike of only `70-120/tonne (across various mines).
April 8, 2013
2
GMDC | Initiating Coverage
The company is also setting up a lignite beneficiation plant at Bhavnagar with a
capacity of 1.2mn tonne, which is expected to improve its lignite realization (at
Bhavnagar) by `400/tonne (+25%). Post the successful setting up of a pyrite plant
at Bhavnagar, the company could potentially set up new pyrite plants at its other
mines which have lignite grades similar to Bhavnagar.
Exhibit 3: GMDC’s blended lignite realization trend
1600
1,417
1,344
1400
1,235
1,150
1200
1,061
916
1000
879
783
800
645
593
600
400
200
0
Source: Company, Angel Research
Exhibit 4: Comparison of landed cost of coal/lignite for GMDC’s customers
Coal India
GMDC
Imported coal
Imported coal price (6000-6800kcal) (US$/tonne)
-
-
60
80
100
INRUSD
-
-
54
54
54
Imported coal price (`/tonne)
-
-
3,240
4,320
5,400
Base price (3000-3400kcal) (`/tonne)*
890
1,235
1,620
2,160
2,700
Taxes and royalty (`/tonne)
531
612
-
-
-
Transportation (`/tonne)
1,050
400
800
800
800
Landed cost for customer (`/tonne)
2,471
2,247
2,420
2,960
3,500
Premium to GMDC coal
10%
-
8%
32%
56%
Source: Company, Angel Research; Note: * Price adjustment for imported coal to align its grade with domestic coal
Lignite power plant’s operational performance to improve
GMDC operates a 250MW lignite power plant at Nani Chher. However, it has
faced operational issues in the past, resulting in a lower plant load factor (PLF).
The plant’s profitability has remained volatile (even reported EBIT losses) over the
past several years. Nevertheless, during FY2013, GMDC has outsourced its
operations to a Korean electric company, Kepco, in order to improve its
operational efficiency. Kepco will be eligible for incentives in case the PLF of the
plant exceeds 75%. We await further clarity on prospective improvement of PLF
before we model a turnaround.
April 8, 2013
3
GMDC | Initiating Coverage
Exhibit 5: Power segment performance has remained erratic
94
100
74
73
80
62
60
51
50
40
31
31
20
15
20
-
(2)
(6)
(20)
(13)
(40)
(28)
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
Net sales
EBIT
Source: Company, Angel Research
GMDC scores over Coal India on operational parameters
We compare GMDC with CIL on operational and financial parameters. Over
FY2003-12, GMDC’s volume growth has increased at a CAGR of 7.5%, compared
to CIL’s CAGR of 4.1%. GMDC’s realization has also increased at a faster pace
than CIL as socio-political concerns have hampered CIL’s ability to take price
hikes. Moreover, unlike CIL, GMDC does not have an overhang in terms of
incurring high staff costs. With rise in mining costs due to diesel price hikes,
GMDC has indicated towards increasing the price of lignite, while there has not
been any hint of a potential price hike by CIL, constrained by socio-political
concerns.
Exhibit 6: Ten year volume CAGR of GMDC
Exhibit 7: Ten year volume CAGR of CIL
450
12
11
400
10
9
350
8
7
300
6
5
250
4
3
200
2
Source: Company, Angel Research
Source: Company, Angel Research
April 8, 2013
4
GMDC | Initiating Coverage
Exhibit 8: Seven year price CAGR of GMDC
Exhibit 9: Seven year price CAGR of CIL
1,500
1,200
1,400
1,100
1,000
1,300
900
1,200
800
1,100
700
1,000
600
900
500
800
400
300
700
200
600
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 10: Seven year EBITDA CAGR of GMDC
Exhibit 11: Seven year EBITDA CAGR of CIL
800
25,000
700
20,000
600
500
15,000
400
10,000
300
200
5,000
100
0
0
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 12: Staff costs as a percentage of sales - GMDC
Exhibit 13: Staff costs as a percentage of sales - CIL
12
10.9
60
10.7
10.1
9.9
48.4
10
50
8.3
40.5
36.5
37.3
37.7
8
7.1
40
6.6
31.8
32.0
6
30
4
20
2
10
0
0
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
Source: Company, Angel Research
Source: Company, Angel Research
GMDC also scores over other PSU miners on various operational, financial and
valuation parameters.
April 8, 2013
5
verage
Exhibit 14: Comparison of mining companies
Rating parameters
GMDC
CIL
NMDC
MOIL
Mine life
Ability to
raise volume
Ability to raise price
Staff costs
Capital
allocation
Rating - Bu
siness (1)
Rating - Va
luation (2)
Final rating (1+2)
15
12
14
Source: Ange
l Research
Exhibit 15
: Rating scale
Most preferred
3
Moderate
2
Least prefer
red
1
Source: Ange
l Research
Wind po
wer capacity addition
- a value
dilutive exercise
GMDC has gradually increased its wind power capacity to 150MW. Further, it has
announced
to add another 50MW
of wind power capacity each during FY2014
and FY201
5 for a total
capex of `580cr. We feel
this is a value dilutive exercise as
ROE of win
d power plants is only 9-11%, compared to the company’s overall ROE
of ~25%.
In our view,
stepping up
dividend payout instead of setting up
a wind
power pla
nt would have been better utilization of surplus cash from the
shareholde
rs’ perspective.
Exhibit 16
: Wind power based capacities
300
250
250
200
200
150
150
101
100
61
50
20
0
FY2010
FY2011
FY2012
FY2013E FY2014E FY2015E
Source: Com
pany, Angel Research
April 8, 2013
6
GMDC | Initiating Coverage
Capex to continue over the coming five years
In addition to setting up wind power plants, GMDC aims to diversify by taking up
other projects in JV with experienced companies. These projects would include
setting up an alumina refinery, a 500MW power plant, a cement plant, fluorspar
beneficiation plant etc where GMDC will deploy its operating cash flow generated
from mining operations. GMDC aims to remain a minority partner in these
ventures. These projects could prove to be value-accretive, as against hoarding
cash like some other PSU miners, thus diluting their ROEs.
Outlook and valuation
GMDC beats CIL in terms of efficiency, volume growth and ability to take price
hikes. Despite these factors, GMDC is currently trading at an EV/EBITDA multiple
of 3.3x FY2015E, compared to CIL’s commensurate multiple of 4.4x, which is
unwarranted in our view. GMDC ticks most boxes in the positive, taking a long-
term view. It is a virtual monopoly with proven ability to increase sales volume and
prices; still its stock is available at an inexpensive valuation. The key catalysts for
the stock are likely to be: 1) lignite price hikes, 2) regulatory approvals for
brownfield expansions, and 3) commencement of production from Umarsar mines.
We value GMDC at an EV/EBITDA of 4.5x FY2015E with a target price of `213
and initiate coverage with a Buy rating.
Exhibit 17: EPS sensitivity to price and volume (FY2015)
Exhibit 18: TP sensitivity to price and volume (FY2015)
Lignite realization (`/tonne)
Lignite realization (`/tonne)
1,317
1,367
1,417
1,467
1,517
1,317
1,367
1,417
1,467
1,517
12.0
21.8
22.7
23.5
24.4
25.2
12.0
183
190
197
203
210
12.5
22.8
23.6
24.5
25.4
26.3
12.5
191
198
205
211
218
13.0
23.7
24.6
25.6
26.4
27.4
13.0
198
205
213
220
227
13.5
24.6
25.6
26.5
27.5
28.4
13.5
205
213
220
228
235
14.0
25.6
26.5
27.5
28.5
29.5
14.0
213
220
228
236
244
Source: Angel Research
Source: Angel Research
Exhibit 19: Key assumptions
FY2013E
FY2014E
FY2015E
Lignite volumes (mn tonne)
10.9
11.4
13.0
Average realization (`/tonne)
1,235
1,344
1,417
Source: Angel Research
Exhibit 20: EPS - Angel forecast vs consensus
Year (`)
Angel forecast
Bloomberg consensus
Variation (%)
FY2014E
20.7
23.1
(10.2)
FY2015E
25.6
25.6
0.1
Source: Bloomberg, Angel Research
April 8, 2013
7
GMDC | Initiating Coverage
Key risks
Delay in approvals
GMDC’s Bhavnagar and Mata-no-Madh brownfield expansions have been
delayed over the past one year. We expect the company to receive approvals
during 2HFY2014. A delay beyond FY2014 in obtaining approvals can lead to
muted growth in lignite volumes.
Delay in price hike
We expect GMDC to hike product prices during FY2014 in order to pass on cost
increases due to diesel price hike. However, in case the company does not (or delays)
hike prices during FY2014, it could pose a downside risk to our margin estimates.
Company overview
GMDC was established by the Government of Gujarat, in the year 1963, for
developing major mineral resources in the state of Gujarat. GMDC is the largest
merchant miner of lignite in India, supplying lignite to various industrial units,
including textiles, chemicals, ceramics, bricks, and captive power plants. The
company operates 5 lignite mines in Gujarat. Apart from lignite, it also produces
bauxite, fluorspar, and manganese ore and operates a 250MW lignite-based
power plant. The company also operates a 150MW wind power plant.
Exhibit 21: Lignite mine reserves of GMDC
Exhibit 22: Lignite mine capacity of GMDC
4
80
70
3.3
70
3.0
60
3
2.5
2.5
50
40
34
34
2
1.8
30
20
15
1
13
10
0
0
Panadhro
Rajpadi
Mata's Math Tadkeshwar
Bhavnagar
Panadhro
Rajpadi
Mata's Math Tadkeshwar Bhavnagar
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 23: Segmental revenue break-up
Exhibit 24: Segmental EBIT break-up
1,600
800
1,400
600
1,200
400
1,000
800
200
600
-
400
(200)
200
-
(400)
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
Mining Power
Mining Power
Source: Company, Angel Research
Source: Company, Angel Research
April 8, 2013
8
GMDC | Initiating Coverage
Exhibit 25: P/E Band
500
450
400
350
300
250
200
150
100
50
0
Mar-07 Nov-07 Jul-08 Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13
9x
14x
19x
24x
Source: Bloomberg, Angel Research
Exhibit 26: EV/EBITDA Band
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Mar-07
Dec-07
Sep-08
Jun-09
Mar-10
Dec-10
Sep-11
Jun-12
Mar-13
5x
8x
11x
17x
14x
Source: Bloomberg, Angel Research
Exhibit 27: P/BV Band
800
700
600
500
400
300
200
100
0
Mar-07
Dec-07
Sep-08
Jun-09
Mar-10
Dec-10
Sep-11
Jun-12
Mar-13
2.0x
4.0x
6.0x
8.0x
Source: Bloomberg, Angel Research
April 8, 2013
9
GMDC | Initiating Coverage
Exhibit 28: Recommendation summary
Companies CMP
Target
Reco.
Mcap Upside
P/E (x)
P/BV (x)
EV/EBITDA (x)
RoE (%)
RoCE (%)
(`)
price (`)
(` cr)
(%) FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E
GMDC
161
213
Buy
5,109
32
7.8
6.3
1.7
1.4
4.5
3.3
24.2
24.6
30.0
31.2
NMDC
124
179
Buy
49,182
44
7.5
6.5
1.4
1.2
3.5
2.7
20.6
20.2
23.4
24.8
Coal India
308
345 Accum.
194,828
12
10.8
10.0
3.0
2.6
5.2
4.4
37.6
36.2
21.9
22.6
MOIL
228
243 Accum.
3,836
6
8.8
7.9
1.3
1.1
3.4
2.5
15.1
15.2
13.4
14.1
Source: Company, Angel Research
April 8, 2013
10
GMDC | Initiating Coverage
Profit & loss statement (Standalone)
Y/E March (` cr)
FY10
FY11
FY12
FY13E
FY14E
FY15E
Net Sales
1,065
1,421
1,631
1,696
1,944
2,317
Other operating income
-
-
-
-
-
-
Total operating income
1,065
1,421
1,631
1,696
1,944
2,317
% chg
9.0
33.4
14.7
4.0
14.6
19.2
Total Expenditure
583
770
873
826
973
1,119
Stock Adjustments
(10)
4
4
-
-
-
Other Mfg costs
390
438
549
492
603
712
Personnel
108
152
108
114
123
131
Other
95
177
212
221
248
276
EBITDA
482
651
758
870
970
1,198
% chg
5.8
35.1
16.3
14.8
11.6
23.5
(% of Net Sales)
45.2
45.8
46.5
51.3
49.9
51.7
Depreciation
86
90
105
120
126
132
EBIT
396
561
652
750
844
1,066
% chg
4.8
41.7
16.3
14.9
12.6
26.3
(% of Net Sales)
37.2
39.5
40.0
44.2
43.4
46.0
Interest & other Charges
26
15
8
-
-
-
Other Income
36
39
73
165
173
190
(% of PBT)
8.9
6.6
10.2
18.1
17.0
15.1
Recurring PBT
406
585
718
915
1,017
1,256
% chg
9.8
44.0
22.8
27.4
11.2
23.5
Extraordinary Inc/(Expense)
4
1
1
-
-
-
PBT (reported)
410
585
718
915
1,017
1,256
Tax
126
210
231
302
336
415
(% of PBT)
31.1
35.8
32.2
33.0
33.0
33.0
PAT (reported)
284
376
488
613
681
842
Extraordinary Inc/(Expense)
4
1
1
-
-
-
Adj. PAT
280
375
487
613
681
842
% chg
20.9
34.0
29.8
25.9
11.2
23.5
Basic EPS (`)
8.4
11.3
14.8
18.7
20.7
25.6
Fully Diluted EPS (`)
8.4
11.3
14.8
18.7
20.7
25.6
% chg
20.7
35.0
31.0
25.9
11.2
23.5
April 8, 2013
11
GMDC | Initiating Coverage
Balance sheet (Standalone)
Y/E March (` cr)
FY10
FY11
FY12
FY13E FY14E FY15E
SOURCES OF FUNDS
Equity Share Capital
64
64
64
64
64
64
Reserves & Surplus
1,342
1,606
1,982
2,482
3,012
3,703
Shareholder’s Funds
1,406
1,670
2,046
2,545
3,076
3,766
Total Loans
216
52
-
-
-
-
Other Long Term liabilities
-
139
369
369
369
369
Net Deferred tax liability
240
254
293
293
293
293
Total Liabilities
1,862
2,115
2,708
3,207
3,738
4,428
APPLICATION OF FUNDS
Gross Block
1,976
2,236
2,557
2,607
2,862
3,222
Less: Acc. Depreciation
635
719
800
920
1,046
1,178
Net Block
1,341
1,517
1,758
1,688
1,817
2,044
Capital Work-in-Progress
10
19
6
206
306
306
Goodwill
-
-
-
-
-
-
Investments
133
133
133
133
133
133
Current Assets
1,481
570
999
1,397
1,731
2,229
Cash
96
35
56
459
777
1,251
Loans & Advances
1,264
441
833
833
833
833
Other
122
94
110
106
121
145
Current liabilities
1,121
524
507
536
568
603
Net Current Assets
360
46
491
861
1,162
1,625
Other Assets
-
400
320
320
320
320
Misc Exp. not w/o
18
-
-
-
-
-
Total Assets
1,862
2,115
2,708
3,207
3,738
4,428
April 8, 2013
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GMDC | Initiating Coverage
Cash flow statement (Standalone)
Y/E March (` cr)
FY10
FY11
FY12
FY13E FY14E FY15E
Profit before tax
406
585
718
915
1,017
1,256
Depreciation
86
90
106
120
126
132
Change in Working Capital
172
(108)
14
33
16
12
Less: Other income
6
(3)
(38)
-
-
-
Others
3
10
11
-
-
-
Direct taxes paid
121
185
248
302
336
415
Cash Flow from Operations
554
389
562
766
824
986
(Inc.)/ Dec. in Fixed Assets
(135)
(275)
(333)
(250)
(355)
(360)
(Inc.)/ Dec. in Investments
(74)
-
-
-
-
-
Other income
20
19
46
-
-
-
Cash Flow from Investing
(190)
(257)
(287)
(250)
(355)
(360)
Issue of Equity
-
-
-
-
-
-
Inc./(Dec.) in loans
(263)
(83)
(133)
-
-
-
Dividend Paid (Incl. Tax)
(74)
(93)
(111)
(113)
(151)
(151)
Others
(26)
(17)
(10)
-
-
-
Cash Flow from Financing
(363)
(193)
(254)
(113)
(151)
(151)
Inc./(Dec.) in Cash
1
(61)
21
402
318
475
Opening Cash balances
95
96
35
56
459
777
Closing Cash balances
96
35
56
459
777
1,251
April 8, 2013
13
GMDC | Initiating Coverage
Key ratios
Y/E March
FY10
FY11
FY12
FY13E
FY14E
FY15E
Valuation Ratio (x)
P/E (on FDEPS)
19.2
14.2
10.9
8.6
7.8
6.3
P/CEPS
14.5
11.5
8.9
7.2
6.5
5.4
P/BV
3.8
3.2
2.6
2.1
1.7
1.4
Dividend yield (%)
1.6
1.9
1.9
1.9
2.5
2.5
EV/Sales
5.0
3.7
3.1
2.8
2.3
1.7
EV/EBITDA
11.1
8.0
6.7
5.4
4.5
3.3
EV/Total Assets
2.9
2.5
1.9
1.5
1.2
0.9
Per Share Data (`)
EPS (Basic)
8.4
11.3
14.8
18.7
20.7
25.6
EPS (fully diluted)
8.4
11.3
14.8
18.7
20.7
25.6
Cash EPS
11.1
14.0
18.0
22.3
24.6
29.6
DPS
2.5
3.0
3.0
3.0
4.0
4.0
Book Value
42.1
50.4
62.3
77.5
93.6
114.6
Returns (%)
ROCE (Pre-tax)
23.9
33.6
34.6
32.7
30.0
31.2
Angel ROIC (Pre-tax)
24.9
30.7
33.8
38.7
40.2
45.1
ROE
21.3
24.4
26.2
26.7
24.2
24.6
Turnover ratios (x)
Asset Turnover (Gross Block)
15.0
38.0
46.5
41.9
49.6
50.6
Inventory (days)
23
18
15
15
15
15
Receivables (days)
24
10
8
8
8
8
Payables (days)
34
31
28
28
28
28
WCcycle (ex-cash) (days)
123
35
50
90
74
60
Solvency ratios (x)
Net debt to equity
(0.0)
(0.1)
(0.1)
(0.2)
(0.3)
(0.4)
Net debt to EBITDA
(0.0)
(0.2)
(0.2)
(0.7)
(0.9)
(1.2)
Interest Coverage (EBIT / Int.)
15.2
36.7
83.1
-
-
-
April 8, 2013
14
GMDC | Initiating Coverage
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
GMDC
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
April 8, 2013
15
GMDC | Initiating Coverage
6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai- 400 093. Tel: (022) 39357800
Research Team
Fundamental:
Sarabjit Kour Nangra
VP-Research, Pharmaceutical
[email protected]
Vaibhav Agrawal
VP-Research, Banking
[email protected]
Bhavesh Chauhan
Sr. Analyst (Metals & Mining)
[email protected]
Viral Shah
Sr. Analyst (Infrastructure)
[email protected]
Sharan Lillaney
Analyst (Mid-cap)
[email protected]
V Srinivasan
Analyst (Cement, FMCG)
[email protected]
Yaresh Kothari
Analyst (Automobile)
[email protected]
Ankita Somani
Analyst (IT, Telecom)
[email protected]
Sourabh Taparia
Analyst (Banking)
[email protected]
Bhupali Gursale
Economist
[email protected]
Vinay Rachh
Research Associate
[email protected]
Amit Patil
Research Associate
[email protected]
Shareen Batatawala
Research Associate
[email protected]
Twinkle Gosar
Research Associate
[email protected]
Tejashwini Kumari
Research Associate
[email protected]
Technicals:
Shardul Kulkarni
Sr. Technical Analyst
[email protected]
Sameet Chavan
Technical Analyst
[email protected]
Sacchitanand Uttekar
Technical Analyst
[email protected]
Derivatives:
Siddarth Bhamre
Head - Derivatives
[email protected]
Institutional Sales Team:
Mayuresh Joshi
VP - Institutional Sales
[email protected]
Hiten Sampat
Sr. A.V.P- Institution sales
[email protected]
Meenakshi Chavan
Dealer
[email protected]
Gaurang Tisani
Dealer
[email protected]
Akshay Shah
Sr. Executive
[email protected]
Production Team:
Tejas Vahalia
Research Editor
[email protected]
Dilip Patel
Production Incharge
[email protected]
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 8, 2013
16