1QFY2014 Result update | Power Cables

August 12, 2013

Finolex Cables
Worst is behind now
Y/E March (` cr) Total operating income EBITDA EBITDA Margin (%) Adj. PAT
Source: Company, Angel Research

BUY
CMP Target Price
4QFY13 632 67 10.5 39 % chg (qoq) (12.4) (22.9) (127)bp (13.0) 1QFY13 518 49 9.4 25 % chg (yoy) 6.9 5.2 (15)bp 35.1

`55 `68
12 Months

1QFY14 554 51 9.3 34

Investment Period
Stock Info Sector Market Cap (` cr) Net Debt Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Power-Cables 834 (202.0) 0.9 66/32 102,815 2 18,789 5,566 FNXC.BO FNXC.IN

Finolex Cables Ltd (FCL) reported a mixed set of numbers for 1QFY2014. Its top-line reported a flat yoy growth of 6.9% to `554cr, as compared to our estimate of `585cr. The EBITDA came in higher by 5.2% yoy to `51cr, in-line with our estimate of `52cr. The EBITDA margin was down marginally by 15bp on a yoy basis to 9.3%. Nevertheless the Adjusted PAT soared by a whopping 35.1% yoy to `34cr vis--vis our estimate of `28cr, aided by other income of `7.7cr (higher by 338% yoy). The PAT margin too expanded from 4.8% in 1QFY2013 to 6.1% in the current quarter. Revival in user industries to drive growth: FCL serves varied user industries, considering the wide usage of cables. With customers increasingly demanding high-quality and branded wires, FCL is poised to grow. The company, with its wide distribution reach and penetration in the market, is well placed to meet increase in demand. Further, we expect the companys initiatives like- 1) increase in advertisement spends 2) setting up of a solar power plant for captive consumption, 3) additions to product portfolio and 4) reduction in sale of copper rods to third party, to boost its top-line and enhance profitability going forward. Outlook and valuation: We expect the companys sales to post an 13.0% CAGR over FY201315E to `2,899cr, and EBITDA to register a CAGR of 11.6% over the same period with margin at 9.8% in FY2015E. However, PAT is expected to post a CAGR of 9.0% over the same period owing to closure of the derivatives contracts (included in exceptional items). At the current market price, FCL is available at an attractive valuation of 4.8x PE for FY2015E. We maintain our Buy recommendation on the stock with a target price of `68 based on target PE of 6x for FY2015E earnings.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 35.8 10.5 22.0 31.7

Abs.(%) Sensex Finolex

3m (5.8) (2.0)

1yr 6.7 36.8

3yr 3.6 (8.6)

Key financials
Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA Margin (%) FDEPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2011 2,036 25.8 87 50.7 7.5 5.7 9.6 1.2 12.1 20.9 0.3 4.0 FY2012 2,064 1.4 98 13.0 8.5 6.4 8.5 1.0 12.3 18.7 0.3 4.0 FY2013 2,270 10.0 145 47.9 10.1 9.5 5.7 0.9 15.7 22.5 0.3 2.8 FY2014E 2,563 12.9 154 6.0 9.8 10.1 5.4 0.8 14.3 22.2 0.2 2.5 FY2015E 2,899 13.1 173 12.1 9.8 11.3 4.8 0.7 13.8 23.1 0.2 2.0

Twinkle Gosar
+91 22 3935 7800 Ext: 6848 [email protected]

Source: Company, Angel Research; Note: CMP as of August 8, 2013

Please refer to important disclosures at the end of this report

Finolex Cables | 1QFY2014 Result update

Exhibit 1: 1QFY2014 performance highlights

Y/E March (` cr) Total operating income Net raw material (% of Sales) Employee cost (% of Sales) Other Expenses (% of Sales) Total expenditure EBITDA EBITDA Margin (%) Interest Depreciation Other income PBT (excl. exceptional items) Exceptional items PBT (incl. exceptional items) (% of Sales) Tax (% of PBT) Adjusted PAT PATM (%)
Source: Company, Angel Research 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg

553.8
417.2

632.1
465.9

(12.4)
(10.4) (12.4) (15.3) (11.2)

518.0
378.0

6.9
10.4 14.3 (12.4) 7.1

2,270.1
1,688.6

2,063.9
1,568.5

10.0
7.7 21.7 6.7 8.1

75.3
22.5

73.7
25.7

73.0
19.7

74.4
84.6

76.0
69.5

4.1
62.7

4.1
74.0

3.8
71.6

3.7
268.1

3.4
251.3

11.3
502.4

11.7
565.6

13.8
469.2

11.8
2,041.3

12.2
1,889.2

51.3
9.3

66.6
10.5

(22.9)
(127)bp

48.8
9.4

5.2
(15)bp

228.8
10.1

174.8
8.5

30.9
161bp

3.5
11.4

4.2
14.6

(17.6)
(21.8)

3.5
10.5

(0.3)
8.3

12.6
46.6

26.1
39.5

(51.7)
18.1

7.7
44.1

6.6
54.4

16.7
(18.8) (4.8) 38.3 (13.0)

1.8
36.5

337.5
20.9 46.9 106.4 35.1

24.2
193.8

36.4
145.6

(33.6)
33.1 56.3 130.5 47.9

0.0
44.1

8.0
46.4

6.5
30.1

23.0
170.8

36.4
109.3

8.0
10.3

7.3
7.4

5.8
5.0

7.5
25.5

5.3
11.1

23.2
33.9

16.0
39.0

16.5
25.1

15.0
145.2

10.1
98.2

6.1

6.2

4.8

6.4

4.8

Top-line & EBITDA in-line; bottom-line above expectation

For 1QFY2014, FCLs top-line reported a flat yoy growth of 6.9% to `554cr, as compared to our estimate of `585cr. The EBITDA came in higher by 5.2% yoy to `51cr, in-line with our estimate of `52cr. The EBITDA margin was down marginally by 15bp on a yoy basis to 9.3%. Nevertheless the Adjusted PAT soared by a whopping 35.1% yoy to `34cr vis--vis our estimate of `28cr, aided by other income and absence of extra-ordinary items of derivatives losses. The PAT margin too expanded from 4.8% in 1QFY2013 to 6.1% in the quarter under review.

Exhibit 2: Economy slowdown weighs on revenue growth

700 600 500 (6.6) 1.7 (2.6) 12.1 12.4 17.4 7.0 4.5 20 6.9 15 10

Exhibit 3: Lower other expenses aid sustain EBITDA margin

80 70 60 50 8.0 8.8 9.6 7.5 9.4 8.0 12.0 15 10.5 9.3 12 9 6 3

( ` cr)

( ` cr)

300 200

(%)

5 0

30 20 10 0

461

499

499

605

518

586

534

632

34

40

44

58

49

71

43

67

51

100 -

554

(5) (10)

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Revenue (LHS)

Revenue growth yoy (RHS)

EBITDA (LHS)

EBITDA Margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

August 12, 2013

1QFY14

(%)

400

40

Finolex Cables | 1QFY2014 Result update

Exhibit 4: Actual vs Estimates

Actual vs Angel's Estimates Total Income (` cr) EBITDA (`cr) EBITDA Margin (%) Adjusted PAT (` cr)
Source: Company, Angel Research

Actual (` cr) 554 51 9.3 34

Estimate (` cr) 585 52 8.9 28

% variation (5.3) (1.8) 33bp 22.6

Segment-wise performance
For 4QFY2013, the electrical cables segment reported a flat yoy growth of 3.9% in sales to `474cr. The contribution of the segment stands at 85.7% as in 1QFY2014 vis--vis 88.1% in 1QFY2013. The EBIT for the segment came in at `52cr (`55cr in 1QFY2013), 6.1% lower yoy while EBIT margin lower by 117bp yoy to 10.9%. The communication cables segment posted a strong growth of 26.0% yoy in its top-line, with sales of `47cr (`38cr in 1QFY2013) and contributed 8.6% to the total revenue. The margin of the segment expanded significantly by 439bp yoy to 12.2% from 7.8% in the same quarter previous year. The continuous copper rods (CCC rods) segment reported a decline of 16.2% in its top-line to `20cr (`24cr in 1QFY2013) during the quarter. The segments contribution has been declining gradually since the company is reducing its exposure to third parties owing to thin margins. The EBIT for the segment came in at `1.6cr, while margin stood at 8.1%, 748bp higher yoy.

Exhibit 5: Segment-wise performance

Y/E March (` cr) Total Revenue A) Electrical Cables B) Communications Cables C) Copper Rods D) Others Total EBIT Margin (%) A) Electrical Cables B) Communications Cables C) Copper Rods D) Others
Source: Company, Angel Research

1QFY14 474 47 20 12 554 10.9 12.2 8.1 (98.1)

4QFY13 546 50 36 55 632 13.7 13.4 6.0 (0.8)

1QFY13 % chg (qoq) % chg (yoy) 456 38 24 40 518 12.1 7.8 0.7 (2.5) (13.1) (5.8) (43.6) (78.2) (12.4) (bp chg) (278) (127) 497 (9,731) (117) 439 748 (9,552) 3.9 26.0 (16.2) (70.3) 6.9

August 12, 2013

Finolex Cables | 1QFY2014 Result update

Investment arguments
Capex plans to complement rising demand
FCL has its manufacturing facilities located at Pune, Goa and Roorkee. Excluding the older plants, the new plants with updated technology have been operating optimally at ~85-90% capacity utilisation. With customers increasingly demanding high-quality and branded wires, FCL is poised to grow. The company, with its wide distribution reach and penetration in the market, is well placed to meet increase in demand. The company has planned a total capex of ~`100cr over the next 18 months (~`40-50cr in FY2013E) to double its capacity at Roorkee plant so as to support rising demand. The same will lead to top-line growth for the company. Moreover, FCL has expanded its capacity at Urse and Goa from 6,000 km-amonth to 8,000 km (further to 10,000) in order to service its tender for the National Optic Fibre Network project to connect all village panchayats (4,00,000cable km project that can go up to even 8,00,000 km).

Organic growth and diversifying portfolio to extend borders

FCL has a substantial market share of ~15-16% in both, electrical and telecommunication cables segments. The company has a wide range of products in its offering, ranging within 1.1kv to 66kv, new range of speaker wires in the communication cables segment and latest versions of T5 tube lights and fittings in the lighting division. Additions in the product portfolio by the company on the back of extensive research and development are expected to facilitate growth in top-line for the company going forward. Also, FCL plans to foray into manufacturing of electrical products like electric motors and transformers to start with, at an investment of ~`100cr with a separate dealer network for these products. This new facility is expected to be operational by FY2015. The company also has plans to set up a new switchgear division this fiscal that will initially make miniature circuit breakers with investment quantum yet to be finalised. Thus, with an expansion of its product portfolio, FCL intends to change its legacy image of being a cabler to a manufacturer of electrical products.

Reducing third party sale of copper rods to boost margins

The copper rods segment was initially set up as backward integration for the cables segment. The excess production after captive consumption is sold off to third parties at market price. However, owing to thin and declining margins from third party transactions, FCL is gradually reducing its exposure to the segment. The contribution of the segment to the top-line has decreased from 21% in FY2010 to ~5% currently. This trend is expected to continue, thereby improving the overall EBIT margin of the company.

Revival in user industry growth to drive top-line

FCL serves varied user industries considering the wide usage of cables due to electrification. The contribution from the construction sector is the largest while other segments include industrial, automotive, power and agriculture. In the near term construction sector appears positive with consumption being reported from interior areas of country rather than limited to larger cities. In the long term, however, the outlook for the entire segment is positive, given the fact that sustained economic growth of the country depends on a robust and stable infrastructure.

August 12, 2013

Finolex Cables | 1QFY2014 Result update

Financials
Exhibit 6: Key Assumptions
Particulars (%) Total Sales Growth Finished Products Volume growth Electrical cables Telephone Cables-Jelly Filled Optical Fibre Cables Continuous Cast Copper Rod Realisation growth Electrical cables Telephone Cables-Jelly Filled Optical Fibre Cables Continuous Cast Copper Rod Raw Material Volume growth Realisation growth
Source: Company, Angel Research

FY2014E 12.9

FY2015E 13.1

11.0 5.0 5.0 (10.0) 3.0 5.0 5.0 9.5 3.6

11.0 5.0 5.0 (10.0) 3.0 5.0 5.0 9.5 3.3

Exhibit 7: Revised Estimates

Y/E March Net Sales (`cr) EBITDA Margin (%) EPS (`)
Source: Angel Research

Earlier estimates FY2014E 2,563 9.8 10 FY2015E 2,899 9.8 11

Revised estimates FY2014E 2,563 9.8 10 FY2015E 2,899 9.8 11

% change FY2014E 0.0 0.0 0.0 FY2015E 0.0 0.0 0.0

Net sales to grow at CAGR of 13.0% over FY2013-15E

Owing to strong growth in varied user industries, additions in the product portfolio, and strategic alliances entered into by the company, the top-line is expected to post a CAGR of 13.0% over FY2013-15E to `2,899cr in FY2015E.

Exhibit 8: User industry growth to drive sales

3,500 3,000 2,500 25.8 20.7 1.4 10.0 13.1 12.9 30 25 20 15 10

Exhibit 9: Segmental contribution

3,000 2,500 2,000 1,771 1,407 1,109 511 204 FY2011 207 205 254 105 FY2013 2,347 2,053 2,683

1,500 1,000

( ` cr)

( ` cr)

(%)

2,000

1,500 1,000 500 -

1,619

2,036

2,064

2,270

2,563

2,899

500 -

5 0

362 176 FY2010

280 94 FY2014E

308 85 FY2015E

FY2010

FY2011

FY2012

FY2013

FY2014E

FY2015E

FY2012

Net sales (LHS)

Net sales growth (RHS)

Electrical cables

Communication

CCC rods

Source: Company, Angel Research

Source: Company, Angel Research

August 12, 2013

Finolex Cables | 1QFY2014 Result update

Revenue from the Electrical cables segment is assumed to grow at a CAGR of 14.3% while the Communication cables segment (telephone jelly cables and optic fibre cables) is expected to post a CAGR of 10.3% over FY2013-15E. CCC rods (net of inter segmental) contribution is however expected to dip at a CAGR of 10.0% for the same period.

EBITDA to post CAGR of 11.6% over FY2013-15E

FCLs EBITDA, on back of healthy top-line growth and improved operational efficiency, is expected to post a CAGR of 11.6% over FY2013-15E. The EBITDA is to rise from `229cr in FY2013 to `285cr in FY2015E. Despite reduced contribution from low-margin copper rods, owing to volatility in copper prices, we expect EBITDA margins to normalize at 9.8% in FY2014E and FY2015E.

Exhibit 10: EBITDA margin to normalise

300 250 200 5.2 7.5 8.5 10.1 9.8 9.8 10 8 12

Exhibit 11: PAT and PAT growth

200 180 160 140 120 100 80 60 40 20 0 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E PAT (LHS) PAT growth (RHS) 58 87 98 145 154 173 (262.4) 50.7 13.0 47.9 6.0 12.1 100 50 0 (50) (100) (150) (200) (250) (300)

( ` cr)

( ` cr)

150 100 50 195 0 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E EBITDA (LHS) EBITDA margin (RHS) 173 175 229 250 285

6 4 2 0

Source: Company, Angel Research

(%)

Source: Company, Angel Research

End of tax exemption to restrict PAT CAGR at 9.0%

A robust top-line coupled with healthy EBITDA and closure of derivatives contract in 4QFY2013 is expected to aid PAT CAGR of 9.0% over FY2013-15E. Tax rate is expected to increase from 10.1% in FY2012 to 15.0% in FY2013E; and 28.0% in FY2014E and FY2015E; owing to end of 100% tax exemption on the Roorkee plant (30% exemption from FY2014E). As a result, despite closure of derivative contracts, the bottom-line is expected to rise gradually from `145cr in FY2013 to `173cr in FY2015E.

August 12, 2013

(%)

Finolex Cables | 1QFY2014 Result update

Concerns
Competition from the un-organized sector is a concern since the products available from them are relatively cheaper and they thus cannibalize into market volumes. Fluctuation in the price of copper which is an essential raw material (~86% of total raw material), is a key concern as it would directly impact operational efficiency. Although prices have fallen recently, but volatility in commodity markets persists.

Competition
The cables industry, both electrical and tele-communication, is highly competitive, with co-existence of both - organised and un-organised players. FCL has a market share of ~15-20% each in the electrical and telecommunication cables segments.

Exhibit 12: Relative Valuation

TTM- Jun13 Sales (` cr) OPM (%) PAT (` cr) EPS (`) ROIC (%) PE (x) PBV (x) EV/ EBITDA (x) EV/ Sales (x)

FCL Torrent Cables KEI Inds*

2,307 323 1,661

9.3 8.1 10.4

154 14 26

10.1 16.4 3.8

22 11 24

5.4 4.1 2.2

0.9 0.3 0.2

2.9 1.8 2.5

0.3 0.1 0.3

Source: Capital Line, Angel Research *TTM ending Mar13

August 12, 2013

Finolex Cables | 1QFY2014 Result update

Outlook and Valuation

We remain positive on the companys prospects going ahead, given the revival in growth in user industries, additions in product portfolio, and strategic alliances which will aid the company to post a CAGR of 13.0% in top-line over FY2013-15E to `2,899cr in FY2015E. EBITDA is expected to grow at a CAGR of 11.2% to `285cr while margins are to stabilize at 9.8% in FY2014E and FY2015E. Despite end of long persisted derivative contract losses, PAT growth, owing to end of tax exemption, is expected to be restricted to a CAGR of 9.0% over FY2013-15E, ie to `173cr in FY2015E. At the current market price, the stock is available at a cheap valuation of 4.8x PE for FY2015E. We continue to maintain our Buy recommendation on the stock with a target price of `68 based on target PE of 6x FY2015E earnings.

Exhibit 13: One-year forward PE

160 140 120 100 80 60 40 20 0

(` )

Aug-10

Aug-11

Aug-12

Price
Source: Company, Angel Research

4.0x

7.5x

11.0x

14.5x

August 12, 2013

Aug-13

Feb-11

Feb-12

Feb-13

Finolex Cables | 1QFY2014 Result update

About the company

FCL is Indias largest manufacturer of electrical and communication cables. The company mainly operates through 4 divisions; 1) Electrical cables (80%) 2) Communication cables (~7%) 3) Continuous Cast Copper rods (~9%) and 4) Others (4%)- comprising switches and compact fluorescent lamps manufactured through its facilities set up at Roorkee, Goa, and Pune (at Pimpri, Urse).

Exhibit 14: Segment details

Segments

Electrical Cables

Communication Cables

Others

Copper Rods

LDEC

Copper Based

Switches

Power Cables

Optic Fibre/ Glass based

Compact Fluoroscent Lamps

Traditional JFTC's
Source: Company

Exhibit 15: Applications of different types of cables

Cables Electrical Cables LDEC Power Cables Communication cables Copper based LAN- high speed networks Coaxial- content input to TV sets PE Insulated to connect telephone instruments V-Sat- Dish to base station Optic Fibre/ glass based Maximum bandwidth and high speed Trunk cables Distribution by telecom companies Multi service organisation and service provider Traditional JFTC Laid underground 4 connecting land line telephone to exchanges Electrification in residential, commercial and industrial establishments Underground usage, main power supply Applications

Source: Company, Angel Research

August 12, 2013

Finolex Cables | 1QFY2014 Result update

Profit and loss statement

Y/E March (` cr) Gross sales Less: Excise duty Net Sales % chg Net Raw Materials % chg Personnel % chg Other Mfg costs % chg Other % chg Total Expenditure EBITDA % chg EBITDA Margin Depreciation& Amort. EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of Net Sales) Recurring PBT % chg Exceptional Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2011 2,186 151 2,036 25.8 1,575 33.6 65 9.3 82 14.7 140 23.2 1,862 173 (10.9) 7.5 39 135 (14.5) 6.6 19 26 1.3 116 (16.8) 34 107 20 19.0 87 87 50.7 4.3 5.7 5.7 50.7 FY2012 2,182 118 2,064 1.4 1,568 (0.4) 69 7.3 84 2.6 167 18.8 1,889 175 0.8 8.5 39 135 0.5 6.6 26 36 1.8 109 (5.5) 36 109 11 10.1 98 98 13.0 4.8 6.4 6.4 13.0 FY2013 2,411 141 2,270 10.0 1,689 7.7 85 21.7 113 33.2 156 (6.7) 2,041 229 30.9 10.1 47 182 34.7 8.0 13 24 1.1 170 55.3 23 171 26 15.0 145 145 47.9 6.4 9.5 9.5 47.9 FY2014E 2,721 158 2,563 12.9 1,914 13.4 95 12.9 127 12.9 176 12.9 2,312 250 9.5 9.8 48 202 11.1 7.9 17 31 1.2 185 9 216 62 28.0 154 154 6.0 6.0 10.1 10.1 6.0 FY2015E 3,076 177 2,899 13.1 2,163 13.0 108 13.1 144 13.1 199 13.1 2,614 285 13.9 9.8 51 234 15.5 8.1 16 24 0.8 218 18 242 69 28.0 173 173 12.1 6.0 11.3 11.3 12.1

August 12, 2013

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Finolex Cables | 1QFY2014 Result update

Balance sheet
Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Total Loans Other Long term liability Net Deferred tax liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Long term Loans & Adv. Investments Other non-current assets Current Assets Cash Loans & Advances Other Inventory Debtors Other current assets Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 826 422 403 19 14 245 538 21 106 411 281 130 291 247 928 871 442 429 12 4 237 534 49 90 395 281 114 194 340 1,022 937 489 448 17 324 19 596 40 77 479 330 150 0.0 229 368 1,175 993 537 456 17 331 19 663 32 115 516 375 141 0.0 213 451 1,273 1,072 588 484 17 364 19 770 38 145 588 428 159 0.0 240 530 1,413 31 687 717 126 54 31 928 31 770 800 155 35 33 1,022 31 894 924 162 54 34 1,175 31 1,048 1,078 151 22 22 1,273 31 1,220 1,251 140 9 14 1,413 FY2011 FY2012 FY2013 FY2014E FY2015E

August 12, 2013

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Finolex Cables | 1QFY2014 Result update

Cash flow statement

Y/E March (` cr) Profit before tax Depreciation (Inc.)/ Dec. in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2011 107 39 (26) (40) (20) 59 (13) 21 26 34 0 (96) (11) (2) (109) (16) 37 21 FY2012 109 39 (36) (65) (11) 36 (39) 18 36 16 0 11 (12) (23) (24) 28 21 49 FY2013 FY2014E FY2015E 171 47 (24) (37) (26) 131 (72) (100) 24 (148) 0 29 0 (21.4) 8 (9) 49 40 216 48 (31) (91) (62) 80 (56) (6) 31 (32) 0 (56) 0 (56) (8) 40 32 242 51 (24) (73) (69) 127 (79) (33) 24 (88) 0 (32) 0 (32) 6 32 38

August 12, 2013

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Finolex Cables | 1QFY2014 Result update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT/Int.) (0.2) (0.8) 7.0 (0.2) (0.8) 5.2 (0.2) (0.9) 14.5 (0.2) (0.8) 11.8 (0.2) (0.9) 14.6 2.5 45 18 47 37 2.4 50 16 47 37 2.4 49 16 47 53 2.6 47 16 47 60 2.7 47 16 47 62 14.5 20.9 12.1 13.2 18.7 12.3 15.5 22.5 15.7 15.9 22.2 14.3 16.5 23.1 13.8 6.6 0.8 3.2 17.0 12.3 (0.2) 16.0 6.6 0.9 2.9 16.8 15.2 (0.2) 16.5 8.0 0.9 2.8 19.1 6.6 (0.2) 16.4 7.9 0.7 2.8 16.0 8.2 (0.2) 14.5 8.1 0.7 2.9 16.6 8.2 (0.2) 14.9 25.0 25.0 28.2 0.7 46.9 6.4 6.4 9.0 0.8 52.3 9.5 9.5 12.5 0.8 60.4 10.1 10.1 13.2 0.8 70.5 11.3 11.3 14.6 0.8 81.8 9.6 6.6 1.2 1.3 0.3 4.0 0.7 8.5 6.1 1.0 1.5 0.3 4.0 0.7 5.7 4.3 0.9 0.3 2.8 0.5 5.4 4.1 0.8 0.2 2.5 0.5 4.8 3.7 0.7 0.2 2.0 0.4 FY2011 FY2012 FY2013 FY2014E FY2015E

August 12, 2013

13

Finolex Cables | 1QFY2014 Result update

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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Finolex Cables No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

August 12, 2013

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