CAPITAL GOODS

COMPARATIVE STUDY

December 27, 2019

▪ RAVI SWAMINATHAN [email protected]  +91 44 4344 0058

▪ UTTHAM KUMAR R  [email protected]  +91 44 4344 0023

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CAPITAL GOODS - COMPARATIVE STUDY

We have undertaken a comparative study of five large capital goods companies across key parameters including growth prospects
(macro/micro driven), end-market diversity, competitive intensity in the industry in which they are present, export potential and INDUSTRY UPDATE
import/indigenization efforts. The following are the key takeaways from an overall industry and individual stock perspective. December 27, 2019

Core industrial demand stays muted - Core industrial demand environment continues to stay sluggish with industrial capacity utilization, as per Market data
RBI data continuing to remain low at ~70%. Similarly, other parameters including industrial investment intention, coal based thermal power
capacity addition and captive power market remains largely stagnant. While we believe that these markets have largely bottomed out in terms of BSE SENSEX 41,682
demand, a full-fledged recovery is some time away (atleast 1-2 years).
Certain segments like automation/energy efficiency motors continues to grow irrespective of end-market weakness – Certain segments like NIFTY 12,266
automation have displayed healthy growth over the past few years even during a weak capex cycle. This had been driven by increased adoption of
automation by end-user clients to improve productivity/efficiency and de-bottlenecking the existing facility before going for fresh capex. Similarly, Performance (%)
increasing demand for energy efficient motors (of rating IE2 and above) is leading to structural growth for these products inspite of end market
capex being subdued. We would prefer players like ABB and SIEM who offers these product range over those who are solely dependent on the 1M 3M 12M
capex cycle recovery for order inflow improvement.
Sensex 3% 10% 15%
ABB, SIEM score high in terms of end market diversity – ABB, SIEM score high over other players in terms of end market diversity, granularity of
orders (KKC also scores high), and end-sector outlook. Whereas, BHEL and TMX score lower in the ranking in this parameter. CG Index -4% -5% -9%
Prefer players operating in MNC space, KKC score low here – While competitive intensity is high across all industries in the capital goods space
given the lack of demand recovery over the past few years, we prefer companies like ABB and SIEM which operates in segments/sub-segments ABB -2% 1% 8%
where they are a higher presence of MNC competitors. This is because of the relatively better pricing discipline that persists in segments where
BHEL -20% -10% -36%
there is a higher share of MNC players than industries dominated by Indian companies.
Potential for increased exports exists for ABB and SIEM, similar to Honeywell - Honeywell Automation (HWN) has increased the share of its KKC -2% -7% -33%
exports revenue from 32% in FY14 to ~45% in FY19, while that of ABB and SIEM is lower at 13% and 18% respectively. While we do not expect the
share of exports to go upto HWN’s level in the near term given the diverse segments in which these two players are present, increased sourcing SIEM -1% 15% 53%
by the parent especially in automation segment can lead to better exports growth/revenue mix.
TMX 2% -4% -6%
Indigenization initiatives to lower import dependence – ABB and SIEM have a higher share of imports (>55% and >40% as a % of raw material
respectively) vs. other players, with a large portion of it driven by high imports for the automation segment. Increased indigenization efforts in the
long term can lead to better pricing, improved margins and lower forex fluctuation risk. Imports for KKC, BHEL and TMX is relatively lower.
RESEARCH ANALYSTS
Views and top picks - Given the current backdrop of continued weakness in the capex cycle, we prefer companies which can grow inspite of an
absence of a capex momentum, with a wide end-market diversity and who are favorably placed in a better pricing environment which points RAVI SWAMINATHAN
towards ABB and SIEM as our top picks over the other players (TMX, BHEL and KKC). [email protected]
+91 44 4344 0058
BHEL Downgrade – Based on our interaction with players in the coal based thermal power equipment value chain including players like L&T-
MHI, JSW-Toshiba, etc, we believe that the demand scenario in the BTG/EPC market is unlikely to materially improve in the next 1-2 years and UTTHAM KUMAR R
overall ordering is likely to remain at ~3-4GW per annum. Given the muted ordering environment and continued stretched working capital [email protected]
cycle we downgrade BHEL from a “Buy” to “Reduce” rating assigning 6x multiple on Sept-21 earnings to arrive at TP of Rs.42. +91 44 4344 0023

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 Capital Goods - Comparative Study

Growth drivers – Investments in core sectors have continued to remain low

Capacity utilization levels across manufacturing sector remains low at ~70% Industrial investment proposal too continues to stay muted

Indian Manufacturing Companies Capacity Utilisation Trend (%) Investment Proposal Trend Across Industries (Rs.bn)
79.0 77.9 18,000
77.7
78.0 16,000 15,239
77.0
14,000
77.0
12,000 10,403
76.0 75.2
74.5 10,000
8,342 8,073
75.0 73.9 8,000 7,612
73.5
74.0 73.1 6,000 4,237 4,474 3,702 4,011 3,758
72.4 72.5 72.3 4,000 2,722 3,374
73.0 2,477
72.0 71.3 2,000
-
71.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
70.0 (Till
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1HFY20 Oct)

Source: RBI, OBICUS Survey, Spark Capital Research Source: SIA Statistics, Spark Capital Research

Thermal power capacity addition has witnessed declining trend due to subdued
Domestic captive power market has remained stagnant over the past few years
demand environment

Net Coal based Thermal Plant Addition Trend (In GW) Domestic Captive Power Market (0-30MW)
1800 1700
25.0
20.5 1600 1400
19.4
20.0 18.1 18.2 1400
15.1 1200
15.0 900
In MW 1000 800 750 740
9.7 800 700 700 650
615
10.0
7.0 600
5.0 400
5.0 3.5
2.5
200
0.0 0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1HFY20 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Source: CEA, Spark Capital Research Source: Industry, Spark Capital Research

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 Capital Goods - Comparative Study

Growth drivers – Certain industries like industrial automation has grown at a healthy pace even during a muted capex cycle
Industrial automation growth majorly driven by efficiency improvement initiatives Sectors such as packaging, food & beverages and pharmaceuticals are driving
by user sectors growth
Industry Drivers
Industrial Automation Revenue Trend
1,20,000 12.6% 14%
The need for manufacturers to deliver more products in less time, lowering
10.9% Packaging down the cost of packaging, helping decrease the labor cost and to
12%
1,00,000 minimize damages during material handling.
8.7% 10%
7.8% 7.6% 7.7%
80,000
5.9% 8% Major automation is happening in the supply chain and logistics part of the
60,000 6% business where scale of businesses is growing very fast. Also companies
64,783
96,476 4% Food & Beverage need to package products at a very high scale, carton it & distribute it and
40,000 80,917 85,702
69,815 75,104 manage the whole warehousing concept automatically which is leading to
59,874 65,077 2%
54,012 implementation of automation.
20,000
0%
- -0.5% -2%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Ever evolving regulations and new standards of quality compliance are
Pharmaceuticals driving the industry to adopt the latest technologies in machine
Market Size (Rs.mn) YoY growth (%) - RHS manufacturing, packaging and various other related aspects.

Source: Company, Spark Capital Research Source: Spark Capital Research

Snippets on automation implementation across industries

Automation is sweeping across India's manufacturing space Siemens to equip Bajaj Energy plant in India with digitalization Flipkart is automating its supply chain with robotics,
Indian shop floors are going smart. Manufacturing, a typically labour- solutions machine learning
intensive process, is adopting technology to boost productivity and Siemens will provide a complete thermal twin for the LPGCL coal-fired As it seeks to bring the next 200 million consumers online,
save costs. It is automating core processes to improve quality and stay power plant, enabling improvements in the plant’s performance. Walmart-owned Flipkart, which competes with US rival Amazon,
competitive. This is Industry 4.0 at its most granular. Siemens experts, in close collaboration with plant operations team, will is betting big on robots as part of its technology-led initiatives.
An example, the new Thermax plant at Dahej in Gujarat. At the ion provide remote performance monitoring and diagnostics from the The company already sells products across over 80 categories,
exchange resins unit, the company has removed workers from its recently launched Siemens MindSphere Application Center in Gurgaon. servicing all 20,000 pin codes in the country.
chemical mixing process. Instead, it has created an algorithm for each R. S. Sharma, Managing Director, Bajaj Power Ventures, said, “We are “If you have to scale business, the amount of space needed for
‘recipe’. delighted to partner with Siemens in our digitalization journey. The sorting millions of packages, is humongous. Doing that manually
Thermax plans to upgrade 13 other plants, some of which are nearly digital solutions are aimed at improving power plant performance and is also prone to error. The idea behind using cobots is to work at
four decades old. Its new facility in Sri City, Andhra Pradesh, is already optimizing operations. The solutions, once executed, will result in scale and provide faster service to the customers,” said Pranav
highly automated and the company has cut the production cycle to 15 sustainable and efficient power generation.” Saxena, head of robotics at Flipkart.
days from 40 earlier. Source: News Article Source: News Article
Source: News Article

Source: News Article, Spark Capital Research

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 Capital Goods - Comparative Study

Growth drivers - Companies commentary across industries indicate automation initiatives undertaken to improve operating efficiency

Source: Annual Reports, Concall Transcripts, Spark Capital Research

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 Capital Goods - Comparative Study

Growth drivers - Industrial motor (major power consumer in industries) demand is on the rise led by transition towards energy efficiency products
Industrial sector accounts for majority of the power consumption in India; Motors
India’s ban on IE1 and below motors a positive trigger for organized players
consume most power in that

India's Electricity Consumption Sector Wise

(FY19)
Residentials
Others,
25%
30%
Power
consumption
Industrials split within
Others 41%
Industrial
8%
sector
Motors,
70%
Commercial
Agriculture
8%
18%

Source: CEA, Spark Capital Research Source: News Article, Spark Capital Research

Shift towards IE2 & IE3 products to happen; Cheap/low efficiency motor import Further scope for growth remains for companies like ABB & Siemens with ~35% of
can come down the market still using less energy efficient motors

Efficiency Class Comparison Industrial Motor Market Mix Industrial Electric Motors Mix Industrial Electric Motors Mix
(2016) (2019)
Efficiency

Imports IE 2 & Above Motors

IE4 18% 15% IE 1 Motors
Super 35%
IE3 Premium
HIgh
Premium
Improved EFF2 IE2
High Exports
Normal EFF2 IE1 82% IE 2 & Above Motors
EFF3 Standard 65%
IE 1 Motors
85%
Efficiency Classification

Source: ICAI, Spark Capital Research Source: News Article, Spark Capital Research

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 Capital Goods - Comparative Study

End-market diversity - ABB, Siemens, and Cummins have diversified portfolio compared to Thermax & BHEL

Revenue mix across sub-segments

ABB Revenue Split: CY18 SIEM Revenue Split: FY19 TMX Revenue Split: FY19 KKC Revenue Split: FY19 BHEL Revenue Split: FY19
Unallocated Others Chemicals
Portfolio of
5% 1% 7%
Companies Power
9% PGBU
Environment Exports 80%
Gas and 29%
Power 14% 30%
Industy
36%
Electrificati Digital 20%
Robotics on Products Industries
and Motion 37% 19%
36%

Mobility
8%
IBU
Energy 17%
DBU
Industrial Smart Infrastructure 79%
24%
Automation 27%
22%

Source: Company, Spark Capital Research

Revenue Diversity Order Granularity End Sector Outlook Remarks

▪ Wide product portfolio, smaller ticket size of orders and better end market outlook
ABB    (automation and motors) are key positives

▪ Wide product portfolio, smaller ticket size of orders and better end market outlook
SIEM    (automation and motors) are key positives

▪ Concentration of orders driven by power sector, dependence of large orders and muted near
BHEL    term outlook are concerns

▪ While revenue diversity and order granularity are healthy, end market demand (real estate)
KKC    continues to be a major drag

▪ Dependence on large orders and core sector industrial demand revival are a near/medium
TMX    term concern.

 High  Low  Medium

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 Capital Goods - Comparative Study

Competition - While competition is fierce across sub-sectors, we prefer companies in MNC space due to its reach and better pricing

Competitive intensity mapping across companies

Competitive Competing MNC

Business Segments Peers Remarks
intensity player presence
Electrification
Products
L&T, Schneider Electric, Siemens, CG Power 
Siemens, Honeywell, Rockwell Automation,
ABB Industrial Automation
Yogokawa  High
▪ While ABB participates in a competitive market, given the high
MNC players dominance, we believe pricing power is better.

Robotics and Motion FANUC, Yasakawa, KUKA 

Gas and Power ABB, GE T&D, Chinese players and Triveni Turbine 
L&T, Schneider Electric, ABB, Emerson, Bosch, United
Smart Infrastructure
Technologies  ▪ While SIEM participates in a competitive market, given the
high MNC players dominance, we believe pricing power is
SIEM Mobility Alstom, Bombardier, Toshiba, Medha Servo, ABB  High
better.

Digital Industries ABB, Honeywell, Rockwell Automation, Yogokawa 

Gears: Elecon, Shanthi Gears, AF India
Portfolio of
Companies
Drives & Motors: Rockwell Automation, Mitsubishi, 
Danfoss, Yasakawa, Weg
Power L&T - MHI, Toshiba JSW, Doosan  ▪ While competitive intensity has come down due to exit of a few
BHEL Low players, pricing discipline is still lacking among the existing
Industrial Thermax, ISGEC, and Triveni Turbine  players due to over-capacity

▪ Competitive intensity remains moderate in this space with

Energy ISGEC, Chinese players  Chinese players showing incremental presence. Pricing
Low
discipline is better than IPP range BTG/EPC market, but lack of
TMX Environment VA Tech and ION Exchange  demand is impacting pricing power.

Chemicals - - ▪ Competitive intensity continues to remain high and increasing

Low due to entry of new players/in new categories in a stagnant
Kirloskar Oil, Ashok Leyland, Eicher, Mahindra
KKC Gensets
Powerol  market.

 High  Low  Medium

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 Capital Goods - Comparative Study

Export Potential - Similar to Honeywell, ABB & Siemens too has significant scope for increasing its exports mix

Exports Trend (as a % of revenue) Commentary

HWN Exports Mix (%) ABB Exports Mix (%) SIEM Exports Mix (%)
▪ HWN’s increased sourcing from the parent
50.0% 15.0% 20.0% driven by lucrative overseas demand had led
18.7%
46.0% to significant increase in HWN India exports
45.0% 13.4% over the past few years.
17.5%
12.6% 16.0%
40.0% 12.5% ▪ ABB’s & SIEM’s exports mix currently is
~12.5% and 18.7% respectively, there is
15.0% enough scope for increasing its exports share
35.0%
32.1% which will positively impact both growth and
margin.
30.0% 10.0% 12.5%
FY14 FY19 FY14 FY19 FY14 FY19

▪ TMX’s export mix had improved from 35% in

Exports Trend (as a % of Sales) FY14 to 44% in FY19 led by geographical
diversification decisions undertaken to
50% 44% counter domestic slowdown.
40% 39%
40% 35% 36% 35%
▪ KKC’s exports mix had declined in FY19 &
30% 35% FY20 as certain markets have continued to
31% 32% 32% 27%
30% display softness due to global growth
20%
11% challenge. We do not expect a significant
10% 5% 4% 5% 3% 2% improvement in demand in the near term
0%
▪ BHEL’s export share has increased from a low
FY14 FY15 FY16 FY17 FY18 FY19
base. Given oversupply in the global market,
TMX KKC BHEL potential for further increase is low.

Source: Company, Spark Capital Research

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 Capital Goods - Comparative Study

Imports and Service income - Imports for ABB and Siemens are high; Indigenization efforts underway which should lead to better margin prospects
in the long run
RM Imports and Service Revenue Trend Commentary

Imports Trend (as a % of RM)

57% ~58%
60%
50% 51% 51% ▪ ABB’s and SIEM’s imports as a % of RM has
45% 47%
50%
40% 46% 41% 41% ~43% been higher at ~58% and ~43% respectively as
40%
36% 39% majority of their respective industrial
32%
36% automation businesses RM are being imported.
30% 35%
28%
30% ABB had indicated that it is continuously in the
31% 32% 33% 30%
20% ~30% process of acquiring technology to lower the
20%
23% 23% 21% 22% 21% 20% ~21% share of imports going forward impacting
10% 16% 16%
14% segment margin positively. SIEM also has the
11% 9% 9% ~9%
0% 7% potential to improve margins through
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY19* indigenization in the long term. Scope for some
improvement exists in KKC too.
ABB SIEM TMX KKC BHEL
*Spark Estimates
30.0%
Service Trend (as a % of Revenue)
23.9% 23.9%
25.0% 22.5% 21.8% 22.6%
21.7%
18.5%
19.4% 21.4% ▪ For SIEM, there is scope for increasing its
20.0% 18.7% 17.0% 17.6% 20.6% service revenue especially in turbine’s segment
20.4%
15.1% by addressing its existing supplies made by its
15.0% 13.4% 12.9%
11.7% 16.6% 16.5% 15.7% parent/associated entities in the overseas
14.2% 14.2% market (specifically neighbouring countries).
8.8% 10.4% 8.4% 8.8%
10.0% 7.3%
11.4% 6.1% 6.9%
6.0% ▪ KKC’s service mix which is higher at ~24%
5.0% 7.2% 6.4% 6.7% 6.6% 6.7% 5.5%
4.8% compared to other players should witness
3.4%
0.0%
decline going forward led by improved power
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 scenario and lack of near term traction from
industrial segment.
ABB SIEM TMX KKC# BHEL*
*Income from external erection & other services; # Income from Spares & Services
Source: Company, Spark Capital Research

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 Capital Goods - Comparative Study

Corporate Governance - ABB, BHEL, TMX come out largely clean; SIEM and KKC score lower
Management Alignment of interest Related party transaction No. of unlisted entities

▪ Being an MNC, ABB has a strong

source of talent for the top ▪ Parent company holds 75% in ABB. ▪ Negligible
ABB ▪ There is one unlisted company.
management Company is run by professionals

▪ Outstanding balance as on FY19

▪ Being an MNC, SIEM has a strong ▪ Parent company holds ~72% in SIEM. related to Siemens Financial Services ▪ Siemens also offers products and
SIEM source of talent for the top Company is run by professionals Pvt Ltd: Inter corporate deposits of services through its 8 unlisted
management Rs.2,850mn and term loans of companies
Rs.5,290mn

▪ It’s a government run company and

BHEL ▪ Government holds ~63% in BHEL. ▪ Negligible ▪ There are no unlisted entities
run by professionals.

▪ Mr. Ashwath Ram, who has been

appointed as the managing director of
Cummins India replacing Mr. Sandeep ▪ Parent company holds ~51%.
KKC ▪ Negligible ▪ There are 4 unlisted companies.
Sinha, has been associated with the Company is run by professionals
company and its related entities for a
vary long time.
▪ Mr. Unnikrishan will continue to lead
TMX in the near term. Given that the ▪ The promoters have ~62% stake in the
promoters have established a company and no related parallel ▪ Negligible
TMX ▪ There are no unlisted entities
professional setup, a successor would business outside the listed entity
be identified during Mr. Unnikrishan’s ▪
retirement
Source: Company, Spark Capital Research

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 Capital Goods - Comparative Study

Financial metrics – ABB

Continuing Business Dis-continued Business
P&L (Rs.mn) CY17 CY18 CY19E CY20E CY21E CY17 CY18 CY19E CY20E CY21E Commentary
Revenue 60,937 66,901 74,187 78,628 89,097 30,876 41,718 41,718 43,804 45,994
Gross Profit 21,765 24,482 26,340 29,848 34,098 12,060 15,006 15,018 15,331 16,098 Positive Triggers:
Gross margin % 35.7% 36.6% 35.5% 38.0% 38.3% 39.1% 36.0% 36.0% 35.0% 35.0%
1) Revenue growth trajectory can remain healthy
EBITDA 4,146 4,578 6,094 7,320 8,448 3,215 4,617 4,363 4,654 4,881
inspite of capex environment being muted. This
EBITDA margin % 6.8% 6.8% 8.2% 9.3% 9.5% 10.4% 11.1% 10.5% 10.6% 10.6% is due to increased automation/efficiency
EBIT 3,911 4,490 5,733 7,329 8,572 2,648 4,087 3,825 4,380 4,599 improvement efforts undertaken across end-
user sectors.
PAT 2,255 2,542 4,103 5,372 6,340 1,945 2,567 2,816 3,237 3,481
2) A recovery in the capex cycle can lead to
PAT margin % 3.7% 3.8% 5.5% 6.8% 7.1% 6.3% 6.2% 6.8% 7.4% 7.6%
substantial increase in large ticket sized orders
EPS (Rs.) 10.6 12.0 19.4 25.4 29.9 9.2 12.1 13.3 15.3 16.4 similar to the ones seen during 2003-2007.

B/S (Rs.mn) CY17 CY18 CY19E CY20E CY21E CY17 CY18 CY19E CY20E CY21E 3) Higher indigenization efforts taken, especially in
key segments like industrial automation (where
Equity 36,069 40,073 36,364 46,669 51,992 - 6,795 9,611 12,848 16,330 more than 90% of the RM are imported) can
Debt 6,041 20 - - - - - - - - lead to significant margin expansion.
Total Networth 42,110 40,094 36,364 46,669 51,992 - 6,795 9,611 12,848 16,330
Creditors 27,131 18,745 20,325 21,542 24,410 - 11,806 11,887 12,458 13,082 Negative Triggers:
Others 19,639 31,930 10,363 10,503 10,649 - 9,422 9,294 9,759 10,247 1) Continued slowdown in key industrial sectors
Total Liabilities 88,881 90,769 67,052 78,714 87,051 - 28,022 30,792 35,065 39,659 like automobiles and infrastructure spending
can lead to subdued revenue growth.
Net fixed assets 2) Sharp rupee depreciation can impact margins
(incl. CWIP & Intg. 13,351 9,762 9,781 9,753 9,678 - 4,357 4,818 5,180 5,515 given higher share of imports.
assets)
Investments 2,706 2 2 2 2 - - - - -
Inventories 11,536 9,279 10,163 10,771 12,205 - 4,194 4,194 4,403 4,623
Debtors 27,878 16,869 19,309 20,465 23,190 - 14,000 14,000 14,700 15,435
Cash & bank
14,917 14,751 13,756 23,050 26,640 - -65 2,244 4,969 7,982
balance
Others 18,493 40,107 14,042 14,673 15,336 - 5,537 5,537 5,814 6,104
Total Assets 88,881 90,769 67,052 78,714 87,051 - 28,022 30,792 35,065 39,659

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Financial metrics – SIEM

P&L (Rs.mn) FY18 FY19 FY20E FY21E FY22E Commentary
Revenue 1,27,251 1,36,838 1,49,653 1,59,280 1,75,533
Gross Profit 41,387 43,608 47,889 50,970 56,171 Positive Triggers:
Gross margin % 32.5% 31.9% 32.0% 32.0% 32.0%
1) Revenue growth trajectory can remain healthy inspite of
EBITDA 13,161 14,757 16,054 17,803 20,221 capex environment being muted. This is due to increased
EBITDA margin % 10.3% 10.8% 10.7% 11.2% 11.5% automation/efficiency improvement efforts undertaken
across end-user sectors.
EBIT 13,994 16,530 17,767 19,938 23,072
2) A recovery in the capex cycle can lead to substantial
PAT 8,939 10,869 13,210 14,834 17,179 increase in large ticket sized orders similar to the ones
PAT margin % 7.0% 7.9% 8.8% 9.3% 9.8% seen during 2003-2007

EPS (Rs.) 25.1 30.5 37.1 41.7 48.3 3) Higher share of services and exports in the Gas and Power
segment can contribute to overall growth and margins
B/S (Rs.mn) FY18 FY19 FY20E FY21E FY22E
4) Higher indigenization efforts taken, especially in key
Equity 83,054 90,436 1,00,638 1,12,465 1,26,636 segments like digital industries can lead to significant
margin expansion
Debt - - - - -
Total Networth 83,054 90,436 1,00,638 1,12,465 1,26,636 5) Cost rationalization efforts taken in “portfolio of
companies” segment, where currently margins are low,
Creditors 41,609 44,617 49,079 53,987 59,385 can lead to better overall margin/profitability
Others 17,829 17,051 18,756 20,632 22,695
Total Liabilities 1,42,492 1,52,104 1,68,473 1,87,083 2,08,716 Negative Triggers:

1) Continued slowdown in key industrial sectors like

Net fixed assets automobiles and infrastructure spending can lead to
(incl. CWIP & Intg. 13,096 12,486 12,073 11,440 10,587 subdued revenue growth
assets) 2) Sharp rupee depreciation can impact margins given higher
Investments 1,592 551 551 551 551 share of imports
Inventories 11,389 10,950 13,940 14,837 16,351
Debtors 52,050 52,330 59,451 63,276 69,732
Cash & bank
36,457 48,913 53,137 64,968 76,523
balance
Others 27,908 26,874 29,320 32,011 34,972
Total Assets 1,42,492 1,52,104 1,68,473 1,87,083 2,08,716

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Financial metrics – BHEL

P&L (Rs.mn) FY18 FY19 FY20E FY21E FY22E Commentary
Revenue 2,89,257 3,03,490 3,01,697 3,30,922 3,58,792
Gross Profit 1,27,822 1,25,848 1,13,136 1,24,096 1,34,547 Positive Triggers:
Gross margin % 44.2% 41.5% 37.5% 37.5% 37.5%
1) A pick-up in ordering in the coal based thermal power
EBITDA 19,317 21,420 20,791 29,311 38,188 plants from both NTPC and States can lead to better inflow
EBITDA margin % 6.7% 7.1% 6.9% 8.9% 10.6% (which currently stands subdued at ~2-3GW vs. peak of
>20GW in 2010)
EBIT 18,395 23,448 21,374 29,425 37,339
2) Reducing competition trend with only BHEL and L&T
PAT 8,066 12,154 13,847 19,871 25,794 participating in regular orders can improve margin
PAT margin % 2.8% 4.0% 4.6% 6.0% 7.2% prospects. GE & Doosan bid only occasionally based on our
channel checks.
EPS (Rs.) 2.2 3.5 4.2 6.0 7.8
3) Continued traction from industrial segment like railways
B/S (Rs.mn) FY18 FY19 FY20E FY21E FY22E etc, can lead to surprise in terms of order inflows
Equity 3,26,011 3,13,999 3,19,784 3,31,973 3,50,084 4) Collection of receivables from key state government
projects can lead to substantial reduction in working capital
Debt 572 25,527 19,145 14,359 10,769
Total Networth 3,26,583 3,39,526 3,38,929 3,46,332 3,60,853
Negative Triggers:
Creditors 1,10,659 1,20,781 1,20,068 1,31,698 1,42,790
1) Slow execution of orders can impact revenue growth and
Others 1,99,939 1,83,853 1,83,853 1,83,853 1,83,853 can lead to further negative operating leverage
Total Liabilities 6,37,181 6,44,160 6,42,850 6,61,883 6,87,496 2) Continued slowdown in coal based thermal project
ordering over the next 1- 2 years can impact order inflow
Net fixed assets (incl. CWIP
32,716 32,024 32,471 32,568 32,314
& Intg. assets)
Investments 6,907 6,694 6,694 6,694 6,694
Inventories 62,588 81,135 78,524 86,130 93,384
Debtors 3,80,938 4,10,104 4,13,284 4,35,185 4,12,857
Cash & bank balance 1,11,759 75,033 72,676 62,072 1,02,980
Others 42,273 39,170 39,202 39,234 39,267
Total Assets 6,37,181 6,44,160 6,42,850 6,61,883 6,87,496

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 Capital Goods - Comparative Study

Financial metrics – TMX

P&L (Rs.mn) FY18 FY19 FY20E FY21E FY22E Commentary
Revenue 44,649 59,732 64,819 60,227 59,224
Gross Profit 21,155 26,365 28,611 26,584 26,141 Positive Triggers:
Gross margin % 47.4% 44.1% 44.1% 44.1% 44.1%
1) Traction from certain segments like cement, sugar, food,
EBITDA 4,009 4,574 5,359 5,625 5,870 pharma and FMCG can continue to drive base order inflow
EBITDA margin % 9.0% 7.7% 8.3% 9.3% 9.9% growth

EBIT 4,349 5,153 5,686 5,986 6,614 2) Traction in the international markets, both through direct
orders from Middle East and Africa and from the newly
PAT 2,563 4,160 4,187 4,479 4,949 constructed Indonesia facility can add to overall order
PAT margin % 5.7% 7.0% 6.5% 7.4% 8.4% inflow

EPS (Rs.) 20.6 36.9 37.1 39.7 43.9 3) Better pricing in the ongoing/futuristic FGD orders can lead
to potential lucrative order wins for TMX when/if it
B/S (Rs.mn) FY18 FY19 FY20E FY21E FY22E participates
Equity 27,147 30,143 33,414 36,147 39,740 4) Being a duopolistic market, improved domestic ordering
can lead to better pricing power and cash flows.
Debt 2,337 2,403 0 0 0
Total Networth 29,485 32,546 33,414 36,147 39,740
Negative Triggers:
Creditors 10,605 13,994 15,186 14,110 13,875
Others 19,361 21,460 22,778 24,260 25,922 1) Lack of traction from core industrial sectors (steel,
aluminium, etc) continues to remain a concern
Total Liabilities 59,450 67,999 71,378 74,517 79,537
2) Aggressive participation of Chinese players in certain
segments like Waste Heat Recovery is impacting pricing.
Net fixed assets
(incl. CWIP & Intg. 10,761 13,520 13,552 13,299 13,010
assets)
Investments 14,717 8,293 8,293 8,293 8,293
Inventories 3,666 5,086 5,519 5,128 5,043
Debtors 13,409 14,917 16,187 15,041 14,790
Cash & bank
2,940 3,691 4,333 8,213 12,755
balance
Others 13,958 22,493 23,493 24,544 25,646
Total Assets 59,450 67,999 71,378 74,517 79,537

Page 15
 Capital Goods - Comparative Study

Financial metrics – KKC

P&L (Rs.mn) FY18 FY19 FY20E FY21E FY22E Commentary
Revenue 50,825 56,590 56,681 60,691 65,775
Gross Profit 18,244 20,455 19,555 20,939 22,692 Positive Triggers:
Gross margin % 35.9% 36.1% 34.5% 34.5% 34.5%
1) A strong recovery in the commercial real estate, industrial
EBITDA 7,325 8,641 7,199 7,775 8,450 market can lead to material growth and pricing power
EBITDA margin % 14.4% 15.3% 12.7% 12.8% 12.8% improvement for incumbents including Cummins

EBIT 8,671 10,466 9,119 9,715 10,506 2) Potential pre-buying ahead of CPCB IV implementation in
June-July 2021 can lead to strong growth in the power
PAT 7,085 7,226 6,638 7,203 7,861 generation segment.
PAT margin % 13.9% 12.8% 11.7% 11.9% 12.0% 3) Given the government’s focus on spend on infrastructure, a
EPS (Rs.) 23.5 26.1 23.9 26.0 28.4 recovery in demand created over a low base in FY20 can
surprise from a growth perspective in FY21 and beyond
B/S (Rs.mn) FY18 FY19 FY20E FY21E FY22E
4) Exports have declined by ~20% over the past 5 years and
Equity 39,861 41,305 42,949 44,159 46,028 can potentially surprise positively even if there is a
moderate recovery in end demand. Exports also carry
Debt 2,515 3,092 1,500 0 0
higher margin vs. domestic revenue and therefore can
Total Networth 42,376 44,396 44,449 44,159 46,028 contribute to margin expansion.
Creditors 7,580 8,251 8,541 9,145 9,911
Others 5,356 5,889 6,379 6,918 7,511 Negative Triggers:

Total Liabilities 55,312 58,536 59,369 60,222 63,450 1) Intense competition in the power generation space can
further impact pricing and therefore margins
2) Falling share of high-margin service income (due to
Net fixed assets (incl. CWIP improved power situation) can impact overall margins.
13,261 14,433 16,169 16,330 16,417
& Intg. assets)

Investments 12,798 10,133 9,133 8,133 7,133

Inventories 5,375 6,254 6,212 6,651 7,208
Debtors 13,263 12,727 13,976 14,965 16,219
Cash & bank balance 4,709 7,379 6,269 6,532 8,863
Others 5,907 7,610 7,610 7,610 7,610
Total Assets 55,312 58,536 59,369 60,222 63,450

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Capital Goods - Comparative Study

Valuations

Page 17
 Capital Goods - Comparative Study

ABB - Financial Summary

Financial Statements
Rs. mn CY12 CY13 CY14 CY15 CY16 CY17* CY18* CY19E* CY20E* CY21E*
Profit & Loss
Revenue 75,650 77,220 77,333 81,403 86,422 60,937 66,901 74,187 78,628 89,097
Gross profit 21,372 23,235 24,904 28,403 30,290 19,908 21,765 24,482 26,340 29,848
EBITDA 3,365 4,699 5,557 7,127 6,945 4,146 4,578 6,094 7,320 8,448
Depreciation 941 1,033 1,128 1,598 1,510 1,012 928 981 1,028 1,075
EBIT 2,424 3,666 4,429 5,529 5,436 3,133 3,650 5,114 6,292 7,373
Other Income 71 70 173 130 1,216 777 840 619 1,037 1,199
Interest expense 432 1,011 1,050 912 919 572 539 250 150 100
Exceptional items 0 0 0 0 0 0 0 0 5,950 0
PBT 2,062 2,725 3,552 4,748 5,733 3,338 3,951 5,483 13,129 8,472
Reported PAT (after minority interest) 1,374 1,793 2,285 3,001 3,745 2,255 2,542 4,103 11,322 6,340
Adj PAT 1,374 1,793 2,285 3,001 3,745 2,255 2,542 4,103 5,372 6,340
EPS (Rs.) 6.5 8.5 10.8 14.2 17.7 10.6 12.0 19.4 25.4 29.9
Balance Sheet
Net Worth 25,980 26,776 28,120 30,086 32,867 36,069 40,073 36,364 46,669 51,992
Deferred Tax -148 -279 -152 -490 -1,304 -1,173 -1,150 -1,150 -1,150 -1,150
Total debt 3,277 6,201 3,711 6,000 6,000 6,041 20 0 0 0
Other liabilities and provisions 16,449 16,693 16,546 16,983 16,872 19,639 31,930 10,363 10,503 10,649
Total Networth and liabilities 45,558 49,390 48,224 52,579 54,435 60,576 70,874 45,577 56,022 61,491
Gross Fixed assets 14,657 17,590 20,352 20,619 21,230 21,880 19,870 20,870 21,870 22,870
Net fixed assets 10,781 12,680 14,315 12,984 12,085 11,722 8,785 8,804 8,776 8,702
Capital work-in-progress 1,170 475 0 443 678 1,165 831 831 831 831
Goodwill 1,293 1,235 0 0 464 464 146 146 146 146
Investments 525 166 164 164 163 2,706 2 2 2 2
Cash and bank balances 767 3,166 2,260 5,736 11,892 14,917 14,751 13,756 23,050 26,640
Loans & advances and other assets 8,168 10,249 10,812 10,967 11,617 17,320 38,958 12,892 13,524 14,187
Net working capital 22,855 21,420 20,673 22,286 17,537 12,282 7,402 9,146 9,694 10,985
Total assets 45,558 49,390 48,223 52,579 54,435 60,576 70,874 45,577 56,022 61,491
Capital Employed 29,109 32,697 31,677 35,596 37,564 40,937 38,944 35,214 45,519 50,842
Invested Capital (CE - cash - CWIP) 27,171 29,056 29,417 29,417 24,993 22,151 20,658 17,923 18,935 20,667
Net debt 2,510 3,035 1,451 264 -5,891 -8,875 -14,730 -13,756 -23,050 -26,640
Cash Flows
Cash flows from Operations (Pre-tax) 476 5,392 4,935 5,188 10,798 10,561 8,502 9,335 7,178 7,693
Cash flows from Operations (post-tax) -502 3,301 4,500 4,180 8,626 7,998 6,255 8,088 5,511 5,707
Capex -1,812 -2,225 -2,288 -710 -1,387 -1,858 -2,437 -1,000 -1,000 -1,000
Free cashflows -2,314 1,076 2,212 3,470 7,239 6,140 3,818 7,088 4,511 4,707
Free cashflows (post interest costs) -2,746 87 1,162 2,558 6,394 5,367 3,019 6,838 4,361 4,607
Cash flows from Investing -3,398 -2,197 -2,286 -710 -681 -3,287 1,437 -1,000 4,950 -1,000
Cash flows from Financing 2,106 1,191 -4,473 437 -1,788 -1,710 -7,937 -8,082 -1,167 -1,117
Total cash & liquid investments 768 3,167 2,260 5,737 11,892 17,621 17,455 16,460 25,754 29,344

*Excluding power grid ( discontinued business) Page 18

 Capital Goods - Comparative Study

ABB - Financial Summary

CY12 CY13 CY14 CY15 CY16 CY17* CY18* CY19E* CY20E* CY21E*
Growth ratios
Revenue 1.6% 2.1% 0.1% 5.3% 6.2% -29.5% 9.8% 10.9% 6.0% 13.3%
EBITDA -7.0% 39.7% 18.3% 28.3% -2.5% -40.3% 10.4% 33.1% 20.1% 15.4%
Adj PAT -25.5% 30.5% 27.4% 31.3% 24.8% -39.8% 12.7% 61.4% 176.0% -44.0%
Margin ratios
Gross 28.3% 30.1% 32.2% 34.9% 35.0% 32.7% 32.5% 33.0% 33.5% 33.5%
EBITDA 4.4% 6.1% 7.2% 8.8% 8.0% 6.8% 6.8% 8.2% 9.3% 9.5%
Adj PAT 1.8% 2.3% 3.0% 3.7% 4.3% 3.7% 3.8% 5.5% 6.8% 7.1%
Performance ratios
Pre-tax OCF/EBITDA 14.1% 114.7% 88.8% 72.8% 155.5% 254.7% 185.7% 153.2% 98.1% 91.1%
OCF/IC (%) -1.8% 11.4% 15.3% 14.2% 34.5% 36.1% 30.3% 45.1% 29.1% 27.6%
RoE (%) 5.4% 6.8% 8.3% 10.3% 11.9% 6.5% 6.7% 10.7% 12.9% 12.9%
RoCE(%) 6.1% 7.8% 9.2% 10.6% 11.9% 6.7% 7.2% 11.6% 13.6% 13.3%
RoCE (Pre-tax) 9.2% 12.1% 14.3% 16.8% 18.2% 10.0% 11.2% 15.5% 18.2% 17.8%
RoIC (Pre-tax) 9.9% 13.0% 15.1% 18.8% 20.0% 13.3% 17.1% 26.5% 34.1% 37.2%
Fixed asset turnover (x) 5.4 4.8 4.1 4.0 4.1 2.8 3.2 3.6 3.7 4.0
Total asset turnover (x) 1.7 1.6 1.6 1.6 1.6 1.1 1.0 1.3 1.5 1.5
Financial stability ratios
Net Debt to Equity (x) 0.1 0.1 0.1 0.0 (0.2) (0.2) (0.4) (0.4) (0.5) (0.5)
Net Debt to EBITDA (x) 0.7 0.6 0.3 0.0 (0.8) (2.1) (3.2) (2.3) (3.1) (3.2)
Interest cover (x) (1.2) 3.3 4.3 4.6 9.4 14.0 11.6 32.4 36.7 57.1
Cash conversion days 110 101 98 100 74 74 40 45 45 45
Working capital days 70 71 71 73 52 60 79 57 59 59
Valuation metrics
Fully Diluted Shares (mn) 212 212 212 212 212 212 212 212 212 212
Market cap (Rs.mn) 3,09,798
P/E (x) 225.5 172.8 104.8 79.8 63.9 106.2 94.2 58.4 44.6 37.8
P/OCF(x) (616.9) 93.9 68.9 74.1 35.9 38.7 49.5 38.3 56.2 54.3
EV (Rs.mn)(ex-CWIP) 2,41,907 2,42,432 2,40,848 2,39,661 2,33,506 2,27,818 2,21,963 2,22,937 2,13,644 2,10,054
EV/ EBITDA (x) 71.9 51.6 43.3 33.6 33.6 55.0 48.5 36.6 29.2 24.9
EV/ OCF(x) (481.7) 73.4 53.5 57.3 27.1 28.5 35.5 27.6 38.8 36.8
FCF Yield -0.7% 0.3% 0.7% 1.1% 2.3% 2.0% 1.2% 2.3% 1.5% 1.5%
Price to BV (x) 11.9 11.6 11.0 10.3 9.4 8.6 7.7 8.5 6.6 6.0
Dividend pay-out (%) 46.3% 35.5% 34.3% 26.1% 20.9% 37.6% 33.3% 20.7% 15.8% 13.4%
Dividend yield (%) 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%

*Excluding power grid ( discontinued business) Page 19

 Capital Goods - Comparative Study

BHEL - Financial Summary

Abridged Financial Statements
Rs. mn FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Profit & Loss
Revenue 4,84,247 3,91,088 3,01,830 2,54,826 2,84,470 2,89,257 3,03,490 3,01,697 3,30,922 3,58,792
Gross profit 2,04,091 1,59,524 1,27,627 88,950 1,13,371 1,27,822 1,25,848 1,13,136 1,24,096 1,34,547
EBITDA 93,898 45,198 20,986 -13,665 10,614 19,317 21,420 20,791 29,311 38,188
Depreciation 9,534 9,829 10,773 9,357 8,488 7,864 4,748 4,553 4,903 5,253
EBIT 84,364 35,369 10,213 -23,023 2,125 11,453 16,672 16,238 24,408 32,935
Other Income 11,217 16,160 12,204 14,978 7,659 6,943 6,776 5,136 5,017 4,404
Interest expense 1,253 1,326 917 3,595 3,506 2,546 2,869 2,869 2,869 2,869
Exceptional items 0 0 -101 0 0 0 0 0 0 0
PBT 94,329 50,203 21,399 -11,640 6,278 15,850 20,579 18,504 26,555 34,470
Reported PAT (after minority interest) 66,143 34,608 14,192 -7,094 4,959 8,066 12,154 13,847 19,871 25,794
Adj PAT 66,143 34,608 14,293 -7,094 4,959 8,066 12,154 13,847 19,871 25,794
EPS (Rs.) 18.0 9.4 3.9 (1.9) 1.4 2.2 3.5 4.2 6.0 7.8
Balance Sheet
Net Worth 3,04,441 3,30,132 3,40,846 3,21,811 3,22,944 3,26,011 3,13,999 3,19,784 3,31,973 3,50,084
Deferred Tax -15,507 -19,690 -22,207 -36,592 -38,414 -36,259 -35,145 -35,145 -35,145 -35,145
Total debt 14,152 26,548 610 1,263 896 572 25,527 19,145 14,359 10,769
Other liabilities and provisions 2,72,825 2,70,257 2,42,097 2,35,544 1,95,059 1,99,939 1,83,853 1,83,853 1,83,853 1,83,853
Total Networth and liabilities 5,75,911 6,07,248 5,61,345 5,22,025 4,80,486 4,90,263 4,88,234 4,87,638 4,95,040 5,09,561
Gross Fixed assets 1,09,446 1,21,440 1,26,661 1,34,072 53,725 56,318 60,048 65,048 70,048 75,048
Net fixed assets 44,966 47,131 41,578 39,632 35,959 30,688 29,670 30,117 30,213 29,960
Capital work-in-progress 11,335 6,220 5,005 3,154 1,683 2,028 2,354 2,354 2,354 2,354
Goodwill 0 0 0 1,457 0 0 0 0 0 0
Investments 4,292 4,202 4,177 6,643 6,614 6,907 6,694 6,694 6,694 6,694
Cash and bank balances 77,320 1,18,729 98,127 1,00,860 1,04,918 1,11,759 75,033 72,676 62,072 1,02,980
Loans & advances and other assets 31,344 34,435 36,187 33,130 32,357 6,014 4,025 4,056 4,089 4,122
Net working capital 4,06,653 3,96,531 3,76,271 3,37,149 2,98,954 3,32,866 3,70,458 3,71,740 3,89,617 3,63,451
Total assets 5,75,911 6,07,248 5,61,346 5,22,025 4,80,485 4,90,263 4,88,234 4,87,638 4,95,040 5,09,561
Capital Employed 3,03,087 3,36,991 3,19,249 2,86,481 2,85,426 2,90,324 3,04,381 3,03,784 3,11,186 3,25,708
Invested Capital (CE - cash - CWIP) 2,14,431 2,12,042 2,16,117 1,82,467 1,78,825 1,76,538 2,26,993 2,28,753 2,46,760 2,20,373
Net debt -63,168 -92,181 -97,517 -99,597 -1,04,022 -1,11,187 -49,506 -53,531 -47,713 -92,211
Cash Flows
Cash flows from Operations (Pre-tax) 51,023 66,490 18,054 6,523 11,509 9,474 -34,607 29,477 21,401 74,321
Cash flows from Operations (post-tax) 18,648 45,177 7,755 3,469 5,620 9,905 -38,815 24,819 14,717 65,645
Capex -9,885 -6,697 -4,568 -5,484 -3,530 -2,813 -4,250 -5,000 -5,000 -5,000
Free cashflows 8,763 38,480 3,187 -2,015 2,090 7,093 -43,065 19,819 9,717 60,645
Free cashflows (post interest costs) 7,538 37,214 2,174 -2,269 1,454 6,720 -45,354 16,950 6,848 57,776
Cash flows from Investing -3,381 -1,681 4,643 884 -5,659 9,643 19,149 -242 17 -596
Cash flows from Financing -4,667 -2,092 -33,000 -1,239 -4,697 -6,710 -65 -16,934 -15,339 -14,142
Total cash & liquid investments 77,320 1,18,729 98,127 1,00,860 1,04,918 1,11,759 75,033 72,676 62,072 1,02,980

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 Capital Goods - Comparative Study

BHEL - Financial Summary

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Growth ratios
Revenue 0.9% -19.2% -22.8% -15.6% 11.6% 1.7% 4.9% -0.6% 9.7% 8.4%
EBITDA -5.2% -51.9% -53.6% -165.1% -177.7% 82.0% 10.9% -2.9% 41.0% 30.3%
Adj PAT -6.0% -47.7% -59.0% -150.0% -169.9% 62.7% 50.7% 13.9% 43.5% 29.8%
Margin ratios
Gross 42.1% 40.8% 42.3% 34.9% 39.9% 44.2% 41.5% 37.5% 37.5% 37.5%
EBITDA 19.4% 11.6% 7.0% -5.4% 3.7% 6.7% 7.1% 6.9% 8.9% 10.6%
Adj PAT 13.7% 8.8% 4.7% -2.8% 1.7% 2.8% 4.0% 4.6% 6.0% 7.2%
Performance ratios
Pre-tax OCF/EBITDA 54.3% 147.1% 86.0% -47.7% 108.4% 49.0% -161.6% 141.8% 73.0% 194.6%
OCF/IC (%) 8.7% 21.3% 3.6% 1.9% 3.1% 5.6% -17.1% 10.8% 6.0% 29.8%
RoE (%) 23.7% 10.9% 4.3% -2.1% 1.5% 2.5% 3.8% 4.4% 6.1% 7.6%
RoCE (%) 24.7% 11.1% 4.5% -1.6% 2.7% 3.3% 4.7% 5.3% 7.2% 8.8%
RoCE (Pre-tax) 35.2% 16.1% 6.8% -2.7% 3.4% 6.4% 7.9% 7.0% 9.6% 11.7%
RoIC (Pre-tax) 45.1% 16.6% 4.8% -11.6% 1.2% 6.4% 8.3% 7.1% 10.3% 14.1%
Fixed asset turnover (x) 4.7 3.4 2.4 2.0 3.0 5.3 5.2 4.8 4.9 4.9
Total asset turnover (x) 0.9 0.7 0.5 0.5 0.6 0.6 0.6 0.6 0.7 0.7
Financial stability ratios
Net Debt to Equity (x) (0.2) (0.3) (0.3) (0.3) (0.3) (0.3) (0.2) (0.2) (0.1) (0.3)
Net Debt to EBITDA (x) (0.7) (2.0) (4.6) 7.3 (9.8) (5.8) (2.3) (2.6) (1.6) (2.4)
Interest cover (x) 14.9 34.1 8.5 1.0 1.6 3.9 (13.5) 8.6 5.1 22.9
Cash conversion days 307 370 455 483 384 420 446 450 430 370
Working capital days 124 150 206 193 175 175 229 232 231 187
Valuation metrics
Fully Diluted Shares (mn) 3,671 3,671 3,671 3,671 3,671 3,671 3,482 3,293 3,293 3,293
Market cap (Rs.mn) 1,53,210
P/E (x) 2.4 4.7 11.3 (22.8) 32.6 20.0 12.6 10.5 7.3 5.6
P/OCF(x) 8.2 3.4 19.8 44.2 27.3 15.5 (3.9) 6.2 10.4 2.3
EV (Rs.mn) (ex-CWIP) 90,042 61,029 55,693 53,613 49,188 42,023 1,03,704 99,679 1,05,497 60,999
EV/ EBITDA (x) 1.0 1.4 2.7 (3.9) 4.6 2.2 4.8 4.8 3.6 1.6
EV/ OCF(x) 4.8 1.4 7.2 15.5 8.8 4.2 (2.7) 4.0 7.2 0.9
FCF Yield 5.7% 25.1% 2.1% -1.3% 1.4% 4.6% -28.1% 12.9% 6.3% 39.6%
Price to BV (x) 0.5 0.5 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.4
Dividend pay-out (%) 20.0% 20.0% 19.9% -20.7% 57.8% 82.8% 57.3% 47.6% 33.1% 25.5%
Dividend yield (%) 8.2% 4.3% 1.8% 0.9% 1.8% 4.1% 4.5% 4.5% 4.5% 4.5%

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 Capital Goods - Comparative Study

KKC - Financial Summary

Abridged Financial Statements
Rs. mn FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Profit & Loss
Revenue 45,894 39,767 44,058 47,088 50,773 50,825 56,590 56,681 60,691 65,775
Gross profit 17,020 15,526 16,833 17,466 18,029 18,244 20,455 19,555 20,939 22,692
EBITDA 8,349 6,967 7,351 7,751 8,018 7,325 8,641 7,199 7,775 8,450
Depreciation 473 528 797 810 848 938 1,103 1,264 1,339 1,414
EBIT 7,876 6,440 6,553 6,941 7,170 6,387 7,538 5,935 6,436 7,037
Other Income 2,067 1,777 2,866 2,259 2,080 2,285 2,928 3,184 3,279 3,469
Interest expense 46 42 45 96 168 148 162 247 90 0
Exceptional items 616 0 0 0 0 561 0 0 0 0
PBT 10,513 8,175 9,374 9,104 9,082 9,084 10,304 8,871 9,625 10,506
Reported PAT (after minority interest) 7,641 6,000 7,859 7,543 7,346 7,085 7,226 6,638 7,203 7,861
Adj PAT 7,025 6,000 7,859 7,543 7,346 6,524 7,226 6,638 7,203 7,861
EPS (Rs.) 25.3 21.6 28.3 27.2 26.5 23.5 26.1 23.9 26.0 28.4
Balance Sheet
Net Worth 23,867 25,652 28,865 34,813 37,422 39,861 41,305 42,949 44,159 46,028
Deferred Tax 328 465 631 128 24 299 988 988 988 988
Total debt 0 0 0 0 2,508 2,515 3,092 1,500 0 0
Other liabilities and provisions 6,736 6,759 7,587 4,444 4,349 5,057 4,901 5,391 5,930 6,523
Total Networth and liabilities 30,931 32,876 37,083 39,384 44,303 47,732 50,285 50,828 51,077 53,539
Gross Fixed assets 10,560 15,345 19,290 19,917 20,003 21,203 22,272 25,272 26,772 28,272
Net fixed assets 4,934 9,192 12,340 12,894 12,326 12,882 12,848 14,584 14,745 14,832
Capital work-in-progress 1,208 958 1,706 5,192 4,631 380 1,585 1,585 1,585 1,585
Goodwill 0 0 0 0 0 0 0 0 0 0
Investments 6,276 4,954 4,650 3,336 9,753 12,798 10,133 9,133 8,133 7,133
Cash and bank balances 3,547 865 799 897 1,291 4,709 7,379 6,269 6,532 8,863
Loans & advances and other assets 6,879 8,426 7,545 7,247 7,205 5,907 7,610 7,610 7,611 7,610
Net working capital 8,088 8,483 10,044 9,818 9,095 11,057 10,729 11,647 12,471 13,516
Total assets 30,931 32,876 37,083 39,384 44,303 47,732 50,285 50,828 51,076 53,539
Capital Employed 24,195 26,117 29,496 34,940 39,954 42,674 45,384 45,437 45,146 47,016
Invested Capital (CE - cash - CWIP) 13,699 19,875 22,795 26,010 27,399 32,526 33,992 35,156 34,601 34,140
Net debt -3,547 -865 -799 -897 1,217 -2,193 -4,288 -4,769 -6,532 -8,863
Cash Flows
Cash flows from Operations (Pre-tax) 7,943 5,932 6,864 8,612 9,322 8,167 7,821 8,460 9,124 9,658
Cash flows from Operations (post-tax) 5,286 3,624 5,012 6,918 7,456 6,344 5,460 6,470 6,969 7,308
Capex -2,288 -4,718 -3,386 -4,918 -2,446 -1,897 -2,823 -3,000 -1,500 -1,500
Free cashflows 2,998 -1,094 1,625 2,000 5,010 4,447 2,637 3,470 5,469 5,808
Free cashflows (post interest costs) 2,952 -1,136 1,580 1,992 4,920 4,347 2,516 3,223 5,379 5,808
Cash flows from Investing -2,186 539 -563 -2,121 -4,860 -1,327 169 -748 877 1,015
Cash flows from Financing -3,590 -4,258 -4,261 -4,677 -2,245 -4,731 -5,186 -6,833 -7,583 -5,993
Total cash & liquid investments 9,288 5,285 4,995 3,738 7,924 9,769 9,807 8,696 8,960 11,290

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 Capital Goods - Comparative Study

KKC - Financial Summary

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Growth ratios
Revenue 11.5% -13.4% 10.8% 6.9% 7.8% 0.1% 11.3% 0.2% 7.1% 8.4%
EBITDA 19.7% -16.5% 5.5% 5.4% 3.4% -8.7% 18.0% -16.7% 8.0% 8.7%
Adj PAT 30.1% -14.6% 31.0% -4.0% -2.6% -11.2% 10.8% -8.1% 8.5% 9.1%
Margin ratios
Gross 37.1% 39.0% 38.2% 37.1% 35.5% 35.9% 36.1% 34.5% 34.5% 34.5%
EBITDA 18.2% 17.5% 16.7% 16.5% 15.8% 14.4% 15.3% 12.7% 12.8% 12.8%
Adj PAT 15.3% 15.1% 17.8% 16.0% 14.5% 12.8% 12.8% 11.7% 11.9% 12.0%
Performance ratios
Pre-tax OCF/EBITDA 95.1% 85.1% 93.4% 111.1% 116.3% 111.5% 90.5% 117.5% 117.4% 114.3%
OCF/IC (%) 38.6% 18.2% 22.0% 26.6% 27.2% 19.5% 16.1% 18.4% 20.1% 21.4%
RoE (%) 31.7% 24.2% 28.8% 23.7% 20.3% 16.9% 17.8% 15.8% 16.5% 17.4%
RoCE(%) 32.4% 24.0% 28.4% 23.7% 20.0% 16.4% 16.7% 15.0% 16.1% 17.1%
RoCE (Pre-tax) 44.6% 32.7% 33.9% 28.6% 24.7% 21.0% 23.8% 20.1% 21.5% 22.8%
RoIC (Pre-tax) 59.2% 38.4% 30.7% 28.4% 26.9% 21.3% 22.7% 17.2% 18.5% 20.5%
Fixed asset turnover (x) 4.4 3.1 2.5 2.4 2.5 2.5 2.6 2.4 2.3 2.4
Total asset turnover (x) 1.6 1.2 1.3 1.2 1.2 1.1 1.2 1.1 1.2 1.3
Financial stability ratios
Net Debt to Equity (x) (0.1) (0.0) (0.0) (0.0) 0.0 (0.1) (0.1) (0.1) (0.1) (0.2)
Net Debt to EBITDA (x) (0.4) (0.1) (0.1) (0.1) 0.2 (0.3) (0.5) (0.7) (0.8) (1.0)
Interest cover (x) 114.7 86.7 110.9 72.2 44.4 42.8 33.7 26.2 77.4 -
Cash conversion days 64 78 83 76 65 79 69 75 75 75
Working capital days 65 93 83 98 86 86 87 89 85 81
Valuation metrics
Fully Diluted Shares (mn) 277 277 277 277 277 277 277 277 277 277
Market cap (Rs.mn) 1,53,846
P/E (x) 21.9 25.6 19.6 20.4 20.9 23.6 21.3 23.2 21.4 19.6
P/OCF(x) 29.1 42.5 30.7 22.2 20.6 24.3 28.2 23.8 22.1 21.1
EV (Rs.mn)(ex-CWIP) 1,44,558 1,48,562 1,48,851 1,50,108 1,48,430 1,46,593 1,47,131 1,46,650 1,44,886 1,42,556
EV/ EBITDA (x) 17.3 21.3 20.3 19.4 18.5 20.0 17.0 20.4 18.6 16.9
EV/ OCF(x) 27.3 41.0 29.7 21.7 19.9 23.1 26.9 22.7 20.8 19.5
FCF Yield 1.9% -0.7% 1.1% 1.3% 3.3% 2.9% 1.7% 2.3% 3.6% 3.8%
Price to BV (x) 6.4 6.0 5.3 4.4 4.1 3.9 3.7 3.6 3.5 3.3
Dividend pay-out (%) 51.3% 60.1% 49.4% 51.4% 52.8% 59.5% 65.2% 62.6% 69.3% 63.5%
Dividend yield (%) 2.3% 2.3% 2.5% 2.5% 2.5% 2.5% 3.1% 2.7% 3.2% 3.2%

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 Capital Goods - Comparative Study

SIEM - Financial Summary

Standalone Financial Statements (FY – September ended)
Rs. mn FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E FY21E FY22E
Profit & Loss
Revenue 1,29,199 1,13,526 1,06,783 1,05,124 1,08,095 1,10,148 1,27,251 1,36,838 1,49,653 1,59,280
Gross profit 30,716 28,158 31,084 34,310 36,283 36,643 41,387 43,608 47,889 50,970
EBITDA 8,913 4,207 5,943 9,761 10,204 10,512 13,161 14,757 16,054 17,803
Depreciation 2,010 2,502 2,291 2,156 2,264 1,966 1,967 2,173 2,413 2,633
EBIT 6,903 1,705 3,652 7,605 7,940 8,546 11,194 12,584 13,641 15,170
Other Income 575 345 1,039 1,604 1,644 2,547 2,800 3,946 4,126 4,768
Interest expense 270 189 82 73 91 77 82 114 114 114
Exceptional items -1,999 325 3,827 7,828 29,923 5,675 0 0 0 0
PBT 5,209 2,186 8,436 16,964 39,416 16,691 13,912 16,416 17,653 19,824
Reported PAT (after minority interest) 3,432 1,940 6,032 11,833 29,171 11,336 8,939 10,869 13,210 14,834
Adj PAT 5,431 1,615 2,205 4,005 -752 5,661 8,939 10,869 13,210 14,834
EPS (Rs.) 16.0 4.5 6.2 11.3 (2.1) 15.9 25.1 30.5 37.1 41.7
Balance Sheet
Net Worth 39,626 40,303 43,756 51,266 65,819 77,047 83,054 90,436 1,00,638 1,12,465
Deferred Tax -3,176 -4,297 -3,738 -3,175 -3,253 -2,442 -2,665 -2,410 -2,410 -2,410
Total debt 0 0 0 0 0 0 0 0 0 0
Other liabilities and provisions 40,279 32,619 31,459 29,147 29,150 27,628 17,829 17,051 18,756 20,632
Total Networth and liabilities 76,729 68,625 71,477 77,238 91,716 1,02,233 98,218 1,05,077 1,16,984 1,30,686
Gross Fixed assets 24,356 26,852 28,114 28,294 27,021 16,242 18,314 19,936 21,936 23,936
Net fixed assets 13,901 13,559 13,442 13,522 11,888 12,212 12,439 11,888 11,475 10,842
Capital work-in-progress 850 889 409 321 791 1,430 624 583 583 583
Goodwill 221 230 114 89 67 53 33 15 15 15
Investments 410 432 82 1,686 1,647 1,629 1,592 551 551 551
Cash and bank balances 9,768 6,038 11,210 20,959 35,094 40,713 36,457 48,913 53,137 64,968
Loans & advances and other assets 29,566 25,993 26,684 25,833 24,523 27,862 25,243 24,464 26,910 29,601
Net working capital 22,013 21,484 19,536 14,828 17,706 18,334 21,830 18,663 24,313 24,126
Total assets 76,729 68,625 71,477 77,238 91,716 1,02,233 98,218 1,05,077 1,16,984 1,30,686
Capital Employed 36,450 36,006 40,018 48,091 62,566 74,605 80,389 88,026 98,228 1,10,055
Invested Capital (CE - cash - CWIP) 25,832 29,079 28,399 26,811 26,681 32,462 43,308 38,530 44,508 44,504
Net debt -9,768 -6,038 -11,210 -20,959 -35,094 -40,713 -36,457 -48,913 -53,137 -64,968
Cash Flows
Cash flows from Operations (Pre-tax) 3,990 2,848 8,039 8,473 8,577 13,652 6,256 18,435 12,615 20,652
Cash flows from Operations (post-tax) 433 1,018 6,078 6,180 5,084 5,538 422 12,305 9,346 16,953
Capex -4,114 -2,239 -1,917 -2,510 -2,982 -2,863 -1,903 -1,197 -2,000 -2,000
Free cashflows -3,681 -1,221 4,161 3,670 2,102 2,675 -1,481 11,108 7,346 14,953
Free cashflows (post interest costs) -3,907 -1,511 4,038 3,552 2,052 2,649 -1,535 11,000 7,232 14,839
Cash flows from Investing -290 -290 1,303 5,691 2,396 13,141 -1,572 -10,512 -2,000 -2,000
Cash flows from Financing -2,594 -4,745 -2,204 -2,679 -16,123 -2,598 -3,054 -3,113 -3,122 -3,122
Total cash & liquid investments 9,768 6,038 11,210 20,959 35,094 40,713 36,457 48,913 53,137 64,968

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 Capital Goods - Comparative Study

SIEM - Financial Summary

Standalone (FY – September ended)
FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E FY21E FY22E
Growth ratios
Revenue 7.1% -12.1% -5.9% -1.6% 2.8% 1.9% 15.5% 7.5% 9.4% 6.4%
EBITDA -31.5% -52.8% 41.3% 64.2% 4.5% 3.0% 25.2% 12.1% 8.8% 10.9%
Adj PAT -59.4% -43.5% 210.9% 96.2% 146.5% -61.1% -21.1% 21.6% 21.5% 12.3%
Margin ratios
Gross 23.8% 24.8% 29.1% 32.6% 33.6% 33.3% 32.5% 31.9% 32.0% 32.0%
EBITDA 6.9% 3.7% 5.6% 9.3% 9.4% 9.5% 10.3% 10.8% 10.7% 11.2%
Adj PAT 4.2% 1.4% 2.1% 3.8% -0.7% 5.1% 7.0% 7.9% 8.8% 9.3%
Performance ratios
Pre-tax OCF/EBITDA 44.8% 67.7% 135.3% 86.8% 84.1% 129.9% 47.5% 124.9% 78.6% 116.0%
OCF/IC (%) 1.7% 3.5% 21.4% 23.1% 19.1% 17.1% 1.0% 31.9% 21.0% 38.1%
RoE (%) 14.0% 4.0% 5.2% 8.4% -1.3% 7.9% 11.2% 12.5% 13.8% 13.9%
RoCE(%) 13.5% 5.0% 8.8% 14.6% 12.8% 11.0% 11.6% 13.0% 14.3% 14.3%
RoCE (Pre-tax) 20.6% 5.7% 12.3% 20.9% 17.3% 16.2% 18.1% 19.6% 19.1% 19.1%
RoIC (Pre-tax) 29.3% 6.2% 12.7% 27.5% 29.7% 28.9% 29.5% 30.8% 32.9% 34.1%
Fixed asset turnover (x) 5.9 4.4 3.9 3.7 3.9 5.1 7.4 7.2 7.1 6.9
Total asset turnover (x) 1.7 1.6 1.5 1.4 1.3 1.1 1.3 1.3 1.3 1.3
Financial stability ratios
Net Debt to Equity (x) (0.2) (0.1) (0.3) (0.4) (0.5) (0.5) (0.4) (0.5) (0.5) (0.6)
Net Debt to EBITDA (x) (1.1) (1.4) (1.9) (2.1) (3.4) (3.9) (2.8) (3.3) (3.3) (3.6)
Interest cover (x) 1.6 5.4 74.1 84.7 55.9 71.9 5.1 107.9 82.0 148.7
Cash conversion days 62 69 67 51 60 61 63 50 59 55
Working capital days 32 48 50 40 44 62 84 70 79 76
Valuation metrics
Fully Diluted Shares (mn) 341 356 356 356 356 356 356 356 356 356
Market cap (Rs.mn) 5,44,680
P/E (x) 95.9 337.3 247.0 136.0 (724.3) 96.2 60.9 50.1 41.2 36.7
P/OCF(x) 1,257.9 535.0 89.6 88.1 107.1 98.4 1,290.7 44.3 58.3 32.1
EV (Rs.mn)(ex-CWIP) 5,34,912 5,38,642 5,33,470 5,23,721 5,09,586 5,03,967 5,08,223 4,95,767 4,91,543 4,79,712
EV/ EBITDA (x) 60.0 128.0 89.8 53.7 49.9 47.9 38.6 33.6 30.6 26.9
EV/ OCF(x) 1,235.4 529.1 87.8 84.7 100.2 91.0 1,204.3 40.3 52.6 28.3
FCF Yield -0.7% -0.2% 0.8% 0.7% 0.4% 0.5% -0.3% 2.0% 1.3% 2.7%
Price to BV (x) 13.7 13.5 12.4 10.6 8.3 7.1 6.6 6.0 5.4 4.8
Dividend pay-out (%) 38.9% 110.3% 96.9% 88.9% -284.2% 44.0% 27.9% 22.9% 18.9% 16.8%
Dividend yield (%) 0.4% 0.3% 0.4% 0.7% 0.4% 0.5% 0.5% 0.5% 0.5% 0.5%

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 Capital Goods - Comparative Study

TMX - Financial Summary

Abridged Financial Statements
Rs. mn FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Profit & Loss
Revenue 54,917 50,999 53,044 51,450 44,831 44,649 59,732 64,819 60,227 59,224
Gross profit 21,760 22,382 24,387 24,052 22,189 21,155 26,365 28,611 26,584 26,141
EBITDA 4,902 4,373 4,614 4,291 4,330 4,009 4,574 5,359 5,625 5,870
Depreciation 771 922 1,341 722 819 824 920 968 1,003 1,039
EBIT 4,131 3,451 3,273 3,569 3,511 3,185 3,654 4,391 4,622 4,831
Other Income 849 716 1,230 1,224 1,141 1,164 1,499 1,294 1,364 1,783
Interest expense 165 273 820 122 97 129 143 90 0 0
Exceptional items 0 0 -494 0 -178 0 -895 0 0 0
PBT 4,814 3,894 3,190 4,671 4,376 4,220 4,114 5,596 5,986 6,614
Reported PAT (after minority interest) 3,041 2,198 1,480 2,823 2,230 2,321 3,254 4,177 4,469 4,939
Adj PAT 3,041 2,198 1,975 2,823 2,408 2,321 4,150 4,177 4,469 4,939
EPS (Rs.) 25.5 18.4 16.6 25.1 21.4 20.6 36.9 37.1 39.7 43.9
Balance Sheet
Net Worth 19,790 21,780 22,244 24,162 25,390 27,147 30,143 33,414 36,147 39,740
Deferred Tax 383 318 0 -1,049 -993 -917 -2,120 -2,120 -2,120 -2,120
Total debt 4,210 7,436 5,534 1,722 1,313 2,337 2,403 0 0 0
Other liabilities and provisions 12,551 16,250 16,299 15,808 13,225 19,196 21,361 22,679 24,161 25,823
Total Networth and liabilities 36,933 45,783 44,078 40,642 38,935 47,764 51,786 53,973 58,188 63,443
Gross Fixed assets 11,235 18,530 19,304 11,865 12,250 14,428 19,362 20,362 21,112 21,862
Net fixed assets 6,978 13,352 12,785 6,895 6,682 8,207 12,550 12,582 12,329 12,040
Capital work-in-progress 5,175 537 429 600 1,413 1,034 401 401 401 401
Goodwill 1,749 1,914 1,529 1,378 1,426 1,520 569 569 569 569
Investments 4,430 7,079 8,217 10,498 10,830 14,717 8,293 8,293 8,293 8,293
Cash and bank balances 3,328 4,510 3,494 2,976 2,210 2,940 3,691 4,333 8,213 12,755
Loans & advances and other assets 4,988 6,579 6,090 6,118 6,454 12,876 20,273 21,274 22,324 23,427
Net working capital 10,287 11,813 11,533 12,177 9,921 6,470 6,009 6,521 6,059 5,958
Total assets 36,933 45,783 44,078 40,642 38,935 47,764 51,786 53,973 58,188 63,443
Capital Employed 24,382 29,533 27,779 24,835 25,710 28,568 30,425 31,294 34,027 37,620
Invested Capital (CE - cash - CWIP) 11,450 17,408 15,638 11,986 13,417 11,766 18,040 18,267 17,119 16,170
Net debt 882 2,927 2,040 -1,255 -897 -603 -1,288 -4,333 -8,213 -12,755
Cash Flows
Cash flows from Operations (Pre-tax) 3,074 5,236 4,508 4,234 4,924 7,107 716 6,370 7,790 8,215
Cash flows from Operations (post-tax) 867 3,213 3,108 2,526 3,346 5,336 -1,154 5,041 6,367 6,638
Capex -3,508 -2,707 -293 -1,324 -1,188 -2,004 -1,547 -1,000 -750 -750
Free cashflows -2,641 506 2,815 1,201 2,158 3,332 -2,701 4,041 5,617 5,888
Free cashflows (post interest costs) -2,806 232 1,995 1,121 2,088 3,260 -2,798 3,951 5,617 5,888
Cash flows from Investing -4,984 -3,821 797 -1,458 -750 -5,311 2,655 -1,000 -750 -750
Cash flows from Financing 345 1,905 -3,512 -1,123 -1,256 -203 -654 -3,398 -1,737 -1,346
Total cash & liquid investments 7,757 11,588 11,711 12,249 10,879 15,768 11,984 12,626 16,506 21,048

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 Capital Goods - Comparative Study

TMX - Financial Summary

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Growth ratios
Revenue -9.8% -7.1% 4.0% -3.0% -12.9% -0.4% 33.8% 8.5% -7.1% -1.7%
EBITDA -17.2% -10.8% 5.5% -7.0% 0.9% -7.4% 14.1% 17.2% 5.0% 4.4%
Adj PAT -22.5% -27.7% -32.6% 90.7% -21.0% 4.1% 40.2% 28.4% 7.0% 10.5%
Margin ratios
Gross 39.6% 43.9% 46.0% 46.7% 49.5% 47.4% 44.1% 44.1% 44.1% 44.1%
EBITDA 8.9% 8.6% 8.7% 8.3% 9.7% 9.0% 7.7% 8.3% 9.3% 9.9%
Adj PAT 5.5% 4.3% 3.7% 5.5% 5.4% 5.2% 6.9% 6.4% 7.4% 8.3%
Performance ratios
Pre-tax OCF/EBITDA 62.7% 119.7% 97.7% 98.7% 113.7% 177.3% 15.6% 118.9% 138.5% 139.9%
OCF/IC (%) 7.6% 18.5% 19.9% 21.1% 24.9% 45.4% -6.4% 27.6% 37.2% 41.1%
RoE (%) 16.3% 10.6% 9.0% 12.2% 9.7% 8.8% 14.5% 13.1% 12.8% 13.0%
RoCE (%) 14.0% 8.7% 7.3% 12.6% 11.8% 9.7% 13.9% 13.8% 13.7% 13.8%
RoCE (Pre-tax) 22.2% 15.5% 15.7% 18.2% 18.4% 16.0% 17.5% 18.4% 18.3% 18.5%
RoIC (Pre-tax) 41.1% 23.9% 19.8% 25.8% 27.6% 25.3% 24.5% 24.2% 26.1% 29.0%
Fixed asset turnover (x) 5.1 3.4 2.8 3.3 3.7 3.3 3.5 3.3 2.9 2.8
Total asset turnover (x) 1.5 1.2 1.2 1.2 1.1 1.0 1.2 1.2 1.1 1.0
Financial stability ratios
Net Debt to Equity (x) 0.0 0.1 0.1 (0.1) (0.0) (0.0) (0.0) (0.1) (0.2) (0.3)
Net Debt to EBITDA (x) 0.2 0.7 0.4 (0.3) (0.2) (0.2) (0.3) (0.8) (1.5) (2.2)
Interest cover (x) 5.2 11.8 3.8 20.7 34.5 41.5 (8.1) 55.9 - -
Cash conversion days 68 85 79 86 81 53 37 37 37 37
Working capital days 18 15 9 18 26 1 30 29 26 22
Valuation metrics
Fully Diluted Shares (mn) 119 119 119 113 113 113 113 113 113 113
Market cap (Rs.mn) 1,17,667
P/E (x) 40.9 56.7 63.0 41.7 48.9 50.7 28.4 28.2 26.3 23.8
P/OCF(x) 135.7 36.6 37.9 46.6 35.2 22.1 (101.9) 23.3 18.5 17.7
EV (Rs.mn) (ex-CWIP) 1,14,119 1,13,515 1,11,490 1,07,140 1,08,101 1,04,236 1,08,086 1,05,041 1,01,161 96,619
EV/ EBITDA (x) 23.3 26.0 24.2 25.0 25.0 26.0 23.6 19.6 18.0 16.5
EV/ OCF(x) 131.6 35.3 35.9 42.4 32.3 19.5 (93.6) 20.8 15.9 14.6
FCF Yield -2.2% 0.4% 2.4% 1.0% 1.8% 2.8% -2.3% 3.4% 4.8% 5.0%
Price to BV (x) 5.9 5.4 5.3 4.9 4.6 4.3 3.9 3.5 3.3 3.0
Dividend pay-out (%) 27.4% 32.5% 42.2% 25.3% 29.7% 30.8% 17.2% 18.1% 32.4% 22.7%
Dividend yield (%) 0.7% 0.6% 0.7% 0.6% 0.6% 0.6% 0.6% 0.6% 1.2% 1.0%

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 Capital Goods - Comparative Study

Spark Disclaimer
Spark Disclaimer
Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities. Spark Capital is registered with SEBI as a Stock Broker, corporate
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of time.
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Details of Financial Interest of Research Entity [Spark Capital Advisors (India) Private Limited] and its Associates No
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Disclosure of interest statement

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No
of the research report

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 Capital Goods - Comparative Study

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BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year horizon
Absolute Rating
Interpretation
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year horizon SELL Stock expected to fall >10% over a 1-year horizon

SPARK CAPITAL ADVISORS | Board: +91.44. 4344 0000 | www.sparkcapital.in

Spark Capital Advisors (India) Pvt. Ltd. is a SEBI registered Research Analyst bearing SEBI Registration No. INH200001459

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