Indian Auto Industry: Minor speed bump, but smooth ride ahead
Dinodia Capital Advisors December 2012
Index
I. II. Executive Summary The Indian Auto Industry
– – – – – – – – – – – – – – – – – Indian Market : Leading the race Structure of the Auto Industry in India Michael Porter’s Analysis Driving Growth in the Market Government support in the Industry Auto Industry : Bitter or Sweet Industry Snapshot Global Rankings Global footprints Future Prospects of the Industry in India Two Wheelers : Taking the Charge Growth Drivers Michael Porter’s Analysis Industry Snapshot and Forecasts Market Leaders Common Stock Comparison Profiles of the Listed Players
III. The Indian Two Wheeler Industry
1
Index
IV. The Indian Passenger Vehicles Industry
– – – – – Innovation & Price are the Key to Success Global Passenger Vehicle Industry in FY 2011 Car Market Share Government Support to the Industry Common Stock Comparison
– Profiles of Listed Companies
V.
The Luxury Car Market in India
– – – – – – – – – – – Smooth Ride for Luxury cars in India Timeline of the Luxury Car Market in India A Mass Success Luxury Toned Down? Growth Drivers Changing face of Indian Transportation Industry Snapshot MHCV Market Share Key Growth Drivers Common Stock Comparison Profiles of Listed Companies
VI. The Indian Commercial Vehicles Industry
2
Index
VII. The Indian Auto Component Industry
– – – – – – – – – – – Auto Components : Expanding Globally Imports and Exports India’s Strength in Auto Components Growth Drivers Key Trends Areas of Opportunity Changing Industry Dynamics Issues and Challenges in Growth Common Stock Comparison Precedent Transactions Profiles of Listed Companies
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Executive Summary (1/3)
The year 2012 has been a tough year for the overall Indian Auto Industry. Despite several new launches in the passenger vehicle segment, there has been a significant slowdown in this segment which can be attributed to several factors ranging for rising oil prices, high inflation and overall pessimism about the Indian economy
India is predominantly a two-wheeler driven market, but despite the heavy discounts and promotions during the October-November Diwali timeframe the sector has continued to disappoint this year
The auto components sector, which has attracted a lot of attention from global players and investors over the last few years also showed signs of slowing down as the OEMs and several export markets struggled in 2012 with their own problems Having said all of the above, Dinodia Capital Advisors’ (―DCA‖) view is that the Auto sector is fundamentally robust and well positioned, and 2013 will bring a fresh wave of growth to the various sub-sectors within the auto industry. In the passenger vehicle segment, we will see a host of new launches and remodeled versions and a boom in the Luxury car segment as well (Special Coverage of the Luxury Car Market in India in SECTION V)
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Executive Summary (2/3)
Product innovation, technology and plastic replacing metal components will be the key drivers of growth in the auto components segment as they will help decrease the weight of the vehicles making them more fuel efficient and more affordable As India’s road connectivity improves (Delhi-Mumbai Industrial Corridor, Golden Quadrangle, Delhi-Agra expressway etc coming on board) and infrastructure projects pick up momentum in the next year with interest rates coming down the Heavy, Medium and Light Commercial Vehicle segments will also witness better growth
The success story of the Tata-JLR deal, finally coming into full bloom in 2012, has also paved the way for future cross-border M&A in the Auto sector in the years to come
Now all eyes are set on whether the technology tie-up between Hero Motocorp and Erik Buell will pay-off? Will M&M be able to turn things around with Ssangyong? And will Motherson Sumi be able to continue to dominate the market with their large Peguform acquisition from last year? And who will have the courage to do the next big pathbreaking cross-border deal?
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Executive Summary (3/3)
Indian Auto Industry1
- Refer to Section II
Automobile Industry
Two Wheelers
(Market Share 75.83% and Annual Production of ~ 154Lac units) – Refer to Section III
Auto Components
Turnover of $43.5bn in the year 2011-12, grew at a CAGR of ~13% for 2007-12 and expected to grow at a CAGR of ~11% for 2012-21 – Refer to Section VII
Passenger Vehicles
(Market Share 15.41% and Annual Production of ~ 31Lac units) – Refer Section IV & for Special Luxury Car Market – Refer to Section V
Commercial Vehicles
(Market Share 4.45% and Annual Production of ~9Lac units) – Refer to Section VI
Three Wheelers
(Market Share 4.32% and Annual Production of ~9Lac units)
Source: SIAM Report, 2012 2 Market share is defined by the Production Volume
1
6
Market Overview
SECTION II: The Indian Auto Industry
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Indian Markets : Leading the Race (1/2)
In terms of the Auto industry, India is the sixth largest market after China, the US, Germany, Japan and Brazil. Overall the market includes cars, two wheelers, trucks & auto parts and India is expected to become #3 in the automobile market by 2015 as defined by sales volume growth The auto sector reported a robust growth rate of 26% in the last two years (2010-2012) although this year the growth has slowed down significantly. The BSE AUTO Index outperformed the benchmark Nifty by 79%, 12% and 19% in FY10, FY11 and FY12, respectively The world standings for the Indian automobile sector, as per the Confederation of Indian Industry in FY 2012, was as follows: Largest three-wheeler market Second largest two-wheeler market Tenth largest passenger car market Fourth largest tractor market Fifth largest commercial vehicle market Fifth largest bus and truck segment Since the de-licensing of the sector in 1991 and the subsequent opening up of 100% FDI through the automatic route, the industry is one of the key drivers of economic growth of the nation
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Indian Markets : Leading the Race (2/2)
The automobile Industry in India is now working with the dynamics of an open market. Many joint ventures have been set up in India with foreign collaborations. For example Volvo-Eicher, Ashok Leyland – Nissan Motors (for LCVs) etc In recent times product innovation and market segmentation have driven growth. Going forward, vehicles based on alternative fuels will be an area of interest for both consumers and auto makers Automobile manufacturers are increasing their focus on fuel efficiency even more today and there are key initiatives being undertaken mainly through improvements in technology and introduction of plastic components and new fuel variants, thereby reducing toxic emissions
Vision 2016 “By 2016, India will emerge as the destination of choice in Asia for the design & manufacturing of automobiles and automotive components. The output of the India’s automotive sector will be $145bn by 2016, (from $34bn in 2006) contributing to 10% of India’s Gross Domestic Product and providing employment to 25 mm people additionally.” - According to Draft Automotive Mission Plan 20062016 by the Ministry of Heavy Industries & Public Enterprises.
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Structure of The Auto Industry in India (1/3)
Indian Auto Industry
Automobiles Industry
Auto Components
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Structure of The Auto Industry in India (2/3)
Automobiles Industry
Automobiles
Two Wheelers
Passenger Vehicles
Passenger Cars Utility Vehicles Multipurpose Vehicles
Commercial Vehicles
Light Commercial Vehicles Medium and Heavy Commercial Vehicles
Threewheelers
Passenger Vehicles
Mopeds
Scooters
Goods Carrier
Motorcycles Electric twowheelers
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Structure of The Auto Industry in India (3/3)
Auto Component Industry
Auto Components
Engine & Engine Parts
Piston and piston rings Engine Valves and parts Cooling systems and parts Power train components
Transmission & Steering parts
Gears
Suspension & Braking Parts
Brake and Brake Assemblies Brake linings
Equipment
Electrical Parts
Starter Motors
Others
Headlights
Sheet Metal Parts
Wheels
Halogen Bulbs
Spark Plugs
Body and Chassis
Steering systems
Shock Absorbers
Wiper Motors
Electric ignition Systems Flywheel magnetos
Fan Belts
Axles
Leaf springs
Dashboard Instruments
Pressure Die Castings Hydraulic pneumatic 12
Clutches
Other Panel instruments
Other Equipment
Michael Porter’s Analysis
Indian Auto Industry
Overall Moderately Attractive
Threat of new substitutes
Fairly mild threat of substitutes in form of mass transit and bicycles
Entry Barriers in the Industry High Medium Low
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Competitive Rivalry
High startup capital required Highly technology intensive
Two-Three large companies in each segment Entry of foreign players has increased competition
Bargaining Power of Suppliers
Bargaining Power of Customers
Threat of new entrants
Wellestablished supplier base Large players have control over the suppliers
Customers have a wide variety to choose from Large customerto-producer ratio favors automakers
Driving Growth in The Market
60% in the working age group (15 to 64 yrs) By 2015, 44mm households expected to join $8,77010,960 income band with 30% car penetration Urbanization to increase up to 35% by 2025 140mm rural population estimated to move to urban areas by 2020
2nd largest pool of certified professionals Highest number of engineers in the world
Growth Drivers
Booming rural Market
Huge base of 720mm consumers across 627,000 villages
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Personal disposable income expected to increase annually at 8.5% till 2015
Source: ACMA and DCA Research
Government Support in The Auto Industry
Favorable Foreign Policies
Manufacturing and Imports free from Licensing and Approvals WTO compliant policies (no import restrictions and reduced tariff levels)
100% FDI permitted without prior Govt. approval
Robust Indian Automotive Industry
Robust Legal system and stable Foreign Exchange regime
Increased budgets for R&D activities
Joined UN-ECE WP 29 for Global Standards in Technology
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Source: ACMA and DCA Research
Auto Industry : Bitter or Sweet
Not such a well oiled Industry, but future looks positive
Oil shocks affect most industries, but their effects on the Auto sector are even more magnified On the demand side, customers start to delay their purchase decisions as oil prices and subsequently petrol / diesel prices start to rise On the supply side, as OEMs see their cost of raw materials / transportation costs increase due to increased oil prices, they start to feel the heat if they cannot pass those costs on to their customers (which is often the case in this highly competitive industry)
Goldman Sachs’ recent report1 on “The Indian outlook” predicts that oil prices will come down in FY2013 and FY2014 in real terms, which will not only help reduce the huge fiscal and the current account deficits that India faces today but will also provide a boost to the currently struggling auto industry
This would also help reduce the rate of inflation in the country and subsequently interest rates (with somewhat of a lag), which will also make car financings cheaper and boost auto demand
Source: ACMA and DCA Research 1Goldman Sachs, Asia in Focus Report, November 29, 2012
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Industry Snapshot
(Units in Thousands)
Volume details and Assumptions Across Segments
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Global Rankings
Original Equipment Manufacturers (OEMs) in India
Indian OEMs have considerably outperformed global peers Amongst the Global OEMs, North America is the cheapest, while China is the most expensive
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Note:Morgan Stanley Capital International (MSCI) Index Source: Morgan Stanley Research, Global Auto Monitor, November 23, 2012
Global Footprint (1/2)
Global Acquisitions by Indian OEMs and Auto Parts Makers
Indian OEM Tata Motors M&M Bajaj Auto Motherson Sumi Motherson Sumi Apollo Tyres Hero Motor Corp Global OEM JLR Ssangyong KTM Peguform Visiocorp Verdestein Erik Buell Country UK South Korea Austria Europe Europe Europe US Acquisition Price US$2.3Bn US$463Mn Eur190Mn Eur300Mn Eur$35Mn US$300Mn Technology Tie-up Year 2008 2010 20072012 2011 2009 2009 2012 % Stake 100% 70% 47% 80% 100% 100% NA
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Global Footprint (2/2)
The Indian Automobile Companies have increasingly acquired businesses overseas (particularly post 2008) to broaden their revenue base, to acquire technology as well as to leverage their distribution network Also Indian companies are increasingly collaborating with their global associates to enhance their local products and know how However, the diversification strategy has its risks-: While expanding overseas has enabled OEMs to enhance technology / diversify revenues, it has exposed them to volatile global cycles and global commodity prices While JLR has witnessed a turnaround, Ssangyong continues to face a challenging environment although we are bullish that the M&M will be able to pull of a win here As the overseas entities require significant capital commitments, the leverage ratios for the local companies such as Tata Motors, Motherson Sumi and Apollo Tyres have also risen post the global acquisitions and will provide opportunities for PE and public market investors to enter these blue-chip businesses to help reduce leverage and grow further
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Future Prospects of Auto Industry in India
India can become a top-three market across segments by 2020
Segments 2012 Actuals M & HCVs 348,483 LCVs 459,498 Passenger vehicles 2,590,291 Two wheelers 13,433,179 Three wheelers 513,251 2020E India World Barclays Est 2012-20E CAGR 2012-20E CAGR 669,298 8.5% 6.2% 1,221,550 13.0% 7,955,684 15.1% 6.7% 34,621,171 12.6% 8.0% 1,100,199 10.0% Share of India India's global rank 2012 5.0% 5.7% 25.0% 2020E 10.0% 11.9% 27.0% 2012 5th 7th 2nd 2020E 3rd 3rd 2nd
Large Investments in capacity by existing and new players
Company Maruti Suzuki Hyundai GM Ford Passenger Cars Nissan Toyota VW Mercedes Honda Two Wheelers Yamaha Suzuki Ashok Leyland Commercial Daimler Vehicles Volvo Eicher Scantia Segment Investment Plans Stated to invest $600million in 2012-13 on capacity expansion, and new model launches Mulling re-start of $80million diesel engine plant (has been put on hold) Mulling production of SAIC (JV from China) products in India Recently increased diesel engine capacity from 0.25mn units p.a. at a capex outflow of $70million Plan to set up diesel engine with 0.2mn units capacity Increasing capacity by 0.1mn units with atotal outlay of $180million Planned investment of $400million (has been put on hold for the time being) Planning to invest around $70million at its Chakan plant to expand capacities Invested around $400million already, and planning $200million investment for next year Planning $300million worth investment in a 2W plant in Chennai Planning $400million investment to setup a new plant. Has invested $100million already Plan to invest around $810million, along with its JV partner Nissan. $180million slated for this fiscal Planning to invest $1000million to setup facilities for BharatBenz trucks Slated to invest $200million over the next two years Investing $180million to setup a new manufacturing facility
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Source: SIAM, Barclyas Research Estimates, August 2012
Market Overview
SECTION III: The Indian Two Wheeler Industry
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Two Wheelers: Taking The Charge
The Indian Two Wheeler industry recorded a sales volumes of 1.34crs units in 2011-12 growing at a rate of 14% over the previous year and is expected to grow at a rate of ~8% - 9% in the year 2012-13 and subsequently at a CAGR of ~21.8% to reach a size of 2.4crs – 2.6crs units by 2016-17
India is the second largest producer of two wheelers in the world
The two wheeler industry consists of three segments arranged by market size ;Motorcycles, Scooters and Mopeds The market penetration rate in this segment is 92 vehicles per 1,000 people currently showing the large opportunity set The players which dominate the market today are Hero Moto Corp for motorcycles and Honda for Scooters As per SIAM, around 70% of the motorcycles sold in India in 2011-12 were in the 75cc – 125cc segment
The sale of scooters grew at a YOY rate of 23.6% in 2011-12 as compared to motorcycles sales which was at 11.9%
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Source: SIAM and DCA Research
Growth Drivers
Two Wheeler Industry
Demographic Advantage
• In the last decade ~77mm youth were added to the Indian population mix which is the key target segment for 2Ws • Over the next 5 years, the incremental addition in India’s youth population is estimated to be ~41mm which will increase the demand for 2W vehicles even faster
Underpenetrated Market
• The 2W penetration level in Indian households was 12% in 2001 • This low 2W penetration provided the structural thrust to the domestic industry’s volume growth over the last decade whose annualized volumes expanded by a factor of 3.4x during this period
Shrinking Replacement Cycle
• The replacement cycle is estimated to have reduced from ~7years (in 2001) to ~5years (in 2011). As per industry estimates, around 50% of the total domestic sales of 2Ws are now made to first – time buyers and 30% to repeat customers
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Michael Porter’s Analysis
Two Wheeler Industry - Attractive
Threat from Substitutes:
Low priced four wheelers are a major threat for two wheelers, as they help fill the gap between motorcycles and low end cars
Bargaining Power of Suppliers:
Supplier power is low as most suppliers are exclusive Supplier power also reduces due to threat of backward integration
Rivalry Among Competitors:
Rivalry has intensified thus requiring greater branding Marketing & product innovation Still tremendous potential in rural markets
Bargaining Power of Customers:
Buyer power is relatively high. Buyers demand two wheelers that suit their personality and comfort; market is price sensitive
Threat of New Entrants:
Barriers to entry have reduced as 100% FDI is allowed in the sector But large distribution channels and service stations can be a major entry barrier
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Industry Snapshot and Forecasts (1/3)
Two Wheeler industry remains to be an attractive segment of the Automobiles segment In 2012-13, the Scooter segment has outperformed the two wheeler industry and the credit to revive the market is given to Honda Activa
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Source: SIAM and DCA Research
Industry Snapshot and Forecasts (2/3)
Two-Wheeler Market Share Forecasts
Untouchably Hero MotoCorp Limited remains the king in the two–wheeler segment in India controlling ~50% of the market The scooter market is dominated by Honda Motorcycle and Scooters India Private Limited (HMSI)
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Source: SIAM and DCA Research
Industry Snapshot and Forecasts (3/3)
Current Market Trends (%)
Indian Two Wheelers Market Trend
Hero has ceded ~600bps in market share since its split with Honda in 2010, but is fighting hard to retain its supremacy (new technology tie-ups and M&A in the pipeline) Honda Two Wheelers has been aggressively increasing capacity by 40% in CY13 as their 1.2m unit plant will come on stream in 2013
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Source: SIAM and DCA Research
Market Leaders
Industry Dynamics
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Common Stock Comparison
(Rs. in Crores)
Sales S.No. Company Name 1 2 3 Bajaj Auto Hero Moto Corp TVS Motors Market Cap Rs. 53,027.05 37,527.74 2,007.26 Net Debt EV 2012 Rs. 19,921.54 23,530.33 7,419.84 EBITDA 2012 Rs. 4,170.15 3,596.76 460.70 Net Income 2012 Rs. 3,045.40 2,378.13 132.33
Rs. -47.26 Rs. 52,979.79 -61.06 37,466.68 21.16 2,028.42
S.No. Company Name 1 2 3 Bajaj Auto Hero Moto Corp TVS Motors Average Maximum Minimum
EBITDA Margin 20.93% 15.29% 6.21% 14.14% 20.93% 6.21%
PAT Margin 15.29% 10.11% 1.78% 9.06% 15.29% 1.78%
EV/Sales 2012 2.66x 1.59 0.27 1.51x 2.66 0.27 2013E 2.47x 1.41 0.24 1.37x 2.47 0.24
EV/EBITDA 2012 12.70x 10.42 4.40 9.17x 12.70 4.40 2013E 13.52x 9.43 4.23 9.06x 13.52 4.23 2012
P/E 2013E 17.04x 13.82 8.25 13.03x 17.04 8.25
17.41x 15.78 15.17 16.12x 17.41 15.17
30
Source: Company Financials and DCA Research Note: Market Data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
The Indian Two Wheeler Industry
PROFILES OF LISTED COMPANIES
Bajaj Auto Limited Hero MotoCorp Limited TVS Motors Limited
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Bajaj Auto Limited
Company Profile
Company Information Head quarters: Year of Incorporation : Pune, India 1945
Business Overview
Bajaj Auto Limited manufactures and sells scooters, motorcycles, and three wheeler vehicles and spare parts in India and internationally The company’s manufacturing facilities are located in Waluj, Chakan and in Pantnagar Bajaj is present in over 50 countries all over the globe and has a dominant presence in Africa, Latin America and South Asia with increasing market share every year The company is the largest exporter of three wheeled commercial vehicles in the world
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low* : Key Management Executive Chairman : Rahul Bajaj Vice Chairman : MD : Executive Director : Director : Madhur Bajaj Rajiv Bajaj Sanjiv Bajaj D S Mehta 53,027.05 17.41x 1977/1410
Note: 52 week High / Low is taken as on 6th December 2012
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Bajaj Auto Limited
Launch Timelines
2000 Bajaj Saffire 2009 Upgraded Pulsar 150 & 180, XCD 135 DTS-Si 2010 Pulsar 220F, Pulsar 180 UG, Pulsar 150 UG, Pulsar Discover DTS-Si
2001 Pulsar, Eliminator
2008 Platina 125 DTSSi, Upgraded Discover 135 DTS-i
2011 Discover 150, Discover 125, Avenger 220 DTSI, KTM Duke 125
2003 Bajaj Pulsar DTS-I, Bajaj wind 125, Caliber115
2006 Platina
2012 KTM Duke 200, Pulsar 220Ns, Discover 125-ST
2004 Bajaj Discover DTSI, Chetak, CT-100
2005 Discover, Avenger DTS-I, Wave DTS-I
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Bajaj Auto Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 8,911.04 Rs. 12,058.44 Rs. 16,796.59 Rs. 19,921.54 30.76% Rs. 9,838.06 % Growth 35.32% 39.29% 18.60% Gross Profit 2,784.58 2,266.02 3,752.47 4,545.54 5,242.57 32.26% % Margin 25.43% 31.12% 27.06% 26.32% 28.30% EBITDA 1,786.91 1,257.17 2,722.44 3,653.03 4,170.15 49.14% % Margin 14.11% 22.58% 21.75% 20.93% 18.16% EBIT 1,710.63 1,126.55 2,585.03 3,529.14 4,023.42 52.86% % Margin 12.64% 21.44% 21.01% 20.20% 17.39% PBT 824.22 2,300.39 4,461.08 4,068.14 70.26% 2,059.06 % Margin 9.25% 19.08% 26.56% 20.42% 20.93% PAT 535.79 1,594.60 3,454.89 3,045.40 78.46% 1,459.06 % Margin 6.01% 13.22% 20.57% 15.29% 14.83% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 Rs. 5,870.44 1,603.06 1,812.79 142.64 392.86 (291.12) 2010 Rs. 6,944.19 1,363.12 2,716.93 107.30 117.03 (1,358.08) 2011 2012 Rs. 9,178.75 Rs. 11,162.41 348.52 150.47 4,807.22 6,081.72 247.50 1,184.84 201.71 109.53 (1,544.90) (2,163.63) 34
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Bajaj Auto Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
25,000 Amount in Crores 20,000 15,000 10,000 5,000 Revenue % Growth 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 6,000 Amount in Crores 5,000 4,000
GP and GP Margin
35% 30% 25% 20% 15% 10% 5% 2009 25.43% 2010 31.12% 2011 27.06% 2012 26.32% 0%
3,000
2,000 1,000 -
2009
8,911.04
2010
12,058.4 35.32%
2011
16,796.5 39.29%
2012
19,921.5 18.60%
Gross Profit 2,266.02 3,752.47 4,545.54 5,242.57 % Margin
EBITDA and EBITDA Margin
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 EBITDA % Margin 25% 20% Amount in Crores 15% 10%
EBITDA and EBITDA Margin
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 PAT % Margin 2009 535.79 6.01% 2010 13.22% 2011 20.57% 2012 15.29% 10% 5% 0% 25%
Amount in Crores
20%
15%
5%
2009 1,257.17 14.11% 2010 2,722.44 22.58% 2011 3,653.03 21.75% 2012 4,170.15 20.93% 0%
1,594.60 3,454.89 3,045.40
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Hero MotoCorp Limited
Company Profile
Company Information Head quarters: Year of Incorporation : New Delhi, India 1984
Business Overview
Hero MotoCorp Limited engages in the manufacturing and sale of motorcycles in India. It provides a range of two wheeler products, including motorcycles and scooters; and spare parts
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low* : Key Management Chairman & MD. : Brijmohan Lal Munjal Pawan Kant Munjal 37,527.74 15.78x 2278/1703
The original company, Hero Honda, was formed by creating a joint venture between the Hero Group and the Honda Motor Company of Japan in 1983
Last year, the Munjal family, the company’s promoters, bought out Honda’s stake for $851 million (about Rs. 4,200 crore) through their unlisted private investment arm HIPL in which Bain and GIC bought a significant stake (rare sizable PE deal in India) The company has two manufacturing units one at Dharuhera, Haryana and the other is located at Gurgaon, Haryana
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Executive Director :
Director : Director : Director : Director :
Sunil Kant Munjal
Suman Kant Munjal Pradeep Dinodia Yoji Shiga
Note: 52 week High / Low is taken as on 6th December 2012
Hero MotoCorp Limited
Launch timelines
2001 Passion, Joy 2002 Dawn, Ambition
2003 CD Dawn, Splendor+, Passion Plus, Karizma
2004 Ambition 135, CBZ
2009 Karizma - ZMR
2008 Passion Pro, CBZ Xtreme, Glamour Fi, CD Deluxe with Power start
2007 Splendor NXG, CD Deluxe, Passion Plus, Hunk
2005 Super Splendor, CD Deluxe, Glamour,Achiever, Pleasure
2010 Splendor Pro launched, Super Splendor and New Hunk
2011 Refreshed version of Glamour, Glamour Fi, CBZ Xtreme, karizma
2012 Maestro (110cc), Ignitor (125cc)
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Hero MotoCorp Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 Revenue Rs. 12,357.32 Rs. 15,821.99 Rs. 19,357.97 Rs. 23,530.33 % Growth 28.04% 22.35% 21.55% Gross Profit 3,106.17 4,444.73 4,613.49 5,945.01 % Margin 25.14% 28.09% 23.83% 25.27% EBITDA 1,761.77 2,739.00 2,641.84 3,596.76 % Margin 14.26% 17.31% 13.65% 15.29% EBIT 1,581.11 2,547.53 2,239.46 2,571.90 % Margin 12.79% 16.10% 11.57% 10.93% PBT 1,781.46 2,831.73 2,404.76 2,864.71 % Margin 14.42% 17.90% 12.42% 12.17% PAT 1,281.76 2,231.83 1,927.90 2,378.13 % Margin 10.37% 14.11% 9.96% 10.11% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank 2009 Rs. 6,085.14 78.49 3,800.75 219.57 315.08 2010 2011 2012 Rs. 9,888.92 4,289.83 76.82 565.05 Rs. 8,523.09 Rs. 10,726.26 66.03 3,465.02 1,907.21 211.57 2,956.06 71.52 364.12 CAGR 2013 (6M) 23.95% Rs. 11,358.96
24.16%
26.86% 17.61% 17.16% 22.88%
2,986.22 26.29% 1,575.49 13.87% 1,063.06 9.36% 1,260.95 11.10% 1,056.04
9.30%
Capital Expenditure Net Working Capital
(1,258.90)
(3,856.04)
(4,979.68)
(2,877.60)
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Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Hero MotoCorp Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
25,000 Amount in Crores 20,000 15,000 10,000 5,000 Revenue % Growth 2009 2010 28.04% 2011 22.35% 2012 21.55% 30% Amount in Crores 25% 20% 15% 10% 5% 0% 7,000 6,000 5,000 4,000 3,000
GP and GP Margin
29% 28% 27% 26% 25% 24% 23%
2,000
1,000 2009 25.14% 2010 28.09% 2011 23.83% 2012 25.27%
22%
21%
12,357.32 15,821.99 19,357.97 23,530.33
Gross Profit 3,106.17 4,444.73 4,613.49 5,945.01
% Margin
EBITDA and EBITDA Margin
4,000
3,500 Amount in Crores 3,000 2,500 2,000 1,500 1,000 500 EBITDA % Margin
PAT and PAT Margin
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 3,000
Amount in Crores 2,500 2,000 1,500 1,000 500 PAT % Margin
16%
14% 12% 10% 8% 6% 4% 2% 0%
2009
1,761.77 14.26%
2010
2,739.00 17.31%
2011
2,641.84 13.65%
2012
3,596.76 15.29%
2009
10.37%
2010
14.11%
2011
9.96%
2012
10.11%
1,281.76 2,231.83 1,927.90 2,378.13
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TVS Motor Company Limited
Company Profile
Company Information Head quarters: Year of Incorporation : Chennai, India 1982
Business Overview
TVS Motor Co. Ltd. is the flagship company of the of the USD 4 billion TVS Group and manufactures two-wheelers such as mopeds, motorcycles & scooterettes The company’s manufacturing facilities are located at Byathahali in Karnataka and Hosur in Tamil Nadu and the company has a strong sales and service network throughout the country
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low : 2,007.26 15.17x 59.40/31.90
Key Management Chairman & MD : Director : Director : Director : Director : Venu Srinivasan H Lakshmanan T Kannan C R Dua K S Bajpai
The company sell its products under the name of Apache RTR 180, Flame, Jive, Star City, Wego, Pep+, Streak and scooty Teenz etc
TVS Motor Company is the third largest two-wheeler manufacturer in India and amongst the top ten in the world
40
Note: 52 week High / Low is taken as on 6th December 2012
TVS Motor Company Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 2,512.17 Rs. 2,660.93 Rs. 2,824.64 Rs. 3,345.90 1,119.99 1,183.42 1,040.72 1,304.42 640.18 620.10 682.69 725.28 67.43 124.95 43.49 137.48 66.70 104.25 318.58 467.05 202.81 124.48 144.90 5.75 2009 2010 2011 2012 3,814.05 Rs. 4,611.17 Rs. 6,542.98 Rs. 7,419.84 2.09% 4.19% 1.34% 888.35 1,229.23 1,594.61 1,788.82 23.29% 26.66% 24.37% 24.11% 119.80 215.70 375.56 460.70 3.14% 4.68% 5.74% 6.21% (13.35) 78.97 241.93 302.41 -0.35% 1.71% 3.70% 4.08% (90.20) 21.32 178.45 226.96 -2.36% 0.46% 2.73% 3.06% (63.15) 33.35 127.94 132.33 -1.66% 0.72% 1.96% 1.78% CAGR 2013 (6M) 24.83% Rs. 3,517.46 26.28% 56.67% NA NA 99.20% 1,058.35 30.09% 315.83 8.98% 154.96 4.41% 124.28 3.53% 96.29 2.74%
41
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
TVS Motor Company Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
8,000 7,000 Amount in Crores 6,000 5,000 4,000 3,000 2,000 1,000 2009 3,814.05 2010 4,611.17 2011 6,542.98 2012 7,419.84 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 Gross Profit % Margin
GP and GP Margin
27% 26% 25% 24% 23% 22% 2009 888.35 23.29% 2010 26.66% 2011 24.37% 2012 24.11% 21%
Revenue
% Growth
Amount in Crores
1,229.23 1,594.61 1,788.82
2.09%
4.19%
1.34%
EBITDA and EBITDA Margin
500 450 400 350 300 250 200 150 100 50 EBITDA % Margin 7% 6% 5% 4% 3% 2% 1% 2009 119.80 3.14% 2010 215.70 4.68% 2011 375.56 5.74% 2012 460.70 6.21% 0% Amount in Crores 200 150
PAT and PAT Margin
3% 2% 2% 1% 1% 0% -1% -1% -2% -2%
Amount in Crores
100
50 (50) (100) PAT % Margin 2009 (63.15) -1.66% 2010 33.35 0.72% 2011 127.94 1.96% 2012 132.33 1.78%
42
Market Overview
SECTION IV: Indian Passenger Vehicles Industry
43
Innovation & Price are the Key to Success
The Indian Passenger vehicle market is the 7th largest market in Asia and 10th largest market in the world in terms of volume As per SIAM, passenger vehicles held a 15.07% domestic market share in the year 201112 India sold 2.6mm passenger vehicles in the domestic market and exported 0.5mm passenger vehicles in the year 2011-12 and grew at a 7 year CAGR of 14% The passenger Vehicle industry is likely to grow at a CAGR of 10-11% till FY20171 - Small car segment to grow at a CAGR of 6-7% in next five years - Mid size segment to record a rise of 17-18% by FY2017 Asian markets are expected to fuel the growth in the short term as demand drops in the European markets, and growing demand for mid-size cars and preference for diesel variants to further boost the realization over the medium term Automobile production in India is expected to grow by a modest 9% in 2012-13 as per current industry forecasts
44
Source: SIAM and DCA Research, 1Care Research June 2012
Global Market Share Analysis in FY 2011
Rivalry: A Mess of Fragmentation in Most Markets
45
Source: Global Report, JP Morgan
Car Market Share (1/2)
Passenger Car Market Share (%)
12%
12% 12% 12% 11%
We believe Maruti’s market share will likely stabilize at ~40% levels over the near term despite the recent Manesar troubles In the passenger car segment, Honda is introducing products in the high growth diesel segment – the OEM will launch an entry level sedan “Amaze” in mid 2013
46
Source: SIAM and DCA Research
Car Market Share (2/2)
Utility Vehicles Market Share (%)
12%
12% 12% 12% 11%
While competition has gained share in the SUV segment, M&M is launching products in sub segments (Quanto) to defend market share. Also Ford will launch the price competitive “EcoSport” in early 2013 Demand for UV’s to remain healthy, driven by the consumer preference for diesel powered vehicles and status symbol quotient that the UVs provide
47
Source: SIAM and DCA Research
Government Support to the Industry
The Industrial Policy of 1991 de-licensed the Automobile Industry in India, but passenger cars were de-licensed in 1993 Now, no license is required for setting up any unit for manufacturing of Automobiles except in some special cases. Further, 100% Foreign Direct Investment (FDI) is permissible Removal of Quantitative Restrictions (QRs) from April 1, 2001 has allowed the import of vehicles, including in the passenger car segment where one can freely import subject to certain conditions notified by Directorate General of Foreign Trade (DGFT) To protect India from becoming a dumping ground for old and used vehicles produced abroad, the custom duty on the import of second hand vehicles including passenger cars has been raised to 111% Custom duty on Completely Built Units (CBU’s) of large cars/ MUV’s/ SUV’s permitted for import without any type approval (value exceeding US$40,000 and Engine Capacity exceeding 3000 cc of Petrol and 2500 cc for Diesel) is being increased from 60% to 75%, which might force foreign brands to set up manufacturing facilities in India
48
Source: SIAM and Angel Broking
Common Stock Comparison
(Rs. in Crores)
Sales S.No. Company Name 1 2 3 Tata Motors Mahindra and Mahindra Maruti Suzuki India Limited Market Cap Net Debt EV 2012 EBITDA 2012 Net Income 2012
Rs. 84,876.59 Rs. 410.52 Rs. 85,287.11 50,921.64 321.92 51,243.56 38,999.96 -102.64 38,897.32
Rs. 165,654.49 Rs. 19,912.17 Rs. 13,516.50 59,643.32 7,324.60 3,126.66 35,593.10 2,831.00 1,681.00
S.No. Company Name 1 2 3 Tata Motors Mahindra and Mahindra Maruti Suzuki India Limited Average Maximum Minimum
EBITDA Margin 12.02% 12.28% 7.95% 10.75% 12.28% 7.95%
PAT Margin 8.16% 5.24% 4.72% 6.04% 8.16% 4.72%
EV/Sales 2012 0.51x 0.86 1.09 0.82x 1.09 0.51 2013E 0.44x 0.73 0.95 0.71x 0.95 0.44
EV/EBITDA 2012 4.28x 7.00 13.74 8.34x 13.74 4.28 2013E 3.35x 6.47 13.04 7.62x 13.04 3.35 2012
P/E 2013E 6.80x 14.66 22.00 14.49x 22.00 6.80
6.28x 16.29 23.20 15.26x 23.20 6.28
49
Source: Company Financials and DCA Research Note: Market data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
The Indian Passenger Vehicles industry
PROFILES OF LISTED COMPANIES
Tata Motors Limited Mahindra & Mahindra Limited Maruti Suzuki India Limited
50
TATA Motors Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Mumbai, India 1945
Business Overview
Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR 1,65,654 crores (USD 32.5 billion) in 2011-12 It is the leader in the commercial vehicles space in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is the world's fourth largest truck and bus manufacturer in India. The Company has over 3,500 touch points in terms of dealerships, sales, service stations and a widespread spare parts network across the country The Tata Motors Group’s over 55,000 employees are guided by the vision to be ''best in the manner in which we operate, best in the products we deliver‖
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : 84,876.59 6.28x 320.6/167.75
Key Management Chairman : Vice Chairman : Managing Director : Director : Director : Director : Ratan N Tata Ravi Kant P M Telang S M Palia S Bhargava V K Jairath
Note: 52 week High / Low is taken as on 6th December 2012
51
TATA Motors Limited
Story So Far
2007
• Construction of Small Car plant at Singur • Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and market pickup trucks
2008
• Ace plant at Pantnagar (Uttarakhand) begins production • Tata Motors' new plant for Nano to come up in Gujarat • Indigo CS (Compact Sedan), world’s first sub four-metre sedan, launched •Tata Motors completes acquisition of Jaguar Land Rover • Tata Motors launches passenger cars and the new pick-up in D.R. Congo.
2009
•Tata Marcopolo Motors, Dharwad plant begins production • Tata Motors launches Nano - The People's Car • Introduction of New World standard truck range • Launch of premium luxury vehicles - Jaguar XF, XFR and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from Jaguar and Land Rover in India. • Tata Motors begins distribution of Prima World truck.
2011
Tata Motors unveils Assembly Plant in South Africa Jaguar Land Rover inaugurates new vehicle assembly plant in Pune India Jaguar c-x75 scoops Louis Vuitton award in Paris Tata Pixel, new city car concept for Europe, displayed at the 81st Geneva Motor Show Tata Motors launches the Tata Magic IRIS, a 3-4 seater 4-wheel passenger carrier for public transportation Tata Motors launches the Tata Ace Zip, a 600-kg micro truck for deep-penetration goods movement Tata Nano begins international journey with Sri Lanka, as Tata Motors celebrates 50th year of its International Business
2010
Tata Ace becomes India's first 1-lakh brand in goods commercial vehicles Jaguar Land Rover announces opening of its Dealership in New Delhi Tata Motors to construct heavy truck plant in Myanmar under Government of India's Line of Credit Tata Motors Passenger Car Division launches ‘Tata Motors Service Edge' for leading edge customer service Chief Minister of Punjab inaugurates Tata Motors supported State Institute of Automotive and Driving Skills Tata Motors launches Magic Iris On 26th April 2010, Tata Motors sold its 4 millionth Commercial Vehicle
52
Source: Annual Report
TATA Motors Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue 32.71% Rs. 85,990.03 Rs. 70,880.95 Rs. 92,519.25 Rs. 122,127.92 Rs. 165,654.49 % Growth 30.53% 32.00% 35.64% Gross Profit 35,887.77 25,228.43 22,220.44 34,066.51 45,341.19 21.58% % Margin 35.59% 24.02% 27.89% 27.37% 41.73% EBITDA 9,744.32 2,192.87 6,728.07 15,577.24 19,912.17 108.63% % Margin 3.09% 7.27% 12.75% 12.02% 11.33% EBIT 7,928.24 (309.40) 3,511.09 12,083.91 16,280.01 NA % Margin -0.44% 3.79% 9.89% 9.83% 9.22% PBT (2,180.98) 3,607.14 10,538.52 13,558.79 NA 6,226.75 % Margin -3.08% 3.90% 8.63% 8.18% 7.24% PAT (2,505.25) 2,571.06 9,273.62 13,516.50 NA 4,319.64 % Margin -3.53% 2.78% 7.59% 8.16% 5.02% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 74,387.35 Rs. 87,019.93 Rs. 101,014.18 Rs. 145,382.64 34,973.85 35,127.60 33,678.35 48,402.40 5,940.64 8,206.48 19,171.47 33,149.93 4,121.34 8,743.32 11,409.60 18,238.13 9,970.78 8,475.43 8,123.98 13,875.55 (3,555.55) (7,999.27) (9,231.70) (14,130.98)
53
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
TATA Motors Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Revenue % Growth 2009 70,880.95 2010 92,519.25 2011 122,127.92 2012 165,654.49 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -
GP and GP Margin
40% 35%
Amount in Crores
Amount in Crores
30%
25% 20% 15% 10% 5% 2009 2010 22,220.44 24.02% 2011 34,066.51 27.89% 2012 45,341.19 27.37% 0%
Gross Profit 25,228.43 % Margin 35.59%
30.53%
32.00%
35.64%
EBITDA and EBITDA Margin
25,000 14% 12% 20,000 15,000 10,000 5,000 EBITDA % Margin 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 (2,000) (4,000)
PAT and PAT Margin
10%
8%
6% 4% 2% 0% -2% -4%
Amount in Crores
10% 8% 6% 4% 2% 2009 2010 2011 2012 0%
Amount in Crores
2009 (2,505.25 -3.53%
2010 2,571.06 2.78%
2011 9,273.62 7.59%
2012 13,516.50 8.16%
-6%
2,192.87
3.09%
6,728.07
7.27%
15,577.24
12.75%
19,912.17
12.02%
PAT % Margin
54
Mahindra and Mahindra Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Mumbai, India 1945
Business Overview
Mahindra & Mahindra (M&M) is the flagship company of the Mahindra Group, a multinational conglomerate based out of India Mahindra offers cars, pickup trucks, and commercial vehicles that are rugged, reliable, environmentally friendly, and fuel-efficient The majority shareholders of the company are institutional investors holding above 56% and the Indian promoters hold more than 22% while the public holds above 10% stake in the company It is the largest tractor manufacturer in the world and the market leader in the Indian Utility Vehicle (UV) industry. The company is has an employee strength of 21,000
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman & MD: Executive Director : Director : Director : Director : Anand G Mahindra Bharat Doshi A K Nanda M M Murugappan A S Ganguly 50,921.64 16.29x 964/622
Note: 52 week High / Low is taken as on 6th December 2012
55
Mahindra and Mahindra Limited
Line of Business
Mahindra & Mahindra
Automobile Sector
Farm Equipment Sector
Defence Sector
LCVs Cars Jeeps Multi utility Vehicles Three Wheelers
Design, development, manufactu ring and marketing of Tractors Farm Equipment Basic and advanced agri equipments Earth moving and construction equipments Manufacturing of industrial engines
Light Armoured multi role vehicles Simulators for weapons & weapons system Mobile surveillance platforms Sea mines and Small arms
M&M has several other lines of business including real estate, technology, financial services etc, but only the sectors relevant to the auto industry have been shown above
Source: Annual Report
56
Mahindra and Mahindra Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 31,321.63 Rs. 35,614.73 Rs. 50,667.88 Rs. 63,869.18 12,190.31 13,485.85 17,047.47 23,152.34 7,069.93 10,155.88 14,284.08 16,770.21 2,967.51 2,737.12 2,220.57 3,479.49 2,941.33 2,702.87 2,652.63 3,337.02 7,211.64 9,266.47 6,172.07 8,814.41 CAGR 2013 (6M) 26,919.76 Rs. 31,687.97 Rs. 37,069.57 Rs. 59,643.32 30.37% Rs. 19,180.35 17.71% 16.98% 60.90% 4,790.66 12,037.53 14,383.64 15,220.07 21,432.83 21.20% 44.72% 45.39% 41.06% 35.94% 24.98% 2,228.35 3,851.19 5,674.72 6,324.54 7,324.60 23.90% 14.31% 17.91% 17.06% 12.28% 11.62% 1,895.12 3,101.86 4,807.55 5,361.39 5,848.34 23.54% 11.52% 15.17% 14.46% 9.81% 9.88% 2,259.03 4,052.45 4,491.84 4,467.48 25.52% 2,184.37 8.39% 12.79% 12.12% 7.49% 11.39% 1,405.41 2,478.56 3,079.73 3,126.66 30.54% 1,627.44 5.22% 7.82% 8.31% 5.24% 8.48% 2009 2010 2011 2012
57
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Mahindra and Mahindra Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
70,000 60,000 Amount in Crores 50,000 40,000 30,000 20,000 10,000 Revenue 2009 2010 17.71% 2011 16.98% 2012 60.90% 70% 60% 50% 40% 30% 20% 10% 0% 2009 44.72% 2010 45.39% 2011 41.06% 2012 35.94% Amount in Crores 20,000 15,000 10,000 5,000 25,000
GP and GP Margin
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
26,919.76 31,687.97 37,069.57 59,643.32
Gross Profit 12,037.5 14,383.6 15,220.0 21,432.8 % Margin
% Growth
EBITDA and EBITDA Margin
8,000 7,000 Amount in Crores 6,000 5,000 4,000 3,000 2,000 1,000 EBITDA % Margin 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 4,000 3,500 Amount in Crores 3,000 2,500 2,000 1,500 1,000 500 PAT % Margin
PAT and PAT Margin
9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2009
3,851.19 14.31%
2010
5,674.72 17.91%
2011
6,324.54 17.06%
2012
7,324.60 12.28%
2009 1,405.41 5.22%
2010 2,478.56 7.82%
2011 3,079.73 8.31%
2012 3,126.66 5.24%
58
Maruti Suzuki India Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Haryana, India 1981
Business Overview
Maruti Suzuki India Limited has been the leading manufacturer of passenger vehicles in India over the past 3 decades. It accounts for 60% of the total Indian passenger car market with respect to volumes
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Managing Director : Director : Director : Director : Director : R C Bhargava Shinzo Nakanishi Tsuneo Ohashi Keiichi Asai Kenichi Ayukawa Pallavi Shroff 38,999.96 23.20x 1,515/906
It has~15 brands and over 150 variants in all the vehicle segments The company has service centers in ~ 1,400 in cities and over 200 driving schools across the country, which make it one of the most well recognized brands in the country The Tragedy that happened at their Manesar plant as a result of labor unrest in July 2012 has shaken up the auto industry & the entire Manesar belt
59
Note: 52 week High / Low is taken as on 6th December 2012
Maruti Suzuki India Limited
Network
100% 90% 80% 70% 60% 50% 40%
30%
933
668
353
1101
1845
1834
2946
1395
802
341 555 315 454 393 312 227 266 223 186
2740
1335 2011
906
1945 681 600 491 375 Total Sales Network 779 1945 683 558 528 1835 1568 MASS's
2767 2628 2423 2096 Total Service Point
1314 1220 1172
1092
2010 2009 2008 2007 2006
20% 10% 0%
Cities Maruti True Dealer Covered by Value Workshop Sales Outlets Network
Cities Covered by Service Network
60
Source: Annual Report
Maruti Suzuki India Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 14,080.50 Rs. 16,967.30 Rs. 19,106.30 Rs. 23,099.30 813.30 973.00 576.40 1,557.30 9,565.30 12,182.60 14,308.80 15,674.50 1,986.80 162.70 2,532.00 2,463.40 1,706.00 1,380.40 2,394.10 2,991.90 190.70 178.70 (584.20) (1,265.00)
61
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
CAGR 2013 (6M) 20,662.20 Rs. 29,591.50 Rs. 36,688.90 Rs. 35,593.10 19.88% Rs. 19,083.58 43.22% 23.98% -2.99% 4,082.36 3,209.70 5,479.20 5,565.80 4,754.90 14.00% 15.53% 18.52% 15.17% 13.36% 21.39% 1,338.80 1,912.50 3,997.30 3,708.00 2,831.00 13.97% 9.26% 13.51% 10.11% 7.95% 7.02% 876.61 1,196.00 3,155.90 2,676.70 1,668.30 11.73% 5.79% 10.66% 7.30% 4.69% 4.59% 1,701.10 3,746.60 3,210.30 2,192.50 8.83% 805.36 8.23% 12.66% 8.75% 6.16% 4.22% 1,227.40 2,624.70 2,382.40 1,681.00 11.05% 651.22 5.94% 8.87% 6.49% 4.72% 3.41%
2009
2010
2011
2012
Maruti Suzuki India Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Revenue % Growth 50% 6,000 Amount in Crores 5,000 4,000 3,000
GP and GP Margin
40%
30% 20% 10% 0% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
Amount in Crores
2,000
1,000 2009 15.53% 2010 18.52% 2011 15.17% 2012 13.36%
2009
2010 43.22%
2011 23.98%
2012 -2.99%
-10%
20,662.20 29,591.50 36,688.90 35,593.10
Gross Profit 3,209.70 5,479.20 5,565.80 4,754.90 % Margin
EBITDA and EBITDA Margin
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 EBITDA % Margin 16% 14% 12% 10% 8% 6% Amount in Crores 3,000
PAT and PAT Margin
2,500
2,000 1,500 1,000 500 PAT % Margin 2009 5.94% 2010 8.87% 2011 6.49% 2012 4.72% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
Amount in Crores
4%
2% 2009 1,912.50 9.26% 2010 3,997.30 13.51% 2011 3,708.00 10.11% 2012 2,831.00 7.95% 0%
1,227.40 2,624.70 2,382.40 1,681.00
62
Market Overview
SECTION V: The Luxury Car Market in India
63
Smooth Ride for Luxury Cars in India
The Indian market for luxury cars is fast maturing, it’s therefore no surprise that all the luxury car brands worldwide are now seriously looking at the Indian market Over the last year, the super premium sports car Bugatti Veyron 16.4 Grand Sport became one of the most expensive cars to hit the Indian roads in 2012 priced at ~Rs 14crores. Aston Martin, Mercedes, Audi, Lamborghini, Bentley, Jaguar, BMW and Porsche already have dealerships despite unattractive government taxes
Though the 'buzz' this sector is generating is disproportionately high in comparison to the size of the market, it shows that the global luxury brands recognize the high potential and depth of the Indian luxury markets
India is a now a part of the global strategy for all major luxury car makers and almost every foreign company is planning to set up their manufacturing base in the country and are also exploring the option of India as an export hub given its location & labour cost advantages There were 23,000 units of luxury cars sold in India in FY 2012 and the market has been growing at a CAGR of 30% Luxury cars, which account for less than 2% of India's 2.2-million car market grew just 9% in the first six months of calendar 2012 with sales of around 12,000 units, compared with a growth of 80% in 2010 for the same period and 35-40 % growth in 2011
64
Source: Economic Times and DCA Research
Timeline of The Luxury Car Market in India
At Present 2012-13: The Indian luxury market is becoming more crowded with an increasing number of global brands like Aston Martin , Koenigsegg, Ferrari, Porsche, JLR hitting the market in recent years, however the three German brands BMW, Mercedes-Benz and Audi continue to sweep the market, cornering over 75% of the top-end market starting from the price band of Rs 25 lakh onwards
In 2006: BMW and Audi made a late entry in the Indian arena but have picked up market share
In 1995: Mercedes-Benz started its operations in the country
65
A Mass Success (1/2)
The luxury car market in India has come a long way from the undisputed, unrivalled leadership of German automaker, Mercedes Benz, to almost every car one can dream of or has seen in oversees markets According to estimates of SIAM, close to 23,000 units of luxury cars were sold in India in 2011-12, which is slated to go up to 1,50,000 units by 2020 and growing at annual average growth rate of 40% With 48 U.S dollar billionaires in India, according to the Forbes list, India has become a top destination for luxury car makers In a vast pool of luxury car makers who are vying for a share of the luxury car market in India, German auto majors, BMW, Mercedes, and Audi continue to rule the roost but are facing stiff competition quickly. Just walk around the Auto Expo every January in Delhi and you will se what we are talking about According to Andreas Schaaf, President of BMW: “India may not be a large market in terms of units sold, but it remains the strongest potential market globally and will outgrow all other markets in future.”
66
A Mass Success (2/2)
Apart from the German auto majors , Tata-owned Jaguar Land Rover, Rolls Royce, Bentley, Porsche are the other prominent names that figure high on the Indian consumer’s wish list The actual rise in the luxury market is combined by rising disposable income, coupled with government initiatives, like relaxation of equity regulations, reduction of import duties and easy loan schemes, which have turned India into a top destination for luxury car makers The Luxury car segment is clearly undergoing a redefinition in India and several premier auto brands are leveraging this trend and doling out low cost luxury cars to tap the growing club of value-conscious Indians looking for luxury at an affordable price (Audi Q3, BMW X1 etc.) The growing network of dealers across the country and the announcement of the launch of MINI by BMW –at a price tag of ~Rs. 25 lakhs (that will compete with Fiat 500 and the popular Beetle of Volkswagen) clearly shows that the appetite for luxury cars in India seems far from satiated
67
Luxury Toned Down?
New Trends
Luxury car makers are lowering their entry price band to Rs.20-25 lakh and lining up nearly half a dozen launches in the premium segments to draw in India’s rich and rev up volumes
With the number of high net worth households in India is set to rise further, industry experts expect over 3,00,000 vehicles priced above Rs. 20 lakh to be sold in the country by the end of the decade
The penetration of luxury vehicles stands at around 1% currently. In China, this is 45%, while in developed markets like Germany it is as high as 14 % ―Today, there are 81,000 ultra high net worth households (UHNHs), then there are undocumented rich household in the category. Even if a third of them often buys or changes premium vehicles every three years, we would have an annual market of 100,000 units in by 2015
Source: Economic Times and DCA Research
68
Growth Drivers
Luxury Car Market
India's nascent luxury growth is being spurred by the younger generation of new millionaires. Whether they are self-made or have inherited wealth Indian car buyers are also skipping certain segments of the market, going from a subcompact Honda straight to a large Mercedes sedan with no step in between
Rising Millionaires
Leading luxury car players have registered high growth owing to their wide dealership network that allows them to penetrate quickly in the Indian market The economic expansion and increasing disposable income of consumers, in Tier II and Tier III cities such as Ludhiana, Chandigarh, Suart, Rajkot, Nagpur and have made these cities important sales regions for the luxury car manufacturers
Improved Dealership Network
To maintain their market share, many manufacturers have established manufacturing facilities in India or have planned to do so and that will allow them to avoid import duty which unnecessarily increases the cost of the cars This decrease in the cost of the cars, will provide a further boost to the sales of luxury cars in the country, while 69 enhancing manufacturer’s profits
Domestic Manufacturing Hub
Market Overview
SECTION VI: Indian Commercial Vehicles Industry
70
Changing Face of Indian Transportation
India is the 5th largest commercial vehicle manufacturer in the world and its primary growth is driven by a healthy economic climate combined with massive investments from the government in infrastructure activities as well as a developing public transportation system The overall commercial vehicle sales in India grew at 18.20% in 2011-12 and as per industry estimates, the Indian market which has seen the entry of international majors like Damiler, Volvo, Beiqi Foton will see a CAGR growth of 15% till 2016-17 The Indian commercial vehicle market will double to 1.6 million units in the next five years thanks to the increase in infrastructure spending, rapid urbanization and entry of major multinational players in the country Global majors will redefine brand positioning in the market while domestic companies will build R&D competence and optimize costs through outsourcing and modularisation The rapid urbanization, improving road infrastructure and regulatory policies will influence CV buyers and OEMs. By 2050, at least five states are expected to be predominantly urban and 12 cities in India with a population of more than 20 lakh are expected to get a metro rail Many global CV majors who have entered the Indian market through Joint Ventures with local majors are expected to make it even more competitive, but local majors like Tata Motors Limited (TML), Ashok Leyland (AL) and Mahindra & Mahindra (M&M) will continue to dominate the market due to their widespread network in India and increasing 71 acquisitions abroad
Industry Snapshot (1/2)
Commercial Vehicles Sales
9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 Volume In Lakhs 6.85 8.10 8.38
With weakening freight rates and no-pick up in the capex cycle, the Medium and heavy commercial vehicle (M&HCVs) segment is estimated to register a volume decline of 4-5% in FY13 as against a 8% growth in FY12 The only bright spot in an otherwise gloomy environment is the robust growth of the light commercial vehicles (LCV) and bus segments, ―The hub and spoke model and the appropriate pricing based on load sizes has that helped this sub-segment grow much faster that the M&HCVs” The growth in the CV industry will also boost demand for used commercial vehicles in the coming years
72
5.33
3.62
4.61
2.88
3.23
3.49
5.23
2010 Light CVs
2.45
2011 2012 Medium & Heavy CVs
2013E Total
Commercial Vehicles YOY Growth
50.0% 43.4% 40.0% Percentage 30.0% 20.0% 10.0% 0.0% -10.0% 2010 Light CVs 2011 2012 2013E -9.6% Total 38.7% 33.5% 31.9% 25.7% 28.6%
27.4% 18.2% 13.5% 7.9% 3.5%
Medium & Heavy CVs
Source: Economic Times , 3rd December 2012
3.15
Industry Snapshot (2/2)
M&HCV volumes (units)
- M&HCV volumes continue to disappoint
LCV volumes (units)
- LCV volumes remain robust
73
Source: SIAM and DCA Research
MHCV Market Share (%)
In the M/HCVs segment, Eicher Volvo’s engine plant will come on-stream in mid 2013 – which will likely drive products reunions for VECV(A Volvo group and Eicher Motors JV) While M/HCV sales will benefit from a benign base, recovery in the investment cycle remains key to growth
74
Source: SIAM and DCA Research
Key Growth Drivers (1/2)
Domestic and Exports Growth
• CVs are a top performer amongst all the segments (2-W, PV) in terms of growth both in domestic and exports • Huge reduction in the volume cyclicality over the past years due to entrance in the highly lucrative Light Commercial Vehicles market
Domestic Penetration
• Low penetration and distribution reach act as a huge trigger for the CV market • The penetration level vs. GDP per-capita income is far lower than other developed and emerging markets
Hinterland Good Transport
• EXIM trade has grown at ~2x – 5x GDP growth which will further boost road transportation • The Indian Global Trade has grown by 1.7x in terms of value and expected to grow at a five year CAGR of ~16%
75
Key Growth Drivers (2/2)
Growing Port Traffic
• Better road infrastructure and increasing exports, total freights and Container cargo at major ports in tonnage terms grew at a CAGR of 7% and 13% • Major Ports are operating at Peak Capacity and therefore new facilities will have to be set up in the coming years to handle the growing trade
Growing Road Infrastructure
• The road length of the country has grown by 8x since 1951 which has impacted the transportation system of the country in a negative manner • The government is running programs like the Golden Quadrilateral for increasing road infrastructure which will lead to increase in sales of heavy tonnage vehicles
Profitability increase
• Freight rates have continuously increased since 2000 which further grows the demand for commercial vehicles by the transporters • Their profitability will further increase as the manufacturers are focused on decreasing the maintenance costs & increasing fuel efficiency
76
Common Stock Comparison
(Rs. in Crores)
Sales S.No. Company Name 1 2 3 4 Ashok Leyland Eicher Motors Escorts Swaraj Market Cap Rs. 6,398.94 6,207.03 588.71 526.79 Net Debt Rs. 55.59 -30.09 2.87 -2.52 EV Rs. 6,454.53 6,176.94 591.58 524.27 2012 Rs. 12,841.99 5,697.08 4,104.92 448.58 EBITDA 2012 Rs. 1,254.05 576.07 202.23 69.35 Net Income 2012 Rs. 565.98 308.77 126.39 52.82
S.No. Company Name 1 2 3 4 Ashok Leyland Eicher Motors Escorts Swaraj Average Median Maximum Minimum
EBITDA Margin 9.77% 10.11% 4.93% 15.46% 10.07% 9.94% 15.46% 4.93%
PAT Margin 4.41% 5.42% 3.08% 11.77% 6.17% 4.91% 11.77% 3.08%
EV/Sales 2012 0.50x 1.08 0.14 1.17 0.72x 0.79 1.17 0.14 2013E 0.48x 0.78 0.12 1.01 0.60x 0.63 1.01 0.12
EV/EBITDA 2012 5.15x 10.72 2.93 7.56 6.59x 6.35 10.72 2.93 2013E 4.76x 7.28 1.53 5.84 4.85x 5.30 7.28 1.53 2012
P/E 2013E 11.04x 15.07 2.90 8.91 9.48x 9.98 15.07 2.90
11.31x 20.10 4.66 9.97 11.51x 10.64 20.10 4.66
77
Source: Company Financials and DCA Research Note: Market Data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
Indian Commercial Vehicles industry
PROFILES OF LISTED COMPANIES
Ashok Leyland Limited Eicher Motors Limited Escorts Limited Swaraj Engines Limited
78
Ashok Leyland Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Chennai, India 1948
Business Overview
Ashok Leyland (ALL) is part of the Hinduja Group, one of the largest commercial vehicle manufacturers in India The company has a traditional stronghold in the South Indian market for CVs and in buses, and is also a national market leader. Also, the company has the second-highest market share in CVs after Tata Motors in India
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Dheeraj G Hinduja 6,398.94 11.31x 33/20
Exe. Vice Chairman : R Seshasayee Managing Director : Executive Director : Executive Director : Executive Director : Vinod K Dasari A R Chandrasekhran Anup Bhat
They are the largest supplier of logistics vehicles to the Indian Army and play a critical role in keeping our borders safe
The company has inked a 50:50 Joint Venture (JV) with Nissan Motor Company (Japan) for Light Commercial Vehicles and John Deere (USA) for construction equipment
Jayendra Parikh
Note: 52 week High / Low is taken as on 6th December 2012
79
Ashok Leyland Limited
Joint Ventures and New Initiatives
Ashok Leyland-Nissan: Ashok Leyland (ALL) has invested ~Rs5bn in its JV with Japanbased Nissan. The JV’s first product, the Dost LCV was commercially launched in Jul’11. The JV intends to launch a portfolio of SCVs and LCVs in the Indian market. The Dost vehicles are currently contract-manufactured at ALL’s facilities in Hosur (Karnataka) but the JV has plans to set up its own manufacturing plant Leyland-Deere: Until Nov’11, ALL had invested ~Rs500mm in a 50:50 JV with UK based John Deere. The JV launched its first commercial product, a backhoe loader, in Nov’11. The targeted capex in this JV is Rs4bn of which ~Rs1.5bn had been incurred as at end-CY11 Hinduja Leyland Finance (HLF): ALL has made an equity investment of Rs1.3bn in HLF, which amounts to 40% the latter’s total equity. This business has spread to ~400 locations (from 130 in Sep’11) and it financed 7.7% of ALL’s unit sales in H1FY12 Other investments: ALL has invested a total of ~Rs500mm in JVs with Finland’s Alteams OY and Germany’s Continental AG in the parts and engines segment
ALL’s bus manufacturer acquisitions: ALL acquired a 25% stake in UK-based bus manufacturer Optare Plc in 2010 and upped the stake to 75% in Dec’11. ALL also acquired Prague-based AVIA in 2006 to form Avia Ashok Leyland Motors
80
Source: Annual Report
Ashok Leyland Limited
Key Strengths
81
Source: Annual Report
Ashok Leyland Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 5,981.07 Rs. 7,244.71 Rs. 11,177.11 Rs. 12,841.99 29.01% Rs. 6,237.03 % Growth 21.13% 54.28% 14.90% Gross Profit 1,649.03 1,404.91 1,905.83 2,769.55 3,104.81 30.26% % Margin 23.49% 26.31% 24.78% 24.18% 26.44% EBITDA 559.15 485.82 769.78 1,228.73 1,254.05 37.18% % Margin 8.12% 10.63% 10.99% 9.77% 8.97% EBIT 387.13 295.82 568.56 954.01 910.00 45.44% % Margin 4.95% 7.85% 8.54% 7.09% 6.21% PBT 208.45 544.78 801.80 689.98 49.03% 236.84 % Margin 3.49% 7.52% 7.17% 5.37% 3.80% PAT 190.00 423.67 631.30 565.98 43.89% 209.53 % Margin 3.18% 5.85% 5.65% 4.41% 3.36% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 7,836.27 Rs. 9,282.04 Rs. 10,593.31 Rs. 11,915.75 1,958.14 2,203.89 2,568.26 3,097.89 3,473.90 3,668.76 3,962.96 4,208.17 88.08 518.92 179.53 32.56 764.13 694.72 352.60 697.84 940.59 660.01 264.51 232.17
82
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Ashok Leyland Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
14,000 12,000 60% 50% 3,500 3,000
GP and GP Margin
27% 27% 26% 26% 25% 25% 24% 24% 23% 23% 22%
Amount in Crores
10,000 8,000 6,000
Amount in Crores
40% 30%
2,500 2,000 1,500 1,000 500 -
4,000
2,000 Revenue % Growth 2009 Rs. 5,981. 2010 Rs. 7,244. 21.13% 2011 Rs. 11,177 54.28% 2012 Rs. 12,841 14.90%
20% 10% 0%
2009
1,404.91 23.49%
2010
1,905.83 26.31%
2011
2,769.55 24.78%
2012
3,104.81 24.18%
Gross Profit % Margin
EBITDA and EBITDA Margin
1,600 1,400 12% 10% 700 600
PAT and PAT Margin
7% 6% 5% 4% 3% 2% 1% 2009 2010 2011 2012 0%
Amount in Crores
Amount in Crores
1,200 1,000 800 600 400 200 EBITDA % Margin 2009 2010 2011 2012 8% 6% 4%
500 400 300 200 100 -
2%
0%
485.82
8.12%
769.78
10.63%
1,228.73
10.99%
1,254.05
9.77%
PAT % Margin
190.00
3.18%
423.67
5.85%
631.30
5.65%
565.98
4.41%
83
Eicher Motors Limited
Company Profile
Company Information Head quarters : Year of Incorporation : New Delhi, India 1982
Business Overview
Eicher Motors Limited is the flagship company of the Eicher Group and a leading player in the Indian automobile industry The company has a 50-50% joint venture with the Volvo Group, VE Commercial Vehicles Limited which designs, manufactures and markets reliable, fuel efficient commercial vehicles of high quality
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management MD & CEO : Chairman : Director : Director : Director : Director : Siddhartha Lal S. Sandilya M. J. Subbaiah Priya Brat R. L. Ravichandran Prateek Jalan Eicher Motors manufactures and markets the iconic Royal Enfield motorcycles
84
6,207.03 20.10x 3240/1376
The company is the 4th largest player in the commercial vehicles segment with a strong presence (market share ~ 30%) in the Light & Medium Duty Segment
Note: 52 week High / Low is taken as on 6th December 2012
Eicher Motors Limited
Company Structure
85
Eicher Motors Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2008 2009 2010 2011 CAGR 2012 (6M) Revenue 49.12% Rs. 4,736.33 Rs. 1,717.96 Rs. 2,949.33 Rs. 4,410.26 Rs. 5,697.08 % Growth 71.68% 49.53% 29.18% Gross Profit 1,354.41 390.49 684.25 1,007.06 1,390.36 52.70% % Margin 22.73% 23.20% 22.83% 24.40% 28.60% EBITDA 431.07 0.48 158.30 371.92 576.07 962.70% % Margin 0.03% 5.37% 8.43% 10.11% 9.10% EBIT 373.39 (36.41) 104.42 314.62 512.11 NA % Margin -2.12% 3.54% 7.13% 8.99% 7.88% PBT 58.76 187.31 417.67 660.20 123.97% 480.09 % Margin 3.42% 6.35% 9.47% 11.59% 10.14% PAT 62.60 83.39 188.92 308.77 70.22% 251.54 % Margin 3.64% 2.83% 4.28% 5.42% 5.31% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 2,302.99 Rs. 2,481.99 Rs. 2,963.32 Rs. 3,779.93 165.61 126.37 95.64 50.38 1,103.69 1,069.04 1,232.14 1,493.13 1,231.80 1,170.65 1,245.68 1,197.27 70.95 134.79 418.78 166.09 (56.27) (128.87) (181.53)
86
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Eicher Motors Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
6,000 5,000 Amount in Crores 4,000 3,000 2,000 1,000 Revenue % Growth 2008 1,717.96 2009 2,949.33 71.68% 2010 4,410.26 49.53% 2011 5,697.08 29.18% 80% 70% Amount in Crores 60% 50% 40% 30% 20% 10% 0% 1,600 1,400 1,200
GP and GP Margin
25% 25% 24% 24% 23% 23% 22% 2008 22.73% 2009 684.25 23.20% 2010 22.83% 2011 24.40% 22%
1,000
800 600 400 200 -
Gross Profit 390.49 % Margin
1,007.06 1,390.36
EBITDA and EBITDA Margin
700 600 Amount in Crores 500 400 300 200 8% 6% 4% 2% 2008 0.48 0.03% 2009 158.30 5.37% 2010 371.92 8.43% 2011 576.07 10.11% 0% PAT % Margin 12% Amount in Crores 350 300 250 200 150 100 50 -
PAT and PAT Margin
6%
10%
5%
4% 3% 2% 1% 2008 62.60 3.64% 2009 83.39 2.83% 2010 188.92 4.28% 2011 308.77 5.42% 0%
100
(100) EBITDA % Margin
87
Escorts Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Haryana, India 1984
Business Overview
Escorts Limited, the flagship company of The Escorts Group and is a leading manufacturer and supplier of Agri Machinery Products, Auto Suspension and Ancillary Products, and Railway Equipment
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman & MD : JMD : Director : Director : Director : Director : Rajan Nanda Nikhil Nanda M G K Menon S A Dave P S Pritam S C Bhargava 588.71 4.66x 93/55
It provides tractors under the Farmtrac, Powertrac, and Escorts brand names Escorts has a manufacturing facility at Faridabad in Haryana. The company also sells its products globally in countries like USA, Poland, Ghana, Tanzania, Malaysia, Australia, Tunisia, Chile, Turkey, Sri Lanka etc Technical collaborations with Germany-based Fichtel & Sachs (now ZF Sachs) in 1966 and Japan-based Kayaba in 1998 have laid a strong foundation for the company to deliver globally-benchmarked products
Note: 52 week High / Low is taken as on 6th December 2012
88
Escorts Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 3,003.81 Rs. 3,029.94 Rs. 3,284.16 Rs. 3,539.72 840.17 403.06 405.32 489.33 935.30 1,425.12 1,685.98 1,783.77 142.34 196.35 211.68 319.11 101.96 45.15 57.45 107.61 392.00 (56.18) 135.13 150.71 2008 2009 2010 2011 2,687.57 Rs. 2,645.44 Rs. 3,366.31 Rs. 4,104.92 -1.57% 27.25% 21.94% 592.35 777.99 911.01 968.15 22.04% 29.41% 27.06% 23.59% 102.80 212.78 253.93 202.23 3.83% 8.04% 7.54% 4.93% 52.03 164.81 205.71 154.63 1.94% 6.23% 6.11% 3.77% (11.58) 57.55 181.28 109.74 -0.43% 2.18% 5.39% 2.67% (37.24) 28.60 132.00 126.39 -1.39% 1.08% 3.92% 3.08% CAGR 15.16% 17.79% 25.30% 43.77% NA 110.22%
89
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt Note : The companies financial year ends in September every year
Escorts Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Revenue % Growth 30% 25% 20% Amount in Crores 1,200 1,000 800 600
GP and GP Margin
35% 30% 25% 20% 15% 10% 5% 2008 592.35 22.04% 2009 777.99 29.41% 2010 911.01 27.06% 2011 968.15 23.59% 0%
Amount in Crores
15%
10% 5% 0% 2008 2,687.57 2009 2,645.44 -1.57% 2010 3,366.31 27.25% 2011 4,104.92 21.94% -5%
400
200 Gross Profit % Margin
EBITDA and EBITDA Margin
300 Amount in Crores
PAT and PAT Margin
9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 200 Amount in Crores 150 100 50 (50) PAT % Margin 2008 (37.24) -1.39% 2009 28.60 1.08% 2010 132.00 3.92% 2011 126.39 3.08% 5% 4% 3% 2% 1% 0% -1% -2%
250
200 150 100 50 EBITDA % Margin 2008 102.80 3.83% 2009 212.78 8.04% 2010 253.93 7.54% 2011 202.23 4.93%
90
Swaraj Engines Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Punjab, India 1985
Business Overview
Swaraj Engines Limited engages in the manufacturing and sale of diesel engines and tractor components in India Promoted in 1986 under a technical and financial collaboration with Kirloskar Oil Engines Ltd. (KOEL) for manufacturing Diesel Engines The company supplies 5 types of engines from 20HP range to 50HP range. It also manufactures diesel engine components and spare parts The company has its only plant in Mohali with a current capacity of manufacturing 185 engines/day (~55,000 engines per annum)
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Director : Director : Director : Director : G P Gupta Pawan Goenka T N Kapoor D R Swar S C Bhargava 526.79 9.97x 498/349
Note: 52 week High / Low is taken as on 6th December 2012
91
Swaraj Engines Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 208.17 Rs. 282.44 Rs. 361.03 Rs. 448.58 29.16% Rs. 237.58 % Growth 35.68% 27.83% 24.25% Gross Profit 54.87 47.46 70.21 83.23 94.19 25.67% % Margin 22.80% 24.86% 23.05% 21.00% 23.10% EBITDA 36.00 31.87 49.57 60.67 69.35 29.59% % Margin 15.31% 17.55% 16.80% 15.46% 15.15% EBIT 33.88 27.17 44.73 56.21 65.11 33.82% % Margin 13.05% 15.84% 15.57% 14.51% 14.26% PBT 32.22 54.71 64.35 77.28 33.86% 39.80 % Margin 15.48% 19.37% 17.82% 17.23% 16.75% PAT 21.28 37.35 43.91 52.82 35.40% 27.70 % Margin 10.22% 13.22% 12.16% 11.77% 11.66% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 125.58 Rs. 167.74 Rs. 212.00 Rs. 263.37 96.97 122.74 152.22 186.28 55.89 56.39 76.20 69.70 1.21 2.02 6.08 30.99 (1.90) (12.35) (8.79) (19.01)
92
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Swaraj Engines Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
500 450 400 350 300 250 200 150 100 50 Revenue % Growth 40% 35% 30% 25% 20% 15% 10% 5% 2009 208.17 2010 282.44 35.68% 2011 361.03 27.83% 2012 448.58 24.25% 0% Amount in Crores 120 100 80 60
GP and GP Margin
26% 25% 24% 23% 22% 21% 20% 2009 47.46 22.80% 2010 70.21 24.86% 2011 83.23 23.05% 2012 94.19 21.00% 19%
Amount in Crores
40
20 Gross Profit % Margin
EBITDA and EBITDA Margin
80 70 Amount in Crores 60 50 40 30 18% 18% 17% 17% 16% 16% Amount in Crores 60
PAT and PAT Margin
14% 12% 10% 8% 6% 4% 2% 2009 21.28 10.22% 2010 37.35 13.22% 2011 43.91 12.16% 2012 52.82 11.77% 0%
50
40 30 20 10 PAT % Margin
20
10 EBITDA % Margin 2009 31.87 15.31% 2010 49.57 17.55% 2011 60.67 16.80% 2012 69.35 15.46%
15%
15% 14%
93
Market Overview
SECTION VII: Indian Auto Component Industry
94
Auto Components: Expanding Globally
The Indian auto components industry was ~ US$43.4bn in 2012, slated to grow to $66.3bn by 2015-2016 further growing at a compounded annual growth rate (CAGR) of ~11% to reach at ~$115bn by 2021
Exports of auto components were ~US$5.2bn in 2011 and are slated to grow at a CAGR of ~ 18.8% to reach $29bn by 2021
Auto component manufacturers supply both to Auto OEMs as well as to the replacement market (accounts for 41% of the auto components consumed in the Indian aftermarket) The replacement market of the auto component industry remains a safe bet even when the economy faces a slowdown and it is looked at as an area of focus by major players in the industry (diversification and hedge against cyclicality) Indian auto components manufacturers have been focusing on R&D activities — innovation, design, and engineering activities — to meet global quality standards and emerge as full-service providers to OEMs
The industry is categorized based on its location namely Tier I, II and III. Tier I locations mostly consist of large firms followed by medium sized firms in Tier II and smaller single component manufacturing firms which are mostly unorganized in Tier III
Source: ACMA & DCA
95
Imports and Exports
Imports
35 35 30 30
Exports
29
- CAGR 2007-11: 11% - CAGR 2011-21: 15.2%
17.5 8.5
25
- CAGR 2007-11: 11% - CAGR 2011-21: 18.8%
12.3 5.2
USD billion
20 15 10 5 0 2008 2009 2010 2011 6.2 6.8 6.5
USD billion
25
20
15
10 5 0 3.8 4 3.4
2016E
2021E
2008
2009
2010
2011
2016E
2021E
Countries of Imports
0.48%
Countries of Exports
1% 7% 36%
5% 35.30% 56.30%
28%
0.21% 7.08% 0.63% Europe South America Australia Asia North America Africa Europe South America
23%
North America Australia
Asia Africa
96
Source: ACMA ans DCA research
India’s Strength in Auto Components
India is a robust manufacturing and Supply Base
97
Growth Drivers
Growing Market for Used Vehicles
• Vehicles in India have a long life, as many people prefer to buy old vehicles and are happy to bear maintenance costs to run vehicles
Overloading of Vehicles
• Most vehicles run in India are overloaded with passengers causing wear & tear • This gives an opportunity for component suppliers to sell their products more frequently
Deteriorating road infrastructure
• On the part of infrastructure in India, most Indian roads are not ideal for vehicles expect in large Metros & Tier I and II cities
Upgradation of emission standards
• Due to growing awareness towards the environment, gov ernment rules are more stringent to change auto components after certain usage
98
Key Trends
Quality awareness has increased across all levels of management and is being viewed as a ―must have,‖ instead of “nice to have” factor Increasing competitive pressure on global Auto components manufacturers to outsource from low cost manufacturers Major focus on productivity and efficiency improvement , besides investing in expanding capacities Increasing global demand and competitive global market are forcing auto component manufacturers to adopt higher technical and quality standards Heavy Investments in R&D operations, carrying out activities like simulations, engineering animations, tool designing, modeling, drafting etc Acquisitions in the foreign markets to further help India to acquire a new set of skills, technology and customers Factors Driving Growth in the Indian Auto Component Industry
Large and Growing Domestic Automobile Market of India
Reforms in Government Policy
High Export Potential Market Low Manufacturing and Labor cost accompanied by Availability of Manpower Proven R&D Capabilities
“Key focus areas are Research & Product Development, Capacity Expansion, and Global Competition”
99
Areas of Opportunity
Abound for all players
Domestic Tier 1 Supplier Domestic Tier 2/3 Supplier Small Local Entrepreneurs
A niche, small entrepreneurial venture can focus on product innovation, leveraging India’s abundance of high-skilled labour at low cost
India-Based Global Supplier
A global supplier operating across multiple product types and geographies can serve as an integrator and preferred supplier to the OEMs
A large India-based auto components manufacturer can focus on the rapidly growing Indian OEM Take advantage of low- market, exports and the cost manufacturing in domestic market India in order to support domestic Tier 1 suppliers and the domestic aftermarket
100
Changing Industry Dynamics
Global opportunity and threat Indian advantage and threat
Implications on Indian industry
• Opportunity for $ sales and Re costs • Growing global trade • Indian cost competitiveness, no major disqualifications • P/E of the Indian component exporters are higher • Lack of scale and scope leaves the Indian firms open to potential threat from the M&A route taken by global players to enter emerging markets • Relatively poor shareholder value creation has led to weakening of investor support • Heightened take-over threat from global players
Source: Automotive Component Manufacturers Association, March 2011
101
Issues and Challenges in growth
Technological capability not enough to match global standards Indian Technology capabilities are not enough to be competitive in comparison to global companies Government support in the auto component industry is not enough to facilitate establishment of new technology in the industry Surging raw material prices putting pressure on profit margins Rising cost of raw materials is effecting EBITDA margins of players Companies have low bargaining power with raw materials suppliers, especially steel suppliers due to rising demand for steel
Slowdown in global economy affecting exports • The overall slowdown in the global economy has negatively affected the growth of the auto components market in India • The Free Trade Agreements (FTA) signed with developing countries may increase bulk imports of relatively cheaper components Increasing rivalry among Players from numerous small firms • Many small “me too” firms are targeting same customer segments and selling counterfeit products to customers • Workings of the unorganized sector in the industry has put a question mark on the credibility of big ger companies as well
102
Indian Auto Component Industry
Common Stock Comparison
Electrical Components Tyre Manufacturers Automotive Components
103
Common Stock Comparison (1/3)
Electrical Components (Rs. in Crores)
S.No. Company Name 1 2 3 Bosch India Cummins Amara Raja Market Cap Rs. 27,645.35 14,069.29 1,873.68 Net Debt EV Sales 2012 4,117.22 2,367.36 EBITDA 2012 706.08 361.83 Net Income 2012 591.27 215.06
Rs. -644.31 Rs. 27,001.03 -223.50 -143.68 13,845.79 1,730.00
Rs. 7,997.18 Rs. 1,546.18 Rs. 1,122.56
S.No. Company Name 1 2 3 \ Bosch India Cummins Amara Raja Average Maximum Minimum
EV/Sales EV/EBITDA EBITDA PAT Margin Margin 2012 2013E 2012 2013E 19.33% 14.04% 3.38x 17.15% 14.36% 3.36 15.28% 9.08% 0.73 2.60x 17.46x 12.47x 3.01 0.66 3.01 0.66 19.61 4.78 19.61 4.78 16.29 4.47 16.29 4.47
P/E 2012 23.80 8.71 24.63 8.71 2013E 22.46 8.43 22.46 8.43 24.63x 19.51x
17.26% 12.49% 2.49x 2.09x 13.95x 11.08x 19.33% 14.36% 3.38 15.28% 9.08% 0.73
19.04x 16.80x
104
Source: Company Financials and DCA Research Note: Market data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
Common Stock Comparison (2/3)
Tyre Manufacturers (Rs. in Crores)
S.No. Company Name 1 2 3 4 Apollo Tyres MRF JK Tyres Ceat Market Cap Net Debt EV Sales 2012 9,764.55 6,947.10 4,649.00 EBITDA 2012 826.94 332.63 287.36 Net Income 2012 Rs. 409.90 618.77 -31.99 18.13
Rs. 4,659.48 Rs. 2,698.98 4,314.85 444.70 385.26 2,186.18 2,037.00 1,259.70
Rs. 7,358.46 Rs. 12,153.29 Rs. 1,150.11 6,501.03 2,481.70 1,644.96
S.No. Company Name 1 2 3 4 \ Apollo Tyres MRF JK Tyres Ceat Average Median Maximum Minimum
EV/Sales EV/EBITDA EBITDA PAT Margin Margin 2012 2013E 2012 2013E 9.46% 3.37% 0.61x 0.54x 6.40x 5.02x 8.47% 6.18% 7.23% 7.32% 9.46% 6.34% 0.67 0.39% 0.35 1.88% 0.48 6.34% 0.67 0.51 0.32 0.32 0.42 0.54 0.32 7.86 7.46 5.72 6.86x 6.93 7.86 5.72 5.30 6.09 6.43 5.71x 5.70 6.43 5.02 4.79% -0.46% 0.36
P/E 2012 2013E 11.37x 7.40x 6.97 NA 21.25 13.20x 11.37 21.25 6.97 10.33 10.79 5.43 8.49x 8.87 10.79 5.43
2.41% 0.50x 0.42x
4.79% -0.46% 0.35
105
Source: Company Financials and DCA Research Note: Market data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
Common Stock Comparison (3/3)
Automotive Components (Rs. in Crores)
S.No. Company Name 1 2 3 4 5 Bharat Forge Motherson Sumi SKF India Amtek Auto Automotive Axle Market Cap Net Debt EV Rs. 9,197.53 9,909.11 3,276.68 7,056.49 667.11 Sales EBITDA Net Income 2012 Rs. 413.05 259.60 208.49 259.48 57.56 Rs. 7,108.55 Rs. 2,088.99 5,762.51 3,501.12 2,067.09 616.65 4,146.60 -224.44 4,989.41 50.46 2012 2012 Rs. 6,279.06 Rs. 1,007.06 14,776.60 2,433.40 5,111.92 1,009.77 1,037.00 318.74 1,313.58 117.26
S.No. Company Name 1 2 3 4 5 \ Bharat Forge Motherson Sumi SKF India Amtek Auto Automotive Axle Average Median Maximum Minimum
EV/Sales EV/EBITDA EBITDA PAT Margin Margin 2012 2013E 2012 2013E 16.04% 6.58% 1.46x 1.27x 9.13x 7.92x 7.02% 13.10% 25.70% 11.61% 14.69% 13.10% 25.70% 7.02% 1.76% 0.67 8.57% 1.35 5.08% 1.38 5.70% 0.66 5.70% 1.35 8.57% 1.46 1.76% 0.66 0.88 0.98 1.19 0.52 0.98 1.27 0.52 9.56 10.28 5.37 5.69 8.01x 9.13 10.28 5.37 11.84 8.15 5.39 4.42 7.54x 7.92 11.84 4.42
P/E 2012 2013E 17.21x 13.80x 22.20 16.79 7.97 10.71 16.79 22.20 7.97 16.69 12.87 3.02 7.81 12.87 16.69 3.02
106
5.54% 1.10x 0.97x
14.98x 10.84x
Source: Company Financials and DCA Research Note: Market data as of September 30, 2012 and Balance Sheet data as of March 31, 2012
Indian Auto Component Industry
Precedent Transactions
Mergers and Acquisitions Private Equity Entry Private Equity Exits
107
Precedent Transactions
Mergers and Acquisitions (Amount in $MM)
Date Target Acquirer Tube Investments of India Ltd. Varroc Engineering Pvt. Ltd. JBM Auto Ltd. Deal Value $83.96 72.00 37.12 17.53 13.70 10.01 197.79 30.48 EV / EBITDA NA NA NA NA NA 9.88x NA NA
13/07/2012 Shanthi Gears Ltd. 12/3/2012 3/1/2012 23/03/2012
Varroc Lighting Systems India Pvt. Ltd.
Tesco Go SpA
York Transport Equipment TRF Ltd. (Asia) Pte. Ltd. Vijayjyot Seats Pvt. Ltd., Seat 6/11/2012 CVG Seating India Pvt. Ltd. Assembly Assets 5/1/2012 Trinity India Ltd. Ring Plus Aqua Ltd. Samvardhana Mother son Global Holdings Ltd. Continental AG
13/07/2011 Peguform GmbH 18/04/2011 Modi Tyres Co. Pvt. Ltd.
108
Source: VC Edge and DCA Research
Precedent Transactions
Mergers and Acquisitions (Amount in $MM)
Date 17/02/2011 Target Acquirer KSPG Automotive India Pvt. Ltd. Dana Holding Corp. Banco Products India Ltd. F.S. Fehrer Automotive GmbH
Deal Value
$19.05 13.00 24.10 14.98
EV / EBITDA
NA NA NA NA
Kirloskar Oil Engines Ltd., Bearings Business Division Axles India Ltd., 25/04/2011 Commercial Truck Axle Nederlandse Radiateuren 22/02/2010 Fabriek BV 25/02/2010 Harita-Fehrer Ltd.
109
Source: VC Edge and DCA Research
Precedent Transactions
Private Equity Entry (Amount in $MM)
Date 2/8/2012 Target Acquirer Deal Value $15.35 15 104 EV / EBITDA NA NA NA
Craftsman Automation Pvt. Standard Chartered Private Ltd. Equity Advisory India Pvt. Ltd. Lhotse Investments Ltd. Navis Capital India Pvt. Ltd.
10/7/2012 Lumax Ancillary Ltd. 27/06/2011 Classic Stripes Pvt. Ltd.
22/12/2011
3/11/2011 22/02/2011
Endurance Technologies Pvt. Ltd.
Actis LLP
71
28 10.19
10.73x
22.60x 6.77x
20/09/2010
26/04/2010
Kotak India Growth Fund I, Minda Corporation Ltd. Kotak India Growth Fund II, Kotak Investment Advisors Ltd. Standard Chartered Private Innoventive Industries Ltd. Equity Advisory India Pvt. Ltd. Craftsman Automation Pvt. International Finance Corp. Ltd. New Silk Route PE Asia Fund Rolex Rings Pvt. Ltd. LP
37
37
NA
12.77x
110
Source: VC Edge and DCA Research
Precedent Transactions
Private Equity Exits (Amount in $MM)
Date Target Seller Exit Value $37.96 71.00 20.00 0.70 15.55 Percentage Sought 9.33% 13.72% NA 1.40% 8.17%
28/06/2012 Balkrishna Industries Ltd. ChrysCapital Investment Advisors 22/12/2011 Endurance Technologies Standard Chartered Private Equity Pvt. Ltd. Ltd. Actis New Vernon Private Equity Ltd. ChrysCapital V LLC
09/05/2011 Sandhar Technologies 5/4/2011 Setco Automotive Ltd. 22/11/2010 Amtek India Ltd.
19/11/2010 Amtek India Ltd.
29/09/2010 Autoline Industries Ltd.
Warburg Pincus India Pvt. Ltd.
Duke India Automotive Fund
8.92
0.52
4.81%
0.81%
111
Source: VC Edge and DCA Research
Indian Auto Component Industry
Profiles of Listed Companies
Amara Raja Batteries Ltd Bosch Ltd Cummins India Ltd Apollo Tyres Ltd MRF Ltd JK Tyre and Industries Ltd CEAT Ltd Bharat Forge Company Ltd Motherson Sumi Systems Ltd SKF Ltd
112
Amara Raja Batteries Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Andhra Pradesh, India 1985
Business Overview
Amara Raja Batteries Ltd. is the largest manufacturer of Standby Valve Regulated Lead Acid (VRLA) batteries in the Indian Ocean Rim region in collaboration with Johnson Controls Inc., USA The Company has expanded its network to 240 franchisees and over 18,000 retailers in AMARON® format It is the preferred supplier to major telecom service providers, Telecom equipment manufacturers, the UPS sector (OEM & Replacement), Indian Railways and to Power, Oil & Gas companies amongst other industry segments Amara Raja's plant is located in Karakambadi, a village 12 km from the temple town of Tirupati
113
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low* : Key Management Non Exe. Chairman : Ramachandra N Galla Managing Director : Jayadev Galla Director : Director : Director : Director : Shu Qing Yang P Lakshmana Rao N Sri Vishnu Raju Jorge A Gonzalez
6th December 2012
1,873.68 8.71x 267/89.50
Note: 52 week High / Low is taken as on
Amara Raja Batteries Limited
Segment Sales
Amara Raja Batteries Limited
Automotive Batteries (55%)
Industrial Batteries (45%)
Telecom (45%) OEMs (25%) UPS (38%) Replacement (75%) Railway & Others (17%)
114
Source: Annual Report and DCA Research
Amara Raja Batteries Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 1,313.18 Rs. 1,464.48 Rs. 1,761.05 Rs. 2,367.36 21.71% Rs. 1,405.59 % Growth 11.52% 20.25% 34.43% Gross Profit 470.72 395.73 524.00 516.86 679.59 19.75% % Margin 30.14% 35.78% 29.35% 28.71% 33.49% EBITDA 234.35 207.38 296.88 264.25 361.83 20.39% % Margin 15.79% 20.27% 15.01% 15.28% 16.67% EBIT 211.35 172.82 253.94 222.54 315.83 22.26% % Margin 13.16% 17.34% 12.64% 13.34% 15.04% PBT 122.66 254.64 220.38 318.65 37.47% 214.09 % Margin 9.34% 17.39% 12.51% 13.46% 15.23% PAT 80.48 167.03 148.10 215.06 38.77% 146.19 % Margin 6.13% 11.41% 8.41% 9.08% 10.40% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 Rs. 894.02 285.87 405.59 70.29 129.06 271.40 2010 2011 2012 Rs. 975.55 Rs. 1,115.92 Rs. 1,351.52 91.19 99.96 85.54 645.93 823.47 543.64 62.47 45.12 229.22 68.47 67.04 86.58 249.51 348.22 301.80
115
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Amara Raja Batteries Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
2,500 Amount in Crores 40% 35% 30% 25% 20% 1,000 500 Revenue % Growth 2009 1,313.18 2010 1,464.48 11.52% 2011 1,761.05 20.25% 2012 2,367.36 34.43%
GP and GP Margin
800 700 Amount in Crores 600 500 40% 35% 30% 25%
2,000
1,500
400
300 200 100 2009 30.14% 2010 524.00 35.78% 2011 516.86 29.35% 2012 679.59 28.71%
20%
15% 10% 5% 0%
15%
10%
5%
0%
Gross Profit 395.73 % Margin
EBITDA and EBITDA Margin
400 350 Amount in Crores 25% 20% Amount in Crores 15% 10% 5% 250 200 150 100 50 -
PAT and PAT Margin
12% 10% 8% 6% 4% 2% 2009 80.48 2010 167.03 2011 148.10 2012 215.06 0%
300
250 200 150
100
50 EBITDA % Margin
2009
207.38 15.79%
2010
296.88 20.27%
2011
264.25 15.01%
2012
361.83 15.28%
0%
PAT
% Margin
6.13%
11.41%
8.41%
9.08%
116
Bosch Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Bangalore, India 1951
Business Overview
Bosch Limited was founded in 1922 and is headquartered in Bengaluru, India. It is a subsidiary of Robert Bosch GmbH. The company was formerly known as Motor Industries Company Limited and changed its name to Bosch Limited in 2008
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : 27,465.35 24.63x 9,400/6,425
Key Management Chairman : Managing Director : JMD : Director : Director : Director :
Note: 52 week High / Low is taken as on
The company engages in manufacturing and trading of automotive products, and industrial equipment and consumer products
The company has a strong focus on R&D, and spends ~ 2-3% of its turnover on R&D With a network spanning across 1,000 towns, and over 5,000 authorized representatives, Bosch Limited facilitates superior product availability and after-sales services
A Hieronimus V K Viswanathan Manfred Duernholz B Bohr Renu S Karnad Prasad Chandran
6th December 2012
117
Bosch Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 4,552.72 Rs. 4,989.84 Rs. 6,237.79 Rs. 7,130.98 264.37 284.31 276.39 307.14 3,095.46 3,385.23 4,098.04 4,728.44 1,070.81 1,067.77 1,325.87 951.45 433.56 144.62 302.13 658.72 477.02 369.83 562.86 1,189.40
118
CAGR 2012 (9M)* 4,601.82 Rs. 4,809.53 Rs. 6,681.75 Rs. 7,997.18 20.23% Rs. 6,520.67 4.51% 38.93% 19.69% 2,853.10 1,787.10 1,863.04 2,564.34 3,028.33 19.22% 38.83% 38.74% 38.38% 37.87% 43.75% 1,083.15 875.88 847.12 1,291.77 1,546.18 20.86% 19.03% 17.61% 19.33% 19.33% 16.61% 845.37 573.42 543.49 1,037.80 1,288.34 30.97% 12.46% 11.30% 15.53% 16.11% 12.96% 856.57 793.42 1,202.79 1,573.99 22.48% 1,101.18 18.61% 16.50% 18.00% 19.68% 16.89% 633.86 590.65 858.91 1,122.56 20.99% 786.12 13.77% 12.28% 12.85% 14.04% 12.06%
2008
2009
2010
2011
* The company’s financial year ends in December every year Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt Note : PBT is more than EBIT because of high interest and investment income
Bosch Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Revenue 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 3,500 3,000 Amount in Crores 2,500 2,000 1,500 1,000 500 -
GP and GP Margin
39% 39% 39% 38% 38% 38% 38% 38% 37% 37%
Amount in Crores
2008
4,601.8
2009
4,809.5 4.51%
2010
6,681.7 38.93%
2011
7,997.1 19.69%
2008
38.83%
2009
38.74%
2010
38.38%
2011
37.87%
Gross Profit 1,787.10 1,863.04 2,564.34 3,028.33
% Growth
% Margin
EBITDA and EBITDA Margin
1,800 1,600 1,400 1,200 1,000 800 600 400 200 EBITDA % Margin 20% 19% Amount in Crores 19% 18% 18% 17% 1,200 1,000 800 600 400 200 -
PAT and PAT Margin
15% 14% 14% 13% 13% 12% 12% 2008 633.86 2009 590.65 2010 858.91 2011 1,122.56 11%
Amount in Crores
2008
875.88 19.03%
2009
847.12 17.61%
2010
1,291.77 19.33%
2011
1,546.18 19.33%
17%
PAT
% Margin 13.77%
12.28%
12.85%
14.04%
119
Cummins India Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Pune, India 1962
Business Overview
Cummins India Limited engages in the manufacturing and sale of internal combustion engines, gensets, and parts for power generation, construction, compressor, mining, marine, locomotive, and fire-fighting applications in India and internationally Cummins India Limited operates as a subsidiary of Cummins Inc. The company was formerly known as Kirloskar Cummins Limited and changed its name to Cummins India Limited in 1997 The Group spans 200 locations in the country and employs close to 14,000 individuals 2012 marks fifty years of Cummins’ operations in India. The journey has been towards fulfilling the Company's Vision of 'Making people’s lives better
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Director : Director : Director : Director : Anant J Talaulicar M A Levett John Wall Patrick Ward James Kelly 14,069.29 23.80x 517.90/322
120
Note: 52 week High / Low is taken as on
6th
December 2012
Cummins India Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 2,188.39 Rs. 2,350.83 Rs. 2,865.66 Rs. 3,101.69 22.91 8.64 1,394.65 1,561.00 1,806.27 2,043.15 32.32 55.93 103.73 223.50 92.75 66.45 148.59 228.82 682.76 430.14 467.70 471.04 2009 2010 2011 2012 3,304.28 Rs. 2,844.87 Rs. 4,042.53 Rs. 4,117.22 -13.90% 42.10% 1.85% 955.80 920.62 1,353.49 1,368.98 28.93% 32.36% 33.48% 33.25% 477.24 527.49 768.91 706.08 14.44% 18.54% 19.02% 17.15% 431.68 491.41 732.27 664.15 13.06% 17.27% 18.11% 16.13% 599.02 610.91 802.37 824.63 18.13% 21.47% 19.85% 20.03% 433.66 443.87 590.99 591.27 13.12% 15.60% 14.62% 14.36% CAGR 2013 (3M) 7.61% Rs. 1,258.75 12.72% 13.95% 15.44% 11.24% 10.89% 461.54 36.67% 232.49 18.47% 221.10 17.57% 258.24 20.52% 180.55 14.34%
121
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt Note : PBT is more than EBIT because of high interest and investment income
Cummins India Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Revenue % Growth 50% 40% 30% 20% Amount in Crores 1,600 1,400 1,200 1,000 800 600 400 200 2009 28.93% 2010 920.62 32.36% 2011 33.48% 2012 33.25%
GP and GP Margin
34% 33% 32% 31% 30% 29% 28% 27% 26%
Amount in Crores
10%
0% -10% 2009 3,304.2 2010 2,844.8 -13.90% 2011 4,042.5 42.10% 2012 4,117.2 1.85% -20%
Gross Profit 955.80 % Margin
1,353.49 1,368.98
EBITDA and EBITDA Margin
900 800 700 600 500 400 300 200 100 EBITDA % Margin 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 700 600 Amount in Crores 500 400 300 200 100 -
PAT and PAT Margin
16% 16% 15% 15% 14% 14% 13% 13% 12% 12%
Amount in Crores
2009
477.24 14.44%
2010
527.49 18.54%
2011
768.91 19.02%
2012
706.08 17.15%
2009 433.66
2010 443.87
2011 590.99
2012 591.27
PAT
% Margin
13.12%
15.60%
14.62%
14.36%
122
Apollo Tyres Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Kochi, Kerala 1972
Business Overview
Apollo Tyres is a leading tyre manufacturer in India with subsidiaries in South Africa and Europe The company has nine manufacturing units across the world, 4 in India, 2 in South Africa, 2 in Zimbabwe and 1 in the Netherlands The major brands of the company are Apollo, Dunlop, Kaizen, Maloya, Regal and Vredestein At the end of its financial year on March 31, 2012, Apollo Tyres had clocked a turnover of US$ 2.5 billion, backed by a global workforce of approximately 16,000 employees Apollo Tyres Ltd is well traded in India with 53.06% of its shares held by the public, government entities, banks and financial institutions
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Onkar S Kanwar 4,659.48 11.37x 102.45/53
Vice Chairman & MD : Neeraj Kanwar Whole Time Director : Sunam Sarkar Whole Time Director : US Oberoi Director : Director :
Note: 52 week High / Low is taken as on
A K Purwar M R B Punja
6th December 2012
123
Apollo Tyres Limited
Product Portfolio
124
Source: Annual Report
Apollo Tyres Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 4,994.54 Rs. 8,120.74 Rs. 8,867.72 Rs. 12,153.29 34.50% Rs. 6,539.53 % Growth 62.59% 9.20% 37.05% Gross Profit 2,349.60 1,307.03 3,089.97 3,005.82 3,465.06 38.40% % Margin 26.17% 38.05% 33.90% 28.51% 35.93% EBITDA 682.65 478.86 1,167.42 976.09 1,150.11 33.92% % Margin 9.59% 14.38% 11.01% 9.46% 10.44% EBIT 533.72 350.37 913.55 705.77 852.25 34.49% % Margin 7.02% 11.25% 7.96% 7.01% 8.16% PBT 213.38 826.64 546.49 554.16 37.45% 397.57 % Margin 4.27% 10.18% 6.16% 4.56% 6.08% PAT 139.15 653.35 440.16 409.90 43.35% 290.22 % Margin 2.79% 8.05% 4.96% 3.37% 4.44% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 8,394.52 2,872.01 2,832.77 173.04 792.98 1,349.74 Rs. 3,134.66 Rs. 5,540.67 Rs. 7,309.34 890.73 1,707.16 2,480.22 1,349.64 1,967.82 2,412.53 362.09 348.98 190.89 501.88 1,044.41 1,118.74 360.73 475.51 995.05
125
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Apollo Tyres Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
14,000 Amount in Crores 12,000 10,000 8,000 6,000 4,000 2,000 Revenue % Growth 2009 4,994.54 2010 8,120.74 62.59% 2011 8,867.72 9.20% 2012 12,153.29 37.05%
GP and GP Margin
70% 60% 50% 40% 30% 20% 10% 0% Amount in Crores 4,000 3,500 3,000 2,500 2,000 1,500 1,000 40% 35% 30% 25% 20% 15% 10%
500
2009 26.17% 2010 38.05% 2011 33.90% 2012 28.51%
5%
0%
Gross Profit 1,307.03 3,089.97 3,005.82 3,465.06 % Margin
EBITDA and EBITDA Margin
1,400 1,200 Amount in Crores 1,000 800 600 400 200 EBITDA % Margin 2009 478.86 9.59% 2010 1,167.42 14.38% 2011 976.09 11.01% 2012 1,150.11 9.46% 16%
PAT and PAT Margin
700
600 Amount in Crores 500 400 300 200 100 PAT % Margin 2009 139.15 2.79% 2010 653.35 8.05% 2011 440.16 4.96% 2012 409.90 3.37%
14%
12% 10% 8%
6%
4% 2% 0%
9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
126
MRF Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Chennai, India 1946
Business Overview
MRF Limited, together with its subsidiaries, engages in the manufacturing, distribution, and sale of tyres for various kinds of vehicles in India In addition, the company operates MRF T&S shops for tyre shopping and wheel balancing services; and offers tyredrome and tyre maintenance services, as well as training to unemployed young men in light and heavy commercial vehicle driving through its MRF Institute of Driver Development
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : 4,314.85 6.97x 11,829/6,471
Key Management Chairman & MD : K M Mammen
Managing Director : Arun Mammen Executive Director : K M Philip Executive Director : Rahul Mammen Mappillai Director : K C Mammen MRF's team of 300 engineers and scientists gives MRF its enormous strength in product design
Note: 52 week High / Low is taken as on 6th December 2012
The company exports its tyres and conveyor belts to America, Europe, the Middle East, Japan, and the Pacific region
127
MRF Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2008 2009 2010 2011 Revenue Rs. 5,065.51 Rs. 5,692.49 Rs. 7,475.08 Rs. 9,764.55 % Growth 12.38% 31.31% 30.63% Gross Profit 1,110.00 1,473.70 1,774.14 1,849.58 % Margin 21.91% 25.89% 23.73% 18.94% EBITDA 452.47 703.07 842.78 826.94 % Margin 8.93% 12.35% 11.27% 8.47% EBIT 282.26 456.84 581.28 578.70 % Margin 5.57% 8.03% 7.78% 5.93% PBT 210.23 396.25 538.06 893.11 % Margin 4.15% 6.96% 7.20% 9.15% PAT 143.44 250.78 357.50 618.77 % Margin 2.83% 4.41% 4.78% 6.34% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 3,372.19 Rs. 2,762.72 Rs. 4,007.02 Rs. 6,323.69 1,192.42 620.05 1,307.95 2,244.63 1,117.00 1,355.70 1,688.43 2,294.14 102.53 60.13 46.45 58.45 583.93 162.36 869.73 1,126.04 895.87 589.87 1,080.06 1,482.01 CAGR 24.45% 18.55% 22.26% 27.04% 61.96% 62.79%
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt Note : The company’s financial year ends in September
128
MRF Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
12,000 Amount in Crores 10,000 8,000 6,000 35% 30% 25% 20% 15% 10% 5% Amount in Crores 2,500
GP and GP Margin
30% 25% 20% 15% 1,000 500 10% 5%
2,000
1,500
4,000
2,000 Revenue
2008
5,065.51
2009
5,692.49 12.38%
2010
7,475.08 31.31%
2011
9,764.55 30.63%
0%
2008
21.91%
2009
25.89%
2010
23.73%
2011
18.94%
0%
Gross Profit 1,110.00 1,473.70 1,774.14 1,849.58
% Growth
% Margin
EBITDA and EBITDA Margin
1,000 900 800 700 600 500 400 300 200 100 EBITDA % Margin 14% 12% Amount in Crores 10% 8% 6% 4% 2% 0% 700 600 500 400 300 200 100 -
PAT and PAT Margin
7% 6% 5% 4% 3% 2% 1% 2008 143.44 2009 250.78 2010 357.50 2011 618.77 0%
Amount in Crores
2008
452.47 8.93%
2009
703.07 12.35%
2010
842.78 11.27%
2011
826.94 8.47%
PAT
% Margin
2.83%
4.41%
4.78%
6.34%
129
JK Tyres and Industries Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Kolkata, India 1951
Business Overview
JK Tyres & Industries Limited manufactures and sells automobile tyres, tubes, and flaps primarily in India and Mexico The main brands of the company for passenger car tyres are Ultima-XPS, Tornado, Rally, Ultima Sport, Ultima Royale, Vectra, for LCV tyres - Steel King, Brute 4x4, Brute_LT, Elanzo) and for LCV/truck tyre - Jetsteel JDH The company has six modern plants in India which are strategically located at three at Mysore and other at Banmore, Kankroli, Chennai Besides India, JK Tyre has enhanced its global foot print with the acquisition of a Mexican tyre major – Tornel in 2008 to further strengthen JK Tyres presence globally
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Hari Shankar Singhania 444.70 N.A. 131/58.30
Managing Director : Raghupati Singhania Director : Director : Director : Arvind Sigh Mewar Bakul Jain Om Prakash Khaitan
130
Note: 52 week High / Low is taken as on
6th
December 2012
JK Tyres and Industries Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 3,317.22 Rs. 3,552.97 Rs. 4,299.73 Rs. 5,140.50 1,382.42 1,158.90 1,610.75 2,141.93 691.64 849.96 858.34 755.32 48.75 88.29 114.47 104.93 324.87 181.27 297.39 623.89 153.66 27.08 586.43 523.81 2009 2010 2011 2012 3,986.28 Rs. 4,584.68 Rs. 5,978.77 Rs. 6,947.10 15.01% 30.41% 16.20% 748.59 1,384.70 1,310.53 1,382.14 18.78% 30.20% 21.92% 19.90% 101.99 516.16 331.79 332.63 2.56% 11.26% 5.55% 4.79% 29.88 416.56 222.54 211.58 0.75% 9.09% 3.72% 3.05% (145.31) 317.11 111.96 (23.00) -3.65% 6.92% 1.87% -0.33% (149.26) 223.52 65.91 (31.99) -3.74% 4.88% 1.10% -0.46% CAGR 2013 (6M) 20.34% Rs. 2,744.96 22.68% 48.30% 92.03% NA NA 756.00 27.54% 213.50 7.78% 187.03 6.81% 73.31 2.67% 50.70 1.85%
131
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
JK Tyres and Industries Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
8,000 7,000 Amount in Crores 6,000 5,000 4,000 3,000 2,000 1,000 35% 30% Amount in Crores 25% 20% 15% 10% 5% 2009 3,986.2 2010 4,584.6 15.01% 2011 5,978.7 30.41% 2012 6,947.1 16.20% 1,600 1,400 1,200 1,000 800 600 400 200 2009 18.78% 2010 30.20% 2011 21.92% 2012 19.90%
GP and GP Margin
35% 30% 25% 20% 15% 10% 5% 0%
Revenue % Growth
0%
Gross Profit 748.59 1,384.70 1,310.53 1,382.14 % Margin
EBITDA and EBITDA Margin
600 500 Amount in Crores 400 300 200 100 EBITDA % Margin 12% 10% 8% 6% 4% 2% Amount in Crores 250 200 150 100 50 (50) (100) (150) (200)
PAT and PAT Margin
6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5%
2009
101.99 2.56%
2010
516.16 11.26%
2011
331.79 5.55%
2012
332.63 4.79%
0%
2009 (149.26)
2010 223.52
2011 65.91
2012 (31.99)
PAT
% Margin
-3.74%
4.88%
1.10%
-0.46%
132
CEAT Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Mumbai, India 1958
Business Overview
CEAT Limited engages in the manufacturing and sale of automotive tires, tubes, and flaps in India The products of CEAT are marketed in India as well as across the world to countries such as the USA, Bangladesh, Pakistan, Vietnam, Iran, Nigeria, Egypt and other African, Middle-East and FarEast Asian countries The research facilities of the company have received a certificate of approval from the Department of Scientific and Industrial Research (DSIR) CEAT won the Employer Branding Award for "Excellence in Training 200708" (Awards by the Asia Pacific HR congress)
133
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Vice Chairman : R P Goenka H V Goenka 385.26 21.25x 125/66.20
Managing Director : Anant Vardhan Goenka Director : M S Gupta
Note: 52 week High / Low is taken as on
6th
December 2012
CEAT Limited
Initiatives Undertaken in 2011-12
134
CEAT Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure 2009 2010 2011 2012 Rs. 1,656.68 Rs. 2,160.98 Rs. 2,853.15 Rs. 3,062.17 645.14 693.02 1,011.36 1,295.66 488.38 629.21 647.44 673.97 201.52 160.37 48.90 35.96 40.87 236.41 607.54 144.43
135
2009
2010
2011
2012
2,387.01 Rs. 2,851.78 Rs. 3,631.13 Rs. 4,649.00 19.47% 27.33% 28.03% 386.49 726.80 655.42 843.51 16.19% 25.49% 18.05% 18.14% 55.74 333.62 165.58 287.36 2.34% 11.70% 4.56% 6.18% 30.13 306.12 129.64 215.53 1.26% 10.73% 3.57% 4.64% (37.17) 243.43 41.76 24.22 -1.56% 8.54% 1.15% 0.52% (16.11) 162.48 26.47 18.13 -0.67% 5.70% 0.73% 0.39%
CAGR 2013 (6M) 24.88% Rs. 2,435.90 29.71% 72.75% 92.68% NA NA 710.97 29.19% 195.36 8.02% 159.44 6.55% 49.62 2.04% 32.80 1.35%
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
CEAT Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Revenue % Growth 30% Amount in Crores 25% 20% 15% 10% 5% 2009 2,387.0 2010 2,851.7 19.47% 2011 3,631.1 27.33% 2012 4,649.0 28.03% 0% 900 800 700 600 500 400 300 200 100 -
GP and GP Margin
30% 25% 20% 15%
Amount in Crores
10%
5% 2009 16.19% 2010 2011 2012 0%
Gross Profit 386.49 % Margin
726.80
25.49%
655.42
18.05%
843.51
18.14%
EBITDA and EBITDA Margin
400 350 Amount in Crores 14% 12% Amount in Crores 10% 8% 6% 4% 2% 0% 180 160 140 120 100 80 60 40 20 (20) (40)
PAT and PAT Margin
7%
6%
5% 4% 3%
300
250 200 150
2%
1% 0% 2009 (16.11) 2010 162.48 2011 26.47 2012 18.13 -1%
100
50 EBITDA % Margin
2009
55.74 2.34%
2010
333.62 11.70%
2011
165.58 4.56%
2012
287.36 6.18%
PAT
% Margin
-0.67%
5.70%
0.73%
0.39%
136
Bharat Forge Company Limited
Company Profile
Company Information Head quarters: Year of Incorporation : Pune, India 1961
Business Overview
Bharat Forge Ltd., the Pune based Indian multinational & the flagship company of the ~US$2.5bn Kalyani Group is a global forging conglomerate It is the first Indian automotive components manufacturing company that made a major break through in China in 2003 by securing large business in First and Second Automotive Works, the two leading automobile manufacturers in that country The company has 11 manufacturing locations across 5 countries, 4 in India, 3 in Germany, 1 in Sweden, 1 in the USA and 2 in China The company has built a strong base of intellectual capital & highly skilled manpower, with over 1,200 engineers in various manufacturing disciplines
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Deputy MD : Executive Director : Executive Director : Executive Director : Executive Director :
Note: 52 week High / Low is taken as on 6th
7,108.55 17.21x 347/231
B N Kalyani G K Agarwal BP Kalyani Sunil K Chaturvedi Amit B Kalyani S E Tandale
December 2012
137
Bharat Forge Company Limited
Clientele
Domestic
Global
138
Source: Annual Report
Bharat Forge Company Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars Revenue Rs. % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 5,343.78 Rs. 5,386.84 Rs. 5,674.81 Rs. 7,334.20 2,190.84 2,252.66 1,901.39 2,760.76 1,666.89 1,463.00 1,952.95 2,183.90 488.34 597.66 396.42 671.78 547.21 142.58 508.93 1,252.04 835.23 401.22 538.21 515.07 2009 2010 2011 2012 4,775.08 Rs. 3,327.16 Rs. 5,086.95 Rs. 6,279.06 -30.32% 52.89% 23.43% 1,598.96 1,119.48 1,778.96 2,216.96 11.51% 33.49% 33.65% 34.97% 35.31% 574.86 356.09 799.64 1,007.06 20.55% 12.04% 10.70% 15.72% 16.04% 323.22 111.49 544.92 705.38 29.71% 6.77% 3.35% 10.71% 11.23% 110.23 (64.70) 436.62 599.52 75.86% 2.31% -1.94% 8.58% 9.55% 55.36 (63.38) 290.16 413.05 95.40% 1.16% -1.90% 5.70% 6.58% CAGR 2013 (6M) 9.56% Rs. 1,803.98 686.91 38.08% 438.01 24.28% 326.03 18.07% 297.98 16.52% 207.99 11.53%
139
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Bharat Forge Company Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
7,000 Amount in Crores 6,000 5,000 4,000 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 2,500 Amount in Crores 2,000 1,500 1,000 500 2009 33.49% 2010 33.65% 2011 34.97% 2012 35.31%
GP and GP Margin
36% 35% 35% 34% 34% 33% 33%
3,000
2,000 1,000 Revenue % Growth 2009 4,775.0 2010 3,327.1 -30.32% 2011 5,086.9 52.89% 2012 6,279.0 23.43%
Gross Profit 1,598.96 1,119.48 1,778.96 2,216.96 % Margin
EBITDA and EBITDA Margin
1,200 1,000 Amount in Crores 800 600 400 200 EBITDA % Margin 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 500 400 Amount in Crores 300 200 100 (100)
PAT and PAT Margin
8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
2009
574.86 12.04%
2010
356.09 10.70%
2011
799.64 15.72%
2012
1,007.06 16.04%
2009 55.36
2010 (63.38)
2011 290.16
2012 413.05
PAT
% Margin
1.16%
-1.90%
5.70%
6.58%
140
Motherson Sumi Systems Limited
Company Profile
Company Information Head quarters : Year of Incorporation : New Delhi, India 1986
Business Overview
Motherson Sumi was started in the year 1975 as a cable manufacturing company but diversified its product portfolio to enter the auto components sector in 1983 The company provides tailored solutions for manufacturing plastic parts as per the diverse requirements of its customers The company is one of the leading manufacturers of automotive wiring harnesses and mirrors for passenger cars in India
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Vice Chairman : Director : Director : Director : Mohinder Singh Gujral Vivek Chaand Sehgal Laksh Vaaman Sehgal Bimal Dhar Amarjit Singh 5,762.51 22.20x 186/86
It has a complete range of services from tool design to tool manufacturing and injection molding under one roof
Given the vast number of Joint Ventures and cross-border M&A deals done by the company in the last few years, it is considered to be an industry leader in terms of deal making
141
Note: 52 week High / Low is taken as on
6th
December 2012
Motherson Sumi Systems Limited
Milestones
142
Motherson Sumi Systems Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2009 2010 2011 2012 CAGR 2013 (6M) Revenue Rs. 2,595.64 Rs. 6,702.19 Rs. 8,249.10 Rs. 14,776.60 78.56% Rs. 12,278.53 % Growth 158.21% 23.08% 79.13% Gross Profit 4,178.81 967.19 2,330.67 2,819.60 4,720.90 69.63% % Margin 37.26% 34.77% 34.18% 31.95% 34.03% EBITDA 731.88 239.50 327.15 935.50 1,037.00 62.99% % Margin 9.23% 4.88% 11.34% 7.02% 5.96% EBIT 400.77 130.44 67.05 857.70 938.00 93.02% % Margin 5.03% 1.00% 10.40% 6.35% 3.26% PBT 255.98 342.79 631.60 411.80 17.17% 279.31 % Margin 9.86% 5.11% 7.66% 2.79% 2.27% PAT 221.20 233.63 390.80 259.60 5.48% 145.72 % Margin 8.52% 3.49% 4.74% 1.76% 1.19% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2009 2010 2011 2012 Rs. 3,489.80 Rs. 3,781.62 Rs. 5,137.30 Rs. 12,056.20 895.09 817.91 1,260.70 4,602.30 783.11 1,164.92 1,608.80 1,871.30 276.62 343.06 353.20 455.70 275.58 412.91 787.40 1,075.80 9.84 162.01 561.40 1,317.60
143
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
Motherson Sumi Systems Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
16,000 14,000 Amount in Crores 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 -
GP and GP Margin
38% 37% 36% 35% 34% 33% 32% 31% 30% 29%
10,000 8,000
6,000
4,000 2,000
Revenue % Growth
Amount in Crores
12,000
2009 2,595.6
2010 6,702.1 158.21%
2011 8,249.1 23.08%
2012 14,776. 79.13%
2009 37.26%
2010 34.77%
2011 34.18%
2012 31.95%
Gross Profit 967.19 2,330.67 2,819.60 4,720.90 % Margin
EBITDA and EBITDA Margin
1,200 1,000 Amount in Crores 800 600 400 200 EBITDA % Margin 12% 10% 8% 6% 4% 2% Amount in Crores 450 400 350 300 250 200 150 100 50 -
PAT and PAT Margin
9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2009
239.50 9.23%
2010
327.15 4.88%
2011
935.50 11.34%
2012
1,037.00 7.02%
0%
2009 221.20
2010 233.63
2011 390.80
2012 259.60
PAT
% Margin
8.52%
3.49%
4.74%
1.76%
144
SKF Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Mumbai, India 1961
Business Overview
SKF India Limited provides products, solutions, and services in the areas of rolling bearings, seals, mechatronics, services, and lubrications systems in India and internationally As the world leader in bearing technology for over a century, SKF has developed a unique understanding of rotating equipment and how machine components and industrial processes are interrelated The company provides services, including engineering consultancy, logistics, asset management, condition monitoring, mechanical maintenance, remanufacturing, and training services The company has manufacturing facilities in Bommasandra in Karnataka and in Chinchwad in Maharashtra
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Director : Director : Director : Director : K C Mehra D C Shroff N J Jhaveri P R Menon Tryggve Sthen 3,501.12 16.79x 728/535.45
145
Note: 52 week High / Low is taken as on
6th
December 2012
SKF Limited
Financials (Rs. in Crores)
Particulars Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 950.54 Rs. 1,081.19 Rs. 1,284.70 Rs. 1,508.03 0.15 0.10 0.01 645.15 714.73 848.71 1,011.24 191.93 289.26 211.91 224.44 71.64 55.12 96.80 85.37 216.98 167.96 320.51 426.52 CAGR 2012 (9M) Rs. 1,626.13 Rs. 1,579.87 Rs. 2,080.51 Rs. 2,433.40 14.38% Rs. 1,698.06 -2.84% 31.69% 16.96% 592.36 474.51 427.19 554.07 642.70 10.64% 29.18% 27.04% 26.63% 26.41% 34.88% 203.07 208.35 175.86 275.70 318.74 15.23% 12.81% 11.13% 13.25% 13.10% 11.96% 170.97 179.41 146.88 242.36 280.58 16.07% 11.03% 9.30% 11.65% 11.53% 10.07% 194.39 143.10 266.07 313.92 17.32% 235.62 11.95% 9.06% 12.79% 12.90% 13.88% 127.66 94.25 177.02 208.49 17.76% 157.90 7.85% 5.97% 8.51% 8.57% 9.30% 2008 2009 2010 2011
•The company’s financial year ends in December •Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
146
SKF Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
3,000 Amount in Crores 2,500 2,000 1,500 1,000 500 35% 30% Amount in Crores 25% 20% 15% 10% 5% 0% 2008 1,626.1 2009 1,579.8 -2.84% 2010 2,080.5 31.69% 2011 2,433.4 16.96% 700 600 500 400 300
GP and GP Margin
30% 29% 29% 28% 28% 27% 27% 26% 26% 25%
200
100 2008 29.18% 2009 427.19 27.04% 2010 554.07 26.63% 2011 642.70 26.41%
Revenue % Growth
-5%
Gross Profit 474.51
% Margin
EBITDA and EBITDA Margin
350 300 Amount in Crores 250 200 150 100 50 EBITDA % Margin 14% 13% Amount in Crores 13% 12% 12% 11% 11% 10% 250 200 150 100 50 -
PAT and PAT Margin
9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2008
208.35 12.81%
2009
175.86 11.13%
2010
275.70 13.25%
2011
318.74 13.10%
2008 127.66
2009 94.25
2010 177.02
2011 208.49
PAT
% Margin
7.85%
5.97%
8.51%
8.57%
147
Amtek Auto Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Haryana, India 1988
Business Overview
The Amtek Auto Group, comprises of Amtek Auto, Amtek India and Ahmednagar Forgings, and is one of the largest integrated component manufacturers in India, with a strong global presence The company manufactures components for various sectors, such as the railways, specialty vehicles, aerospace, agricultural, heavy earth moving equipment, construction, and locomotives The company has 43 world class manufacturing facilities located in India (39) and Europe (4) It supplies directly to OEMs in the domestic and global automotive industry and the Ggoup is well positioned in the Indian Auto and NonAuto component markets
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : 2,067.09 7.97x 146.50/70.35
Key Management Chairman : Managing Director : Director : Director : Director : Arvind Dham D S Malik Sanjay Chabbra Rajiv Thakur B Lugani
148
Note: 52 week High / Low is taken as on
6th
December 2012
Amtek Auto Limited
Joint Ventures
Neumayer Tekfor, Germany Magna Powertrain, Can ada Sumitomo Metals, Japan
Auto Division
Amtek Auto
Non Auto Division
American Railcar Industries
Enertec Systems Limited
149
Amtek Auto Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2008 2009 2010 Revenue Rs. 4,656.79 Rs. 3,438.62 Rs. 3,690.85 % Growth -26.16% 7.34% Gross Profit 1,612.90 1,282.38 1,362.41 % Margin 34.64% 37.29% 36.91% EBITDA 966.64 725.65 916.24 % Margin 20.76% 21.10% 24.82% EBIT 756.19 452.81 606.02 % Margin 16.24% 13.17% 16.42% PBT 633.83 275.31 392.41 % Margin 13.61% 8.01% 10.63% PAT 427.42 172.76 240.49 % Margin 9.18% 5.02% 6.52% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 7,272.46 Rs. 8,444.38 Rs. 9,468.34 Rs. 14,600.83 2,899.18 3,898.10 3,808.66 6,378.99 2,952.27 3,198.77 4,399.84 5,801.18 1,037.27 798.15 824.73 1,389.58 1,465.54 1,158.74 967.83 3,454.90 859.13 1,219.67 1,728.43 2,926.02 2011 Rs. 5,111.92 38.50% 1,803.40 3.79% 35.28% 1,313.58 10.76% 25.70% 963.58 8.41% 18.85% 475.09 NA 9.29% 259.48 NA 5.08% CAGR 3.16% 2012 (3M)* Rs. 551.26 225.85 40.97% 169.47 30.74% 114.95 20.85% 70.48 12.79% 50.39 9.14%
*The company’s financial year ends in June Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt
150
Amtek Auto Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
6,000 Amount in Crores 5,000 4,000 3,000 2,000 1,000 Revenue % Growth 2008 4,656.7 2009 3,438.6 -26.16% 2010 3,690.8 7.34% 2011 5,111.9 38.50% 50% 40% 30% 20% 10% 0% -10% -20% -30% 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 -
GP and GP Margin
38% 37% 37% 36% 36% 35% 35% 34% 34% 33%
Amount in Crores
2008 34.64%
2009 37.29%
2010 36.91%
2011 35.28%
Gross Profit 1,612.90 1,282.38 1,362.41 1,803.40 % Margin
EBITDA and EBITDA Margin
1,400 1,200 Amount in Crores 1,000 800 600 400 200 EBITDA % Margin 30% 25% 20% 15% 10% 5% Amount in Crores 450 400 350 300 250 200 150 100 50 -
PAT and PAT Margin
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2008
966.64 20.76%
2009
725.65 21.10%
2010
916.24 24.82%
2011
1,313.58 25.70%
0%
2008 427.42
2009 172.76
2010 240.49
2011 259.48
PAT
% Margin
9.18%
5.02%
6.52%
5.08%
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Automotive Axles Limited
Company Profile
Company Information Head quarters : Year of Incorporation : Mysore, India 1981
Business Overview
Automotive Axles Ltd.(AAL), a Mysore based company is a joint venture of Arvin Meritor Inc., USA (formerly the automotive division of Rockwell International Corporation), and the Kalyani (Bharat Forge) Group
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.) : 2012 P/E : 52 week High / Low* : Key Management Chairman : Director : Director : Director : Director : B N Kalyani Timothy Bowes B B Hattarki B C Prabhakar P C Bhalerao 616.65 10.71x 560/320
With manufacturing facilities located at Mysore, the company is currently the largest independent manufacturer of Rear Drive Axle Assemblies in the country The company manufactures and sells rear drive axle assemblies primarily in India & exports its products to the United States, France, Italy, China, Brazil, and Australia The clientele of AAL includes Ashok Leyland, Eicher, Essar, Telco, Mahindra & Mahindra, Volvo and Bharat Earth Movers etc.
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Note: 52 week High / Low is taken as on
6th
December 2012
Automotive Axles Limited
Financials (Rs. in Crores)
Profit and Loss Account Particulars 2008 2009 2010 2011 CAGR Revenue Rs. 746.85 Rs. 266.30 Rs. 667.99 Rs. 1,009.77 10.58% % Growth -64.34% 150.84% 51.17% Gross Profit 155.47 62.92 136.32 183.82 5.74% % Margin 20.82% 23.63% 20.41% 18.20% EBITDA 116.91 33.64 88.36 117.26 0.10% % Margin 15.65% 12.63% 13.23% 11.61% EBIT 96.02 15.14 67.37 93.87 NA % Margin 12.86% 5.69% 10.09% 9.30% PBT 85.43 12.67 65.89 87.14 0.66% % Margin 11.44% 4.76% 9.86% 8.63% PAT 55.79 9.66 44.07 57.56 1.05% % Margin 7.47% 3.63% 6.60% 5.70% Balance Sheet Particulars Total Assets Total Debt Share Holders Fund Cash & Bank Capital Expenditure Net Working Capital 2008 2009 2010 2011 Rs. 491.36 61.79 243.87 11.33 39.23 149.84
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Rs. 356.73 Rs. 298.51 Rs. 375.19 72.07 45.42 70.66 169.89 174.72 203.87 19.20 8.67 8.97 38.04 2.89 9.54 68.11 73.42 138.38
Note : Net Working Capital = Current Assets – Cash - Short-term Investments – Current Liabilities – Short-term Borrowings – Current Portion of Long-term Debt Note : The company’s financial year ends in September
Automotive Axles Limited
Financials (Rs. in Crores)
Revenue and Revenue Growth
1,200 Amount in Crores 1,000 800 600 400 200 200% 150% 100% 50% 0% -50% 2008 746.85 2009 266.30 -64.34% 2010 667.99 150.84% 2011 1,009.77 51.17% Amount in Crores 200 180 160 140 120 100 80 60 40 20 -
GP and GP Margin
25%
20%
15% 10% 5% 2008 20.82% 2009 2010 2011 0%
Revenue % Growth
-100%
Gross Profit 155.47 % Margin
62.92
23.63%
136.32
20.41%
183.82
18.20%
EBITDA and EBITDA Margin
140 120 Amount in Crores 100 80 60 40 20 EBITDA % Margin 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 70 60 Amount in Crores 50 40 30 20 10 -
PAT and PAT Margin
8%
7%
6% 5% 4%
3%
2% 1% 2008 55.79 2009 9.66 2010 44.07 2011 57.56 0%
2008
116.91 15.65%
2009
33.64 12.63%
2010
88.36 13.23%
2011
117.26 11.61%
PAT
% Margin
7.47%
3.63%
6.60%
5.70%
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Dinodia Capital Advisors
Dinodia Capital Advisors
Corporate Profile
Dinodia Capital Advisors is a Financial Consulting firm based in New Delhi, India. It assists clients across all industries grow, both organically and inorganically. The firm helps clients Raise Capital. Execute Merger & Acquisition opportunities. Restructure, Transform and Turnaround businesses. Resolve challenging problems. Take advantage of financial and strategic opportunities. Balance investor expectations. DELIVER VALUE
155
Dinodia Capital Advisors
Service Offerings
Dinodia Capital Advisors Advise Clients on :
Mergers and Acquisitions
We help in conducting a robust scan of the market and selecting the most suitable buyer or seller
Capital Raising
We advice clients on their capital needs and find them the right partner who brings more than just capital
Restructuring
We advise on business restructurings to help achieve financial, strategic and operational efficiency
India Entry Strategy
We help set up and incubate businesses in India, acting as a trusted advisors to facilitate the India entry strategy
Organizational Transformation
We work with companies to put systems, processes and people in place to help take advantage of both organic and inorganic synergies
Turnarounds
We work closely with companies to help devise and implement a turnaround strategy by plugging the deficiencies of management, technology, capital or partnerships
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Dinodia Capital Advisors Private Limited
C-37, Connaught Place , New-Delhi 110001, Website - www.dinodiacapital.com Tel No: +91 11 2341 7692, 2341 5272, Fax No: +91 11 4151 3666 Email:
[email protected]
This report and the information provided herein is the sole Intellectual property of Dinodia Capital Advisors Pvt. Ltd. (“DCA”) and DCA holds its complete copyrights. No part of this report shall be reproduced / copied / extracted etc. without the express permission of DCA in writing. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced. Neither DCA nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in with the use of this information.