1 August 2020
1QFY21 Results Update | Sector: Chemicals
SRF
Estimate change
TP change
Rating change
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CMP: INR3,792
TP: INR4,550 (+20%)
Buy
Packaging business drives performance for another quarter
PAT, EBITDA above estimates; Revenue in line
SRF’s 1QFY21 margin expansion was robust due to the packaging segment.
Chemicals segment reported strong revenue growth on back of Specialty
Chemicals. However, the COVID-19 pandemic and Auto sector slowdown
impacted Technical Textiles and Refrigerant segments.
Factoring in the estimate beat, we have increased FY21/FY22E earnings by
15%/6%. Maintain
Buy
rating.
1QFY21 revenue declined 12% YoY to INR15.5b (v/s est. INR15.9b) with
EBITDA margin expansion of 450bp to 24.1% (v/s est. 18.3%). This was
driven by the Packaging Film business. EBITDA was up 8% YoY to INR3.7b
(v/s est. INR2.9b) while Adj. PAT grew 16% YoY to INR1.9b (v/s est. INR1.1b).
Chemicals
revenue grew 17% YoY to INR7.1b with EBIT margin contraction
of 50bp YoY to 12.6% (EBIT grew 13%).
Specialty Chemicals
reported robust
performance due to improved margins, better plant efficiencies and positive
sales off-take, despite logistical challenges faced during the nationwide
lockdown. However,
Fluorochemicals
sales were adversely impacted due to
the COVID-19 pandemic. Significant impact in white goods and automobile
sales largely impacted the
refrigerant gases’
segment.
Packaging Film
revenue declined 3% YoY to INR6.8b with margin expansion
of 11.8pp YoY to 32.6% (EBIT grew 52% YoY). Margin expansion was due to
higher spreads, led by supply-demand mismatch and higher share of value-
added products, resulting in higher value realizations across
Indian/international operations.
Technical Textiles’
revenue plunged 63% YoY to INR1.4b due to significant
slowdown in demand from tyre majors. The COVID-19 pandemic impacted
the segment the most, resulting in a complete shutdown of all its
manufacturing facilities across India. However, plants have resumed
manufacturing in a calibrated manner from May’20 and have since
stabilized operations. EBIT loss for the quarter stood at INR140m (v/s profit
of INR569m last year).
Capex:
Company plans to spend INR12-13b on capex in FY21 across
geographies and segments.
Going forward, net-debt to EBITDA should decline from current level of
~2.5x, as surplus cash will be utilized to repay debt. SRF aims to maintain
net-debt to EBITDA in the range of 1.5-1.8x.
The SRF board has approved setting up of an additional facility to produce
100kMT of Chloromethanes at Dahej, which is expected to be completed by
end-Jan’22. The projected cost is INR3.2b and would be funded through a
mix of debt and internal accruals. SRF already has 95kMT capacity, which is
operating at 100% utilization.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E Mar
2020 2021E
Sales
72.1
78.3
EBITDA
14.6
17.0
PAT
9.2
8.6
EBITDA (%)
20.2
21.7
EPS (INR)
157.2
146.7
EPS Gr. (%)
49.4
(6.6)
BV/Sh. (INR)
860
982
Ratios
Net D/E
0.7
0.6
RoE (%)
20.1
15.9
RoCE (%)
13.3
10.9
Payout (%)
9.6
16.0
Valuations
P/E (x)
24.1
25.8
EV/EBITDA (x)
17.7
15.1
Div Yield (%)
0.4
0.5
FCF Yield (%)
(1.3)
3.4
SRF IN
59
217.9 / 2.9
4259 / 2492
-3/8/40
1072
Chemicals business shows resilience
2022E
98.8
22.0
12.2
22.2
208.6
42.1
1,168
0.5
19.4
13.8
11.1
18.2
11.5
0.5
3.2
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-20 Mar-20 Jun-19
52.3
52.3
52.3
11.3
11.3
11.3
17.1
18.3
18.2
19.3
18.1
18.2
Highlights from management commentary
Note: FII includes depository receipts
Research Analyst: Sumant Kumar
(Sumant.Kumar@MotilalOswal.com)
Darshit Shah
(Darshit.Shah@motilaloswal.com) /
Yusuf Inamdar
(yusuf.inamdar@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
SRF
Valuation and view
Performance in 1QFY21 was impacted due to the COVID-19 pandemic and auto
slowdown. While sluggishness in autos dented performance of the Technical
Textiles business, the slowdown in white goods/auto impacted the Refrigerants
business.
However, strong margin expansion was witnessed in Packaging Film segment
due to demand-supply mismatch and higher share of value-added products.
However, management expects it to moderate in FY21 owing to oversupply.
Additionally, in May’20, SRF commenced BOPET film line at Thailand, which
would aid in driving FY21 volumes.
On the positive side, management remains confident of achieving 20-25%
revenue growth in the Specialty Chemicals segment (forms 23% of FY20 sales). It
expects HFC gas demand to improve in 2HFY21 on the back of export
opportunities, which are opening up for the company due to the current geo-
political issue.
Factoring in beat to our estimates, we have increased FY21/FY22E earnings by
15%/6%. We value SRF on an SOTP basis to arrive at a target price of INR4,550.
Maintain
Buy.
FY20
2Q
3Q
4Q
17,378 18,505 18,578
-1.0
2.3
-4.1
14,026 14,603 14,695
3,352 3,902 3,884
19.3
21.1
20.9
929 1,019 1,014
550
475
466
220
56
63
2,093 2,463 2,467
-960
-103
355
3,053 2,566 2,112
41
-864
255
2.0 -35.1
10.3
3,011 3,430 1,857
2,051 3,327 2,212
40.5 132.5
22.3
11.8
18.0
11.9
FY20
2Q
-28.8
25.1
-4.8
6.5
19.3
19.6
50.8
7.4
9.4
13.0
49.2
19.3
13.9
FY21
FY20 FY21
2QE
3QE
4QE
18,818 21,419 22,647 72,094 78,336
8.3
15.7
21.9
0.5
8.7
15,068 16,875 17,662 57,510 61,333
3,750 4,544 4,985 14,584 17,003
19.9
21.2
22.0
20.2
21.7
1,070 1,090 1,100 3,886 4,300
510
530
520 2,007 1,992
220
80
90
491
491
2,390 3,004 3,455 9,182 11,202
0
0
0
-997
89
2,390 3,004 3,455 10,179 11,113
574
721
829
-12 2,617
24.0
24.0
24.0
-0.1
23.4
1,817 2,283 2,626 10,191 8,496
1,817 2,283 2,626 9,194 8,585
-11.4 -31.4
18.7
49.7
-6.6
9.7
10.7
11.6
12.8
11.0
FY21
2QE
3QE
-30.0
29.8
7.0
3.5
18.0
26.0
50.8
8.0
9.4
11.9
49.2
19.9
14.2
-10.0
26.5
16.0
10.0
19.0
23.5
50.4
7.1
9.5
11.8
49.6
21.2
16.1
(INR Million)
FY21
Var
1QE
%
15,872
-3
-10.0
12,964
2,907
28
18.3
1,025
535
150
1,497
0
1,497
359
24.0
1,138
1,138
63
-29.1
7.2
FY20
FY21
Consolidated - Quarterly Earning Model
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO expense
Extra-Ord expense & DO
PBT
Tax
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
1Q
17,633
5.2
14,186
3,447
19.5
925
515
152
2,159
-289
2,448
556
25.8
1,892
1,603
11.2
9.1
1Q
15,452
-12.4
11,728
3,723
24.1
1,040
432
101
2,353
89
2,264
493
21.0
1,771
1,860
16.0
12.0
Key Performance Indicators
Y/E March
Consolidated
Segment Revenue Growth (%)
Technical Textile
Chemicals & Polymers
Packaging Film
Segment EBIT Margins (%)
Technical Textile
Chemicals & Polymers
Packaging Film
Cost Break-up
RM Cost (% of sales)
Staff Cost (% of sales)
Power and Fuel Cost (% of sales)
Other Cost (% of sales)
Gross Margins (%)
EBITDA Margins (%)
EBIT Margins (%)
1Q
-23.8
26.4
11.1
14.9
13.0
20.7
54.1
7.3
8.8
10.3
45.9
19.5
14.3
3Q
-26.1
38.5
-9.2
10.9
17.6
23.4
50.4
7.4
9.8
11.3
49.6
21.1
15.6
4Q
-21.6
5.0
-3.5
11.7
18.0
21.7
49.4
7.9
9.2
12.6
50.6
20.9
15.4
1Q
-63.2
16.9
-3.5
-10.0
12.6
32.6
48.0
8.9
8.0
11.0
52.0
24.1
17.4
4QE
-5.0
35.5
17.0
11.0
20.0
23.0
49.5
6.8
9.3
12.4
50.5
22.0
17.2
-25.1
21.7
-1.9
11.2
17.2
21.3
51.1
7.5
9.3
11.8
48.9
20.2
14.8
-28.6
28.0
8.7
5.9
17.9
26.2
49.8
7.6
9.1
11.9
50.2
21.7
16.2
6 June 2020
2
 Motilal Oswal Financial Services
SRF
Key Exhibits
Exhibit 1: Consolidated revenue trend
36.4%
Revenues (INR m)
29.5%
20.1%
5.2%
17,550
16,762
18,088
19,370
Growth %
18,505 18,578
-1.0% 2.3% -4.1%
Exhibit 2: Consolidated EBITDA trend
EBITDA (INR m)
19.0% 18.1% 17.2%
Margins (%)
24.1%
29.6%
15,452
19.3% 19.5% 19.3% 21.1% 20.9%
17,633
17,378
-12.4%
3,186 3,175 3,120 3,740 3,447 3,352 3,902 3,884 3,723
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 3: Consolidated Adj. PAT trend
PAT (INR m)
Growth %
132.5%
Exhibit 4: Revenue mix trend
Technical Textile
Chemicals
Packaging
Others
2%
3%
4%
4%
4%
4%
4%
4%
4%
2,212
38%
1,860
16.0%
28%
30%
40%
31%
26%
39%
32%
25%
32%
43%
21%
40%
34%
22%
38%
39%
19%
34%
44%
18%
32%
47%
17%
44%
56.0% 53.1%
29.9%
54.0%
1,603
11.2%
40.5%
2,051 3,327
46%
9%
1,441 1,460 1,431 1,809
22.3%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: EBIT mix trend
Technical Textile
2%
38%
31%
28%
2%
47%
24%
27%
2%
36%
32%
30%
2%
33%
51%
15%
Chemicals
3%
50%
27%
20%
Packaging
3%
45%
45%
7%
2%
44%
42%
11%
Others
2%
39%
75%
48%
11%
30%
-5%
0%
Source: Company, MOFSL
1 August 2020
3
 Motilal Oswal Financial Services
SRF
Exhibit 6: Chemicals revenue trend
Revenues (INR m)
56.6%
33.8%
65.8%
45.8%
6,032
6,780
Growth
8,119
38.5%
5.0%
16.9%
8,819
7,052
16%
12%
13%
13%
Exhibit 7: Chemicals EBIT trend
PBIT (INR m)
20%
Margins (%)
19%
18%
18%
13%
4,774
5,420 5,860 8,400
26.4% 25.1%
787
630
766 1,660 787 1,308 1,431 1,589 886
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 8: Packaging Films revenue trend
Revenues (INR m)
69.5%
52.3%
63.3%
18.3%
6,627
11.1%
6,382 6,015
6,774
Growth
Exhibit 9: Packaging Films EBIT trend
PBIT (INR m)
Margins (%)
33%
17%
17%
21%
20%
23%
22%
15%
13%
6,318 6,959 7,026 6,231 7,017
-4.8% -9.2% -3.5% -3.5%
973 1,204 881 1,057 1,456 1,299 1,494 1,307 2,207
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 10: Technical Textiles revenue trend
Revenues (INR m)
-1.2%
8.7%
0.5%
-12.5%
Growth
Exhibit 11: Technical Textiles EBIT trend
PBIT (INR m)
14%
15%
16%
12%
15%
6%
569
209
Margins (%)
11%
12%
-23.8%-28.8%-26.1%-21.6%
1,404
-63.2%
721
695
728
475
365
372
-140
-10%
5,014 4,535 4,543 4,042 3,821 3,230 3,357 3,168
Source: Company, MOFSL
Source: Company, MOFSL
1 August 2020
4
 Motilal Oswal Financial Services
SRF
Management commentary highlights
Specialty Chemicals
Shutdown of manufacturing plants due to the lockdown and supply-chain
disruptions impacted production in Apr’20. Availability of raw material and
intermediates were adversely impacted.
Launched one new product in the pharma category.
Demand outlook in key global markets remains healthy. Expect 20-25% growth
in the Specialty Chemicals business in FY21.
Fluorochemicals
Segment registered subdued performance during the quarter due to (a) lower
volumes and price of refrigerants in both domestic and export markets, and (b)
lower sales from the solvents business.
The company is focused on developing new export markets, while strengthening
its existing key markets, including the US.
The SRF board has approved setting up of an additional facility to produce
100kMT of Chloromethanes at Dahej, which is expected to be completed by
end-Jan’22. The projected cost stands at INR3.2b and would be funded through
a mix of debt and internal accruals. SRF already has 95kMT of capacity, which is
operating at 100% utilization. The capex would provide significant opportunity
for import substitution in MDC and CTC as India is still a large importer and
Chloroform is used for captive requirements.
MDC and CTC are saleable products and are imported in India. Production and
launch of these products in India will help meet the substitution demand.
Project for integrated facility for development of PTFE at an estimated cost of
INR4.2b has been approved by the board in Aug’19. The project is likely to be
delayed by one year due to adverse changes in the global economic scenario
due to the COVID-19 pandemic. Thus, the expected time-line for the project
completion is Nov’22.
Packaging
The segment delivered encouraging performance due to (a) strong demand for
both BOPET/BOPP film segment, (b) robust focus on quality and delivery, along
with several sustainability and R&D initiatives, and (c) increased sales of value-
added products.
SRF commissioned a BOPET film line at Thailand in May’20, which will further
strengthen its presence in the South-East Asian region and expand its customer
base to new geographies. MoM, the plant is operating at 60% utilization level.
Start-up of some new film lines is expected during FY21, which will lead to a
correction in prices.
The company is seeing strong demand for hygienic packaging due to the COVID-
19 pandemic, which it expects to continue post-COVID as well.
Commissioning of a new plant in Hungary has been delayed due to COVID-19,
leading to travel restrictions. Trial runs have been completed and other
approvals are in place. SRF will make an announcement over the next 10-15
days.
1 August 2020
5
 Motilal Oswal Financial Services
SRF
Technical Textiles
Performance of the Tyre Cord Fabric segment remained under severe pressure
due to (a) COVID-19 related slump in auto sector demand, and (b) challenging
macroeconomic environment.
Margins from Polyester Industrial Yarn remained muted due to the Chinese
absorbing anti-dumping duty.
Better demand across segments was witnessed from Jun’20 onwards.
Significant impact was seen in 1QFY21 due to the lockdown and compression in
tyre sales.
SRF’s Technical Textiles business’ manufacturing facilities remained closed
during the lockdown. Lockdown period was efficiently utilized to carry out plant
maintenance activities, which led to further enhancement of operational
excellence parameters.
Others
The board has approved an interim dividend of INR5 per share.
The company is looking to de-risk its supply-chain, which largely depends on
China for import of raw materials.
Capex:
SRF plans to spend INR12-13b on capex in FY21 across geographies and
segments.
SRF has sanctioned investments of IRN1.4b for power and steam for carrying out
maintenance operations and augmenting its existing capacity.
During the quarter, SRF received 3 patents, completely developed by its R&D
department. R&D spends will continue.
Debt:
Going forward, net-debt to EBITDA should decline from current level of
~2.5x, as surplus cash will be utilized to repay debt. SRF aims to maintain net-
debt to EBITDA in the range of 1.5-1.8x.
Valuation and view
Performance in 1QFY21 was impacted due to the COVID-19 pandemic and auto
slowdown. While sluggishness in autos dented performance of the Technical
Textiles business, the slowdown in white goods/auto impacted the Refrigerants
business.
However, strong margin expansion was witnessed in Packaging Film segment
due to demand-supply mismatch and higher share of value-added products.
However, management expects it to moderate in FY21 owing to oversupply.
Additionally, in May’20, SRF commenced BOPET film line at Thailand, which
would aid in driving FY21 volumes.
On the positive side, management remains confident of achieving 20-25%
revenue growth in the Specialty Chemicals segment (forms 23% of FY20 sales). It
expects HFC gas demand to improve in 2HFY21 on the back of export
opportunities, which are opening up for the company due to the current geo-
political issue.
Factoring in beat to our estimates, we have increased FY21/FY22E earnings by
15%/6%. We value SRF on an SOTP basis to arrive at a target price of INR4,550.
Maintain
Buy.
1 August 2020
6
 Motilal Oswal Financial Services
SRF
Valuation Methodology
EV/EBITDA
Technical Textiles
Chemicals & Polymers
Packaging Films
Others
Total EV
Less: Debt
Less: Minority Interest
Add: Cash & Cash Equivalents
Target Mcap (INR mn)
Outstanding share (mn)
Target Price (INR)
CMP (INR)
Upside (%)
FY22 EBITDA (INR m)
1,569
11,259
10,272
287
Multiple (x)
7
18
8
5
EV (INRm)
10,985
2,02,664
82,173
1,433
2,97,255
34,740
-
3,762
2,66,277
58.5
4,550
3,792
20%
Source: MOFSL
Exhibit 12: Change in estimates
Earnings Change
(INR m)
Revenue
EBITDA
Adj. PAT
Old
FY21E
FY22E
76,819
96,231
15,624
21,080
7,485
11,558
New
FY21E
FY22E
78,335
98,794
17,002
21,981
8,585
12,203
Change
FY21E
FY22E
2%
3%
9%
4%
15%
6%
Source: MOFSL
1 August 2020
7
 Motilal Oswal Financial Services
SRF
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Less: Mionrity Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY16
45,927
1.2
36,199
78.8
9,728
21.2
2,750
6,979
1,305
278
5,952
-103
5,849
1,551
0
26.5
0
4,299
4,402
45.4
9.6
FY17
48,218
5.0
38,524
79.9
9,694
20.1
2,834
6,859
1,018
730
6,572
0
6,572
1,422
0
21.6
0
5,150
5,150
17.0
10.7
FY18
55,890
15.9
46,828
83.8
9,062
16.2
3,158
5,904
1,239
688
5,353
463
5,817
1,200
0
20.6
0
4,617
4,154
-19.3
7.4
FY19
70,996
27.0
57,787
81.4
13,209
18.6
3,582
9,627
1,984
280
7,923
262
8,185
1,769
0
21.6
0
6,416
6,155
48.2
8.7
FY20
72,094
1.5
57,510
79.8
14,584
20.2
3,886
10,698
2,007
491
9,182
997
10,179
265
-277
-0.1
0
10,191
9,194
49.4
12.8
FY21E
78,335
8.7
61,333
78.3
17,002
21.7
4,300
12,702
1,992
491
11,202
-89
11,113
2,617
0
23.5
0
8,496
8,585
-6.6
11.0
(INR Million)
FY22E
98,794
26.1
76,813
77.8
21,981
22.2
4,472
17,509
1,993
540
16,056
0
16,056
3,853
0
24.0
0
12,203
12,203
42.1
12.4
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Preference Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Current Investments
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Misc Expenditure
Appl. of Funds
FY16
584
0
27,045
27,630
0
3,820
25,153
56,603
71,410
30,334
41,076
49
1,174
1,606
1,649
20,291
6,711
5,145
3,399
5,036
8,934
7,146
1,477
312
11,357
1,297
0
56,603
FY17
584
0
31,242
31,827
0
2,866
23,962
58,655
77,169
33,169
44,000
49
2,586
1,708
1,959
21,090
8,381
6,569
961
5,178
11,055
8,089
2,606
359
10,035
26
0
58,655
FY18
584
0
35,061
35,645
0
2,914
31,418
69,978
87,502
36,327
51,175
41
5,588
1,217
1,218
25,608
9,582
6,807
967
8,252
13,653
10,442
2,831
380
11,955
0
0
69,978
FY19
585
0
40,708
41,293
0
3,420
36,993
81,706
68,322
12,269
56,053
41
7,536
1,005
1,006
34,243
12,247
10,288
1,989
9,719
17,173
13,824
2,908
441
17,070
0
0
81,706
FY20
585
0
49,748
50,333
0
1,755
40,240
92,328
76,934
15,540
61,394
41
13,933
1,985
2,027
32,373
12,012
8,911
1,255
10,196
17,440
11,117
5,881
442
14,934
0
0
92,328
FY21E
585
0
56,887
57,472
0
1,755
37,740
96,967
85,934
19,840
66,094
41
11,933
0
2,027
36,008
10,677
9,658
2,929
12,745
19,136
12,813
5,881
442
16,873
0
0
96,967
(INR Million)
FY22E
585
0
67,732
68,317
0
1,755
34,740
1,04,812
92,934
24,313
68,622
41
11,933
0
2,027
44,640
12,767
12,180
3,762
15,931
22,449
16,127
5,881
442
22,190
0
0
1,04,812
1 August 2020
8
 Motilal Oswal Financial Services
SRF
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
EBITDA Margins (%)
Net Profit Margins (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Debt/Equity
FY16
75.3
122.4
472.8
9.8
15.5
50.3
31.0
8.0
5.3
24.9
0.3
58.9
21.2
9.6
17.0
10.5
18.5
0.6
0.8
105
41
112
0.9
FY17
88.1
136.6
544.6
11.8
15.9
43.0
27.8
7.0
5.0
25.1
0.3
19.0
20.1
10.7
17.3
11.0
17.8
0.6
0.8
126
50
122
0.8
FY18
71.1
125.1
609.9
16.0
23.5
53.3
30.3
6.2
4.5
27.7
0.4
-110.5
16.2
7.4
12.3
8.5
13.8
0.6
0.8
115
44
126
0.9
FY19
105.2
166.4
705.9
20.0
21.2
36.0
22.8
5.4
3.6
19.4
0.5
428.1
18.6
8.7
16.0
10.7
18.1
1.0
0.9
113
53
127
0.9
FY20
157.2
223.6
860.4
14.0
9.6
24.1
17.0
4.4
3.6
17.7
0.4
-50.7
20.2
12.8
20.1
13.3
15.3
0.9
0.8
119
45
110
0.8
FY21E
146.7
220.3
982.4
20.0
16.0
25.8
17.2
3.9
3.3
15.1
0.5
128.6
21.7
11.0
15.9
10.9
21.0
0.9
0.8
100
45
120
0.7
FY22E
208.6
285.0
1,167.8
20.0
11.1
18.2
13.3
3.2
2.6
11.5
0.5
122.8
22.2
12.4
19.4
13.8
26.8
1.1
0.9
95
45
120
0.5
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY16
5,952
2,750
1,305
-1,551
703
9,159
-947
8,212
-4,771
3,441
0
-707
-5,477
0
1,053
-1,305
-664
507
-409
2,326
1,073
3,399
FY17
6,572
2,834
1,018
-1,422
-2,464
6,538
1,742
8,280
-7,170
1,110
0
-310
-7,479
0
-1,523
-1,018
-821
123
-3,238
-2,438
3,399
961
FY18
5,817
3,158
1,239
-1,200
-2,138
6,876
0
6,876
-13,335
-6,460
0
741
-12,595
0
7,806
-1,239
-1,085
243
5,726
6
961
968
FY19
8,185
3,582
1,984
-1,769
-4,171
7,811
0
7,811
17,232
25,043
212
0
17,444
1
5,575
-1,984
-1,357
-26,469
-24,234
1,021
968
1,989
FY20
10,179
3,886
2,007
-265
-3,762
12,044
0
12,044
-15,009
-2,965
-1,021
4,841
-11,189
0
3,246
-2,007
-983
-1,846
-1,590
-734
1,989
1,255
FY21E
11,113
4,300
1,992
-2,617
-265
14,523
0
14,523
-7,000
7,523
0
0
-7,000
0
-2,500
-1,992
-1,357
0
-5,849
1,674
1,255
2,929
(INR Million)
FY22E
16,056
4,472
1,993
-3,853
-4,484
14,184
0
14,184
-7,000
7,184
0
0
-7,000
0
-3,000
-1,993
-1,357
0
-6,350
833
2,929
3,762
1 August 2020
9
 Motilal Oswal Financial Services
SRF
NOTES
1 August 2020
10
 Motilal Oswal Financial Services
SRF
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
1 August 2020
11
 Motilal Oswal Financial Services
SRF
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
1 August 2020
12