Common Financial Analysis

7/29/2019 Common Financial Analysis

1/35

2012 2011 2010 2009 2008

SC 9.5 9.5 9.5 9.5 9.5

Reserves 520 377 260 188 158

DTL 11 8 3 4 3

Preference shares 0 0 0 0 0

Advance towards capital 0 0 0 0 0

Total Equity 540.5 394.5 272.5 201.5 170.5Secured 0 0 7 55 20

Unsecured 0 0 0 5 0

Total Loans 0 0 7 60 20

Minority Interest 0 0 0 0 0

Other Long term Liabilities 0 0 0 0 0

Total Funds Employed 540.5 394.5 279.5 261.5 190.5

Gross Tangible Block 265 263 228

AD 85 72 58

Net Block 230 180 180 191 170

Capital WIP 13 10 7 4 4

Total Tangible Assets 243 190 187 195 174

Intangible Assets 0.5 0 0 0 0

Intangible Assets under development 0 0 0 0 0

Non current investments 2 2 2 2 8.5

Goodwill on consolidation 0 0 0 0 0

Other noncurrent assets 0 0 0 0 0

Total Non Current assets 245.5 192 189 197 182.5

Current Investments 21 10 0 0 0

Loans and advances (LT and ST) 56 42 20 11 15

Liquid Assets

Inventories 116 80 46 46 31Debtors 157 171 131 70 76

Cash 82 13 2 1.3 12

Other current assets 0 0 0 0 0.2

Total current assets 355 264 179 117.3 119.2

Current maturities of LT debt 1 0.5 0 0 0

Creditors 108 84 86 54 98

Customer Advances 0 0 0 0 0

Other current liabilities 2.5 2 0 0 0

Provisions (LT and ST) 27 27 22 18 27

Total current liabilities & Provisions 138.5 113.5 108 72 125

Net current assets 216.5 150.5 71 45.3 -5.8

Total Assets 539 394.5 280 253.3 191.7

Total Assets Y-O-Y Growth 37% 41% 11% 32% #DIV/0!

Adjusted BV (Cr) 540.5 394.5 272.5 201.5 170.5

#DIV/0!

LT Debt + ST Debt - Cash -82 -13 5 59 8

Sales #REF! #REF! #REF! #REF! #REF!

Capital Employed 458 381.5 277.5 260.2 178.5


2/35


3/35

2012 2011

Operating profit before WC 226 203

% Growth 11% 50%

Inventories -36 -34

Debtors 15 -51

Loans and advances -10 -17

Current Liabilities 25 12Cash from Operations 219 113

Taxes Paid -64 -64

Interest paid 0 0

Net CFO 155 49

% CFO Growth 216% -6%

PAT 151.9 127.8

% PAT Growth

Fixed Assets -68 -18

Sale of Fixed assets 0 0

Transfer of fixed assets from Sundaram Clayton (Net) 0 0

Increase in receivables against Service concession Agreements 0 0

Purchase of investments -555 -404

Proceeds from sale of investments 545 395

Long term Loans Given 0 0

Sale of MF units 0 0

Investment in subsidiaries 0 0

Net Intercorporate deposits given 0 0

Dividend received 0 0

Interest received 2 0.6

Fixed deposits for period exceeding 3 months 0 0

Advance against property 0 0Net CFI -76 -26

Proceeds from borrowings 0 0

Repayment of borrowings 0 0

Dividend Paid including tax -11 -6

Interest and finance charges -0.1 -0.2

Proceeds from issuance of share capital 0 0

Increase in advance towards capital 0 0

Profit and Loss a/c 0 0

Net CFF -11 -6

Free cash flow 87 31

Tax % of CFO -29% -57%

Capex/Sales #REF! #REF!

FCF Y-o-Y Growth 181% -33%

Debtors/Sales -5.7%

CFO per share 82.7 25.7

Buyback Price #REF! #REF!


4/35

2010 2009 2008 2007 2006 2005 2004

135 73 118

85% -38% #DIV/0! #DIV/0! #DIV/0!

0.2 -15 -31

-61 6 -76

-7 4 -15

32 -45 111100 25 108

-45 -14 -33

-3 -7

52 4 75 0 0 0 0

1200% -95% #DIV/0! #DIV/0! #DIV/0! #DIV/0!

78 36 70 0 0 0 0

-10 -35 -72

4 0 0

0 0 -111

0 0 0

0 -0.3 -9

7 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0.5

0 0 0

0 0 01.2 -35 -192

0 25 0

-25 0 0

0 -19 -11

0 0 0

0 0 9.5

0 0 78

0 0 34

-25 6 111

46 -31 3 0 0 0 0

-45% -56% -31% #DIV/0! #DIV/0! #DIV/0!

#REF! #REF! #REF! #REF! #REF! #REF! #REF!

-248% -1133% #DIV/0! #DIV/0! #DIV/0!

-10.0% 1.3% -13.9% #DIV/0! #DIV/0! #DIV/0! #DIV/0!

27.6 2.1 39.4 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

#REF! #REF! #REF! #REF! #REF! #REF! #REF!


5/35

2012 2011 2010 2009

Revenues from Operations 1143 978 641 483

Less: Excise Duty 98 85 50 57

Net Revenues from Domestic Operations 1045 893 591 426

Export 0 0 0 0

Net Revenues from Operations 1045 893 591 426

Other Income 12 5 18 20Total 1057 898 609 446

% Growth in Revenues 17.7% 47.5% 36.5% -18.3%

Cost of material consumed 580 508 330 246

Purchase of stock in trade 0 0 0 0

Change in inventories of FG, WIP and stock in trade -7 -13 0 0

Operating expenses 159 126 90 75

Employee expenses 94 71 54 51

Total expense 826 692 474 372

Operating Profit 219 201 117 54

Depreciation 16 14 14 14

Amortisation of Goodwill 0 0 0 0

EBIT 215 192 121 60

Interest 0.1 0.2 3 7

PBT 214.9 191.8 118 53

Extraordinary expenditure 0 0 0 0

Tax 63 64 40 17

Tax rate 29% 33% 34% 32%

Net Profit before minority interest 151.9 127.8 78 36

Minority Interest 0 0 0 0

Share of net profit of associates 0 0 0 0

Accounting Profit for the Year 151.9 127.8 78 36Dividend 11 6 0 19

Basic EPS 81 67 41.4 18.7

Diluted EPS 81 67 41.4 18.7

No of shares (crores) 1.9 1.9 1.9 1.9

BV 288 207 145 105

Split adjusted EPS 81 67 41.4 18.7

Split adjusted BV 288 207 145 105

BV CAGR Growth #DIV/0!


6/35

2008 2007 2006 2005 2004

628

94

534 0 0 0

0 0

534 0 0 0 0

12546 0 0 0 0 CAGR Sales 18.0%

#DIV/0! #DIV/0! #DIV/0! #DIV/0!

306

0

0

78

45

429 0 0 0 0

105 0 0 0 0

10

0

107 0 0 0 0

3

104 0 0 0 0

0

34

33% #DIV/0! #DIV/0! #DIV/0! #DIV/0!

70 0 0 0 0

0

0

70 0 0 0 0 CAGR 21.4%11

36.8

36.8

1.9 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

90 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

37 CAGR EPS #DIV/0!

90 #DIV/0! #DIV/0! #DIV/0! #DIV/0!


7/35

2012 2011 2010 2009 2008

SC

Reserves

DTL

Total Equity 0 0 0 0 0

Change in Equity

SecuredUnsecured

Total Loans 0 0 0 0 0

Minority Interest

Total Funds Employed

Gross Block

AD

Net Block

Capital WIP

Total Tangible Assets 0 0 0 0 0

Intangible Assets

Non current investments

Goodwill on consolidation

Total Non Current assets

Current Investments

Inventories

Debtors

Cash

Loans and advances

Other current assets

Total current assets

CreditorsCustomer Advances

Other current liabilities

Provisions

Total current liabilities

Net current assets 0 0 0 0 0

Total Assets 0 0 0 0 0


8/35

2007 2006 2005

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0


9/35

2012 2011 2010

Revenues from Operations

Less: Excise Duty

Net Sales 0 0 0

Export

Net Revenues from Operations 0 0 0

Other IncomeTotal 0 0 0

% Growth in Revenues #DIV/0! #DIV/0! #DIV/0!

Cost of material consumed

Purchase of stock in trade

Change in inventories of FG, WIP and stock in trade

Employee expenses

Other expenses

Total expense 0 0 0

EBITDA 0 0 0

Depreciation

Amortisation of Goodwill

EBIT 0 0 0

Interest

PBT 0 0 0

Extraordinary expenditure

Tax

Tax rate #DIV/0! #DIV/0! #DIV/0!

Net Profit before minority interest 0 0 0

Minority Interest 0 0 0

Share of net profit of associates 0 0 0

Accounting Profit for the Year 0 0 0

EBITDA margin - S/Alone #DIV/0! #DIV/0! #DIV/0!

NPM - S/Alone #DIV/0! #DIV/0! #DIV/0!

RoCE - S/Alone #DIV/0! #DIV/0! #DIV/0!

EBITDA - Consol 21% 23% 20%

NPM - Consol 14.5% 14.3% 13.2%

RoCE - Consol 51.2% 58.2% 43.9%


10/35

2009 2008 2007 2006 2005 2004

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0 CAGR Sales #DIV/0!

#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

0 0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0 0 CAGR #DIV/0!




13% 20% #DIV/0! #DIV/0! #DIV/0! 0%

8.5% 13.1% #DIV/0! #DIV/0! #DIV/0! 0.0%

24.2% 116.5% #DIV/0! #DIV/0! #DIV/0! 0.0%


11/35

2012 2011 2010 2009 2008 2007

SC 9.5 9.5 9.5 9.5 9.5 0

Reserves 520 377 260 188 158 0

DTL 11 8 3 4 3 0

Total Equity 540.5 394.5 272.5 201.5 170.5 0

Change in Equity

Secured 0 0 7 55 20 0Unsecured 0 0 0 5 0 0

Total Loans 0 0 7 60 20 0

Minority Interest 0 0 0 0 0 0

Total Funds Employed 540.5 394.5 279.5 261.5 190.5 0

Gross Block 0 0 265 263 228 0

AD 0 0 85 72 58 0

Net Block 230 180 180 191 170 0

Capital WIP 13 10 7 4 4 0

Total Tangible Assets 243 190 187 195 174 0

Intangible Assets 0.5 0 0 0 0 0

Non current investments 2 2 2 2 8.5 0

Goodwill on consolidation 0 0 0 0 0 0

Total Non Current assets 245.5 192 189 197 182.5 0

Current Investments 21 10 0 0 0 0

Inventories 116 80 46 46 31 0

Debtors 157 171 131 70 76 0

Cash 82 13 2 1.3 12 0

Loans and advances #REF! #REF! #REF! #REF! #REF! #REF!

Other current assets 0 0 0 0 0.2 0

Total current assets 355 264 179 117.3 119.2 0

Creditors 1 84 86 54 98 0Customer Advances 0 0 0 0 0 0

Other current liabilities 2.5 2 0 0 0 0

Provisions 27 27 22 18 27 0

Total current liabilities 138.5 113.5 108 72 125 0

Net current assets 216.5 150.5 71 45.3 -5.8 0

Total Assets 539 394.5 280 253.3 191.7 0


12/35

2006 2005 2004

0 0

0 0

0 0

0 0

0 00 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

#REF! #REF!

0 0

0 0

0 00 0

0 0

0 0

0 0

0 0

0 0


13/35

2012 2011 2010 2009

Revenues from Operations 1143 978 641 483

Less: Excise Duty 98 85 50 57

Net Sales 1045 893 591 426

Export 0 0 0 0

Net Revenues from Operations 1045 893 591 426

Other Income 12 5 18 20Total 1057 898 609 446

% Growth in Revenues 18% 47% 37% -18%

Cost of material consumed 580 508 330 246

Purchase of stock in trade 0 0 0 0

Change in inventories of FG, WIP and stock in trade -7 -13 0 0

Employee expenses 94 71 54 51

Other expenses #REF! #REF! #REF! #REF!

Total expense 826 692 474 372

EBITDA 219 201 117 54

Depreciation 16 14 14 14

Amortisation of Goodwill 0 0 0 0

EBIT 215 192 121 60

Interest 0.1 0.2 3 7

PBT 214.9 191.8 118 53

Extraordinary expenditure 0 0 0 0

Tax 63 64 40 17

Tax rate

Net Profit before minority interest 151.9 127.8 78 36

Minority Interest 0 0 0 0

Share of net profit of associates 0 0 0 0

Accounting Profit for the Year 151.9 127.8 78 36

Employee cost % of sales 9% 8% 9% 11%


14/35

2008 2007 2006 2005

628 0 0 0

94 0 0 0

534 0 0 0

0 0 0 0

534 0 0 0

12 0 0 0546 0 0 0

#DIV/0! #DIV/0! #DIV/0! #DIV/0!

306 0 0 0

0 0 0 0

0 0 0 0

45 0 0 0

#REF! #REF! #REF! #REF!

429 0 0 0

105 0 0 0

10 0 0 0

0 0 0 0

107 0 0 0

3 0 0 0

104 0 0 0

0 0 0 0

34 0 0 0

70 0 0 0

0 0 0 0

0 0 0 0

70 0 0 0

8% #DIV/0! #DIV/0! #DIV/0!


15/35

2012 2011 2010

Number of M&HCV vehicles sold 383277 345818 25071

CV Growth 11% 33% 31%

Y-o-Y Sales Growth of Wabco 17.70% 47% 37%

Planned Capex for next year (Crores) 70 60 35

Exports (Crores) 148 118 55

Total Sales (Crores) 1046 892 590Exports % of Sales 14% 13% 9%

After market % of sales 16% 19%

After market sales (Crores) 143 112


16/35

2009 2008 2007 2006 2005

191286 291114

-34%

-19%

10

35 28

426 5468% 5%


17/35

2012 2011 2010 2009 2008

Profitability

Operating margin (EBITDA/Sales) 21.0% 22.5% 19.8% 12.7% 19.7%

ROE 32.5% 38.3% 32.9% 19.4% 82.1%

ROCE 51.2% 58.2% 43.9% 24.2% 116.5%

Sales Growth 17% 51% 39% -20% #DIV/0!

EPS Growth 21% 62% 121% -49% #DIV/0!Dividend Payout 7% 5% 0% 53% 16%

PAT margin 14.5% 14.3% 13.2% 8.5% 13.1%

Simplified RoCE (PBT/Capital Employed after

Intangible Assets, Goodwill and Cash) 51.2% 58.2% 43.9% 24.2% 116.5%

Operating efficiency

Raw material % of sales 54.8% 55.4% 55.8% 57.7% 57.3%

Employee efficiency 9% 8% 9% 12% 8%

Capital Intensity 4.5 5.0 3.3 2.2 3.1

% WC of Total Assets 40% 38% 25% 18% -3%

% Fixed assets of Total Assets 45% 48% 67% 77% 91%

% Investment of Total Assets 4% 3% 0% 0% 0%

Operating expense % of sales #REF! #REF! #REF! #REF! #REF!

Sales/NWC #REF! #REF! #REF! #REF! #REF!

WC % of Sales 21% 17% 12% 11% -1%

CFO % of Sales #REF! #REF! #REF! #REF! #REF!

Receivables/Sales #REF! #REF! #REF! #REF! #REF!

Debtors % of Total Assets 29% 43% 47% 28% 40%

Payables % of WC #REF! #REF! #REF! #REF! #REF!

Inventory % of WC 9% 20% 16% 18% 16%

Ex-cash WC 214.5 137.5 69 44 -17.8

Liquidity ratios

Current ratio 2.6 2.3 1.7 1.6 1.0

Quick ratio 1.7 1.6 1.2 1.0 0.7

Interest coverage ratio 2150.0 960.0 40.3 8.6 35.7

CFO coverage #REF! #REF! #REF! #REF!

Operating cycle

Days inventory 62 46 51 57 37

Days receivables 57 62 62 63 52

Days Payables 61 63 77 113 117

Operating cycle 59 45 36 7 -28

Earnings retention test

Retained earnings (crores) 141 122 78 17 59

Gain in MV (5 years) 2439

Leverage

D/E 0.00 0.00 0.03 0.30 0.12


18/35

Net Debt/Equity -0.15 -0.03 0.02 0.29 0.05

Interest rate #DIV/0! #DIV/0! 0% 0% 0%

CAGR

Sales #DIV/0!

EPS 21.8%

BV #DIV/0!


19/35

2007 2006 2005 BSE 2012-2013 2011-2012 2010-2011 2009-2010

High Price 1588 1316 795

#DIV/0! #DIV/0! #DIV/0! Low Price 971 686 127

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0! High P/E 0.0 23.7 31.8 42.5

#DIV/0! #DIV/0! #DIV/0! Low P/E 0.0 14.5 16.6 6.8

#DIV/0! #DIV/0! #DIV/0!#DIV/0! #DIV/0! #DIV/0! High P/BV 0.0 7.7 9.1 7.6

#DIV/0! #DIV/0! #DIV/0! Low P/BV 0.0 4.7 4.7 1.2

#DIV/0! #DIV/0! #DIV/0!

High MV - 2978 2510 1498

Low MV - 1821 1309 239

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0! Consol EPS 81 67 41.4

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0! Consol BV 288 207 145

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0! Current P/E 19.1

#REF! #REF! #REF! Current P/BV 5.4

#REF! #REF! #REF! Price 1544

#DIV/0! #DIV/0! #DIV/0! EPS 81

#REF! #REF! #REF! BV 288

#DIV/0! #DIV/0! #DIV/0! Mcap 2895

#DIV/0! #DIV/0! #DIV/0!

#REF! #REF! #REF!

#DIV/0! #DIV/0! #DIV/0!

0 0 0

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#REF! #REF!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#VALUE!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!


20/35

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!


21/35

2008-2009 2007-2008 2006-2007 2005-2006 2004-2005

374

100

10.2 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

2.7 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

4.2 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

1.1 #DIV/0! #DIV/0! #DIV/0! #DIV/0!

720 0 #DIV/0! #DIV/0! #DIV/0!

193 0 #DIV/0! #DIV/0! #DIV/0!

18.7 36.8 0

105 90 #DIV/0!


22/35

Operating expense 2011 Dec-10 Dec-09 2008 2007

Stores, spares and tools consumed

Power and Fuel

Sub-contract expenses

Repairs

Building

MachineryOther

Rent

Lease Rent

Rates and taxes

Printing and stationary

Postage,telegrams and telephones

Travelling

Insurance

Consultancy

Legal

Auditors

Loss on sale of assets

Advertisement&Publicity

Research&Development

Freight and cartage inward

Freight and cartage outward

Commission&Discount

Royalty Payment

Provision for dimunition investments

Provision for Doubtful debts

Loss on exchange fluctuationSundry

Total Operating expense

Freight % of sales 0.0% 0.0% 0.0% 0.0% 0.0%

Subcontract % of sales 0.0% 0.0% 0.0% 0.0% 0.0%

Power % of sales 0.0% 0.0% 0.0% 0.0% 0.0%

Stores % of sales 0.0% 0.0% 0.0% 0.0% 0.0%

Total Revenues


23/35

2006 2005

#DIV/0! #DIV/0!

#DIV/0! #DIV/0!

#DIV/0! #DIV/0!

#DIV/0! #DIV/0!


24/35

2012 2011 2010 2009 2008 2007

Cost of materials consumed

Purchase of stock in trade

Change In inventory

Opening stock:

WIP

Finished Goods

Stock in trade

Closing stock:

WIP

Finished Goods

Stock in trade

Add: Share in JV

Change in inventory

Inventories

Raw materials

WIPFinished Goods

Stock in trade

Stores and spares

Add: Share in JV

Total


25/35

2006 2005 2004 2003


26/35

2012 2011 2010 2009 2008

Tangible Assets

Land

Buildings

Vehicles

Data processing equipments

Office premisesOffice equipments

Leasehold improvements

Furniture and fixtures

Electrical Installations

Plant and Machinery

Advertisement structure

Leased Plant and Machinery

Leased Vehicles

Leased furnitures and fixtures

Leased building and structures

Leased Land

Total tangible assets

Software/Licenses

Commercial right acquired

Trademark and licenses

Others - R&D expenses

Total Intangible assets

Total Gross Block


27/35

2007


28/35

No Characteristic

Value chain

1 Commodity Products

2 Long history of operation

3 Products

4 Demand for products

5 Value addition to the customers

6 Competitive positioning

7 Management strength

8 Strong balance sheet

9 Are the fixed assets difficult to rebuild

10 Are capex plans ready and predictable for next 5 years

10 Does the company have a diversified business within the industry

11 New Launches

12 Cyclical business

13 High returns on equity (>25%)

14 High Net fixed asset turnover

15 High Operating margins (>20%)

What can lead to operating margin expansion16 Is the company able to utilize Capacity completely

17 Does the company have a healthy dividend payout

18 Do you see significant Difference between CFO and PAT

19 Has the company generated Stable Free Cash flow in the past

20 Earnings retention test

21 Growth capex requirement

23 Does the company have to loosen credit to customers to increase sales

24 Is the company able to quickly generate cash

25 Working capital requirement

26 Employee base

27 Does the company have a strong distribution network

28 Does the company have R&D strength

29 Does the company have International Presence through JV/subsidiary

30 High potential growth areas

31 Patents and Intellectual Property


29/35

32 Are the raw material prices susceptible to wide swings

33 Does the company have a good marketing network

34 Does the company have interesting markets to explore

35 Does the company have the lowest cost advantage36 Does the company have favorable export markets

38 What could be the likely Barriers to entry

39 Is it possible that changes in technology can destroy the company

Does the company face any threat from substitutes

40 What could be the industries competitive vulnerabilities

41 What could be the companies competitive vulnerabilities

41 Who are the primary competitors of the company

42 Does the company enjoy pricing power

43 Is it easy to scale up the business

44 Does the company have subsidiaries and are they well integrated

45 What 3 or 4 things can destroy this business

46 How much is the promoter holding

47 Can a chinese company dominate Indian market


30/35

Opinion RoCE

No

Yes

Low competition, oligopolistic market

Depends on growth in M&HCV market

Yes

85% market share in OEM market and 75%

market share in after sales market

Yes

Yes

No X

No X

Expansion of product portfolio

Yes X

Yes

Yes

Yes

Possible No information X

No X

No

Yes

MV added/RE = 5.8 times

Plants and equipment

No

Yes

Low~9% of operating sales -

Yes

Yes

No

Yes

Yes


31/35

Yes X

Yes

Yes

No information -Yes

No

No information -

Slowdown in overall M&HCV segment

Dependent on key customers like Ashok

Leyland, Tata Motors X

Knorr Bremse, Haldex, Bosch X

Yes

Yes

Softwares services -

Destroy is difficult but deterioration is possible

75%

Difficult and lower probability


32/35

Rational

Electronics technology products Tier 1 - supplier to OEM's

Innovation requirement

Fundamental drivers are trucks and buses which are getting more sophisticated with electronic

components

Major products include Air actuation systems (air compressors, actuation systems, controlvalves), air braking systems (6% of sales)

Products meant to increase Vehicle safety, also present in after-sales market

Monopoly positioning in automotive electronics. Strategy to outperform the market by

providing outstanding soultions in vehicle safety and efficiency through breakthrough

technologies and innovative products

Mr Kaniappan is an ex Bosch employee

High cash, No debt, CAGR Asset growth of 33% in 4 years

Intangible assets which comes from innovation strength. Cannot comment on the plants and

equipments in it's 3 manufacturing facilities. World class manufacturing facilities

No information

Only automotive electronic component supplier to OEM's

From brake systems to vehicle control systems

Based on medium and heavy commercial vehicle growth

Greater than 30% and cash buffer give RoCE in excess of 50%

Highest it has gone to is 5 times

~ 21-22%

Increase share of after sales revenues (Probability is low due to less truck utilization in current

periods), increased exports (highly probable), improvement in raw material marginsBut improvement in fixed asset turnover

Less than 10%

Less chances of significant cash outflow in the future due to accruals

136 crores in 5 years

From 2008 to 2012, Retained earnings of 417 crores and change in market value over the same

period is 2439 crores

Discretionary capital spending

55-60 days of receivables

Generation of free cash flow of

Non cash WC/Sales ratio stable, extended cash conversion cycle. This means RoCE has a higher

chance of remaining stable then getting better1161 employees

156 authorized service centres, Strong aftermarket network of more than 7000 outlets

Intellectual property owned by Wabco Inc parent

Wabco parent has operations all around the world

Air braking system(favorable government rules to ensure road safety,high margin yield),

Automated manual transmission control system, lift axle control valve

Strong reputation for technological innovation


33/35

Aluminium, steel, rubber, zinc, copper, plastics

Sales organization based near customers

Export market expected to increase 8 fold to 1000 crores by 2015, after sales market,

Possibility of increase in business from foreign OEM's like JCB, Daimler, Volvo

-Europe, Latin America, China

Ability to increase sales faster than M&HCV growth due to increasing content per vehicle,

technology barriers, strong distribution network, quality manufacturing facilities, Globalization,

employee strength, after sales market, bargaining power with OEM's

Wabco is driving the technology changes

-

But over the long term, there is a high chance that CV industry will grow as compared to de-

grow and Wabco has the capability to ride the growth

Customer concentration, raw material risk, transfer pricing risk, possibility of increase in

royalty payments

Pricing power is obtained from status as market leader, Tier-I suppliers, exposure to

replacement market (16% of revenues) and exports (13% of revenues). Strong technology from

parent helps to widen the product offering per client. All of this adds to the companys

bargaining power with customers.

OEM's have to face a duopoly market giving a higher pricing power

Technology available, so just the requirement of fixed asset capex

To Wabco Germany

Loss of key customers, decrease in fixed asset turnover, higher investment in working capital,

increasing royalty expense, slowdown in CV growth, forex volatility, If the global demand for

WABCO reduces

Held by parent WABCO Inc

Wabco Inc is preferred supplier for many Chinese OEM's


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Minimum valuation 2012 2013 2014 2015 2016

Total Assets

WC

CFO before WC

Debtors

Payables

InventoryChange in Debtors 0 0 0 0

Change in Payables 0 0 0 0

Change in inventory 0 0 0 0

CFO before tax 0 0 0 0

Taxed Paid

After tax CFO

Sales

Sales Growth rate 0% -5% 10% -5%

Capex 0 0 0 0

Free cashflow 0 0 0 0

FCF Y-o-Y (%) #DIV/0! #DIV/0! #DIV/0!

Discount factor 1.12 1.25 1.40 1.57

CFO Growth rate 20%

Discount rate 12%


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2017 2018

0 0

0 0

0 0

0 0

10% 10%

0 0

0 0

#DIV/0! #DIV/0!

1.76 1.97

Common Financial Analysis

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