The Byke Hospitality Initiating Coverage 01102016 - GEPL · With the introduction of new management...

Equity | India | Hotels

The Byke Hospitality LtdAtithi Devo Bhavah… October 01, 2016

BUY

AnalystDhiral Shah

+91-22- 6614 2693 [email protected] Institutional Research 1

Initiating Coverage

CMP (`) Target (`)

180 231

Potential Upside Absolute Rating

28% BUY

Market Info (as on Sept 30, 2016)

BSE Sensex 27865

Nifty S&P 8611

Stock Detail

BSE Group B

BSE Code 531373

NSE Code BYKE

Bloomberg Code BYKE:IN

Market Cap (`bn) 7.22bn

Free Float (%) 56%

52wk Hi/Lo 196 / 148

Avg. Daily Volume (NSE) 274576

Face Value / Div. per share (`) 10.0 / 1.00

Shares Outstanding (mn) 40

Shareholding Pattern (in %)

Promoters Public

44.46 55.54

Financial Snapshot (`mn)

Y/E Mar FY15 FY16 FY17E FY18E

Net Sales 1814 2,315 2,953 3,660

EBITDA 374 527 676 842

PAT 201 260 344 440

EPS 5.0 6.5 8.6 11.0

ROE (%) 20.1% 21.5% 22.8% 23.2%

ROCE (%) 25.0% 31.7% 34.2% 35.1%

P/E 33 24 21 16

EV/EBITDA 18 12 11 8

Share Price Performance

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Close Price BSE_SENSEX

Rel. Perf. 1Mth 3 Mths 6Mths 1Yr

Byke (%) 12.6 11.2 15 13.2

SENSEX (%) (1.7) 3.2 10 6.5

Source: Company data, Institutional Research

Company Snapshot

The Byke Hospitality (BYKE) is Mumbai based, mid market leisure hospitality service company. It is one of the fastest growing hospitality brands in India. Company has a unique asset light business model & focus purely on domestic middle class leisure tourism. Company operates under two broad segments i.e. owning & leasing (O&L) model & room chartering model. Company offers the unique value- proposition of being India’s first & only vegetarian hospitality brand.

Investment Rationale

Robust expansion plan under Owned & Lease (O&L) model The Byke hospitality is one of the India’s fastest growing mid market leisure hospitality brands. Under the O&L model, byke operates 9 resorts across Maharashtra, Rajasthan, Odisha, Goa & Himachal Pradesh with a total capacity of 677 keys. With a strong brand & renewed momentum, company is leveraging this opportunity to grow at a rapid pace & thus aim to extend their presence across other geographies. Company has plan to add 8 more properties over next two years which would lead to an addition of 450-500 rooms. With an asset light approach, we believe, this will enable company to grow at a faster pace with a minimum capex requirement

Room Chartering business enables company to scale up revenue beyond its own resort locations & geographic presence Under the room chartering business, Byke buys peak season room nights of mid-budget hotels in bulk across leisure, tourist & religious destination during off-peak seasons & subsequently letting them out during peak season to tourists at a retail level through travel agents who in turn earn a commission. This model has helped the company to strengthen its pan India presence through chartering rooms across more than 70 cities in India. Revenue under Room chartering business has grown at a CAGR of 35% in last five years i.e. FY12-FY16 owing to 29% CAGR rise in room nights sold from 1.4lac room nights in FY12 to 4.9lacs room nights in FY16. Going ahead, we expect strong growth momentum to continue in this segment owing to robust network agents, strong occupancy level & huge industry size.

Unique asset light strategy continues to aid superior financial performance With the introduction of new management team in 2011, company has adopted a unique asset light model for business expansion. With the adoption of the ’asset-light’ strategy, the Company has aggressively added rooms in both the lease and room chartering businesses. In last five years, company’s overall revenue has grown at a CAGR of 36%. Further, ebitda margin has also improved from 9.6% in FY12 to 22.8% in FY16. This unique asset light business model has enable company to leverage high profitability growth from a low capital base & thus profits has grown at a GAGR of 61% in last five years i.e. FY12-FY16. We believe, company to grow its overall revenue & profitability at a CAGR of 26% & 30% respectively over FY16-FY18E owing to robust expansion plan & growing domestics tourism industry.

ValuationAt CMP ` 180, company trades at 21.0x & 16.4x its FY17E EPS & FY18E EPS of ` 8.6/- and `

11.0/- respectively. With an asset light business approach, robust expansion plan, proven track records, deleverage balance sheet along with the industry tailwinds are likely to place Byke on a high growth phase in coming years. Hence, we initiate coverage on The Byke Hospitality with a “BUY” rating and attach a multiple of 21x to Byke Hospitality FY18E (EPS) of ` 11/- to arrive at the target price of ` 231, indicating a potential upside of 28% from current level.


The Byke Hospitality Ltd October 01, 2016

Institutional Research | Initiating Coverage 2

Index & Content

Sr. No. Topic Page No.

1 Company Background 3

2 Business Model 4

3 Key Management Personnel 6

4 Investment Rationale 7

5 Revenue Growth Drivers 9

6 Financial Overview 12

7 Key Risks 16

8 SWOT Analysis 17

9 Michael Porter’s Five Force Analysis 18

10 Valuation & Outlook 19

11 Financials 20

12 Disclaimer 21




Company BackgroundThe Byke Hospitality Ltd was incorporated in 1990. It was name under “Kotawala Financial Consultancy Pvt Ltd”. Company made its maiden public issue in 1995 & further changed it name to Suave Hotels Ltd in 2007. During FY11, the company’s current promoters Mr. Anil Patodia, Mr. Kamal Poddar, Mrs. Vinita Patodia and Hotel Relax Private Ltd acquired the stake of the erstwhile promoters and further increased their holding through open offer to the existing shareholders. With the change in the management, the name of the company was also changed to “The Byke Hospitality Ltd”. Company’s business consists of two broad categories, Owned & Leased hotels (O&L) and Room Chartering (RC) business. In the O&L hotels business, the company enters into an operating lease agreement with hotel property on an annual lease basis, renovates it and operates it under the brand “The Byke”. Currently, the company has 9 properties under its operation: of which, 2 are owned and the rest 7 are on leased. It is also engaged in the room chartering business where the company buys bulk peak season room inventory in advance and then sells them through its network of agents




Business Segment

The Byke Hospitality Ltd follow two distinct operating models namely Owned & Leased (O&L) model & Room Chartering Model

Under the Owned & Lease model, the company enters into an operating lease agreement with hotel property on an annual lease basis, renovates it and operates it under the brand “The Byke”. Currently, company operates 9 resorts across Maharashtra, Rajasthan, Goa, Odisha & Himachal Pradesh with a total capacity of 677keys. Company owned 2 out of 9 resorts & remaining 7 are on operating lease basis with a period range between 12 to 15 years. Byke has made a niche for itself by catering to only vegetarian food. Company’s Food & Beverages (F&B) segment & MICE segment are also an integral part of the makeup of a hotel. The company currently has close to 14 Restaurants and around 16 halls and events lawns.

Current Locations

Hotel Portfolio Rooms Type

The Byke Old Anchor, Goa 240 Leased

The Byke Grassfield, Jaipur 54 Leased

The Byke Suraj Plaza, Thane 122 Leased

The Byke Neelkanth, Manali 40 Leased

The Byke Hidden Paradise, Goa 40 Leased

The Byke Redwood, Matheran 25 Leased

The Byke Vijoya, Puri 54 Leased

The Byke Heritage, Matheran 80 Owned

The Byke Sunflower, Goa 22 Owned

Total 677




Identified 8 New Locations for the Next Phase of Growth

Under the Room Chartering model, Byke buys peak season room nights of mid-budget hotels in bulk across leisure, tourist and religious destinations during off-peak seasons. In the peak seasons they sell these room nights. During the peak season time, the room-nights are sold to the customers by the travel agents who in return earn a commission. Currently, the company has a presence in more than 70 cities with 450 active agents.




Key Management Personnel

The Byke Hospitality Ltd has an experienced management with sound knowledge & which helps company to attain desire growth over the period of time.

Mr Anil Patodia, Manging DirectorMr. Patodia took over the management of The Byke Hospitality in March 2011. Mr Patodia is a commerce graduate from university of Rajasthan, having huge experience in the Hospitality & Manufacturing Industries

Mr. Pramod Patodia, Executive Director Mr. Pramod Patodia experience in Hospitality industry spans across two decades. He has over 25 years of extensive experience in the field of management, administration, extensive hotel experience to the The Byke Hospitality in operations and management

Mr. Satyanarayan Sharma, Non- Executive DirectorMr. Satyanarayan Sharma is an Electrical Engineer having past vast experience of more than 25 years in hospitality industry. He is the visionary founder promoter of The Byke Hospitality Limited

Mr. Ram Ratan Bajaj – Independent Director,Mr Bajaj has been associated with the Company since March 30, 2011. His expertise has been significant in making the financials decisions of the Company.




Investment Rationale Robust expansion plan under Owned & Lease (O&L) model.

The Byke hospitality is one of the India’s fastest growing mid market leisure hospitality brands. With the adoption of the asset light strategy in 2011, company has aggressively added rooms under lease model. In the O&L hotels business, the company enters into an operating lease agreement with hotel property on an annual lease basis, renovates it and operates it under the brand “The Byke”. Company currently operates 9 resorts across 5 different locations & this includes Maharashtra, Rajasthan, Goa, Odisha & Himachal Pradesh with a total capacity of 677 keys. Out of 677 rooms in FY16, 623 rooms where operational. Company currently owns 2 out of 9 resorts & remaining 7 are on lease basis. The lease is typically for more than 12-15 years with an escalation of 5% to 15%p.a over three years. The company has expanded the number of rooms at CAGR of 30% over the last 5 years. Further, there has been a steady increase in occupancy level & Average room rent (ARR) during the same period. The average occupancy rate in O&L business has been steadily increasing from 61% in 2011-12 to 65% in 2015-16. The ARR has also increased to ` 3,909/- in 2015-16 from ` 2,768/- in 2011-12, a CAGR of 8%. With a strong brand & renewed momentum, company is leveraging this opportunity to grow at a rapid pace & thus aim to extend their presence across other geographies. Thus management has identified the 8 new locations that it plans to enter for the next phase of business growth and are targeting to add close to 450-500 rooms inventory by the end of FY18 & this properties are spread across Lonavala, Mumbai, Mahableshwar, Dalhousie, Gangtok, Jodhpur, Chandigarh, Udaipur & Darjeeling. These expansion initiatives would help the company to become a pan India player. The current expansion plan will be under unique asset light model, which would not require any significant capex. Also, company recently acquired 2 new properties on lease basis in Jaipur & in Mumbai with total addition of 120 rooms in overall room inventory. Company expect this properties to be operational in FY17 itself. Further, company is also planning to add few more properties by end of FY17. We believe, total operational room capacity by FY18 end is expected to reach more than 1000 rooms an increase of 377 rooms over FY16 operational room capacity. This substantial increase in capacity is due to addition of operational facilities in Puri, Mumbai, Jaipur & another 4 facilities added by FY18E. With the significant increase in the capacity addition, we expect the room revenues to grow at 30% CAGR in FY16-18E reaching ` 899 Mn in FY18E. However, we expect occupancy level to fall be in range of 63-64% by FY18E due to peak up in new room inventory. Further, we believe, ARR to remain in the range of ` 3909-4187 during FY16-18E & thus witnessing a growth of 3% CAGR during FY16-18E. The Food & Beverages (F&B) and others segment which includes meetings, incentives, conferencing & exhibitions (MICE) activities also makes an integral part of hotel revenue. Byke also offers one more unique value-proposition of being India’s first and only vegetarian hospitality brand. The company as of now has 14 restaurants and 16 halls and lawns across all their properties. With new properties being added, this inevitability would lead to increase in F&B revenue (including events). With the company to present in key tourist locations, we may see good growth on back of increase in MICE and destination weddings. Thus F&B and MICE segments, which contribute nearly 50% of hotel revenues in last five years, are expected to contribute same over next two years. In last five years i.e. FY12-FY16, revenue under O&L segment has grown at a CAGR of 38% led by 29% rise in room revenue & 49% rise in F&B & other revenue. We believe, going ahead, O&L segment to grow at a CAGR of 28% over FY16-FY18E reaching to ` 1858mn by FY18E with ` 899mn to be contributed from room rental & ` 959mn to be contributed from F&B & other segments.




Room Chartering business enables company to scale up revenue beyond its own resorts locations & geographic presence

The company started its room chartering business from 2010-11. Under room chartering business, Byke buys peak seasons rooms inventory of mid-budget hotels in bulk across leisure, tourist & religious destination during off-peak seasons & subsequently letting them out during peak season to tourists at a retail level through travel agents who in turn earn a commission. This business provides scalability and flexibility to the company as it gets access to a wide range of properties and locations. This model also helps the company to strengthen its pan India presence through chartering rooms across more than 70 cities with the help of more than 450 active agents. Company has plans to expand it to newer regions and increase the agent count going ahead. We believe, room chartering business will continue to be strategic for the company as it will give insights into tourist trends and also helps to identify locations to expand. Company is also planning to open an online portal for its agents network whereby travel agents will be able to book rooms online & at the same time can see the availability of room inventory & other details against the current practice of E-mails. Company expects a strong response for this upcoming B2B online portal from agents network along with addition in agents network as this will simplify the process for room booking going ahead. The room chartering business has grown from 140,000 room-nights purchased in 2011-12 to 519,967 in 2015-16, nearly 4 times in size. In last five years, revenue from chartering business has grown at a CAGR of 35% reaching ` 1172mn in FY16 from ` 259mn in FY12. Further, there has also been a steady increase in occupancy level & Average room rent (ARR) during the same period. The average occupancy rate in RC business has been steadily increasing from 88% in 2011-12 to 94% in 2015-16. The ARR has also increased to ` 2388/- in 2015-16 from ` 2096/- in 2011-12, a CAGR of 3.3%. We believe, going ahead, revenue to grow at a CAGR of 24% over FY16-FY18E owing to robust network agents, strong occupancy level & huge industry size.

Unique asset light strategy continues to aid superior financial performance With the introduction of a new management team in 2011, company has adopted a unique asset light model for business expansion. Company’s asset-light model has enable company for robust expansion growth plan in last few years as well as in future as incremental room addition has required only minimal capital employment. All this has led company to remain largely deleveraged in last few years. With the adoption of the ’asset-light’ strategy, the Company has aggressively added rooms in both the lease and room chartering businesses. Due to asset light approach, company’s revenue has grown at a CAGR of 36% in last five years i.e. from ` 489mn in FY12 to ` 2315mn in FY16. Also during the same time, ebitda margin has also improved from 9.8% in FY12 to 22.8% in FY16. We believe, company’s unique ‘asset-light’ business model has allows it to leverage high profitability from a low capital base. Thus, profitability has also grown at a CAGR of 61% in last five years i.e. from Rs 24mn in FY12 to Rs 260mn in FY16. Company has also witnessed a healthy return ratio over last five years. Company’s ROE has improved from 3.5% in FY12 to 21.5% in FY16 owing to better improvement in profitability. Also during the same time, company’s ROCE has improved from 4.7% in FY12 to 32% in FY16 owing to efficient utilization of capital. We believe, going ahead, company’s revenue to grow at a CAGR of 26% over next two years i.e. from FY16-FY18E. Overall revenue to reach ` 3660mn in FY18E from `

2315 in FY16. Also, profitability to grow at a CAGR of 30% over FY16-FY18E largely due to robust expansion growth plan & reducing long debt in next two years. Further, return ratio to also improve in next two years. ROE to improve from 21.5% in FY16 to 23.2% by FY18E & ROCE to improve from 31.7% in FY16 to 35.1% by FY18E.




Revenue Growth Drivers Segment Overview

Revenue Contribution

As we can see from the below chart, revenue in last five years has grown at CAGR of 36% led by strong growth in O&L as well as room chartering model. During FY12-FY16, revenue growth in O&L based & room chartering based business model has grown at a CAGR of 38% & 35% respectively. Under O&L based business model, company expanded no of rooms inventory by a CAGR of 31% over FY11-FY16. Also under RC model, company sold rooms night at a CAGR of 29% led by strong agents network. We believe, in next two years overall revenue to grow at 26% CAGR over FY16-FY18E reaching ` 3660mn in FY18E from ` 2315mn in FY16.

Revenue chart





Owned & lease based business model

As seen from the below charts, in last five years i.e. FY12-FY16, total revenue has grown at a CAGR of 38% from ` 231mn in FY12 to ` 1142mn in FY16. Strong growth was primarily led by 30% CAGR growth in no of rooms inventory in last several years i.e. FY11-FY16. Further, ARR during the same period has also grown at CAGR of 8% led by steady improvement in occupancy rate. Also, during the same period, revenue from F&B segment as well as other revenue which includes MICE activities grown at a CAGR of 40% & 63% as much of properties has right mix of restaurants & lawns. We believe, total revenue in next two years will grow at a CAGR of 28% as company has identified the new locations & has target to add close to 8 new properties by the end of FY18. Company already has acquired 2 new properties under lease model in Mumbai as well as in Jaipur & to operate additional 120 rooms from FY17 itself. Further, we believe revenue from hotel rooms, F&B segment as well as MICE activities to grow at a CAGR of 30%, 22% & 27% over FY16-FY18E respectively. However, we believe, occupancy rate to remain largely in the range of 63-64% due to peak up in addition of new room inventory over FY16-FY18E & at the same time we expect 3% CAGR improvement in ARR over FY16-FY18E.

O&L Model : ARR & Occupancy trend

O&L Model : Revenue chart (Rs mns)






Room Chartering business

As we can see from below charts, room chartering business has grown at a CAGR of 36% in last five years i.e. FY12-FY16 with more than 90% occupancy rate since last 3 years. This was also led by 29% CAGR growth in room night sold in last five years i.e. 1.4lacs room night sold in FY12 to 4.9lacs room night sold in FY16 due to rise in agents network as well as increase in cities. Also, ARR during the same period has grown at a CAGR of 3% between FY12-FY16. Company currently has more than 450 agents as on September 2016 as compared to 134 agents in FY13. We believe, revenue under room chartering business to grow at 24% over FY16-FY18E reaching `

1802mn by FY18E from ` 1172mn in FY16, as robust occupancy rate to sustain going ahead along with penetrating in new cities.

Room Chartering : Revenue chart( Rs mn)


Room Chartering: (ARR & Occupany Rate)





Financial Overview EBITDA Margins

As we can see from below charts, ebitda margins of the company has been on an uptrend since last five years on an annually basis. In last five years i.e. FY12 –FY16, margins have improved from 9.6% to 22.8%. This was primarily led by strong growth in total revenue of the company. Further, company operates under a unique asset light business model which results into lower overall expenses. We believe, company to maintain a strong ebitda margin over next two years i.e. FY16-FY18E owing to strong growth in overall revenue.

EBITDA margin Growth


EBIT margins

EBIT margins (operating margin) have also shown steady uptrend in last five years as shown in the graph below. In last five years, operating margin has also improved from 7.6% in FY12 to 17.8% in FY16. This was primarily led by strong business growth under O&L & room chartering business. We believe, going ahead, operating margin to improve further as company continues to expand its future business growth under a unique asset light business model.

Operating profit growth





PAT Margins

As we can see from below charts, profit margins have also shown a steady uptrend in last five years. It has improved its profit margin from 4.8% in FY12 to 11.2% in FY16. Company’s unique asset light model has allowed it to leverage high profitability from a low capital base. This has also supported the company to remain largely deleveraged in last five years. We believe, profitability margin to improve further as repayment of long term debt will reduce finance cost going ahead & this will eventually aid to the profitable growth going ahead.

NAPAT margin





Return ratios

Return on equity has improved substantially in last five years. ROE in FY12 was 3.5%. With improvement in business profitability led by strong revenue growth & operating margin, ROE in FY16 was 21.5%. We believe, going ahead, minimum capital employment owing to asset light business model & strong business expansion plan, will further improve return on equity over next two years.

ROE (Return on Equity)





ROCE

As we can see in the chart below, return on the capital employed has been on uptrend since FY12. Below chart indicates that company in last five year has efficiently invested capital for business growth. ROCE of the company is expected to improve over FY16-18E due to ability of the company to fund its expansion through internal accruals owing to minimal capital requirement.

ROCE (Return on Capital Employed)


Dividend Payout Ratio

As we can see from below charts, dividend payout ratio as compared to profit has been falling. This is largely due to constant dividend policy. Going ahead, we believe, dividend payout ratio to fall further as company to maintain its dividend policy going ahead.

Dividend to Payout ratio





Key Risks

Investment Risk :

Delay in expansion plan may hamper incremental revenue growth & thus future profitability

Any natural or man-made calamity could have a negative impact on tourism which inevitably may have a negative impact on the company’s growth

Rising competition from the online room aggregators

Slowdown in the domestic economy might impact spending in tourism segment




SWOT Analysis

The BykeHospitality

Ltd.

Strengths• Strong brand visibility.

• Robust network agents

• Strengthen balance sheets

• Superior return ratios

Opportunities• Entering into a new

geographical areas

• Huge Industry size

Weaknesses• Strong dependence on domestic

mid size tourism

Threats• Slowdown in economy

• Aggressive competitions from

online aggregators players





Michael Porter’s Five Force Analysis

Inter-firm Rivalry–Low

Low Entry barriers in the industry due to less capital requirement.

Threat of new entrants –

High• Business model is easy to replicate

& hence threats of new entrants is

high

Bargaining Power of Suppliers – Low• Due to intense competitions &

large no of suppliers, bargaining

power of supplier is low

Bargaining Power of Buyers –

High• With availability of large no of

hotel players in the hospitality

industry, Buyers have bargaining

power.

Threat from Substitutes -Low

• There is no major threat of

substitute.





Valuation & Outlook

At CMP ` 180, company trades at 21.0x & 16.4x its FY17E EPS & FY18E EPS of ` 8.6/- and `

11.0/- respectively. With an asset light business approach, robust expansion plan, proven track records, deleverage balance sheet along with the industry tailwinds are likely to place Byke on a high growth phase in coming years. Hence, we initiate coverage on The Byke Hospitality with a “BUY” rating and attach a multiple of 21x to Byke Hospitality FY18E (EPS) of ` 11/- to arrive at the target price of ` 231/-, indicating a potential upside of 28% from current level.

1 year forward P/E Chart

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Source: Capitaline, Institutional Research

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Source: Capitaline, Institutional Research




Income Statement Y/E Mar (`mn) FY14 FY15 FY16 FY17E FY18E

Net revenues 1,558 1,814 2,315 2,953 3,660

Total Expenses 1,273 1,440 1,788 2,277 2,818

EBITDA 285 374 527 676 842

EBITDA Margin (%) 18.3% 20.6% 22.8% 22.9% 23.0%

Depreciation 53 102 116 138 159

Other Income - - 1 1 1

Interest (Net) 20 17 14 14 12

PBT 212 255 398 525 672

PBT Margin (%) 14% 14% 17% 18% 18%

Tax 54 54 138 182 233

Reported PAT 158 201 260 344 440

Key Ratio Y/E Mar (`mn) FY14 FY15 FY16 FY17E FY18E

Per Share Ratios

Fully diluted E P S 3.9 5.0 6.5 8.6 11.0

Book Value 21 25 30 38 47

Dividend per share 1.5 1.0 1.0 1.0 1.0

Valuation Ratio

P/E 41 33 24 21 16

P/BV 7.6 6.6 5.2 4.8 3.8

EV/EBITDA 22.8 17.8 12.0 10.7 8.4

Mkt Cap/Sales 4.1 3.6 2.7 2.4 2.0

Growth Ratios

Sales Growth 54% 16% 28% 28% 24%

EBITDA Growth 69% 31% 41% 28% 24%

Net Profit Growth 105% 27% 30% 32% 28%

Common size Ratios

EBITDA Margin 18.3% 20.6% 22.8% 22.9% 23.0%

EBIT margin 14.9% 15.0% 17.8% 18.3% 18.7%

PAT margin 10.1% 11.1% 11.2% 11.6% 12.0%

Return ratios

RoNW 18.7% 20.1% 21.5% 22.8% 23.2%

RoCE 24.2% 25.0% 31.7% 34.2% 35.1%

Turnover ratios (days)

Debtors ( Days) 25 28 28 27 28

Creditors ( Days) 18 17 13 14 12

Inventory (Days) 17 15 13 13 13

Solvency Ratios

Total Debt/Equity 0.20 0.15 0.13 0.10 0.07

Interest Coverage Ratio 11.6 16.0 29.5 39.7 57.2


Balance SheetY/E Mar (`mn) FY14 FY15 FY16 FY17E FY18EEquity capital 200 401 401 401 401

Reserves & Surplus 647 600 810 1106 1497

Net worth 847 1001 1211 1507 1898

Total debt 111 88 91 70 50

Total Capital Employed 958 1,089 1,302 1,577 1,948

Short term borrowings 61 60 61 81 83

Creditors 64 67 64 73 77

Other current liabilities 97 71 81 103 128

Provisions 73 73 87 131 182

Total Liabilities 1,253 1,360 1,595 1,964 2,417

Net block 820 806 873 1023 1173

Other Non Current Assets 56 70 102 128 156

Total Non-Current Assets 876 876 975 1,151 1,329

Inventories 60 60 62 64 64

Debtors 107 140 177 260 302

Cash & bank 20 23 29 41 167

Loans & advances 190 261 352 449 556

Total Current Assets 377 484 620 814 1,088

Total Assets 1,253 1,360 1,595 1,964 2,417

Cash Flow Y/E Mar (`mn) FY14 FY15 FY16 FY17E FY18E

PBT 212 255 398 525 672 Tax Paid 54 54 138 182 233 Dep & amortization 53 102 116 138 159

Working capital changes (45) 39 128 108 87 Net Cash flow from Operation 157 172 175 269 395 Capital expenditure 115 88 183 288 309 Sale/purchase of investments 1 14 32 26 28CF from Investing 333 309 936 314 337

Issue of shares & sh. premium (35) (47) (50) (48) (48)

Debt change (11) (23) 3 (21) (20)

CF from Financing acti. (46) (70) (47) (69) (68)

Net changes in cash (9) 10 3 7 12




NOTES

Recommendation Rationale

Recommendation Expected Absolute Return (%) over 12 months

BUY >15%

ACCUMULATE <10% and >15%

NEUTRAL <-10% and <10%

REDUCE >-10% and <-20%

SELL >-10

Expected absolute returns are based on share price at market close unless otherwise stated. Stock recommendations are based on absolute upside (downside) and have a 12-month horizon. Our target price represents the fair value of the stock based upon the analyst’s discretion. We note that future price fluctuations could lead to a temporary mismatch between upside/downside for stock and our recommendation.

Name Designation Email Contact

Dhiral Shah Fundamental Research [email protected] 91 (22) 6614 2693

I, Mr. Dhiral Shah (Research Analyst of GEPL), having Education Qualification MBA Finance, hereby certify that all of the views expressed in this research report accurately reflect my views about the subject issuer(s) or securities. I, also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

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The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

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