IPO Note

RETAIL EQUITY RESEARCH

Future supply chain solutions Ltd
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Sensex: 32,802
Price Range Rs. 660 - Rs. 664
Nifty: 10,118

5th December, 2017

Logistics led by IT-enabled automation... Issue Details

Future supply chains solutions Ltd (FSCL), promoted by Future Date of Opening 6th December 2017
Enterprises Ltd (FEL) is one of Indias largest organised third party Date of Closing 8th December 2017
logistics (3PL) service operators. FSCL provides services in three key Total no. of Shares offered(cr) 0.98
areas i.e. (i) Contract Logistics (contributes ~70% to total revenue) (ii) Post Issue No. of shares (cr) 4.01
Express Logistics (~22% to total revenue) and (iii) Temperature-
Price Band Rs. 660-664
Controlled Logistics (~6% to total revenue) as on FY17. FSCL currently
Face Value Rs. 10
operates with 14 hubs, 106 branches, dedicated containerized fleet of
Bid Lot Multiples of 22 shares
687 vehicles and caters services to wide range of customers across
Listing BSE & NSE
various sectors. FSCLs extensive distribution network, diverse
customer base and asset light business model comprehensively cover IDFC Bank Ltd, IIFL
Lead Manager Holdings Ltd, Yes
customers supply chain needs. Over the last three years, company Securities( India )Ltd
clocked 19% and 38% CAGR in revenue and EBITDA while retaining
Registrars Link Intime India
its competitive market position. Indian logistics market grew at a
Issue size (at upper price) Rs. Cr
CAGR of 12% over FY12-17, supported by growth in manufacturing and
Fresh Issue -
consumption demand in the country. Further, organised players like
OFS 650
FSCL is expected to get benefitted from industrial growth on account of
increasing consumerism, favourable regulatory changes and higher Total Issue 650
levels of outsourcing of logistics activities. Going ahead, management Shareholding (%) Pre Issue Post Issue
intends to capitalise on opportunities arising from recent GST roll out, Promoters 57 52
growth in third party logistics industry, technology & process Others 43 48
enhancements and market share expansion through customised and Total 100 100
new service offerings. At an upper price band of Rs664, FSCL is Size Rs.cr
Issue structure Allocation %
available at a reasonable valuation of 41x on annualised HIFY18 EPS. (at upper band)
We recommend 'Subscribe' to the issue, with a medium-to-long term Retail 35 227
perspective. Non Institutional 15 97
QIB 50 355
Purpose of IPO
Total 100 650
At the upper price band, total issue size stands at Rs649.70cr. The public issue
comprises an OFS of up to 0.98cr equity shares by promoters and existing Y.E March (Rscr) FY16 FY17 6MFY18
shareholders. Although FSCL will not receive any proceeds from this offer yet the Sales 520 561 357
prime purpose of the issue is to achieve the benefits of listing equity shares to Growth (%) 27 8 27
enhance its visibility and brand image. EBITDA 70 74 56

Key Risks... Margin% 13.5 13.2 15.7

Highly dependent on technology & automation and any disruptions/failure PAT Adj 29 46 33
in this regard could have an adverse effect on results and operations. Growth (%) 19.3 55.5 44
Changing regulations in India could lead to new compliance requirements EPS 7.3 11.4 16.4*
that could either increase costs or otherwise adversely affect business and P/E (x) 90 58 41*
results of operations. 39 37 24.5*
EV/EBITDA
Dependent on the road network in India and any disruptions/delays in this
P/BV (x) 11 9 8*
regard could adversely affect business and lead to a loss of reputation and
profitability.
Peer Valuation...
PAT
Mcap Revenue EBITDA Mcap/ CAGR%
Company (Rs cr) (Rs cr) Margin (%) ROE EBITDA P/E* (FY14-17) D/E
Transport Corporation of India Ltd 2,262 1,804 9 13 14 25 4 0.6
Mahindra Logistics India Ltd 3,043 2,589 2.6 14 45 53 8 0.0
Aegis Logistics Ltd 8,196 390 26 14 82 44 25 0.4
Future Supply chain solutions Ltd 2,660 561 13.2 17 36 41 126 0.3
Source: Geojit Research, Bloomberg; Note: Valuations of FSCL are based on upper end of the price band, Financials as per FY17, *H1FY18 annualised/Bloomberg estimates.
Company Description
Incorporated in 2006, Future supply chain solutions Ltd (FSCL), a group company of Future Enterprises Ltd (FEL) is one of the largest
organised third party logistics (3PL) service provider in India. Their services include automated and IT-enabled warehousing, distribution
and other logistics solutions to a wide range of customers. FSCL provides services in three key areas i.e. (i) Contract Logistics (contributes
~70% to total revenue) (ii) Express Logistics (~22% to total revenue) and (iii) Temperature-Controlled Logistics (~6% to total revenue) as of
FY17. Company's service offerings, automated technology system support, IT enabled warehousing infrastructure, pan-Indian distribution
network and "hub-andspoke" transportation model supports its competitive market position. FSCLs customers operate in various sectors
across India, including retail, fashion and apparel, automotive and engineering, food and beverage, fast moving consumer goods (FMCG),
e-commerce, healthcare, electronics and technology, home and furniture and ATMs. The company has an extensive network of 46
distribution centres, including 4 temperature controlled distribution centres and operates through "hub-and-spoke" distribution model
comprising 14 hubs and 106 branches across India (including franchisees and 12 of which are co-located on the same premises of hubs),
across 29 states and 5 union territories as of September 2017. FSCL owns ~687 containerised vehicles, including 257 GPS-enabled vehicles
of which 144 are refrigerated (reefer) trucks and operates 9,616 pallets as a part of temperature-controlled logistics services.

Business offerings in three key areas:

Contract Logistics: Warehousing, distribution and other value-added services
Express Logistics: Point-to-point, less-than-truck-load, time-definite transportation services
Temperature-controlled Logistics: Cold-chain warehousing, transportation solutions and distribution of perishable logistics

Contract Logistics: Contract logistics segment is the largest revenue contributor to the company (~70% as per FY17). FSCL provides
warehousing, distribution and other value-added services to its customer. Company runs its contract logistics through 42 distribution
centres across India, covering approximately 3.84 mn sqft of warehouse space and also operate 2 distribution centres of its customers,
covering approximately 0.37 mn sqft of warehouse space. Company's distribution centre in MIHAN is one of the largest and most highly
automated distribution centres in India, covering 0.37mn sqft of warehouse area and is centrally located with efficient linkage to
production and consumption clusters in India. The key end user industry segments for contract logistics services are auto, retail, pharma,
FMCG and CDIT, telecom, e-commerce and e-tail. Overall contract logistics spend has grown at a faster pace than the Indian logistics
industry at approximately 17% annually over FY12-17.

Express Logistics: Express logistics contributed ~22% to total revenue of the company as of FY17. Company's express logistics offerings
provides customers distribution services using "hub-and-spoke" distribution network and containerised fleet of technology-enabled trucks.
The key consumer industries of express logistics are auto components, banking and financial services, IT components, apparel,
pharmaceuticals, telecom products and e-commerce, among others. Organized national players contribute to ~50% of the express logistics
spend. The express logistics market in India has grown at a CAGR of approximately 14% over FY12-17.

Temperature-Controlled Logistics: Temperature controlled logistics contributed ~6% to total revenue of the company as of FY17. The
company temperature-controlled logistics offerings provides product-handling solutions for temperature-sensitive perishable products
through temperature controlled warehousing and transportation in reefer trucks. Organized logistics service providers contribute ~40% of
the addressable cold chain spend. Demand for cold chain logistics services is primarily driven by bulk agricultural commodities
(predominantly potato storage), consumer segments such as frozen food, dairy, confectionery, high-value fruits and vegetables,
pharmaceuticals and B2B segments. Organized cold chain logistics, has grown at a higher pace than the overall logistics industry in India
at approximately 25% annually over FY12-17. Management has commenced its temperature controlled logistics services in 2016 by
entering into a long-term operating lease for the operative assets, including refrigeration equipment, of Brattle Foods Private Limited.
Company has subsequently acquired reefer vehicles from Laxman Logistics Private Limited through a slump sale in Fiscal 2017.

Segment - wise revenue breakup

Rs435 cr Rs 537 cr Rs583cr

5% 7% 2%
10% 6%
6%
22%
36% 26% others
Cold chain logistics
Express logistics
70%
59% 60%
Contract logistics

FY15 FY16 FY17

Source: RHP, Geojit Research

Key Strengths:
Leading 3PL service provider with an extensive network of facilities.
Diverse customer base across many sectors.
Asset light business model.
Comprehensive solution for supply chain requirements.
At the forefront in automation.

Leading 3PL service provider with an extensive network of facilities...

Future supply chain solutions Ltd (FSCL) is one of Indias largest organised third-party logistics operators with an extensive network of
facilities in a fast growing third party logistics market. FSCL has an extensive network of 46 distribution centres, including 4 temperature
controlled distribution centres, 14 hubs and 106 branches (including franchisees and 12 of which are co-located on the same premises of
hubs), covering 11,235 pin codes across 29 states and 5 union territories creates a pan-India supply chain network. In addition, distribution
centre in Nagpur is one of the largest and most highly automated distribution centres in India. The distribution centre at MIHAN (Multi-
modal International Hub Airport at Nagpur) covers approx.0.37 million square feet of warehousing space, housing a high-speed cross-belt
sorter system, which is the first of its kind in India, with a sorting capacity of approximately 2,000 cases per hour. Further, it is believed
that the projected growth and the changes in the Indian third-party logistics market resulting from the introduction and implementation of
GST in India will result in an increase in the dependence of existing and new customers on third party logistics services.

Diverse customer base across many sectors...

The customer base spans many sectors, including retail, fashion and apparel, automotive and engineering, food and beverage, FMCG, e-
commerce, healthcare, electronics and technology, home and furniture and ATMs. The diversified customer base in each of the sectors the
company serve includes Indian corporate groups and multinational companies apart from the Promoter and certain Group Companies
such as Pepe Jeans India Limited, Bakers Circle (India) Private Limited, Clarks Future Footwear Private Limited, HPL Electric & Power
Limited, PepCart Logistics Private Limited (Pepperfry), Wildcraft India Private Limited etc.
A breakdown of revenue attributable to the various sectors served in Fiscal 2017, other than Promoter and certain of Group Companies is
set forth in the following chart:

Revenue breakdown from various sectors (%)

Fashion and Apparel

5.6 4.3 2.7
Automotive & Engineering
6 Food & Beverage
23.6
6.1 FMCG
E-commerce
Healthcare
6.7 7.3 22.3 Electronics & Technology
15.3 Home & Furniture
ATM
Others

Source: RHP, Geojit Research

Asset light business model

Company has an asset light logistics model and it leases most of the warehouse locations and delivery vehicles, which enables them to
expand their operations in order to adapt to the changing industry conditions and customer needs. Basically in asset-light model, logistic
service providers use infrastructure developed by others and customize it per customer requirements to deliver logistics services. The
service-based model has following key characteristics: (i) high ROCE, (ii) customer stickiness and (iii) high entry barriers. FSCL leases
distribution centres, equipment and vehicles from third party vendors and also engages with independent contractors for skilled and
unskilled labour needs. On fleet side, ownership is limited to the reefer trucks used in temperature controlled business. FSCL operates
approx.687 containerised vehicles, including 257 GPS-enabled vehicles of which 144 are refrigerated (reefer) trucks that are owned by the
company.

Comprehensive solution for supply chain requirements...

Companys supply chain provides a comprehensive solution for third-party logistics services through contract logistics, express logistics
and temperature-controlled logistics. FSCL provides end-to-end customised logistics and supply chain solutions that are created based on
customers requirements and their ability to manage complete supply chain enables customers to reduce the number of service providers
they engage. Companys logistics offerings with cross-selling opportunities acts as a key driver to enhance value proposition and
strengthen relationships with existing customers. For instance, FSCLs engagement with a consumer product company started by
providing warehousing services and expanded to handling their distribution supply chain through FSCLs express logistics services.
At the forefront in automation...
Adoption of technology and automated processes differentiates FSCL within supply chain management industry in India. FSCL is at the
forefront of warehouse management systems and automation solutions for meeting client specific needs in India. The management has
made investments to implement automated technology and processes in order to increase capacity and operating efficiency, thereby
improving our profitability and allowing us to customise services to suit our requirements and those of our customers. FSCL has adopted
various technologies and automation in their business which includes (i) Dynamic Put-to light (PTL) sortation system, which is an effective
sorting technology, (ii) warehouse management system (WMS) that coordinates across receiving, put-away, pack and dispatch processes,
(iv) vehicle tracking system (VTS) for tracking goods online and in real time while in transit. FSCLs quality of technological capabilities
has garnered them the recognition for technology and excellence.

Healthy Financials
FSCLs revenue and EBITDA grew at a CAGR of 19% and 38% respectively over FY14-17. Company has maintained an healthy EBITDA
margin in the range of 13%-16% and PAT margins at 6-8% in past 3 years, while had ROE & ROCE in the range of 12-14% and 17-20%
over the same period. Revenue grew 8%YoY in FY17 primarily due to increase in revenue from contract logistics services by 25.6%YoY
which is the major revenue contributor (~70%) to the company. This increase in revenue is mainly due to higher throughputs from
customers added in FY16 and growth in business from existing customers. Further, the revenue contribution from future entities (Key
customer) has also grown in last three years which accounted for ~70% of total revenue in FY17. In H1FY18 numbers are healthy with
EBITDA and PAT margins of 15.7% and 9.3% respectively.

Industry Outlook
Indian Logistics market

Indian logistics market is estimated at Rs 9,100 billion (US$ 140 billion) in Fiscal 2017. The Indian logistics market has grown at 12% CAGR
between FY2012 and FY2017. The industry growth is expected to continue in line with the historical growth trajectory on account of strong
demand and supply side drivers. Key factors contributing to the future growth include growth of the Indian economy, increasing
urbanization, increasing consumerism due to higher per capita incomes, favourable regulatory changes, incentives from the government
for infrastructure investment and higher levels of outsourcing of logistics activities. On the back of these drivers, organized logistics
service providers are expected to grow faster than the logistics market.

Indian Logistics market (in Rs cr)

1523

910
517

FY2012 FY2017 FY2022(P)

Source: RHP, Geojit Research

Some of the key drivers for organised LSPs and logistics market are presented below:
Growth in the underlying economy

Over the next few years, Indian economy is expected to be the fastest growing major developing economy. Manufacturing and trade are
expected to see strong growth on account of several government initiatives such as Make in India and Indian Foreign Trade Promotion
Policy for 2015-2020, which provide incentives for manufacturing in and exports from India. Growth of these segments is expected to
result in the demand for quality logistics, on both domestic as well as EXIM front, and is expected to drive demand for organized LSPs
(Logistics service providers). Moreover, consumer-focused industries (product industries such as auto, apparel, pharma, FMCG, CDIT) are
growing at a faster rate than raw material centric industries in value terms, indicating premiumization in these industries. Increased
premiumization in end user industries results in a higher requirement for organized LSPs (Logistics service providers) and increase in
adoption of value-added logistics services.

Evolving customer requirements

A shift in customer requirements from pure-play logistics activities to a service/ management oriented requirement is expected to drive
growth for organized LSPs. Outsourcing to contract LSPs is increasing in both consumer-focused industries, as well as in bulk industries.
The auto industry outsources an estimated 90-95% of logistics requirements to contract LSPs for not only warehousing & transportation,
but also for in-plant activities such as store management, line feed, sub-assembly and pre-delivery inspection amongst others. FMCG, CD,
and apparel industries have been increasing the level of outsourced activities for LSPs. These industries have in the recent past outsourced
consolidation, packaging, labelling, sorting and distribution to large organized LSPs.

Further, customer requirements are becoming increasingly sophisticated. Customers are increasingly willing to pay a premium for higher
infrastructure/ service quality (e.g. technology, automation and other value-added services), higher product safety, modern infrastructure
and other industry-specific specialized requirements. MNCs and large Indian companies have increased self-regulation and have
increased adoption of global compliance standards. This is leading to an increase in acceptance of premium services of organized LSPs that
meet the required standards.

Key segments of the logistics industry

Road transport is the largest segment of Indian logistics market, accounting for ~65% of its total value estimated at Rs 5,900 billion (US$ 91
billion) for FY 2017. This segment is highly fragmented with participants typically providing commoditized undifferentiated services. The
top ten road transportation service providers account for less than 2% of the segment. This segment is plagued by several inefficiencies
such as poor turnaround times, low utilization, poor road infrastructure and difficulty in generating reverse loads amidst others. This
segment has moderate level of asset intensity and provides moderate returns. Rail transport accounts for ~15% of Indian logistics market
estimated at Rs1,350 billion (US$ 21 billion) for FY 2017. It has traditionally had a high level of government control and only recently
opened to participation from private service providers in select segments such as CTO, wagon leasing schemes, PFT and SFTO.

Key addressable segments

Contract Logistics:
Contract logistics service providers provide inbound and outbound logistics services to various manufacturing and service companies.
These service providers take responsibility for transportation, warehousing and other value-added activities such as packaging, kitting,
sorting, labelling, reverse logistics and consolidation, among others. The key end user industry segments for these services are auto, retail,
pharma, FMCG and CDIT, telecom, e-commerce and e-tail. The contract logistics market in India was estimated at approximately 110
billion (US$ 1.7 billion) in Fiscal 2017. Contract logistics spend has grown at a faster pace than the overall Indian logistics industry at
approximately 17% annually between Fiscals 2012 and 2017.

Express Logistics:

Express logistics offers door-to-door delivery across domestic regions along with real-time shipment tracking facilities, and serves the need
for time-sensitive logistics services for customers requiring transport of less than truck load cargo. Express logistics services customers, for
whom speed to market is crucial for converting sales across regions, meeting customer expectations and maintaining business
competitiveness. The key consumer industries of express logistics are auto components, banking and financial services, IT components,
apparel, pharmaceuticals, telecom products and e-commerce, among others. The express logistics market in India was estimated at
approximately 100 billion (US$ 1.5 billion) in Fiscal 2017 and has grown at a CAGR of approximately 14% between Fiscals 2012 and 2017.
Organized national players contribute to 50% of the express logistics spend.
Cold chain Logistics:
Cold chain is a temperature-controlled supply chain offering services, including refrigerated storage, transportation and distribution
services along with associated value-added support activities. Demand for cold chain logistics services is primarily driven by bulk
agricultural commodities (predominantly potato storage), consumer segments such as frozen food, dairy, confectionery, high-value fruits
and vegetables, pharmaceuticals and B2B segments. The cold chain logistics market in India was estimated at approximately Rs200 billion
(US$ 3.1 billion) of which product and processed food based segments (addressable) cold chain spend is approximately Rs33 billion (US$
0.5 billion) in Fiscal 2017. Organized logistics service providers contribute 40% of the addressable cold chain spend (approximately 7% of
the total cold chain spend) estimated at approximately Rs13.5 billion (US$ 0.2 billion) in Fiscal 2017. Organized cold chain logistics, has
grown at a higher pace than the overall logistics industry in India at approximately 25% annually between Fiscals 2012 and 2017.

Overall addressable market (in Rs bn)

400
36.1

200.2 Cold Chain

300 Express
13.5 Contract
106.4 100
4.4 243.7
51.9
109.7
50
FY12 FY17 FY22

Source: RHP, Geojit Research

Promoter and promoter group
FEL (Future Enterprises Ltd) is the promoter of the company and currently holds 22,472,831 equity shares, equivalent to 56.10% of the pre-
offer issued, subscribed and paid-up equity share capital of company. After the issue, the promoter shall continue to hold 51.22% of the
post-offer paid up equity share capital of the company.

Highly Experienced Management...

The company has a highly skilled board of directors. Currently FSCL has 8 directors including 4 independent directors. Members of senior
management have around 25 years of experience in the retail, fashion, supply chain and logistics sectors. Experience in these industries is
key in driving business growth and provides thought leadership in the supply chain space on making operations more efficient and
productive, including with the use of technology.

Rakesh Biyani: The Chairman and a Non-Executive Director of Company. He holds a bachelors degree in Commerce from University of
Bombay and has attended the Advanced Management Program from Harvard Business School. He has over 25 years of experience in the
retail, supply chain and logistics, and fashion industries. He was awarded (i) an appreciation award by Datamatics Global Services
Limited for outstanding contribution to leadership development initiative of Datamatics Global Services Limited; and (ii) an appreciation
award by the Clothing Manufacturers Association of India (CMAI) at the CMAI Fashion Retail Summit on May 8, 2013. He has been a
Director on Board since July 13, 2007.

Mayur Toshniwal: Managing Director and Chief Executive Officer of Company. He holds a post graduate diploma in management from
the Indian Institute of Management, Ahmedabad and a bachelors degree in technology in mechanical engineering from the Indian
Institute of Technology, Banaras Hindu University, Varanasi. He has around 25 years of experience in the industry for manufacturing
paint, fast moving consumer goods and retail industries, including five years of experience as an entrepreneur. Previously he has worked
with Asian Paints, Coca Cola, Future Group, Allgreen Ecotechsolutions, an entrepreneurial venture. He has been a Director on Board since
August 5, 2017.

Chandra PrakashToshniwal : Non-Executive Director of Company. He holds a bachelors degree in commerce from the University of
Rajasthan. He is a qualified Chartered Accountant from the ICAI and is an Associate Member of the Institute of Company Secretaries of
India. He has over 20 years of experience in the retail, supply chain and logistics, fashion, insurance and media industries. He was
awarded the CFO Service Sector Award in 2011 by the Institute of Chartered Accountants of India. He has been associated with Future
Retail Limited and Future Lifestyle Fashions Limited in various capacities. He has been a Director on Board since March 8, 2006.

Janat Shah: An Independent Director of Company. He is a Fellow of the Indian Institute of Management, Ahmedabad. He has 27 years
of experience in the education field. He is the director of Indian Institute of Management, Udaipur. Previously he has worked with Indian
Institute of Management, Bangalore. He was the principal researcher of the team which won the IBM faculty award in 2005, 2006 and 2008.
He has been a Director on our Board since March 30, 2015.

Promoter group
FEL (Future Enterprises Ltd) is the promoter of the company. FEL is currently engaged in the business of retail infrastructure, mainly
providing the infrastructure assets and support to various retail formats of Future Retail Limited. FEL has a highly skilled board of
directors. Currently, FEL has seven Directors in the board, including four independent directors. The individual promoter of FEL is
Kishore Biyani.

Kishore Biyani, is the Vice-Chairman and Director of FEL. He holds a bachelors degree in Commerce and a post graduate diploma in
management from the University of Mumbai. He has led Future Entities foray into organized retail and brands across food, fashion and
home with the opening of the stores such as, Big Bazaar, Central, Home Town. He has over 37 years of experience in the field of
manufacturing, marketing of readymade garments and retail.

The corporate promoter of FEL is Central Departmental Stores Private Limited (CDSPL). CDSPL was incorporated on August 31, 2006 as a
private limited company. It is involved in the business of dealing in sales, purchases, export, import, distribution of fabric through
departmental stores, departmental chain shops, franchise shops, speciality shops, retail chain shops or through any other means for retail
selling or otherwise. The board of directors of CDSPL comprises (i) Hemant Kumar Bhotica; (ii) Ravie ManoharlalLalpurria; (iii) Rajkumar
Premvallabh Pande; and (iv) Nikunj Anil Biyani.
 Financials

Profit & Loss Account Balance Sheet

Y.E March (Rscr) FY15 FY16 FY17 6MFY18 Y.E March (Rscr) FY15 FY16 FY17 6MFY18
Sales 408 520 561 357 Cash 1.8 1.5 46.7 63.8
% change 23.6 27 8 27* Accounts Receivable 182 221 217 250
EBITDA 64 70 74 56 Inventories - - - -
% change 128.5 9 6 51* Other Cur. Assets 30 87 23 20
Depreciation 20 21 19 10 Investments 0 0 0 10
EBIT 44 49 55 46 Gross Fixed Assets
Interest 10 13 13 4 Net Fixed Assets 8 9 1 -
Other Income 3 9 16 8 CWIP 146 137 129 207
PBT 37 45 58 49 Intangible Assets 3 1 1 1
% change 653 22 30 70* Def. Tax 8 9 1 -
Tax 12 15 12 16 Other Assets 15 25 23 23
Tax Rate (%) 32.6 34 21 33 Total Assets 387 484 510 576
Reported PAT 25 29 46 33 Current Liabilities 105 141 128 145
Adj Provisions 3 4 5 15
Adj PAT 25 29 46 33 Debt Funds 52 80 74 80
% change 483.3 19.3 55.5 44 Other Liabilities 0 0 0 0
No. of shares (cr) 4.01 4.01 4.01 4.01 Def.Tax 9 11 10 11
Adj EPS (Rs) 6 7.3 11.4 16.4* Equity Capital 39 39 39 39
% change 483.3 19.3 55.5 44* Reserves & Surplus 179 208 254 287
*Annualised Shareholders Fund 218 247 293 326
Total Liabilities 387 484 510 576
BVPS (Rs) 54 62 73 81

Cash flow Ratios

Y.E March (Rscr) FY15 FY16 FY17 6MFY18
Y.E March FY15 FY16 FY17 6MFY18
PBT 37 45 58 49
Non-cash adj. 28 27 17 9 Profitab. & Return
Changes in W.C (21) (87) 17 (18) EBITDA margin (%) 15.7 13.5 13.2 15.7
C.F.O 43.7 (15.4) 92.6 40.5 EBIT margin (%) 10.9 9.5 9.8 12.9
Capital exp. (20) (38) (79) (25) Net profit mgn.(%) 6.0 5.7 8.2 9.2
Change in inv. - - - (10) ROE (%) 11.8 12.7 16.9 21.2
Sale of investment (0) 27 0 10 ROCE (%) 11.4 12.5 15.9 17.6
Other invest.CF 2 8 14 3 W.C & Liquidity
C.F - investing (17.5) (2.5) (63.9) (22.2) Receivables (days) 146.7 141.5 142.4 238.4
Issue of equity - - - - Inventory (days) - - - -
Issue/repay debt (11) 31 29 3
Payables (days) 135.4 132.5 130.9 210.0
Dividends paid - - - -
Current ratio (x) 2.0 2.2 2.2 2.2
Other finance.CF (16) (13) (13) (4)
C.F - Financing (27) 17 16 (1) Quick ratio (x) 1.7 1.6 2.1 2.2
Chg. in cash (0) (1) 45 17 Turnover &Levg.
Closing cash 1.79 1.5 47 63.8 Net asset T.O (x) 2.9 3.7 4.2 2.1
Total asset T.O (x) 1.1 1.2 1.1 0.7
Int. covge. ratio (x) 4.3 3.7 4.3 10.6
Adj. debt/equity (x) 0.3 0.3 0.3 0.3
Valuation ratios
EV/Sales (x) 6.7 5.3 4.9 3.8*
EV/EBITDA (x) 42.6 39.2 36.9 24.5*
P/E (x) 107.9 90.4 58.1 40.5*
P/BV (x) 12.2 10.8 9.1 8.2*
*Annualised
Investment Rating Criteria
Large Cap Stocks; Mid Cap and Small Cap;
Buy - Upside is above 10%. Buy - Upside is 15% or more.
Hold - Upside is between 0% - 10%. Accumulate - Upside between 10% - 15%.
Reduce/Sell - Downside is more than 0%. Hold - Upside is between 0% - 10%.
Reduce/Sell - Downside is more than 0%.
To satisfy regulatory requirements, we attribute Accumulate as Buy and
Reduce as Sell.
The recommendations are based on 12 month horizon, unless otherwise specified. The investment ratings are on absolute positive/negative return basis. It is
possible that due to volatile price fluctuation in the near to medium term, there could be a temporary mismatch to rating.
For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. Please note that the stock always carries the risk of being
upgraded to BUY or downgraded to a HOLD, REDUCE or SELL.

General Disclosures and Disclaimers

CERTIFICATION
I, Sheen G, author of this Report, hereby certify that all the views expressed in this research report reflect our personal views about any or all of the subject
issuer or securities. This report has been prepared by the Research Team of Geojit Financial Services Limited, hereinafter referred to as Geojit.
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sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. We have also reviewed the
research report for any untrue statements of material facts or any false or misleading information. While we endeavor to update on a reasonable basis the
information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so.
RISK DISCLOSURE
Geojit and/or its Affiliates and its officers, directors and employees including the analyst/authors shall not be in any way be responsible for any loss or
damage that may arise to any person from any inadvertent error in the information contained in this report. Investors may lose his/her entire investment
under certain market conditions so before acting on any advice or recommendation in these material, investors should consider whether it is suitable for their
particular circumstances and, if necessary, seek professional advice. This report does not take into account the specific investment objectives, financial
situation/circumstances and the particular needs of any specific person who may receive this document. The user assumes the entire risk of any use made of
this information. Each recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in
the securities of companies referred to in this report (including the merits and risks involved). The price, volume and income of the investments referred to in
this report may fluctuate and investors may realize losses that may exceed their original capital.
FUNDAMENTAL DISCLAIMER
We have prepared this report based on information believed to be reliable. The recommendations herein are based on 12 month horizon, unless otherwise
specified. The investment ratings are on absolute positive/negative return basis. It is possible that due to volatile price fluctuation in the near to medium
term, there could be a temporary mismatch to rating. For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. The
stocks always carry the risk of being upgraded to buy or downgraded to a hold, reduce or sell. The opinions expressed are subject to change but we have no
obligation to tell our clients when our opinions or recommendations change. This report is non-inclusive and does not consider all the information that the
recipients may consider material to investments. This report is issued by Geojit without any liability/undertaking/commitment on the part of itself or anyof
its entities. We may have issued or may issue on the companies covered herein, reports, recommendations or information which is contrary to those contained
in this report.
The projections and forecasts described in this report should be evaluated keeping in mind the fact that these are based on estimates and assumptions and
will vary from actual results over a period of time. The actual performance of the companies represented in the report may vary from those projected. These
are not scientifically proven to guarantee certain intended results and hence, are not published as a warranty and do not carry any evidentiary value
whatsoever. These are not to be relied on in or as contractual, legal or tax advice. Prospective investors and others are cautioned that any forward-looking
statements are not predictions and may be subject to change without notice.
JURISDICTION
The securities described herein may not be eligible for sale in all jurisdictions or to all categories of investors. The countries in which the companies
mentioned in this report are organized may have restrictions on investments, voting rights or dealings in securities by nationals of other countries.
Distributing/taking/sending/dispatching/transmitting this document in certain foreign jurisdictions may be restricted by law, and persons into whose
possession this document comes should inform themselves about, and observe any such restrictions. Failure to comply with this restriction may constitute a
violation of any foreign jurisdiction laws. Foreign currencies denominated securities are subject to fluctuations in exchange rates that could have an adverse
effect on the value or price of or income derived from the investment. Investors in securities such as ADRs, the value of which are influenced by foreign
currencies effectively assume currency risk.
REGULATORY DISCLOSURES:
Geojits Associates consists of privately held companies such as Geojit Technologies Private Limited (GTPL- Software Solutions provider), Geojit Credits
Private Limited (GCPL- NBFC Services provider), Geojit Investment Services Limited (GISL- Corporate Agent for Insurance products), Geojit Financial
Management Services Private Limited (GFMSL) &Geojit Financial Distribution Private Limited (GFDPL), (Distributors of Insurance and MF Units).In the
context of the SEBI Regulations on Research Analysts (2014), Geojit affirms that we are a SEBI registered Research Entity and in the course of our business as a
stock market intermediary, we issue research reports /research analysis etc that are prepared by our Research Analysts. We also affirm and undertake that no
disciplinary action has been taken against us or our Analysts in connection with our business activities.
In compliance with the above mentioned SEBI Regulations, the following additional disclosures are also provided which may be considered by the reader
before making an investment decision:
1. Disclosures regarding Ownership*:
Geojit confirms that:
(i) It/its associates have no financial interest or any other material conflict in relation to the subject company (ies) covered herein.
(ii) It/its associates have no actual beneficial ownership greater than 1% in relation to the subject company (ies) covered herein.
Further, the Analyst confirms that:
(i) he, his associates and his relatives have no financial interest in the subject company (ies) covered herein, and they have no other material conflict in the
subject company.
(ii) he, his associates and his relatives have no actual/beneficial ownership greater than 1% in the subject company covered
2. Disclosures regarding Compensation:
During the past 12 months, Geojit or its Associates:
(a) Have not received any compensation from the subject company; (b) Have not managed or co-managed public offering of securities for the subject
company (c) Have not * received any compensation for investment banking or merchant banking or brokerage services from the subject company. (d) Have
not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company
(e) Have not received any compensation or other benefits from the subject company or third party in connection with the research report (f) The subject
company is / was not a client during twelve months preceding the date of distribution of the research report.
3. Disclosure by Geojit regarding the compensation paid to its Research Analyst:
Geojit hereby confirms that no part of the compensation paid to the persons employed by it as Research Analysts is based on any specific brokerage services
or transactions pertaining to trading in securities of companies contained in the Research Reports.
4. Disclosure regarding the Research Analysts connection with the subject company:
It is affirmed that I, Sheen G, Research Analyst(s) of Geojit have not served as an officer, director or employee of the subject company
5. Disclosure regarding Market Making activity:
Neither Geojit/its Analysts have engaged in market making activities for the subject company.

Please ensure that you have read the Risk Disclosure Documents for Capital Market and Derivatives Segments as prescribed by the Securities and
Exchange Board of India before investing

Digitally signed by SHEEN G

Date: 2017.12.05 17:55:36 +05'30'

Geojit Financial Services Ltd. (formerly known as Geojit BNP Paribas Financial Services Ltd.), Registered Office: 34/659-P, Civil Line Road, Padivattom,
Kochi-682024, Kerala, India. Phone: +91 484-2901000, Fax: +91 484-2979695, Website: geojit.com. For investor queries: customercare@geojit.com, For
grievances: grievances@geojit.com, For compliance officer: compliance@geojit.com.

Corporate Identity Number: L67120KL1994PLC008403, SEBI Regn.Nos.: NSE: INB/INF/INE231337230 I BSE:INB011337236 & INF011337237 | MSEI:
INE261337230, INB261337233 & INF261337233, Research Entity SEBI Reg No: INH200000345, Investment Adviser SEBI Reg No: INA200002817, Portfolio
Manager:INP000003203, NSDL: IN-DP-NSDL-24-97, CDSL: IN-DP-CDSL-648-2012, ARN Regn.Nos:0098, IRDA Corporate Agent (Composite) No.: CA0226.
Research Entity SEBI Registration Number: INH200000345