Spark Research 18 June 2018 PDF

Closing % YTD % 1 YR
SPARK RESEARCH SENSEX 35,622 4.60 14.53

18 June 2018 NIFTY 10,830 2.84 12.96
WHAT’S INSIDE SECTORAL INDICES

Closing % YTD % 1 YR
 Spark Strategy: True test of pricing power; Creating a framework to assess earnings and multiples BSE Auto 24,850 (7.1) 2.7
vulnerabilities BSE Bank 29,558 2.4 11.4
BSE Cap Goods 18,289 (4.4) 4.8
 V-Mart Retail – FY18 Annual Report Analysis
BSE Cons Dur 20,518 (9.6) 28.8
BSE FMCG 11,217 4.9 10.7
 Exchange and Currency Performance
BSE IT 13,951 23.7 38.9
 Spark Focus Stocks BSE Health 14,301 (3.4) 0.2

BSE Metal 13,406 (10.3) 19.1
BSE Oil 14,397 (11.6) 4.9
BSE Power 2,017 (15.3) (9.3)
BSE PSU 7,722 (15.8) (9.1)
BSE Realty 2,183 (16.3) 8.6
BSE TECK 7,185 12.1 28.0
NIFTY OUTPERFORMERS
Price % YTD % 1 YR
Tech Mahindra Ltd 711 41.1 82.2
Titan Co Ltd 904 5.3 75.1
Bajaj Finance Ltd 2,272 29.3 61.1
Tata Consultancy Svcs Ltd 1,868 38.3 55.7
Hindustan Unilever Ltd 1,630 19.2 49.3
NIFTY UNDERPERFORMERS
Price % YTD % 1 YR
Tata Motors Ltd 303 (29.9) (33.5)
Bharti Infratel Ltd 292 (22.9) (22.2)
Lupin Ltd 911 2.9 (19.5)
Upl Ltd 700 (8.2) (19.2)
Indian Oil Corp Ltd 171 (12.2) (15.7)
find SPARK RESEARCH on Page 1

(SPAK <go>)
SPARK STRATEGY
True test of pricing power; Creating a framework to assess earnings and multiples vulnerabilities
We are in the middle of a ‘Bad macro-Good micro’ phase with earnings growth bouncing off a low base and due to the lag effects of a good
macro cycle between 2015-18. While CY18 earnings may not be at risk due to this, we believe that, with the lead indicators deteriorating over STRATEGY
the past six-eight months on commodity prices, inflation, interest rates, current & capital account challenges and fiscal pangs to growth, the 18 June 2018
risks to CY19/FY20 earnings have risen. While the market is beginning to price it in terms of multiples compression, earnings estimates for
the ensuing 12-24 month period are still building in a blue sky scenario. We sequence the likely trajectory -
BSE Sensex 35,622
Phase 1 – Sep-Dec’17 saw commodity prices go up, interest rates rise and the twin deficit challenges begin.
Phase 2 – March quarter of FY18 results showed margin pressures due to higher commodity prices and rupee depreciation. NSE Nifty 10,817
Phase 3 – Apr-Jun’ 18 has seen companies take price hikes. Behaviorally, companies tend to anticipate further cost inflation in taking price hikes. 20%
This increases inflationary risks. Interest rates and central bank policy rates go up. Margins in the ensuing 2 quarters can bounce back.
15%
Phase 4 – Oct’18-Mar’19 - Will demand sustain inspite of higher prices? This should be the key testing ground. Street’s earnings estimates for
CY19 are baking in margin AND demand stability implying value growth, volume growth and operating leverage. That’s the key risk we see. 10%
Phase 5 - Our call is that volume growth and/or margin assumptions for CY19 should then moderate as customer behavior should change 5%
reacting to interest rates, currency movements and fiscal spend. Also, working capital cycle should elongate and cash generation weaken. 0%
This boils down to pricing power. Very few companies have a time tested track record of demonstrated pricing power, underlying robust -5%
business model, strong shock absorbers and a solid governance structure to deliver consistent performance irrespective of cycles and
Aug-17
Sep-17
Feb-18
Apr-18
May-18
Jun-17
Jun-18
Jul-17
Nov-17
Dec-17
Jan-18
Mar-18
Oct-17
headwinds. We identified a few in our earlier note titled ‘Identifying The Best “All Weather” Managements’.
In this note, we are creating a framework to identify companies, within each sector, which are, in our opinion, most and least vulnerable for Sensex BSE 200
the volume and/ or margins risks as well as multiples de-rating risks that we assess.
Where are the landmines? Performance (%)
• Cyclically boosted gross margins and EBITDA margins (or Net Interest Margins) due to low input prices, benign wage/ lease rental/ logistics 1m 3m 12m
cost environment and a strong rupee over FY15-FY18. Companies with weak pricing power in a competitive B2B business or Govt. contracts
Sensex -0.4% 3.0% 11.9%
can see mean reversion on margins and stretched working capital.
BSE200 0.2% 5.2% 14.5%
• Operating & Financial de-leverage – High fixed cost businesses, financially levered (measured by Debt/ Operating cashflows) show the
highest sensitivity to profit estimates for even a 2% lesser revenues. RESEARCH ANALYSTS
• High growth, rather than high quality, led top decile P/E or EV/ EBITDA valuations esp. ones with weak cashflow profiles to support it are the VIJAYARAGHAVAN SWAMINATHAN
third vulnerable pack. raghavan@sparkcapital.in
+91 44 4344 0022
Large caps – Axis Bank, ICICI Prudential Life, Zee, OMCs and L&T
GAUTAM SINGH
Large Midcaps – RBL Bank, Cholamandalam, Shriram Transport, TVS Motors, Dalmia Bharat, Pidilite, Emami, Apollo Hospitals and Kansai Nerolac gautam@sparkcapital.in
Mid caps – Quess, Most B2B auto ancillaries, Trent, Govt. spend dependent contractors, Gujarat Gas, India Cements and Century Ply +91 22 6176 6804
Portfolio Strategy: We expect companies with weaker business model/franchisee strength to be tested meaningfully in the current uncertain ARJUN N
macro environment. Hence, we recommend a portfolio strategy which has a prudent mix of companies with long history of pricing power and arjun@sparkcapital.in
low beta/inexpensive ‘value’ stocks, hoping that they re-rate from company-specific triggers. +91 44 4344 0081
(SPAK <go>)
Framework to Identify companies vulnerable for earnings and/or multiples downgrades
Spark Coverage of 200 stocks put through a quantitative test based on the framework
Parameter Methodology used Impact
Average Gross Profit Margin  Average Gross Profit margin FY13-FY18 Higher the better; Reflects pricing power and value addition
Gross Margin Vulnerability & Lower the better; How much of the margins are cyclically
 Trough to current Gross Profit margins from FY13-18
Volatility boosted and is vulnerable for mean reversion
Higher the better; Business model strength. Ability to

Average EBITDA Margin  Average EBITDA margin FY13-FY18
withstand macro risks
EBITDA Margin Vulnerability Lower the better; Strength of shock absorbers and ability to
 Trough to current EBITDA margins from FY13-18
& Volatility juggle to deliver profitability
Lower the better; High fixed costs proportion impacts

Operating Leverage  Non-raw material cost as a % of Total cost from FY13-18
nimble footedness esp. when demand environment is weak
Lower the better; Triple impact of gross margins, operating

Profit sensitivity  Sensitivity of 2% lesser revenues on PAT estimates for FY19E
and financial de-leverage; Vulnerability for earnings shocks
Higher the better; Terms of trade reflects pricing power.

Working capital efficiency  Cumulative OCF (post tax/interest) /PAT from FY13-18
Earnings without cashflows can get exposed
Lower the better; Vulnerable for debt traps when demand

Balance sheet strength  Net Debt/OCF on FY19E
environment is not as expected
High growth led high Lower the better; Stocks trading at high multiples only due
 Revenue CAGR FY18-20E and FY19 P/E
multiples to high growth expectations rather than high quality
Lower the better; Good earnings, bad cashflows cannot

Valuations  Difference between EV/OCF and P/E
sustain valuations for long and are de-rating candidates
Notes: *OCF – Operating Cash Flow
Page 3
Banks
Inc. SA to Peak to
MCLR Movemen FY18-
Liabilities Assets Assets - Inc. Base Rate - trough ▲in FY19E ▲ in lag
movement I/(D+B) t in YoA ▲ in Retail FY20E
NIM Sensitivity repricing repricing Liabilities deposits MCLR non-CASA P/ABV book Rank
(Dec-17 to Ratio (same spreads Deposits Loan Book
in <1-year in <1-year Mismatch (Sep-16 to differential CoD (FY13 Multiple GNPA Impact
Mar-18) period) CAGR
Mar-18) to FY18)
Higher/ Lower
Lower Higher Higher Lower Higher Higher Lower Lower Higher Lower Higher Lower Lower Lower Lower
the better
Most
Axis Bank 45% 29% -16% 55% 0.15% 18.6% 0.85% 2.65% 2.05% 0.60% 52.7% 18.0% 2.3 1.4% 13
impacted
Indusind 55% 35% -20% 64% 0.40% 23.3% 1.30% 3.30% 3.52% -0.22% 25.1% 30.9% 4.2 0.3% 12
Canara Bank 49% 31% -18% 77% 0.10% 25.4% 1.00% 2.53% 2.23% 0.29% 58.0% 12.5% 1.2 1.4% 11
DCB Bank 53% 20% -33% 23% 0.15% 18.9% 0.57% 2.31% 1.26% 1.05% 43.1% 26.0% 2.1 0.5% 10
Kotak Bank 53% 38% -14% 63% 0.05% 23.7% 0.45% 3.45% 3.86% -0.41% 51.2% 24.5% 4.4 0.6% 9
RBL Bank 66% 57% -9% 16% 0.25% 21.1% 0.65% 3.04% 1.59% 1.46% 29.9% 33.5% 3.3 0.5% 8
YES 47% 39% -8% 26% 0.40% 17.7% 1.00% 2.60% 3.53% -0.93% 29.4% 26.0% 2.6 0.7% 7
ICICI Bank 33% 32% -1% 48% 0.10% 21.2% 0.55% 2.66% 1.68% 0.98% 57.2% 13.5% 1.3 1.1% 6
PNB 31% 19% -12% 63% 0.15% 25.0% 1.05% 2.79% 3.11% -0.33% 67.7% 7.0% 2.7 0.7% 5
KVB 32% 43% 11% 52% 0.15% 23.1% 0.94% 2.63% 1.88% 0.75% 64.6% 15.5% 1.4 0.6% 4
HDFC Bank 44% 40% -4% 32% 0.20% 21.3% 0.55% 2.87% 2.00% 0.88% 57.2% 23.2% 3.6 0.2% 6
Federal Bank 41% 35% -5% 35% 0.00% 19.1% 0.73% 2.01% 2.38% -0.37% 87.1% 20.0% 1.2 0.8% 5
CUB Bank 31% 41% 10% 28% -0.20% 21.7% 0.70% 2.22% 2.24% -0.03% 72.3% 19.5% 3.1 0.5% 4
BOB 48% 30% -18% N/A 0.00% 29.4% 0.85% 1.07% 1.23% -0.16% 66.7% 13.0% 1.2 1.5% 3
South Indian
35% 42% 7% 24% 0.10% 22.8% 0.90% 2.07% 2.65% -0.58% 65.4% 20.0% 1.0 0.6% 2
Bank
Least
SBI 42% 18% -24% 63% 0.20% 30.1% 0.55% 2.09% 1.82% 0.27% 75.0% 11.0% 1.4 0.4% 1
impacted
* FY17 numbers considered where FY18 not available
Page 4
NBFCs
Fixed Costs / Operating De-
Liabilities Assets % INDAS Transition Impact
Banks + leverage
Floating repricing repricing portfolio AUM
CP as a % Assets - 65% of
Rate in the in the facing CAGR P/ABV on Total Fixed Securitised/
Particulars of total Liabilities Other Opex Employee Investment Rank
assets next one next one pricing FY18- FY19 Opex as a % GNPA % PCR % Assigned
borrowin Mismatch / as a % of Costs as a % s as a % of
(FY18) year year pressure FY20 of total (FY18) (FY18) Portfolio as
gs (FY18) opex (FY18) of Opex Total Assets
(FY17) (FY17) (FY18) opex (FY18) a % of AUM
(FY18)
Higher/Lower
Higher Lower Lower Higher Higher Lower Lower Lower Lower Lower Lower Lower Higher Lower Higher Lower
the better
Most
Cholamandalam 5% 53% 33% 35% 2% 50% 21% 4.3 55% 27% 82% 2.9% 44% 15% 1% 12
Impacted
AU BANK 55% 28% 41% 32% -10% 45% 37% 6.8 44% 36% 80% 2.0% 37% 17% 16% 11
REPCO 90% 72% 27% 7% -20% 70% 17% 2.4 34% 41% 74% 2.9% 56% 0% 0% 10
Shriram
5% 35% 32% 31% -2% 30% 17% 2.6 50% 31% 81% 9.2% 71% 16% 5% 9
Transport
Mahindra
5% 43% 35% 44% 9% 40% 19% 3.2 46% 33% 80% 8.4% 58% 1% 3% 8
Finance
Sundaram
5% 38% 57% 42% -14% 70% 14% 3.9 37% 33% 70% 1.3% 61% 22% 10% 7
Finance
Bharat
50% 39% 33% 46% 14% 50% 31% 6.6 59% 25% 84% 1.5% 74% 3% 4% 6
Financial
LIC Housing 90% 10% 18% 6% -12% 85% 14% 1.8 65% 22% 87% 0.8% 45% 0% 1% 5
Shriram City
55% 71% 44% 60% 16% 40% 20% 2.7 46% 34% 79% 9.0% 62% 0% 3% 4
Union Finance
Equitas 40% 16% 42% 50% 8% 60% 26% 2.2 32% 38% 70% 2.7% 47% 5% 29% 3
HDFC 90% 15% 16% 18% 2% 70% 17% 2.8 50% 29% 79% 1.1% 29% 10% 8% 2
Least
Ujjivan 95% 43% 76% 68% -8% 5% 31% 2.5 38% 36% 74% 3.7% 81% 0% 13% 1
Impacted
Page 5
Insurance
VNB Sensitivity -FY18 (%) EV Sensitivity -FY18 (%) Growth (%) Product mix (%) ROEV protection
Avg Opex
Companies APE
(ex- Op
+100bps 10% +10% +100bps 10% +10% growth v/s % VNB Rank
% ULIP to comm)/Total VIF % of EV variance %
interest increase in increase in interest increase in increase in valuation protection Gearing Impact
APE Premium - (FY18) of opening
rates expense lapse rate rates expense lapse rate (P/EV) to APE (FY18)
Higher/ Lower (FY15-18) EV (FY18)
FY18-20E
the better
Higher Lower Lower Higher Lower Lower Lower Lower Higher Lower Higher Lower Lower Lower
Most
ICICI Pru Life -4.9% -3.5% -8.6% -2.1% -1.0% -1.3% 13.9% 81.9% 5.7% 9.3% 62.6% 1.6% 7.9% 4
impacted
Max Financial 4.9% -5.3% -5.5% -1.9% -0.9% -1.9% 17.2% 41.1% 7.9% 13.7% 67.0% 1.0% 10.0% 3
HDFC Life 0.3% -2.2% -5.6% -1.8% -0.6% -1.8% 17.0% 50.7% 11.3% 12.4% 68.1% 2.9% 10.3% 2
Least
SBI Life 1.0% -2.9% -7.0% -4.0% -0.7% -1.0% 18.4% 66.6% 5.3% 8.0% 60.8% 1.0% 8.4% 1
Impacted
Agro Chemicals
Non-RM cost Working Revenue CAGR Valuation
Companies Avg Gross Gross margin Avg EBITDA EBITDA margin Profit Balance sheet
as a % of Total capital (FY18-FY20) (Diff. between Rank
Margin improvement margin improvement sensitivity efficiency Impact
Higher/ Lower cost efficiency v/s valuation EV/OCF & PE)
the better Higher Higher Higher Higher Lower Lower Higher Lower Higher Lower Lower
Dhanuka Most
39% 7.0% 17% 3% 27% -5% 0.8 -1.9 12% 11.3 5
Agritech Impacted
Rallis India 41% 5.2% 16% 0% 30% -5% 1.1 -1.0 10% -3.5 4
UPL 51% 4.3% 19% 3% 40% -5% 1.5 1.1 14% -2.0 3
Sharda
34% 3.2% 20% 4% 18% -4% 0.8 -0.5 15% -6.8 2
Cropchem
Least
PI Industries 45% 7.3% 20% 6% 31% -4% 0.9 -0.9 17% 2.0 1
Impacted
Page 6
Automobiles
Valuation
EBITDA Non-RM cost Working FY18-20E
Avg Gross Gross margin Avg EBITDA Profit Balance sheet (Diff.
Companies margin as a % of capital Revenue Rank
Margin vulnerability margin sensitivity efficiency (x) between
vulnerability Total cost efficiency (x) CAGR Impact
EV/OCF & PE)
Higher more
Higher/lower the better Higher Lower Higher Lower Lower Lower Higher Lower Lower Lower
vulnerable
Most
TVS Motors 28% 0% 7% 2% 23% -5% 1.5 0.7 17% -8.4 7
Impacted
Ashok Leyland 26% 7% 8% 9% 19% -7% 2.4 -2.4 21% -10.1 6
Eicher Motors 42% 13% 25% 18% 23% -2% 1.2 -3.8 22% -9.3 5
Hero MotoCorp 30% 5% 15% 4% 18% -3% 1.1 -1.5 14% -4.2 4
Maruti Suzuki 30% 6% 13% 6% 19% -3% 1.6 -2.9 14% -10.0 3
Mahindra and Mahindra 31% 5% 14% 2% 20% -4% 1.4 -3.0 14% -9.6 2
Least
Bajaj Auto 31% 3% 20% 1% 14% -2% 1.0 -0.1 11% -0.1 1
Impacted
Auto Ancillaries
Most
SKF India 37% 3% 13% 4% 29% -3% 0.8 -4.1 14% 12.0 12
Impacted
Ceat 38% 7% 11% 2% 30% -6% 1.3 4.8 12% 4.7 11
Timken 40% 3% 13% 4% 31% -4% 1.0 -0.1 22% -5.9 10
Rane Holdings 46% 5% 10% 1% 40% -12% 1.0 -1.5 14% 14.3 9
Sundram Fasteners 58% 7% 15% 6% 50% -4% 1.2 -0.1 16% -1.6 8
Bharat Forge 61% 5% 18% 7% 52% -5% 1.4 1.7 16% 5.1 7
Suprajit Engineering 40% 7% 16% 1% 29% -5% 0.9 0.7 12% 4.9 6
NRB Bearings 59% 0% 17% 3% 51% -6% 1.3 2.0 10% 14.5 5
Apollo Tyres 44% 6% 14% 0% 35% -8% 1.6 3.7 16% 2.8 4
Wabco India 41% 0% 16% 0% 30% -4% 1.1 -4.7 20% 26.1 3
Amara Raja Batteries 34% 0% 16% 0% 21% -4% 1.0 -0.8 18% -1.1 2
Least
Exide Industries 36% 1% 14% 0% 25% -4% 1.1 -1.1 14% -4.0 1
Impacted
Page 7
Consumption
EBITDA Non-RM cost Working FY18-20E Valuation (Diff.
Companies Avg Gross Gross margin Avg EBITDA Profit Balance sheet
margin as a % of capital Revenue between Rank
Margin vulnerability margin sensitivity efficiency (x)
vulnerability Total cost efficiency (x) CAGR EV/OCF & PE) Impact
Higher/ Lower the better Higher more
Higher Lower Higher Lower Lower Lower Higher Lower Lower Lower
vulnerable
Most
Jyothy Laboratories 48% 3% 13% 5% 41% -6% 0.8 -1.7 15% 2.5 9
Impacted
Emami 65% 10% 26% 8% 52% -8% 1.8 -0.8 15% -7.0 8
Britannia Industries 39% 1% 12% 10% 31% -4% 1.0 -1.6 16% -0.2 7
Hindustan Unilever 50% 5% 18% 6% 39% -5% 1.0 -1.2 15% -3.8 6
Bajaj Corp 63% 10% 31% 3% 46% -6% 0.9 -2.0 15% 0.0 5
Marico 50% 1% 17% 4% 40% -4% 0.9 -0.8 14% -0.8 4
Dabur India 51% 0% 18% 5% 40% -3% 0.9 -2.5 14% 5.0 3
Zydus Wellness 69% 0% 23% 0% 60% -4% 0.8 -5.8 14% 5.1 2
Least
ITC 63% 2% 37% 3% 42% -3% 1.0 -1.6 11% 2.2 1
impacted
Most
Trent 45% 18% 4% 10% 42% -8% 1.1 2.9 22% 51.1 12
Impacted
Pidilite Industries 49% 8% 19% 6% 37% -5% 1.3 -2.3 14% 10.1 11
Kansai Nerolac Paints 36% 8% 14% 6% 25% -5% 1.1 -1.8 14% 8.8 8
Titan 26% 0% 10% 2% 18% -5% 0.9 -2.3 21% 58.8 8
Page Industries 57% 6% 20% 2% 46% -5% 1.4 -1.2 22% 22.2 8
V.I.P.Industries 46% 4% 9% 6% 41% -7% 1.4 -1.5 13% 8.4 7
Asian Paints 43% 1% 18% 3% 31% -5% 1.4 -1.4 18% 13.1 5
Arvind 56% 0% 12% 0% 50% -16% 0.9 5.9 13% 6.9 5
Berger Paints India 41% 3% 13% 4% 32% -6% 1.5 -0.8 15% -0.2 4
Wonderla Holidays 81% 13% 39% 7% 67% -6% 1.9 0.4 15% -13.9 3
Vmart Retail 30% 3% 9% 3% 23% -7% 1.5 -1.1 22% 1.1 2
Least
Bata India 54% 2% 13% 2% 47% -8% 1.5 -3.8 12% 3.1 1
impacted
Page 8
Cement
Valuations
GP/T EBITDA/t EBITDA/t Balance
GP/T Average Avg Fixed costs Earnings Working capital - FY18-20E (Diff.
Vulnerability - average volatility sheet FY19E
Companies FY13-18 as a % of total sensitivity- OCF post tax post Revenue between Ranking
Trough to FY13-18 from FY14-18 - Net
(Rs.) costs FY14-18 2% revenue interest/PAT CAGR EV/OCF v/s Impact
FY18 (Rs.) (Rs.) (Rs.) debt/OCF
PE)
Higher more
Higher/ Lower the better Higher Lower Higher Lower Lower Lower Higher Lower Higher Lower
vulnerable
Most
Dalmia Bharat 1,884 467 945 565 30% -7% 317% 2.0 10% -7 7
Impacted
India Cements 1,393 236 697 91 18% -16% 256% 8.9 7% -10 6
Ramco Cements 1,673 637 1,063 591 18% -4% 188% 0.9 10% -7 5
UltraTech 1,993 70 965 75 27% -6% 135% 2.3 15% -8 4
Ambuja Cements 1,489 154 850 141 18% -4% 127% -2.3 6% -9 3
Shree Cement 1,471 372 972 325 18% -4% 154% -1.0 18% -13 2
Least
ACC 1,820 121 707 106 27% -5% 138% -1.9 5% -13 1
impacted
Building Materials
Valuation
Companies Avg Gross Gross margin Avg EBITDA Profit Balance sheet (Diff.
margin as a % of capital Revenue Rank
EV/OCF & PE)
vulnerable
Most
Century Plyboards 45% 10% 14% 6% 36% -9% 1.0 3.0 17% 8.5 7
Impacted
Somany Ceramics 42% 7% 8% 2% 37% -12% 0.8 1.9 13% 4.6 6
Astral Poly Technik 30% 6% 14% 3% 18% -6% 1.1 -0.0 22% 1.3 5
Cera Sanitaryware 55% 5% 15% 1% 47% -8% 0.9 0.6 15% 3.0 4
Finolex 34% 5% 16% 2% 20% -4% 1.3 0.6 16% 3.1 3
Kajaria Ceramics 60% 7% 17% 2% 52% -7% 1.1 -0.1 11% -3.6 2
Least
Supreme Inds. 37% 1% 11% 0% 29% -5% 1.2 -1.4 14% -3.4 1
impacted
Page 9
Consumer durables, Electricals & Capital Goods

Valuation
EV/OCF & PE)
vulnerable
Most
Blue Star 30% 6% 5% 3% 26% -10% 0.8 0.6 14% -10.9 5
Impacted
V-Guard 28% 5% 9% 0% 21% -5% 0.8 -1.3 16% -3.7 4
Voltas 28% 4% 7% 6% 22% -3% 0.8 -7.0 15% 4.1 3
Whirlpool 39% 1% 10% 4% 32% -5% 1.3 -2.9 16% -13.6 2

Least
Havells India 39% 2% 13% 0% 30% -5% 1.3 -1.7 15% -5.6 1
impacted
Most
Elgi Equipments 43% 6% 9% 4% 37% -8% 1.1 -0.2 16% -5.1 12
Impacted
Dixon 12% 4% 3% 2% 9% -6% 1.1 -0.3 21% 3.2 11
Bharat Heavy Electricals 41% 9% 7% 12% 36% -10% 0.7 -8.1 8% -8.4 10
KEC International 48% 4% 8% 5% 44% -7% -0.3 -5.3 13% - 9
Thermax 46% 8% 9% 1% 40% -7% 1.1 -1.0 17% -5.7 8
Kalpataru Power 33% 3% 16% 1% 20% -6% 1.5 41.1 11% 114.0 6
Amber 18% 2% 8% 2% 10% -4% 2.3 -0.7 30% 4.7 6
Triveni Turbine 45% 8% 21% 2% 29% -4% 0.8 -0.8 13% -5.0 5
Grindwell Norton 58% 0% 16% 2% 50% -5% 1.3 -1.2 19% 0.7 4
Carborandum Universal 65% 2% 0% 0% 65% -5% 1.7 -0.3 12% -3.3 3
AIA Engineering 64% 0% 25% 4% 52% -4% 0.9 -2.2 14% -1.8 2
Least
Cummins India 37% 0% 17% 0% 25% -4% 0.8 -1.1 7% 2.4 1
impacted
Page 10
Logistics
Valuation
EV/OCF & PE)
vulnerable
Most
Mahindra Logistics 18% 7% 3% 1% 16% -7% 0.3 -5.5 19% 130.1 7
Impacted
Navkar 54% 16% 38% 8% 26% -4% 0.9 2.7 24% 4.6 6
Blue dart 41% 16% 12% 4% 33% -10% 1.1 0.4 10% -15.5 5
VRL Logistics 29% 4% 14% 0% 17% -8% 2.0 0.9 18% -8.6 4
Allcargo 31% 0% 8% 0% 25% -11% 1.6 0.3 9% -3.5 3
Container Corporation 30% 3% 22% 2% 11% -3% 1.0 -2.2 17% -11.8 2
Least
Gateway Distriparks 35% 0% 22% 1% 17% -4% 1.6 2.5 8% -7.2 1
impacted
Media
Valuation
EV/OCF & PE)
vulnerable
Most
Zee Enterprises 56% 9% 28% 5% 39% -6% 0.5 -7.0 16% 35.0 4
Impacted
Inox 35% 0% 15% 4% 23% -20% 2.1 1.3 16% -8.8 3
PVR 70% 2% 16% 4% 64% -21% 2.5 0.6 15% -13.6 2
Least
Sun TV 88% 0% 69% 1% 61% -3% 0.8 -2.4 21% -4.7 1
impacted
Page 11
IT
EBITDA
Companies Gross margin Non-RM cost Working FY18-20E Valuation
Avg Gross Avg EBITDA margin Profit Balance sheet
improvement as a % of capital Revenue (Diff. between Rank
Margin margin improvement sensitivity efficiency (x) Impact
from trough Total cost efficiency (x) CAGR EV/OCF & PE)
from trough
Higher/ Lower the better
Higher Higher Higher Higher Lower Lower Higher Lower Higher Lower Lower
Most
Wipro 31% 0% 21% 0% 12% -4% 0.9 -0.02 4% -2.6 13
Impacted
Firstsource Solutions 32% 0% 11% 1% 23% -7% 1.1 -1.16 8% -1.4 12
Mindtree 37% 1% 17% 0% 24% -6% 1.0 -1.90 13% -5.0 11
Cyient 43% 5% 15% 1% 33% -6% 0.8 -2.28 13% -2.9 10
Tech Mahindra 33% 1% 18% 1% 18% -5% 1.0 -0.55 10% -2.3 9
NIIT Technologies 35% 2% 16% 6% 23% -5% 1.3 -0.74 12% -3.3 8
Eclerx Services 52% 0% 36% 0% 26% -6% 1.0 -1.73 7% -1.7 7
L&T Infotech 33% 5% 20% 0% 16% -5% 0.9 -1.56 17% 0.9 6
Tata Consultancy Services 46% 0% 28% 0% 24% -4% 1.0 -2.06 10% -0.6 5
HCL Technologies 36% 0% 23% 1% 16% -4% 1.0 -1.09 11% -2.2 4
Infosys 37% 0% 27% 0% 13% -3% 1.0 -1.56 8% -1.2 3
Persistent Systems 35% 0% 20% 0% 19% -5% 1.1 -3.72 11% -1.0 2
Least
Tata Elxsi 38% 7% 20% 13% 23% -4% 1.0 -2.41 15% 5.6 1
impacted
Internet, Education & Flexi staffing
EBITDA Non-RM cost Working FY18-20E Valuation
Companies Avg Gross Gross margin Avg EBITDA Profit Balance sheet
margin as a % of capital Revenue (Diff. between Rank
Margin vulnerability margin sensitivity efficiency (x)
vulnerability Total cost efficiency (x) CAGR EV/OCF & PE) Impact
vulnerable
Most
Quess Corp 11% 8% 5% 2% 6% -3% -0.2 6.5 27% 441.0 7
Impacted
TeamLease Services 3% 2% 1% 3% 2% -3% 0.4 -8.5 23% 0.4 6
Redington (India) 6% 0% 2% 0% 4% -4% 0.5 23.3 10% 23.8 5
SIS 18% 1% 5% 1% 14% -3% 0.5 -0.6 17% 2.0 4
Info Edge (India) 58% 4% 30% 11% 40% -4% 1.0 -7.5 16% -7.8 3
Navneet Education 36% 0% 23% 0% 17% -4% 0.7 0.1 13% -1.7 2
Least
Just Dial 46% 5% 25% 6% 28% -3% 1.2 -10.0 10% -5.2 1
impacted
Page 12
Healthcare & Pharma

Non-RM cost as Valuation (Diff
Companies Avg Gross Gross margin Avg EBITDA EBITDA margin Profit Working capital Balance sheet FY18-20E
a % of Total between Rank
Margin improvement margin improvement sensitivity efficiency efficiency Revenue CAGR
cost EV/OCF and PE) Impact
Higher/ Lower the better Higher Higher Higher Higher Lower Lower Higher Lower Higher Lower Lower
Most
Apollo Hospitals Enterprise 51% 2% 13% 0% 43% -16% 1.2 5.7 11% -12.7 4
impacted
Narayana Hrudayalaya 75% 3% 11% 0% 72% -35% 2.8 3.6 20% -57.6 3
HealthCare Global Enterprises 73% 8% 13% 6% 67% -26% -52.3 5.1 17% -64.7 2
Least
Dr. Lal PathLabs 79% 0% 25% 3% 72% -5% 1.0 -1.4 18% -3.3 1
Impacted
Most
Glenmark Pharma 69% 0% 20% 0% 59% -10% 0.7 3.8 11% 2.3 13
Impacted
Alkem Lab 56% 7% 15% 3% 45% -6% 0.5 -0.1 16% 4.5 12
Lupin Ltd 67% 3% 25% 0% 55% -9% 0.9 2.3 13% -3.2 11
Sun Pharma 77% 0% 33% 0% 67% -7% 1.0 -2.2 16% 1.9 10
Torrent Pharma 71% 3% 26% 1% 61% -8% 1.0 3.3 20% -5.5 9
Cipla 63% 3% 20% 2% 54% -7% 1.1 0.6 14% -2.2 8
Cadila 64% 3% 21% 7% 53% -5% 0.8 1.2 12% 0.9 7
Granules India 45% 8% 17% 5% 30% -6% 1.1 4.7 16% 0.8 6
Biocon 60% 3% 23% 1% 47% -8% 0.9 0.6 29% -10.0 4
Aurobindo Pharma 55% 10% 22% 8% 36% -5% 0.7 1.2 10% 3.7 4
DRL 56% 2% 21% 0% 44% -3% 1.3 0.7 16% -3.1 3
Divi's 62% 0% 37% 0% 41% -3% 0.9 -2.1 16% -1.6 2

Least
Syngene International 72% 1% 32% 2% 59% -5% 1.1 -2.0 19% -5.1 1
Impacted
Page 13
Oil & Gas

Valuation
Companies EBITDA Non-RM cost Working
Avg Gross Gross margin Avg EBITDA Profit Balance sheet FY18-FY20 (Diff.
margin as a % of capital Rank
Margin vulnerability margin sensitivity efficiency EBITDA CAGR between
vulnerability Total cost efficiency Impact
EV/OCF & PE)
Higher/ Lower the better Higher
vulnerable
Most
Gujarat Gas 19% 11% 11% 7% 8% -5% 2.0 2.3 19% -8.7 4
Impacted
Mahanagar Gas 44% 16% 28% 12% 23% -3% 1.2 -0.3 2% -5.4 3
Petronet 8% 8% 7% 7% 2% -3% 1.5 -2.0 6% -2.6 2
Least
Indraprastha Gas 39% 13% 22% 4% 21% -5% 1.6 -3.1 7% -9.0 1
Impacted
Oil Marketing Companies

Volatility in Cushion to
Average Opex Sensitivity to Working Valuation (Diff.
Companies Average GRM GRM - (Trough Marketing-to- earnings from FY19
% of Gross earnings Capital between Rank
FY13-FY18 to FY18 GRM Refining ratio pipeline/petche EBITDA growth
Profit (FY13-18) if crude @ $80 efficiency EV/OCF & PE) Impact
$/bbl) m segments
Higher/ Lower the better Lower better Lower decline
Higher Lower Higher Lower Lower Lower Lower Lower
@high crude vulnerable
Most
HPCL 4.8 5.3 2.2 5% 63% -8% 2.7 -25% 19.7 3
Impacted
BPCL 5.3 3.2 1.8 5% 60% -5% 1.5 -12% 11.2 2
Least
IOCL 4.8 8.2 1.3 23% 59% -5% 2.3 -32% -0.5 1
Impacted
Infrastructure
Valuation
Companies EBITDA margin Working capital Balance sheet FY18-FY20
Avg EBITDA margin Profit sensitivity (Diff. between Rank
vulnerability efficiency efficiency Revenue CAGR
EV/OCF & PE) Impact
Higher Lower Lower Higher Lower Lower Lower
vulnerable
Most
Sadbhav Engineering 21% 13% -5% 4.2 218.2 30% 284.9 6
Impacted
L&T 12% 0% -5% 0.6 21.7 7% 31.4 5
Dilip Buildcon 21% 0% -14% -0.2 6.9 24% 25.4 4
VA Tech Wabag 9% 0% -6% -0.7 4.0 11% 24.1 3
Adani Ports 64% 2% -4% 0.6 3.6 4% 6.0 2
Least
Gujarat Pipavav Port 57% 8% -3% 1.3 -1.5 16% -7.1 1
impacted
Page 14
Spark Model Portfolio
BSE 200 Spark Mcap 6M ATV FY19 FY20

Company CMP FY18-20 CAGR% 6M return 12M Return Investment Rationale Spark Model Portfolio Performance
Weights Weights (Rs. Bn) (Rs. Mn) Multiple Multiple
Financials 33.12% 23.0% PAT OCF* P/ABV P/ABV 211%
HDFC Bank 5.0% 5,284 2,030 3,797 25% 25% 3.7 3.2 8% 22% Best in Class
State Bank of India 3.0% 2,476 277 6,440 55% 19% 1.7 1.4 -11% -3% Credit growth pickup & NPA recovery
Kotak Mahindra Bank 3.0% 2,554 1,340 2,594 25% 24% 6.2 5.4 30% 36% "Peace of mind" asset quality 110%
87%
M&M Finance 3.0% 293 475 841 63% 27% 3.2 2.9 3% 36% Rural recovery best high beta proxy 67%
Federal Bank 3.0% 166 84 1,212 31% 22% 1.4 1.2 -22% -31% Growth, Corp NPA & RoA rebound 44%
14% 37%
City Union Bank 3.0% 125 188 160 19% 15% 2.8 2.4 5% 13% Steady state; SME growth 6.5% 6.0% 2% 12%
6% 14%
Karur Vysya Bank 3.0% 76 104 165 23% 12% 1.4 1.2 -8% -25% Management change, NPA recovery 5.8% 5%
Consumer & Media 13.5% 20.0% PE PE 3M 6M 1 yr 3yr Since
Oct'13
Hindustan Unilever 5.0% 3,510 1,621 1,739 10% 12% 58.4 49.9 22% 48% Defensive; Pick-up in volume growth Spark BSE 200
Britannia Industries 3.0% 737 6,137 690 14% 11% 57.7 50.0 30% 72% Better volume growth; Product mix
Sun TV 3.0% 358 908 1,435 17% 36% 25.5 19.9 -3% 8% Clearing political risks; TN digitization Changes in Model Portfolio
Asian Paints 3.0% 1,230 1,282 1,086 15% 22% 52.5 43.8 15% 12% Stellar pricing power Current
Sector Wts Prev. Wts Delta
Emami 3.0% 249 1,098 210 20% 11% 41.3 34.6 -14% -1% High growth; Margin expansion Wts
ABFRL 3.0% 109 142 130 42% 14% 55.8 46.5 -16% -21% Non linear earnings recovery
Financials 23% - 23%
Auto & Logistics 11.0% 18.0% PE PE Consumer & Media 20% - 20%
Mahindra & Mahindra 4.0% 1,131 909 2,232 7% 6% 11.3 10.2 23% 31% Rural demand recovery IT & Biz Services 17% - 17%
Hero Motocorp 3.0% 738 3,694 1,299 9% 16% 17.6 15.3 5% -2% North/ Central/ East Rural recovery Autos & Logistics 15% +3% 18%
Bharat Forge 3.0% 299 643 834 20% 33% 27.2 21.3 -8% 9% Growth & cashflow rebound Industrials & Infra 11% -5% 6%
Container Corp 3.0% 308 1,263 518 9% 16% 29.5 23.5 -3% 11% Non linear DFC beneficiary Pharma 10% +2% 12%
Exide Industries 3.0% 213 251 493 17% 26% 24.0 20.0 23% 13% Market share recovery candidate
VRL Logistics 2.0% 32 349 56 22% 33% 20.8 17.7 -17% 8% Less-than-truck load pick-up Change in weights of stocks Wts
IT & Business Services 10.5% 17.0% PE PE Hero Motocorp -1%
Infosys 5.0% 2,798 1,281 5,609 5% 4% 18.1 16.7 26% 37% Value, Dividend yield
Dr. Reddy’s Laboratory +1%
Tech Mahindra 3.0% 693 707 2,077 8% 21% 16.7 14.2 41% 81% Value, Gradual non linear margin
Info Edge 3.0% 152 1,248 156 16% 12% 42.6 35.1 1% 24% Jobs recovery; Non linear earnings Cadila +1%
Cyient 3.0% 82 731 316 12% 68% 17.0 14.4 32% 44% Quality, niche & value
Eclerx 3.0% 50 1,303 87 2% -2% 16.7 14.6 2% -3% Growth & cashflow rebound Stocks Out Wts
Industrials & Infrastructure 15.0% 6.0% EV/EBITDA EV/EBITDA
L&T 5%
Power Grid Corporation 3.0% 1,035 198 1,894 12% 19% 7.9 7.2 -1% -6% Steady state low risk low return
Cummins India 3.0% 191 687 370 3% -9% 23.1 20.8 -18% -25% Early stage cyclical recovery Glaxo SmithKline CH. 3%
Pharma & Healthcare 4.9% 12.0% PE PE
Dr. Reddy's Laboratories 5.0% 390 2,350 1,556 27% 27% 22.7 16.4 -1% -12% FDA risks less impact; Complex generics
Cadila 4.0% 408 399 488 10% 74% 19.2 17.4 -3% -24% Promising pipeline; No FDA risks; Stocks In Current Wts
Apollo Hospitals 3.0% 144 1,033 431 51% 104% 41.9 31.7 -14% -20% End of capex cycle; Non linear upside M&M 4%
Oil & Gas 11.6% 4.0% PE PE
Petronet LNG 4.0% 317 212 888 5% -14% 14.3 13.0 -15% -1% LNG growth opportunity Asian Paints 3%
*Operating cash flows (post tax / interest), PPOP for banks Page 15
V-MART RETAIL
FY18 Annual Report Analysis – ‘Niche at the bottom of the pyramid’
Key Takeaways from FY18 Annual Report

ANNUAL REPORT ANALYSIS
 Superior Operating Performance: V-Mart Retail’s (VMART) revenues grew by a healthy ~22% in FY18 on a strong base led by a ~24% volume 18th June 2018
growth during the year. Backed by a ~21% growth in store network, ~23% increase in footfalls (conversion rate however marginally dipped to
~57% during the year from ~60% in FY17) & 5% increase in transaction size, the company’s scale of operations continue to gallop. Further to Industry CONSUMER
accruing operating leverage, a host of initiatives at the back end aided a robust ~240bps expansion in the company’s EBITDA margins which CMP Rs. 2,398
expanded to ~10.9%, the highest we note in the known history of the company.
 Pronounced expansion in Tier 4 cities and clear cut near term goals: Out of the 31 new stores opened by VMART in FY18 (highest ever in its Target Price Rs. 2,660
history), we note that 15 of them were opened in Tier IV cities increasing the company’s footprint in Tier IV cities from 3 stores in FY17 to 18 Key Stock Data
stores currently. We believe the heightened focus on Tier 4 cities is also reflective of the ‘coming of age’ of the bottom of pyramid Indian
consumer. The management noted that it intends to revamp and widen its presence on social and digital media, commission stores in North Bloomberg VMART
East India (where we believe the bulk of the near term expansion is expected to pan out), strengthen the existing brand campaign and reinforce Shares o/s 18mn
customer feedback collecting mechanisms to service customers better.
 Slew of Initiatives to strengthen the backend: VMART we note, in addition to digital investments also invested in various spheres of business to Market Cap Rs. 44bn
strengthen its backend in FY18. Firstly, we understand that the company invested in trend analytics and using that understanding continued to 52-wk High-Low Rs. 2,515-1,018
strengthen its product mix. Secondly, it consolidated its outsourced logistics with third-party logistics players and employed automatic shrink-
wrapping machines for cartons to reduce pilferage. Further, it also established a print-and-apply system to check and weigh cartons before 3m ADV Rs. 88mn
forwarding to stores, minimising shrinkage too [the company’s shrinkage further reduced to ~1.3% in FY18]. While the company centralised its Index -
warehousing operations in 2015 itself, the company also implemented a special pallet tracking system at the warehouse to optimise space
utilisation and reduce costs. In terms of digital investments, VMART strengthened its supply chain through investments in technologies such as Sep’17 Dec’17 Mar’18
INFOR, It introduced Manthan software for advanced analytics leveraging data for more informed operations and Darwin for better planning. Promoters 54.4 54.4 54.4
 Balanced expansion as reflected in assertive rather than aggressive growth: VMART we understand continues to follow its unwritten policy of Institutions 31.4 33.2 33.2
commissioning only as many stores as it can fund with internal accruals and maintain a stance of closing stores that under-perform as against its
Public 14.2 12.4 12.4
benchmark profitability. While we believe not only does this stance ensure healthy checks and balances in controlled expansion, but also aid
the company balance between the unending seesaw game of growth and ‘perennial retail debt syndrome’. Pledge - - -
 Rating & Recommendation: We believe VMART’s revenues and PAT can grow at a CAGR of ~22% and ~26% respectively over the FY18 to FY20 RESEARCH ANALYSTS
period. We note that till 3QFY18, we maintained a ~20% discount on VMART to industry average on the valuation front. However, significant
improvement in capital efficiency ratios (VMART’s ROCE improved from ~16% in FY17 to ~24% in FY18), short term debt being close to ‘nil’ TEJASH SHAH
alongside improving cashflows despite healthy capex plans has led us to up our multiples on VMART. We retain our BUY rating with a TP of Rs. tejash@sparkcapital.in
2,660 [PE(G) ratio of 1.5x and implied EV/EBITDA of 23x FY20E EPS]. +91 22 6176 6802
Financial summary MADHAV PVR
madhav@sparkcapital.in
Year Revenues (Rs. mn) EBITDA (%) PAT (Rs. mn) EPS (Rs.) P/E(x) ROE (%)
+91 44 4344 0060
FY18 12,224 10.9% 777 42.9 56 25%
GNANASUNDAR
FY19E 14,715 10.4% 905 50.0 48 23% gnanasundar@sparkcapital.in
FY20E 18,309 11.3% 1,234 68.2 35 25% +91 44 4344 0062

(SPAK <go>)
V-Mart Retail– FY18 Annual Report Analysis
Spark Dashboard
SPARK DASHBOARD
Accounting Comments
The company’s CFO declined in FY18 despite ~22% growth in revenues during
Revenue Revenue delta /CFO delta -50x the year. This we believe was majorly owing to its stance of curtailing its
creditor days so as to save on margins.
Since the company does not have any manufacturing operations, it does not
R&D spending trends -
Operating spend on research & development explicitly.
Expenses
In FY18, the company did not provide for any provision against doubtful
Is the provision for bad debt matching with Cash flow? -
advances .
Despite significant improvement in inventory days, given the company’s
EBITDA EBITDA delta/CFO delta -11x conscious decision to decrease creditor days to enhance margins, OCF
marginally declined in FY18.
Higher than prevailing interest rates given actual balances during the twelve
Other Income Interest Income / Average cash and Equivalents 13.3%
months may vary from year end balances.
Given the significant store expansion, depreciation lower than capex and
Depreciation / Capex 48%
useful life of furniture and fixtures being 10 years.
Depreciation Rolling three year deprecation/ Capex on fixed assets 52% -
Change in method of depreciation, if any No The company follows the straight line method for depreciation.
Interest expense in Cash flow / Interest expense in P&L 100% -

Interest
Interest expense as per cash flows/ Average Debt 8.5% Broadly in line with prevailing interest rates.
Tax Tax in Cash flow / Tax in P&L 110% Higher tax outflow owing to deferred tax liability.
Majority of contingent liabilities pertain to tax demands (income tax, value

Networth Contingent Liability / Net worth 1.8%
added tax, service tax) in excess of provisions .
Page 17
V-MART FY18 Annual Report Analysis in ONE Slide

Out of the 31 new stores opened by VMART in FY18 Enhanced SCM Vertical aiding lower shrinkage: VMART
 
(highest ever in its history), we note that 15 of them we understand consolidated its outsourced logistics
were opened in Tier IV cities increasing the company’s with third-party logistics players. It employed
footprint in Tier IV cities from 3 stores to 18 stores. We automatic shrink-wrapping machines for cartons to
believe the heightened focus on Tier 4 cities is also reduce pilferage. Further, it established a print-and-
reflective of the ‘coming of age’ of the bottom of apply system to check and weigh cartons before
pyramid Indian consumer. forwarding to stores, minimising shrinkage too.
Digitization Initiatives: The company we understand
 
The company continues to widen its merchandise invested in warehouse automation during the year.
offering with its SKU’s for sale increasing from 3,986 Further, it strengthened its supply chain through
SKU in 2016-17 to 4,591 SKU in FY18. We believe this investments in technologies such as INFOR. It
would not only translate into growing conversion introduced Manthan software for advanced analytics
efficiency but also aid VMART keep competition at bay. leveraging data for more informed operations and
Darwin for better planning.
VMART continues to follow its unwritten policy of
 
VMART in FY18 we note developed a celebrity brand commissioning only as many stores as it can fund with
campaign fronted by Bollywood actors Ayushmann internal accruals and maintain a stance of closing stores
Khurrana and Bhumi Pednekar and sponsored events that under-perform as against its benchmark
across its regions of presence. profitability. This we believe would help the company
balance between aggressive and assertive growth.
The company we note invested in trend analytics using
 
that understanding continued to strengthen its product Penetration into Newer Areas: VMART whose
mix. The company currently derived ~94% of its operational footprint is majorly spread across Uttar
revenues from fashion oriented merchandise and Pradesh, Bihar & Orrisa among others we note has
progressed in offering private labels such as Be intended to expand into North East India.
Princess, Flick, Desi Mix and Twist etc. in FY18.
Page 18
Key Excerpts from Chairman’s letter
Indian Retail Sector @

Positive Domino Effect “We will follow a conscious
Inflection Point approach, we will grow
stores only in Tier 2, 3 and 4
locations, we will
“In the retail sector, growth commission stores only in
is a given: for the simple pockets where we can
“Indian retail sector is at an Favorable Macro Factors reason that the larger the breakeven by the end of the
inflection point…we stand to volume being marketed, the first quarter of launch and
benefit as a result: apparel stronger the negotiation for be net-positive starting the
with a sticker price of less lower prices, which in turn first year, we will
than Rs.1,000 is attracting the could help widen the commission only as many
lowest tax slab of 5 per cent “An increase in Minimum market and increase stores as we can fund with
and around 85 per cent of our Support Prices for crops, a consumption. In view of internal accruals and we
revenues are from products growing government focus on this, there is a premium on will close stores that under-
priced at Rs.1,000 or agriculture, stable monsoons, the ability to keep riding perform our desired
lower….Tax rates and the government focusing on this virtuous cycle, a profitability. It would
statutes will now work more public health cover (expected premium reflected in a be tempting to grow the
in favour of the organised to translate into higher robust Balance Sheet, fastest in response to the
retail sector, narrowing a disposable incomes), stronger relative under-borrowing, prevailing potential by
legacy cost disadvantage that consumption thrust and job growing footprint, informed loading debt on our books
this segment suffered against creation at the grassroots are understanding of what sells but: it is a temptation we
unorganised competitors. The factors that could drive retail fastest, ability to rotate intend to avoid.”
result is that the country’s consumption.” inventory faster and
organised sector will emerge enhance overall
increasingly competitive” margins/surpluses available Superior Long Term
for reinvestment into more
outlets – to keep the
Thought Process
virtuous engine ignited.”
Page 19
Key Excerpts from Chairman’s letter

Digital Investments
Four Pillars of Aggressive yet controlled
FY18 Investments Expansion

“We invested in
digitalisation. The store
layout and ambience was
“We invested broadly across “We accelerated store rollout; improved and visual
three areas: building people the 31 stores that were merchandising was
capabilities, increasing commissioned during the year enhanced. The Company
technology investments and under review were the largest launched successful
systemising better processes.” in any single year in our marketing campaigns and
existence” consolidated the number of
vendors in return for lower
costs. Investments were
made in warehouse
automation. We widened
our operating footprint
(entering Tier 4 locations)
“Revenue per sq ft increased 3 and strengthened our
per cent, inventory turns “Company also progressed in supply chain to make it
remained constant, same-store offering private labels such faster and more flexible
revenue growth 8.9 per cent as Be Princess, Flick, Desi Mix through investments in
and the volume increased by 24 and Twist etc.” technologies such as INFOR.
per cent” We introduced Manthan
software for advanced
analytics leveraging data
and support for more
Robust Growth Numbers
Private Label Introduction informed operations. For
in FY18 better planning we have
introduced Darwin.”
Page 20
Notable Excerpts from Annual Report & Management Discussion & Analysis
Portfolio Enhancement: V-Mart we note has been consistently working towards its investments in widening
its merchandise. In FY18, the company we note enhanced its offering from 3,986 SKU in 2016-17 to 4,591 SKU
in 2017-18. The result of this widening choice translated into a growing conversion efficiency.
Growth Potential: The company extended into Tier-IV towns: of ten stores launched between October and December
2018, five were in Tier-IV towns marked by volume off take (as opposed to high priced products). The company intends to
deepen its footprint by launching stores within 100 to 150 kilometres of existing stores, strengthening synergy and
economies. The prudence of our locational selection is reflected in steady or rising revenue per square feet: from Rs.799
in 2016-17 to Rs. 823 in 2017-18. There are 5,000 more such towns with a population of more than 200,000 across India
where V-Mart can have a presence, capitalising the untapped opportunity.
Natural benefits of business model coupled with Fiscal Discipline: V-Mart’s growing presence in Tier-II, III and IV towns has
generated related benefits such as relatively low rentals, high recall among consumers, ability to keep employee costs and
overheads under control and enjoy high customer loyalty.
Centralised warehousing: V-Mart we note had four warehouses till 2014. In 2015, the company leveraged a hub-and-spoke
delivery model to reduce the number of warehouses to one, moderating inward (from vendors) and outward (from stores)
product movement cycles, while strengthening inventory control and profitability. It also implemented a special pallet
tracking system at the warehouse to optimise space utilisation and reduce costs.
Cascading effect of GST: Nearly 85% of the company’s revenues we note were derived from products with a sticker
price of Rs. 1,000 or lower, attracting the lowest tax slab of 5% thereby strengthening the company’s positioning as a
value-led retailer. Further GST also aided in Ease in documentation which also entailed faster delivery cycles.
Page 21
Notable Excerpts from Annual Report & Management Discussion & Analysis
Investments in IT: VMART in FY18 set up a new data center, made investments in IT infrastructure, disaster
recovery facility, deployed retail analytics software and a world class range management software. Further,
the company also implemented a special pallet tracking system at the warehouse to optimise space utilisation
and reduce costs.
Initiatives to strengthen its supply chain management: The company consolidated its outsourced logistics with third-party
logistics players for a superior financial proposition. It also employed automatic shrink-wrapping machines for cartons to
reduce pilferage. Further it also established a print-and-apply system to check and weigh cartons before forwarding to
stores, minimising shrinkage
Way Forward:
The management noted that it intended to revamp and widen its presence on social and digital media, commission stores in
North East India, strengthen the existing brand campaign and reinforce customer feedback collecting mechanisms to service
customers better
Indian Retail Sector – Key Snippets from VMART MDA on Indian Retail Potential:
• Growing at a rate of 12 per cent annually, the sector size is estimated at US$672 billion. The country is the fifth-largest retail destination.
• The “Organised Retail Market” was valued at $60 billion in April 2018, which is only 9 per cent of the total sector. The “Unorganised Retail Market” constitutes
91 per cent of the sector.
• New Models: Retailers will need to adopt omni-channel to not just survive, but leverage a growing opportunity. They will also need to evaluate expansion
through own or franchisees and establish a customised model.
• Intelligent automation: Retailers could seek solutions not just in finance and IT but also in core retail areas like merchandising and supply chain. Retail
companies that are early adopters could enjoy an edge over others, saving costs and enhancing model flexibility.
• Four trends shaping Indian retail: Strengthening existing and new retail markets Retail-tainment, enhancing leisure through shopping, Physical store core to
retailing, Refitting of popular superstores
Page 22
Not So Random Observations
VMART’s average revenue per square feet increased Share of household consumption expenditure: Growth of emerging cities
~3% in FY18. The company’s private label revenues
as a % of sales increased from 20% in FY17 to 49% in Rural Tier-IV Tier-III Tier-II Tier-I Metros
FY18. However, we believe at the price point 2016 51% 13% 10% 4% 10% 12%
operated by VMART currently, this equation at least
for now doesn’t matter in the overall scheme of 2025 42% 17% 12% 5% 13% 12%
things.
The remuneration of the company secretary in FY18

In terms of expansion we note that the company we note amounted to Rs.0.456mn.
intends to deepen its footprint by launching stores
within 100 to 150 kilometres of existing stores,
strengthening synergy and economies. The The company maintained inventory turns at 4.24x
management noted that are 5,000 more such towns despite commissioning 31 stores during the year.
with a population of more than 200,000 across India
where V-Mart can have a presence, capitalising the
untapped opportunity. VMART’s shrinkage has reduced from ~1.6% in FY14 to
~1.3% in FY18.
Learning Curve: V-Mart’s longstanding presence in
Tier-II and III locations helped it understand varied and
evolving consumer preferences in these regions leading The company appointed Mr. Samir Misra as its chief
to relevant productisation, high conversation and operating officer in May 2018
attractive inventory turns.
V-Mart automated its central warehouse and The company noted that as per data compiled by
conducted detailed checks on incoming and outgoing Bloomberg VMART was the world’s best-performing
inventory; Slow moving inventory is transferred to department store, 2017-18.
other store location or sold on promotional discounts.
Page 23
Financial Analysis – Profit & Loss
FINANCIAL RESULTS
Rs. mn\Period FY17 FY18 yoy Growth
Revenues 10,017 12,224 22%
Raw materials 7,027 8,303 18%  VMART’s revenues grew ~22% in FY18 led by ~21% growth in
store network (the company had 171 stores as of March 2018 Vs
Employee cost 783 984 26% 141 stores as of March 2017) and ~23% growth in footfalls during
the year.
Other expenditure 1,359 1,609 18%
Total Operating Cost 9,170 10,896 19%  We note that the company’s Same Store Sales Growth (SSSG)
for the year was ~9% (in value terms) aided by ~13% volume
EBITDA 848 1,328 57% SSSG. VMART’s conversion rate in FY18 however marginally
reduced to 57% Vs 60% in FY17 with the average transaction
EBITDA margins 8.5% 10.9% -240bps increasing by 5% to Rs.750.
Depreciation 186 229 24%
 Aided a host of sourcing initiatives and lower shrinkage the
Other income 41 41 0% company’s gross margins improved by ~223bps to 32.1%.
EBIT 703 1,140 62%  Further to healthy gross margin expansion, operating leverage
aided EBITDA Margins expand ~240bps to ~10.9%.
Interest 35 15 -57%
PBT 668 1,125 68%  Lower interest expenses and significantly lower effective tax
rate (~30.9% in FY18 Vs ~34.3% in FY17) in addition to EBITDA
Tax 229 348 52% growth led to PAT growing by ~77% to Rs.777mn for the year.
Effective tax rate 34.3% 30.9%  We note that an instance of robbery of cash and inventory
worth Rs.1.38mn was noted at one of the stores of the Company,
PAT 439 777 77%
which has been provided for in the financial statements by the
Adj PAT 439 777 77% company.
PAT margin 4.4% 6.4% -197bps
EPS (Rs. ) 24.3 42.9 77%
Page 24
Robust Balance Sheet marked by strong capital efficiency and healthy working capital management
Superior operating performance coupled with lower incremental capital employed has led
Annual Financial Results to significant improvement in
Rs. mn\Period 31-Mar-17 31-Mar-18 YoY Growth
30%
Equity Share capital 181 181 0% 25%
25% 24% 23%
Reserves & Surplus 2,520 3,293 31%
21%
Networth 2,700 3,474 29% 20% 18% 18%
16% 16%
Loan Funds 355 3 -99%
15% 12%
Other Long term Liability 66 81 23% 11%
Total Liabilities 3,121 3,558 14% 10%
5%
Gross Block 1,947 2,443 25%
0%
Depreciation 802 1,031 29% FY14 FY15 FY16 FY17 FY18
Capital WIP 12 35 192% ROE ROCE
Net Block 1,157 1,447 25%

Source: Company filings, Spark Capital Research
Intangible Assets 27 35 30%
Investments 883 515 -42% Working capital days have consistently improved with optimum inventory holding
Current Assets 2,761 3,409 23%
120
Inventories 2,692 3,071 14% 106
98 92
100 93 92
Sundry Debtors - - -
Cash & Bank Balances 29 196 576% 80
Other Current Assets 30 131 337% 60

58
Short term Loans & Advances 10 12 20% 40 50
41 43
Current Liabilities 1,786 1,941 9% 38
20
Current Liabilities / Trade 0 0 0 0 0
1,599 1,668 4%
payables 0
FY14 FY15 FY16 FY17 FY18
Other Current Liabilities 185 270 46%
Provisions 2 3 50% Debtor Days Inventory Days Creditor Days
Net Current Assets 975 1,469 51% Source: Company filings, Spark Capital Research
Total Assets 3,121 3,558 14%
Page 25
Debt Structure & Cash Flow – Key observations

Robust Capital structure further strengthened in FY18 despite significant improvement Annual Financial Results
in its scale of operations
Rs. mn\Period 31-Mar-17 31-Mar-18 YoY Growth
500 0.26 0.30
Operating Profit before Working Capital Changes 860 1,370 59%
400 0.25
0.20 Total Working Capital Changes 69 -346 -

300 0.15
0.12
Rs.mn
0.13 0.15 687 643 -6%

Net Cash Generated from Operating Activities
200
0.10 Net cash from investing activities -728 -151 -
100 0.00 0.05
FREE CASH FLOW 272 166 -39%
435 302 269 355 3
0 0.00
FY14 FY15 FY16 FY17 FY18 Net cash used in financing activities 49 -384 -
Debt (In Rs.Mn) Debt Equity Ratio Cash and cash equivalents at the end of year 29 137 372%
Source: Company filings, Spark Capital Research Source: FY18 Annual Report & Spark Capital Research
Despite ~57% increase in EBITDA, VMART’s OCF declined y-o-y majorly owing to lower Given the significant store addition in FY18, FCF also marginally declined
creditor days
800 7% 8% 300 3% 4%
2%
700 5% 7% 3%
6% 200 1%
6% 1% 2%
600 6%
100 1%
500 5% 64 201 272 166
Rs.mn
0%
Rs.mn
400 4% 0
-222 -1%
300 2% 3% -100 -2%
200 2% -3%
-200
100 1% -4%
110 399 461 687 643 -4%
-300 -5%
0 0%
FCF FCF/Net Sales
OCF OCF/Net Sales
Page 26
Corporate Governance
The Board consists of five Directors comprising one Chairman & Managing Director, three Independent Directors and one whole time director.
BOD member Mr. Lalit Agarwal Mr. Madan Gopal Agarwal Mr. Aakash Moondhra Mr. Murli Ramachandran Ms. Sonal Mattoo
Audit Committee - - Chairman Member Member
Nomination and Remuneration Committee - - Member Chairman Member
Corporate Social Responsibility Committee Chairman Member Member - Member
Stakeholders’ Relationship Committee Member Member - - Chairman
Source: FY18 Annual Report & Spark Capital Research
Remuneration of Top Management & BOD trends over the last two years
KMP Designation 2018 2018 % of PAT 2018 Vs 2017 (%) 2017 2017 % of PAT 2016 2017 Vs 2016 (%)
Mr. Lalit Agarwal Managing Director 23.50 3.0% 44% 16.29 3.7% 12.52 30%
Mr. Madan Gopal Agarwal Whole Time Director 6.64 0.9% 54% 4.32 1.0% 3.52 23%
Mr. Aakash Moondhra Independent Non- Executive Director 3.15 0.4% 108% 1.52 0.3% 1.05 45%
Mr. Murli Ramachandran Independent Non- Executive Director 2.63 0.3% 105% 1.29 0.3% 0.93 39%
Ms. Sonal Mattoo Independent Non- Executive Director 2.58 0.3% 104% 1.26 0.3% 0.92 38%
Mr. Anand Agarwal Chief Financial Officer 7.86 1.0% - - - -
Ms. Megha Tandon Company Secretary 0.46 0.1% 39% 0.07 0.0% - -
Mr. Deepak Sharma* Chief Financial Officer - 3.81 0.9% 5.4 -29%
Mr. Sudhir Kumar* Company Secretary - 0.69 0.2% 0.72 15%
Mr. Hemant Agarwal* Non- Executive Director - - 0.2 -
Source: Company filings, Spark Capital Research; * Discontinued post/during FY27
Page 27
Related Party Transactions
Key Managerial Personnel Relatives of KMP Entities owned by KMP & Relatives of KMP
2018 2017 2018 2017 2018 2017

Managerial Remuneration 30.15 20.60 - - - -
Post employment Benefits – Gratuity 2.73 -0.008 - - - -
Independent Directors Commission 7.77 3.47 - - - -
Salaries, Wages & Bonuses - - 4.80 3.95 - -
Director Sitting Fees 0.6 0.6 - - - -
ESOP issued - - 2.08 - - -
Dividend Paid 36.51 0.29 5.18 0.41 3.11 0.27
Purchase of Traded Goods - - - - 27.66 44.68
Total 77.76 24.95 12.06 4.36 30.77 44.96
Balance at the end of Year
Remuneration Payable 15.946 4.533 - - - -
Independent Directors Commission Payable 7.77 3.467 - - - -
Trade Payable - - - - - 4.436
Related Parties
Entities owned by KMP &
Key Managerial Personnel Nature of Relation Relatives of KMP Nature of Relation Relatives of KMP Nature of Relation
Managerial Remuneration 2018 2017
Mr. Lalit Agarwal MD Mrs.Sangeeta Agarwal Wife of MD Lalit M Agarwal (HUF) Karta in HUF
Remuneration 11.385 9.108 Mother of MD & Madan Gopal Agarwal
Commission 15.303 8.224 Mr. Madan Gopal Agarwal WTD Mrs.Uma Devi Agarwal Wife of WTD (HUF) Karta in HUF
Perquisites 3.457 3.272 Mr. Aakash Moondhra Independent Director Mr.Snehal Shah Son in Law of WTD Hemant Agarwal (HUF) Karta in HUF
Total 30.147 20.604 Sister of MD & Owned by Hemant
Mr. Murali Ramachandran Independent Director Mrs.Sunita Shah Daughter of WTD Wesbok Lifestyle Pvt. Ltd Agarwal
Brother of MD &
Ms.Sonal Mattoo Independent Director Mr.Hemant Agarwal Son of WTD
Daughter in law of Conquess Business Entity having Significant
Mrs.Smiti Agarwal WTD Services Pvt. Ltd. Influence
Source: FY18 Annual Report & Spark Capital Research
Page 28
Financial Summary
Abridged Financial Statements
Rs. mn FY13 FY14 FY15 FY16 FY17 FY18P FY19E FY20E FY21E
Profit & Loss
Revenue 3,835 5,750 7,202 8,093 10,017 12,224 14,715 18,309 22,395
Gross profit 1,140 1,709 2,059 2,380 2,990 3,921 4,635 5,804 7,054
EBITDA 398 522 637 618 848 1,328 1,536 2,061 2,556
Depreciation 76 109 46 190 186 229 261 320 386
EBIT 2 7 22 12 41 41 37 48 60
Other Income 324 421 613 440 703 1,140 1,312 1,789 2,229
Interest expense 57 42 42 31 35 15 0 0 0
Exceptional items 0 0 -18 14 0 0 0 0 0
PBT 266 378 553 423 668 1,125 1,312 1,789 2,229
Reported PAT (after minority interest) 180 252 374 276 439 777 905 1,234 1,494
Adj PAT 180 252 386 267 439 777 905 1,234 1,494
EPS (Rs.) 10.0 14.0 21.4 14.8 24.3 42.9 50.0 68.2 82.5
Balance Sheet
Net Worth 1,477 1,702 2,049 2,307 2,700 3,474 4,328 5,504 6,935
Deferred Tax 0 19 50 84 37 42 42 42 42
Total debt 350 435 302 269 355 3 3 3 3
Other liabilities and provisions 10 12 15 21 29 39 39 39 39
Total Networth and liabilities 1,837 2,168 2,415 2,681 3,121 3,558 4,412 5,588 7,019
Gross Fixed assets 756 1,079 1,396 1,692 1,947 2,443 3,043 3,692 4,438
Net fixed assets 470 691 965 1,076 1,146 1,412 1,751 2,080 2,440
Capital work-in-progress 13 10 7 23 12 35 0 0 0
Goodwill/Intangible Assets 4 9 15 27 27 35 35 35 35
Investments 493 471 376 493 883 515 715 1,115 1,615
Cash and bank balances 158 23 34 43 29 196 305 219 275
Loans & advances and other assets 52 55 60 125 118 234 104 104 104
Net working capital 647 909 958 894 906 1,130 1,501 2,035 2,549
Total assets 1,837 2,168 2,415 2,681 3,121 3,558 4,412 5,588 7,019
Capital Employed 1,827 2,137 2,351 2,576 3,055 3,478 4,331 5,507 6,938
Invested Capital (CE - cash - CWIP) 1,656 2,103 2,310 2,510 3,014 3,247 4,026 5,288 6,663
Net debt -94 220 105 33 -334 -708 -1,017 -1,330 -1,887
Cash Flows
Cash flows from Operations (Pre-tax) 199 230 567 610 930 1,024 1,296 1,527 2,041
Cash flows from Operations (post-tax) 98 110 399 461 687 643 889 973 1,305
Capex 222 333 335 261 416 479 564 649 746
Free cashflows -124 -223 64 201 272 164 325 324 559
Free cashflows (post interest costs) -166 -261 27 171 240 150 318 316 551
Cash flows from Investing -622 -271 -190 -372 -728 -151 -727 -1,001 -1,187
Cash flows from Financing 666 23 -199 -96 49 -384 -52 -58 -63
Total cash & liquid investments 444 216 196 236 689 473 582 496 552
Page 29
Financial Summary
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E

Growth ratios
Revenue 36.0% 49.9% 25.3% 12.4% 23.8% 22.0% 20.4% 24.4% 22.3%
EBITDA 37.8% 31.3% 21.9% -2.9% 37.1% 56.7% 15.7% 34.2% 24.0%
Adj PAT 63.1% 39.7% 48.5% -26.1% 58.9% 77.0% 16.5% 36.3% 21.0%
Margin ratios
Gross 29.7% 29.7% 28.6% 29.4% 29.8% 32.1% 31.5% 31.7% 31.5%
EBITDA 10.4% 9.1% 8.8% 7.6% 8.5% 10.9% 10.4% 11.3% 11.4%
Adj PAT 4.7% 4.4% 5.4% 3.3% 4.4% 6.4% 6.2% 6.7% 6.7%
Performance ratios
Pre-tax OCF/EBITDA 50.1% 44.1% 89.0% 98.7% 109.7% 77.2% 84.4% 74.1% 79.9%
OCF/IC (%) 6% 5% 17% 18% 23% 20% 22% 18% 20%
RoE (%) 18% 16% 21% 12% 18% 25% 23% 25% 24%
RoCE (%) 16% 14% 18% 11% 16% 24% 23% 25% 24%
RoCE (Pre-tax) 23% 22% 28% 18% 26% 36% 35% 37% 37%
RoIC (Pre-tax) 25% 22% 28% 18% 25% 36% 36% 38% 37%
Fixed asset turnover (x) 10.2 6.3 5.8 5.2 5.5 5.6 5.4 5.4 5.5
Total asset turnover (x) 2.7 2.9 3.1 3.2 3.5 3.7 3.7 3.7 3.6
Financial stability ratios
Net Debt to Equity (x) -0.1 0.1 0.1 0.0 -0.1 -0.2 -0.2 -0.2 -0.3
Net Debt to EBITDA (x) -0.2 0.4 0.2 0.1 -0.4 -0.5 -0.7 -0.6 -0.7
Interest cover (x) 1.7 2.6 9.6 14.8 19.5 42.1 4,596.7 5,029.3 6,748.7
Inventory days 70 65 55 49 40 42 44 46 46
Working capital days 74 67 57 53 40 42 44 46 46
Valuation metrics 2,398
Fully Diluted Shares (mn) 18
Market cap (Rs.mn) 43,397
P/E (x) 239 171 112 162 99 56 48 35 29
P/OCF(x) 444 394 109 94 63 67 49 45 33
EV (Rs.mn) (ex-CWIP) 43,290 43,607 43,496 43,407 43,051 42,655 42,380 42,067 41,511
EV/ EBITDA (x) 109 83 68 70 51 32 28 20 16
EV/ OCF(x) 443 396 109 94 63 66 48 43 32
FCF Yield 0.4% 0.7% 0.7% 1.3%
Price to BV (x) 29 26 21 19 16 12 10 8 6
Dividend pay-out (%) 12% 8% 14% 8% 6% 6% 6% 5% 4%
Dividend yield (%) 0.1% 0.2% 0.2% 0.2%
Page 30
Crystal Ball Gazing
VMART’s target population constitutes the lower middle class and lower class, who are expected to witness the biggest ‘delta’ in income levels
over the medium to long term. Further, given the government’s growth thrust on the semi-urban/rural section of economy, we believe VMART
would be a structural beneficiary of this ‘emerging India’ thesis. Furthermore, with the company being ‘HINDI BELT’ revenue heavy, any
systematic uptick in growth rates in core states viz. Uttar Pradesh, Bihar, Orissa, etc. is expected to lead to a secular growth trajectory for the
company.
We believe VMART’s revenues and profits can grow Backed by healthy growth trajectory and improving While company currently trades at lifetime peak
at a CAGR of ~22% & ~32% respectively over the FY17 margins without corresponding increase in capital valuation, it still trades at ~20% discount to industry
to FY21E period employed, capital efficiency to further improve average.
FY08-FY11 FY11-FY14 FY14-FY17 FY18-FY22E FY08-FY11 FY11-FY14 FY14-FY17 FY18-FY22E Implied P/E multiple FY22E EPS (mn) Price target
Revenues CAGR 30% 39% 20% 22% RoE (%) 13.8% 18.7% 16.2% 20.2% 37x Rs.102.2 Rs.2,759
Gross Margin 31.1% 29.6% 29.3% 31.6% RoCE (%) 10.1% 15.7% 14.5% 19.5% 39x Rs.102.2 Rs.3,986
EBITDA CAGR 28% 39% 16% 24% RoIC (%) 10% 14.5% 14.4% 19.6%
EBITDA margin 8.1% 9.9% 8.2% 11.2% Average 1 yr fwd
EPS CAGR 21% 59% 16% 24% PE (x) - 10.0 18.9 38.9
Total Asset Turnover (x) 2.74 2.93 3.24 3.26 EV/EBITDA (x) - 5.3 9.8 19.1
Total WC days 88 68 48 47 Peak 1 yr fwd
Pre-tax OCF/EBITDA (%) -6% 56% 100% 89% PE (x) - 12.7 31.6 46.2
Post Tax OCF as a % of IC -3% 10% 19% 24% EV/EBITDA (x) - 7.1 15.8 21.6
Debt/EBITDA 2.5 1.0 0.4 0.0
TOTAL
PAT CAGR of ~24%, exit RETURN OF
Entry = Rs.2,398 @ 35x Cumulative Dividends of
multiple of 39x on FY22E
FY20E EPS Rs.12.3/share 67%
EPS
Page 31
Exchange and Currency Performance SPARK RESEARCH
18 June 2018
Equity Performance (%) Chg. Chg. Currency Performance (%) Chg. Chg.
Global Indices from from Currency from from
Today 1d 5d 1m 3m 6m 12m 52WH 52WL Today 1d 5d 1m 3m 6m 12m 52WH 52WL
Developed Developed
US (Dow Jones) 25,090 -0.3 -0.9 1.5 0.6 1.2 17.3 -5.7 18.4 Dollar Index# 94.9 0.1 1.3 1.3 5.1 1.2 -2.4 -3.1 7.5
UK (FTSE100) 7,634 -1.7 -0.6 -1.2 6.9 1.8 1.8 -3.4 11.2 Pound 1.3 -0.1 -0.8 -1.4 -5.4 -0.8 4.2 -7.7 5.4
Japan (Nikkiei 225) 22,663 -0.8 -0.6 -1.2 4.5 -1.0 13.6 -6.1 17.8 Yen 110.4 0.2 -0.3 0.3 -3.9 1.9 1.0 -3.8 5.5
Germany (DAX) 13,011 -0.7 1.9 0.1 6.5 -0.9 1.9 -4.3 10.9 Euro 1.2 -0.1 -1.6 -1.5 -6.0 -1.6 4.0 -7.7 4.3
BRICS BRICS
Brazil (IBOV) 70,758 -0.9 -3.0 -14.8 -16.6 -3.2 14.8 -19.9 16.9 Real 3.7 2.1 -0.6 -2.0 -11.9 -11.5 -12.2 -6.0 21.1
Russia (IMOEX) 2,238 -0.7 -1.3 -4.6 -3.5 3.6 18.8 -4.9 23.1 Ruble 63.1 0.1 -0.4 -1.2 -8.4 -7.0 -7.3 -3.0 13.6
India (Sensex) 35,622 0.1 0.5 0.2 5.2 7.8 14.5 -2.3 16.1 Rupee 68.1 -0.2 -1.1 -0.2 -4.3 -5.7 -5.5 -0.5 7.7
China (SHCOMP) 3,022 -0.7 -1.5 -5.4 -7.6 -7.5 -3.2 -15.8 0.4 Renminbi 6.4 -0.6 -0.5 -1.0 -1.8 2.6 5.7 -5.9 3.1
South Africa (Jalsh) 57,661 -1.4 -1.0 -1.3 -2.4 0.6 11.7 -6.7 13.6 Rand 13.4 -0.1 -2.1 -5.0 -10.6 -5.2 -3.3 -7.8 16.8
Asian Asian
HK (H S I) 30,309 -0.4 -2.1 -2.4 -3.8 4.3 18.3 -9.5 20.3 HK Dollar 7.8 0.0 0.0 0.0 -0.1 -0.4 -0.6 0.0 0.7
Korea (Kospi) 2,379 -1.0 -3.0 -3.3 -4.6 -4.1 0.7 -8.7 3.0 Won 1,104.5 -0.6 -2.7 -2.4 -3.0 -1.4 2.6 -4.6 4.8
Singapore (Straits) 3,301 -1.7 -3.9 -6.8 -6.2 -3.4 2.1 -9.4 3.4 SG Dollar 1.4 0.0 -1.2 -0.6 -2.5 -0.3 2.6 -2.9 3.9
Malaysia (KLCI) 1,746 -0.9 -1.8 -5.5 -5.4 -0.4 -2.4 -7.9 2.2 Ringgit 4.0#N/A N/A -0.2 -0.6 -2.0 2.1 7.0 -7.1 3.7
Indonesia (Jakarta) 5,994 -1.9 0.2 0.6 -6.8 -0.5 5.6 -10.5 5.7 Ind Rupiah 13,932.0#N/A N/A -0.4 0.3 -1.2 -2.6 -4.5 -2.0 6.1
Commodities Performance (%) Commodities Performance (%)

Brent ($/bbl) 72.8 -0.9 -4.8 -7.3 9.9 14.7 53.6 -9.6 64.1 Indonesian Coal ($/MT) 96.6 NA NA 7.9 -5.2 2.7 28.0 -5.2 28.0
WTI ($/bbl) 63.8 -1.9 -3.4 -10.6 3.1 12.5 35.5 -12.4 41.3 S Africa Coal ($/MT) 61.0 NA -3.7 -7.6 -6.9 -16.7 -26.4 NA NA
Copper ($/MT) 7,019 -2.1 -4.2 3.7 1.9 2.4 24.5 -4.2 24.5 Australia Coal ($/MT) 61.8 NA -1.0 -0.6 -4.4 -11.9 -25.4 NA NA
Zinc ($/MT) 3,120 -3.1 -3.3 2.4 -3.5 -2.6 25.3 -13.8 26.1 Gold Spot $/Oz 1,280 0.1 -1.5 -1.0 -2.8 1.4 2.9 -6.3 6.3
Aluminium ($/MT) 2,205 -2.5 -4.0 -5.3 6.9 7.5 18.5 -15.3 18.9 GOLD INDEX (Rs./10g) 31,068.0 0.1 0.1 -0.9 2.5 8.7 8.2 -1.1 12.1
Iron Ore ($/MT) 63 1.5 -0.4 -3.7 -6.8 -6.5 15.4 -22.1 16.1 Silver Spot $/Oz 16.5 -0.2 -2.3 0.5 1.3 2.4 0.2 -9.3 8.8
Lead ($/MT) 2,391 -2.0 -2.5 2.5 -1.0 -6.1 15.4 -10.9 15.1 MCX Silver (Rs./KG) 41,364.0 0.9 2.7 4.4 8.2 12.9 6.7 0.0 16.0
Page 32
Exchange and Currency Performance SPARK RESEARCH
18 June 2018
Particulars Today 1D 1M 3M 6M 12M NSE / BSE Category wise turnover

Liquidity (Rs. Bn)
Reverse Repo 81 193 96 306 41 72 FII DII Others 450
Repo 38 42 54 37 168 22 400
MSF 1 - 2 13 97 0 114 350
Rs. bn
Net liquidity 42 151 41 255 (223) 50 300
Money Market Rates Change in BPS 153 82 136 250
128 137 136
NSE MIBOR 6.78 (7) (55) (42) (99) (136) 200
1M CP 7.74 - 86 83 118 118 73 150
73 72 77 57
3M CP 7.44 - - - - - 211 100
6M CP 7.67 4 (34) 39 82 67 92 97 96 100 120 50
3M CD 7.26 - 11 (23) (87) (108) -
6M CD 7.46 9 24 (19) (81) (101) 11-Jun 12-Jun 13-Jun 14-Jun 15-Jun 1M avg
12M CD 7.62 3 17 (25) (71) (104)
Bond Market Change in BPS
India 10 yr 7.84 (5) - 27 65 135 Nifty Top 10 Deliveries
US 10 yr 2.91 (1) (15) 6 51 75 Rank Company Delivery % 30D Del. % Price Chg
Spread (India 10Y-US10Y) 493 1 AMBUJA CEMENTS LTD 81.2 56.5 -0.5%
India 10YR AAA corp 8.71 (6) 10 44 87 115
2 HOUSING DEVELOPMENT FINANCE 80.5 74.9 -0.1%
Spread (India 10Y-AAA10Y) 88
3 NTPC LTD 74.7 71.8 -1.5%
91D T.Bills 6.40 8 29 4 29 12
1Y T.Bills 6.42 2 (21) 3 18 32 4 ITC LTD 72.5 62.4 -1.0%
Call rate 6.10 2 23 20 12 4 5 BHARAT PETROLEUM CORP LTD 72.3 46.7 -1.0%
LIBOR, MIFOR Change in BPS 6 GAIL INDIA LTD 71.7 56.0 -1.2%
LIBOR 1.56 (18) (35) (64) (70) (91) 7 POWER GRID CORP OF INDIA LTD 70.3 73.7 -0.5%
MIFOR 5.97 (58) (56) (75) (43) (86) 8 BAJAJ AUTO LTD 69.8 48.9 -0.6%
OIS 6.06 (25) (25) (38) (38) (69) 9 ULTRATECH CEMENT LTD 68.4 64.2 -2.0%
12m OIS fwd 6.85 (1) 9 39 47 63 10 CAIRN INDIA LTD 67.5 54.0 0.8%
Market Activity FII & DII - Provisional (INR Bn) Bulk Deals (INR Mn)
Last 5 Day FII Buy FII Sell Net DII Buy DII Sell Net Date Script Client Name Type Price
15-Jun-18 97.9 113.1 -15.2 44.0 38.4 5.6 15-Jun-18 CNOVAPETRO ASIA INVESTMENT CORPORATION MAURITIUS LTD BUY 1,40,000 29.0
14-Jun-18 43.2 56.9 -13.7 31.3 25.6 5.8 15-Jun-18 IBREALEST INDIABULLS REAL ESTATE LIMITED BUY 26,00,000 172.8
13-Jun-18 47.7 48.4 -0.7 40.9 36.1 4.9 15-Jun-18 PENTAGOLD STAR ENTERPRISES BUY 1,74,000 39.3
12-Jun-18 42.4 54.1 -11.7 42.9 29.6 13.3 15-Jun-18 PENTAGOLD TRIKAAL THEATRES AND REALTY INDIA PRIVATE LIMITED
SELL 99,000 41.0
11-Jun-18 40.2 51.7 -11.6 41.9 31.3 10.6 15-Jun-18 POKARNA ASHISH RAMESHCHANDRA KACHOLIA SELL 2,00,000 177.8
Page 33
Spark Focus Stocks SPARK RESEARCH
18 June 2018
Delivery Volume
Delivery Volume
% inc/dec to 30D
% inc/dec to 30D
PE (All sectors) PE (All sectors)
Returns (%) EV/EBITDA (x) Returns (%) EV/EBITDA (x)
Delivery %
Delivery %
& P/ABV (Banks) & P/ABV (Banks)
Rating
Rating
('000)
('000)
Price
Price
avg
avg
Company Company
1D 1M 3M 1Y FY18E FY19E FY18E FY19E 1D 1M 3M 1Y FY18E FY19E FY18E FY19E
Automobiles & Logistics Cement & Building Material
AMARA RAJA BATTERIES LTD 773 0.3 (7.1) (1.2) (7.9) 87.2 (0.5) 34.6 30.4 24.4 16.8 16.3 Buy DALMIA BHARAT LTD 2548 1.0 (5.7) (10.3) 3.3 57.1 0.2 56.2 40.1 23.9 15.1 13.1 Buy
GATEWAY DISTRIPARKS LTD 179 (1.3) 7.0 (6.6) (32.4) 159.5 0.8 81.0 15.6 10.8 12.2 11.4 Buy GREENPLY INDUSTRIES LTD 249 0.4 (13.2) (25.7) (11.9) 27.5 (1.0) 71.9 30.4 28.8 19.6 18.2 Buy
IGARASHI MOTORS INDIA LTD 741 0.2 (8.0) (7.3) (32.4) 19.2 (1.0) 75.8 34.9 35.0 22.9 22.9 Add ASTRAL POLY TECHNIK LTD 1003 (0.4) 7.6 17.3 44.1 5.6 (1.0) 52.4 55.2 38.3 34.2 29.4 Reduce
TIMKEN INDIA LTD 753 (1.1) 6.4 3.4 8.1 6.3 (1.0) 53.4 39.7 33.6 35.2 24.9 Reduce SOMANY CERAMICS LTD 546 0.2 (4.9) (16.8) (30.9) 2.1 (1.0) 61.6 43.2 26.0 15.5 19.3 Buy
VRL LOGISTICS LTD 349 0.8 (12.9) (10.1) 8.2 15.5 (1.0) 42.6 35.1 25.7 18.9 15.5 Buy RAMCO CEMENTS LTD/THE 731 0.2 (13.3) (1.3) 5.4 91.9 (0.5) 44.3 27.8 24.2 16.3 16.5 Add
VST TILLERS TRACTORS LTD 2506 (2.0) (13.0) (5.0) 21.3 2.8 (1.0) 64.8 32.1 27.6 23.3 23.2 Add Financials
WABCO INDIA LTD 7345 (0.4) (3.5) 1.0 30.7 1.9 (0.5) 61.7 52.9 41.6 41.7 35.4 Reduce CHOLAMANDALAM INVESTMENT AND 1611 0.6 3.4 10.1 47.6 117.2 (0.2) 29.6 4.6 3.8 4.6 3.8 Add
Consumption & Media CITY UNION BANK LTD 188 (0.5) (0.8) 7.2 12.9 97.0 (0.7) 95.3 2.8 2.4 2.8 2.4 Buy
ARVIND LTD 414 (0.5) 3.7 5.4 9.0 174.7 (1.0) 9.1 29.6 20.8 13.2 13.1 Reduce EQUITAS HOLDINGS LTD/INDIA 151 (1.1) (8.5) 7.0 NA 20.0 (1.0) 21.6 2.2 2.0 2.2 2.0 Sel l
BAJAJ CORP LTD 426 (1.0) (5.7) (8.6) 12.9 24.9 (0.8) 71.3 32.1 28.2 25.6 27.2 Buy FEDERAL BANK LTD 84 (2.2) 1.7 (10.1) (30.6) 2528.3 (0.4) 36.0 1.6 1.5 1.6 1.5 Buy
BERGER PAINTS INDIA LTD 291 2.7 3.8 15.4 16.2 458.9 (0.1) 54.6 71.7 60.5 23.7 21.1 Add KARUR VYSYA BANK LTD 104 (1.6) 4.9 5.9 (24.8) 803.8 (0.2) 76.0 1.7 1.5 1.7 1.5 Buy
INDIAN TERRAIN FASHIONS LTD 170 (1.3) (3.2) (9.4) (16.5) 286.3 6.0 97.8 23.0 17.7 3.6 3.1 Reduce REPCO HOME FINANCE LTD 563 (0.7) (2.4) (0.9) (36.9) 55.5 (0.3) 33.7 2.9 2.5 2.9 2.5 Reduce
JYOTHY LABORATORIES LTD 452 0.1 2.8 25.9 20.3 30.2 (0.8) 30.3 32.4 30.1 24.4 23.1 Add SHRIRAM CITY UNION FINANCE 2296 0.3 5.8 6.9 (5.9) 20.4 (0.2) 86.2 2.6 2.2 2.6 2.2 Add
KEWAL KIRAN CLOTHING LTD 1440 (2.8) (8.1) (7.2) (16.3) 0.3 (0.8) 90.6 23.6 18.7 14.0 13.5 Add SOUTH INDIAN BANK LTD 24 (2.8) (5.9) (4.0) (18.3) 407.5 (0.9) 59.4 1.2 1.0 1.2 1.0 Buy
LA OPALA RG LTD 260 0.0 (6.0) (20.0) (3.2) 105.7 4.2 96.2 53.9 42.8 38.8 31.0 Add SUNDARAM FINANCE LTD 1731 (1.3) (0.1) 6.4 21.6 148.2 (1.0) 87.1 4.3 3.5 4.3 3.5 Add
SUN TV NETWORK LTD 908 (0.4) (4.6) 0.6 8.3 361.6 (0.9) 36.1 33.5 28.6 20.4 18.0 Buy IT Services
WONDERLA HOLIDAYS LTD 335 (1.5) (8.5) (2.2) (10.8) 7.9 (1.0) 52.4 33.0 26.7 28.2 18.6 Add CYIENT LTD 731 (1.3) (7.9) 15.4 43.9 117.1 0.1 25.3 17.0 14.6 14.4 12.8 Buy
ZYDUS WELLNESS LTD 1435 3.5 11.9 17.1 68.7 14.8 (1.0) 34.7 37.9 32.9 45.8 39.8 Buy FIRSTSOURCE SOLUTIONS LTD 82 (0.8) 16.2 65.6 149.0 1512.8 (0.4) 29.3 11.6 11.1 10.1 9.1 Buy
Capital Goods & Infra INTELLECT DESIGN ARENA LTD 213 (2.2) (2.1) 15.1 91.2 205.5 (0.5) 33.6 NA 38.5 NA 30.7 Buy
AIA ENGINEERING LTD 1550 (1.4) (0.9) 15.0 9.0 21.1 (1.0) 58.0 32.8 28.9 20.5 23.0 Buy REDINGTON INDIA LTD 124 (0.2) (4.1) (9.9) (8.0) 1600.1 4.2 69.5 14.0 12.2 9.2 9.8 Add
AHLUWALIA CONTRACTS LTD 354 (0.8) (4.8) (10.5) 11.5 5.2 (1.0) 58.1 19.2 15.1 14.1 11.2 Buy Pharma
BLUE STAR LTD 647 (0.9) (12.3) (17.8) (3.1) 193.8 0.5 55.9 46.1 27.4 30.5 23.4 Buy BIOCON LTD 624 1.5 (4.0) 6.4 83.9 873.9 (0.8) 26.2 91.7 66.6 37.5 41.0 Sel l
ELGI EQUIPMENTS LTD 267 (0.3) (5.8) (4.3) 13.5 7.2 (1.0) 63.1 52.3 36.8 37.6 29.6 Add GRANULES INDIA LTD 89 1.7 (6.1) (19.3) (36.9) 1474.0 (0.7) 21.6 18.9 16.8 12.6 12.6 Add
KIRLOSKAR OIL ENGINES LTD 291 (3.1) (8.5) (20.9) (24.5) 14.4 (1.0) 64.0 36.3 30.7 16.4 18.0 Add HEALTHCARE GLOBAL ENTERPRISE 285 (1.7) (8.1) (5.7) NA 8.5 (1.0) 46.3 77.0 73.6 89.0 74.8 Reduce
KNR CONSTRUCTIONS LTD 263 (2.0) (12.3) (10.3) 28.2 85.8 (1.0) 63.0 25.3 30.7 19.6 12.2 Reduce SYNGENE INTERNATIONAL LTD 584 (0.2) (3.5) 6.8 27.9 111.7 (1.0) 65.6 39.1 35.4 30.6 26.5 Sel l
SADBHAV ENGINEERING LTD 315 (2.6) (14.3) (17.5) 3.4 133.8 (1.0) 61.1 54.0 42.3 12.9 10.7 Reduce Oil & Gas
TECHNO ELECTRIC & ENGINEERIN 291 (1.6) (8.0) (13.0) (29.9) 3.5 (1.0) 51.0 17.6 17.0 13.8 11.7 Sel l GUJARAT GAS LTD 821 0.2 (5.0) (1.6) NA 141.7 (1.0) 70.4 35.9 23.5 20.0 15.7 Sel l
TRIVENI TURBINE LTD 113 0.0 12.8 1.9 (19.2) 10.5 (1.0) 63.1 32.4 26.5 26.1 24.9 Add AgroChemicals
VA TECH WABAG LTD 416 (2.0) (8.7) (17.3) (41.5) 148.2 1.0 72.7 16.2 13.5 11.1 9.2 Reduce PI INDUSTRIES LTD 797 (1.3) (7.6) (3.5) (2.5) 180.6 (1.0) 87.4 28.9 24.8 21.1 21.3 Buy
V-GUARD INDUSTRIES LTD 213 (1.2) (5.3) (8.7) 17.6 121.7 (0.8) 21.8 58.3 46.2 44.6 41.9 Add SHARDA CROPCHEM LTD 395 (0.5) (9.2) 4.6 (18.6) 3.8 (1.0) 68.5 19.6 15.8 11.2 10.9 Buy
VOLTAS LTD 520 (1.2) (5.8) (17.1) 6.1 286.7 (0.9) 27.1 33.3 29.4 30.8 24.8 Buy
Page 34
Spark Recommendation History SPARK RESEARCH
18 June 2018
Rs. Report Date Price Target Reco.

V-Mart Retail – 3 Year Price and Rating History 28/May/18 2,309 2,660 Buy
3000
15/Feb/18 1,602 1,982 Buy
2500
13/Nov/17 1,399 1,674 Buy
2000 27/Sep/17 1,435 1,650 Buy
1500 Price
1000 Target
500
0
May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18
Page 35
Spark Disclaimer (1/2) SPARK RESEARCH
18 June 2018
BUY Stock expected to provide positive returns of >15% over a 1-year horizon ◄► No Change
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year horizon
Absolute Rating Symbol
▼ Downgrade
Interpretation Interpretation
REDUCE Stock expected to provide returns of <5% – -10% over a 1-year horizon
SELL Stock expected to fall >10% over a 1-year horizon ▲ Upgrade
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Spark Disclaimer (2/2) SPARK RESEARCH
18 June 2018
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incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:
COAL; HDFCB: ICICIBC; SUF; CIFC; CUBK; HDFC; PLNG; NARH;
Disclosure of interest statement INDA GUJGA Others
TCS WPRO; IGM Z; DITV; ITC; ITFL
Analyst financial interest in the company Yes Yes No No No No
Group/directors ownership of the subject company covered Yes No No Yes No No
Investment banking relationship with the company covered No No Yes No No No
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Closing % YTD % 1 YR

SPARK RESEARCH SENSEX 35,622 4.60 14.53

WHAT’S INSIDE SECTORAL INDICES

 Spark Focus Stocks BSE Health 14,301 (3.4) 0.2

find SPARK RESEARCH on Page 1

Higher the better; Business model strength. Ability to

Lower the better; High fixed costs proportion impacts

Lower the better; Triple impact of gross margins, operating

Higher the better; Terms of trade reflects pricing power.

Lower the better; Vulnerable for debt traps when demand

Lower the better; Good earnings, bad cashflows cannot

Notes: *OCF – Operating Cash Flow

* FY17 numbers considered where FY18 not available

Somany Ceramics 42% 7% 8% 2% 37% -12% 0.8 1.9 13% 4.6 6

Finolex 34% 5% 16% 2% 20% -4% 1.3 0.6 16% 3.1 3

Consumer durables, Electricals & Capital Goods

Voltas 28% 4% 7% 6% 22% -3% 0.8 -7.0 15% 4.1 3

Whirlpool 39% 1% 10% 4% 32% -5% 1.3 -2.9 16% -13.6 2

KEC International 48% 4% 8% 5% 44% -7% -0.3 -5.3 13% - 9

Thermax 46% 8% 9% 1% 40% -7% 1.1 -1.0 17% -5.7 8

Amber 18% 2% 8% 2% 10% -4% 2.3 -0.7 30% 4.7 6

Carborandum Universal 65% 2% 0% 0% 65% -5% 1.7 -0.3 12% -3.3 3

Allcargo 31% 0% 8% 0% 25% -11% 1.6 0.3 9% -3.5 3

Inox 35% 0% 15% 4% 23% -20% 2.1 1.3 16% -8.8 3

PVR 70% 2% 16% 4% 64% -21% 2.5 0.6 15% -13.6 2

Redington (India) 6% 0% 2% 0% 4% -4% 0.5 23.3 10% 23.8 5

SIS 18% 1% 5% 1% 14% -3% 0.5 -0.6 17% 2.0 4

Healthcare & Pharma

Cipla 63% 3% 20% 2% 54% -7% 1.1 0.6 14% -2.2 8

Cadila 64% 3% 21% 7% 53% -5% 0.8 1.2 12% 0.9 7

Biocon 60% 3% 23% 1% 47% -8% 0.9 0.6 29% -10.0 4

DRL 56% 2% 21% 0% 44% -3% 1.3 0.7 16% -3.1 3

Divi's 62% 0% 37% 0% 41% -3% 0.9 -2.1 16% -1.6 2

Oil & Gas

Oil Marketing Companies

BSE 200 Spark Mcap 6M ATV FY19 FY20

Key Takeaways from FY18 Annual Report

find SPARK RESEARCH on Page 16

Depreciation Rolling three year deprecation/ Capex on fixed assets 52% -

Interest expense in Cash flow / Interest expense in P&L 100% -

Majority of contingent liabilities pertain to tax demands (income tax, value

V-MART FY18 Annual Report Analysis in ONE Slide

Digitization Initiatives: The company we understand

VMART continues to follow its unwritten policy of

The company we note invested in trend analytics using

Key Excerpts from Chairman’s letter

Indian Retail Sector @

Key Excerpts from Chairman’s letter

Four Pillars of Aggressive yet controlled

FY18 Investments Expansion

Not So Random Observations

The remuneration of the company secretary in FY18

Financial Analysis – Profit & Loss

Rs. mn\Period FY17 FY18 yoy Growth

Revenues 10,017 12,224 22%

PAT margin 4.4% 6.4% -197bps

EPS (Rs. ) 24.3 42.9 77%

Total Liabilities 3,121 3,558 14% 10%

Net Block 1,157 1,447 25%

Other Current Assets 30 131 337% 60

Debt Structure & Cash Flow – Key observations

0.20 Total Working Capital Changes 69 -346 -

0.13 0.15 687 643 -6%