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CMP: | 102 Target: | 110 (8%) Target Period: 12 months

HealthCare Global Enterprises (HEAGLO)

HOLD

December 10, 2019

Oncology to the fore; balance sheet improvement key

HealthCare Global Enterprises (HCG) is a focused player in cancer & fertility

treatment. Under the HCG brand, the company operates the largest private

cancer care network with a pan-India presence. Established by oncologist

Dr Ajai Kumar in 1989, the HCG network consists of 25 pan-India cancer

centres, including 21 comprehensive cancer centres, three freestanding

diagnostic centres and one day care chemotherapy centre. The company’s

fertility centres under the Milann brand are one of the leading brands in IVF

in India, running eight centres across India. The company also operates four

multi-specialty hospitals in Ahmedabad, Bhavnagar, Rajkot and Hubli.

Comprehensive cancer treatment network with strong pedigree

HCG operates one of the largest private cancer care networks in India with

end-to-end solutions available under single corporate entity. This consisted

of 21 comprehensive cancer centres that provide a single point destination

for complete cancer care. Most centres are on lease or rental basis with

some in partnership with local doctors or hospitals. Owing to exclusive

agreement with vendors, HCG procures equipment on a deferred payment

basis. We expect revenues from the HCG centres to grow at 16.2% CAGR to

| 1436 crore mainly on the back of a ramp up of new hospitals.

Cancer – Rapidly growing, under reported segment in India

Cancer is one of the fastest growing lifestyle diseases in India. High

incidences of cancer in India can be attributed to rapid industrialisation,

ageing population, lifestyle and food habits, poor immune conditions,

genetic predisposition, hormonal imbalances, etc. As per Indian Council of

Medical Research (ICMR), in 2018, total number of new cancer cases in India

are estimated to be 15.7 lakh, which is likely to reach over 17.3 lakh by 2020.

However, the real incidence of cancer in India could be 1.5-2x higher than

the reported numbers (Ernst & Young report).

Valuation & Outlook

Cancer as a therapeutic category remains largely underpenetrated in India

despite a conducive business environment with growing awareness and

better diagnosis. HCG, with its integrated, one-stop-solution and focused

model, is well poised to capture the growing potential with a pan-India focus.

With an army of oncologists at its disposal who are well-versed with modern

technological advancements besides cutting-edged latest machines, the

ecosystem is well set for future growth. However, due to aggressive

expansion (seven centres in past 18 months), the company’s balance sheet

has been leveraged significantly (D/E 1.4x and debt/EBITDA 5.9x in FY19).

This, besides weaker return ratios has been a major overhang on the stock.

We initiate coverage on HCG with a HOLD recommendation and a target

price of | 110 (10x FY22E EV/EBITDA). Moderation of capex and

improvement in return ratios are key triggers to re-rate the stock.

Key Financial Summary (| crore)

| Crore FY19 FY20E FY21E FY22E CAGR FY19-22E (%)

Revenues 976.0 1159.1 1336.2 1545.3 16.6

EBITDA 111.6 137.1 174.1 216.8 24.8

EBITDA margins (%) 11.4 11.8 13.0 14.0

Net Profit -30.9 -94.1 -68.1 -34.3 NA

EPS (|) -2.8 -11.0 -7.9 -4.0

PE (x) NA NA NA NA

M.Cap/ Revenues (x) 0.9 0.8 0.7 0.6

EV to EBITDA (x) 13.8 15.5 12.5 9.7

RoCE (%) 3.0 1.2 2.5 4.3

ROE NA NA NA NA

Source: ICICI Direct Research; Company

Particulars

Particular

Market Capitalisation

Debt (FY19)

Cash (FY19)

EV

52 week H/L 249/94

Equity capital

Face value | 10

MF Holding (%) 16.43%

FII Holding (%) 30.12%

| 87.9 crore

| 1535 crore

Amount

| 898 crore

| 658 crore

| 21 crore

Price Performance

Research Analyst

Siddhant Khandekar

[email protected]

Mitesh Shah, CFA

[email protected]

Sudarshan Agarwal

[email protected]

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HCG(L.H.S) NSE500(R.H.S)

ICICI Securities | Retail Research 39

ICICI Direct Research

Stock Tales | HealthCare Global Enterprises

Company Background

The company is a provider of specialty healthcare in India focused on cancer

and fertility. Under the HCG brand, it operates the largest cancer care

network in India in terms of the total number of private cancer treatment

centres while under the Milann brand, it operates fertility centres.

Exhibit 1: HCG timeline

o

Source: ICICI Direct Research, Company

As of FY19, HCG’s network consisted of 21 comprehensive cancer centres

(including the company’s centre of excellence in Bengaluru), three

freestanding diagnostic centres and one day care chemotherapy centre

across India. Each of its comprehensive cancer centres offer, at a single

location, comprehensive cancer diagnosis and treatment services (including

radiation, medical oncology and surgical treatments). The company’s

freestanding diagnostic centres and day care chemotherapy centre offer

diagnosis and medical oncology services, respectively.

The company provides fertility treatment under its Milann brand. It acquired

50.10% equity interest in BACC Healthcare Pvt Ltd in 2013, which was

operating fertility centres under the Milann brand. During FY19, right to

shares for balance 49.9% has been acquired. The company operates eight

Milann fertility centres across Bengaluru, Delhi, Chandigarh and Ahmedabad

as on March 31, 2019. It consists of a team of 38 in-vitro fertilisation (IVF)

specialists and nine embryologists. Through this business, the company

provide comprehensive reproductive medicine services such as assisted

reproduction, gynaecological endoscopy and fertility preservation. It is

recognised as a premier training and academics institution offering

programmes for fertility specialists and embryologists. Cumulatively, till

March 2019, the company has treated 10000+ couples.

Revenue Break Up


Oncology

79%

Multi-

Specialty

14%

Fertility

7%




Under the Triesta brand, the company provides clinical reference laboratory

services in India with a specialisation in oncology, including molecular

diagnostic services and genomic testing. The company’s Triesta central

reference laboratory is located in its centre of excellence in Bengaluru.

Triesta offers research and development (R&D) services to pharmaceutical

and biotechnology companies in the areas of clinical trial management and

biomarker discovery and validation. Triesta is led by a team of specialist

oncopathologists, molecular biologists and clinical researchers.

The company operates four multi-specialty hospitals in Ahmedabad,

Bhavnagar, Rajkot and Hubli. The company provides comprehensive patient

care in key specialties including cardiology, neurology, orthopaedics,

gastroenterology, urology, internal medicine and pulmonary and critical

care.

Cluster wise revenue break-up


Payee Mix (FY19)

Source: Company

Karnata

ka

39%

Gujarat

29%

Maharashtra

14%

Andhra

Prades…

East

India

7%

Tamil

Nadu

4%

Cash

54%

Govt Schemes

15%

CGHS/ECHS

6%

TPA/Insurance

13%

Corporates

12%




Investment Rationale

Cancer - Fast growing but under reported segment in India

The cancer segment continues to be dynamic, especially in India, due to

rising incidence of cancer driven by increased awareness, diagnosis, genetic

and lifestyle factors.

In India, the incidence of lifestyle diseases is expected to increase faster than

any other segment. Within the lifestyle space, cancer is one of the fastest

growing segments. High incidence of cancer in India can be attributed to

factors like poor immune conditions, genetic predisposition and hormonal

conditions, industrialisation, ageing population, lifestyle and food habits.

According to an Ernst & Young report, the prevalence of cancer in India is

expected to increase from an estimated 39 lakh in 2015 to an estimated 71

lakh people by 2020. However, the biggest problem in India is enormous

under reporting of cancer cases. As per the Ernst & Young report, the real

incidence of cancer in India could be 1.5-2x higher than the reported

incidence. Also, as per Indian Council of Medical Research (ICMR), the total

number of new cancer cases in India are likely to reach over ~17 lakh in

2020 from ~15.7 lakh in 2018.

Exhibit 2: Number of new cancer cases in 2018


With incidences rising at a rapid pace, cancer is ranked as the sixth leading

cause of death in India. Of the new cases of cancer projected to have been

diagnosed in India each year, breast cancer in women and oral cancer for

men are among the top two cancers in terms of both incidence and

mortality. The cancer mortality rate in India is high, at 68% of the annual

incidence. This ratio indicates that fewer than 30% of Indian patients with

cancer survive five years or longer after diagnosis.

The reported incidence of cancer in India is based on data collected from

the cancer registries, which cover less than 10% of the population, resulting

in a significant margin of error in estimation. The gap between reported and

real cancer incidence can primarily be attributed to under-diagnosis of

cancer in India. The under diagnosis of cancer is represented in the relatively

late stage of presentation of cancer cases.

As per ICMR, only 12.5% of patients come for treatment in the early stages

of the disease. A case in point is breast screening with less than 1% of

women in India aged between 40 and 69 years participating in

recommended breast screening mammograms once in 24 months

compared to 32% in China and 67% in the US in 2015. As per the survey,

between 2009 and 2011, only 43% breast cancer cases were diagnosed at

early stages (i.e. stage I or stage II) of the disease in India. The corresponding

number was 62% in the US, 81% in the UK and 72% in China.

Breast

14%

Lip, oral cavity

10%

Cervix Uteri

8%

Lung

6%Stomach

5%

Other Cancers

57%

High incidence of cancer in India can be attributed to

factors such as poor immune conditions, genetic

predisposition and hormonal conditions,

industrialisation, ageing population, lifestyle and

food habits

According to an Ernst & Young report, the prevalence

of cancer in India is expected to increase from an

estimated 39 lakh in 2015 to an estimated 71 lakh

people by 2020

With incidences rising at a rapid pace, cancer is

ranked as the sixth leading cause of death in India




Exhibit 3: Cancer diagnosis early stages (Stage I and Stage II)


Existing demand-supply gap in diagnosis and treatment

Despite high demand for comprehensive cancer care centres, India only has

200-250 comprehensive cancer centres, which represent just one per 6

million people compared to one per 0.2 million in countries like the US.

Similarly, ~40% of these centres are located in eight metropolitan cities

while fewer than 15% of these centres are government operated, which

limits access to advanced and multimodal treatment options available to

cancer patients. As a consequence, the majority of cancer care is expected

to be provided by the private/for-profit sector in India. India needs at least

450 to 550 comprehensive cancer centres by 2020, with a high proportion

of such centres in non-metropolitan cities and towns.

In addition, there is a significant shortage of oncologists in India. The country

has only one oncologist per 1,600 cancer patients in India against one per

100 cancer patients in the US as of 2014. Due to the limited access to cancer

care in India and inability of significant sections of the population to pay for

quality care, only around 15-20% of cancer patients are currently able to

undergo radiation treatment in India, compared to a potential clinical need

of 40-50% of cancer patients.

Largest private network in high demand segment

HCG operates the largest private cancer care network in India. The network

consisted of 21 comprehensive cancer centres, which provide single point

destination for complete cancer care. Apart from the comprehensive

centres, the company also operates three freestanding diagnostic centres

and one day care chemotherapy centre across India and one in Africa.

The company uses cutting-edge technologies such as molecular pathology

and molecular imaging for accurate diagnosis and staging of cancer.

Leveraging on its relationships with technology vendors and pharmaceutical

companies together with its own inputs, the company remains well-updated

on latest advances in technology. It also provides targeted nuclear medicine

therapies as well as advanced radiation treatments to minimise side effects

and improve the outcome of treatments. Each of its comprehensive cancer

centres offer comprehensive cancer diagnosis and treatment services

(including radiation, medical oncology and surgical treatment). The HCG

network operates on a hub-and-spoke model wherein its HCG centre of

excellence in Bengaluru serves as a hub to other cancer centres. This

network operates with a pool of 305 doctors including oncologists,

radiologists, pathologists and specialists and 1798 nurses.

62%

81%

72%

43%

0%

20%

40%

60%

80%

100%

US UK China India

Breast

US UK China India

71% 70%

91%

10%

0%

20%

40%

60%

80%

100%

US UK China India

Cervical

US UK China India

31%30%

19%

8%

0%

5%

10%

15%

20%

25%

30%

35%

US UK China India

Head & Neck

US UK China India

Despite high demand for comprehensive cancer care

centres, India only has 200-250 comprehensive

cancer centres, which represents just one per 6

million people

In addition, there is a significant shortage of

oncologists in India. The country has only one

oncologist per 1,600 cancer patients in India

HCG’s comprehensive cancer centres

Location Centres Operational beds

Karnataka 7 632 beds

Gujarat 5 447 beds

Maharashtra 3 336 beds

Andhra Pradesh 3 177 beds

Odisha 1 116 beds

Tamil Nadu 2 70 beds

Jharkhand 1 49 beds

Rajasthan 1 45 beds


HCG network consisted of 21 comprehensive cancer

centres, which provides single point destination for

complete cancer care




Exhibit 4: HCG’s comprehensive cancer centres

Location Year No of Beds RT- LINACsOperation

Theatres

PET- CT Laboratory

Karnataka Cluster

Bengaluru - Double Road 1989 51 1 4 - Yes

Shimoga 2003 60 1 3 - Yes

Bengaluru - COE 2006 225 3 7 2 Yes

Bengaluru - MS Ramaiah Nagar 2007 22 1 1 1 Yes

Hubli 2008 70 1 2 1 Yes

Gulbarga 2016 85 1 3 - Yes

Gujarat Cluster

Ahmedabad 2012 78 2 4 - Yes

Baroda 2016 60 1 3 1 Yes

East India Cluster

Ranchi 2008 56 1 2 - Yes

Cuttack 2008 116 2 2 1 Yes

Maharashtra Cluster

Nasik 2007 77 1 3 1 Yes

Borivali 2017 69 1 5 1 Yes

Nagpur 2017 115 1 2 1 Yes

Others

Vijaywada 2009 30 2 4 - Yes

Chennai 2012 35 1 - - Yes

Ongole 2012 19 1 2 - Yes

Tiruchirappalli 2014 - - - - Yes

Vishakapatnam 2016 88 1 - 1 Yes

Jaipur 2018 45 1 3 1 Yes

Bhavnagar Oncology 2018 - 1 3 - Yes

Nashik Phase II 2018 75 1 5 - Yes

Kolkata 2019 80 1 3 - Yes

Source: ICICI Direct Research, Company; COE-Centre of Excellence

Unique vendor arrangement

Owing to an exclusive agreement with vendors, HCG procures equipment

on a three years deferred payment basis. As per the management, a new

HCG centre requires | 50-60 crore of capex of which 45-60% account for

equipment costs, which are leased by the vendor and paid by the centre

after three years of equipment purchase. Hence, upfront outgo is only | 15-

20 crore to put up a HCG centre. Most centres in Tier I and II generally take

a year or two to reach breakeven. Thus, due to deferred agreement, the

particular centre is capable of managing its equipment cost.

Follows local tie-up to set up new centre

Cancer treatment requires multiple patient visits to centres. Its treatment

tenure is generally longer than other major therapies. Over the years, the

company has followed a strategy of tapping local oncologists to set up a

cancer centre. Each cancer centre offers comprehensive cancer diagnosis

and treatment services including radiation, medical oncology & surgical

treatment. In some cases it follows a partnership model (with HCG having a

majority stake). This also helps it to achieve faster ramp up in newer centres.

Each centre typically has eight to nine doctors and two to three physicians.

To expand Milann network of fertility centres across India

An estimated 22 crore women in India are of reproductive age (between 20

and 44 years) while about 2.75 crore couples in this group are estimated to

be suffering from infertility. The number of infertile couples in India is

expected to increase from 2.75 crore in 2015 to 3.25 crore by 2020.

The prevalence of infertility in India has been rising owing to 1) demographic

changes with an increase in the number of women of reproductive age, 2)

Owing to exclusive agreement with vendors, HCG

procures equipment on three years deferred

payment basis

Over the years, the company has followed a strategy

of tapping local oncologists to set up a cancer centre




lifestyle changes, 3) prevalence of several known clinical factors and 4)

ethnicity. Awareness of infertility and fertility treatment options in India are

among the lowest in the world.

The IVF market in India is under-penetrated relative to its potential demand.

Potential demand for IVF cycles could be 9-12x higher than the current actual

number of patients availing treatment in Delhi, Mumbai and Bengaluru. In

order to address the growing demand for fertility treatment in India, the

company plans to expand its Milann network by setting up greenfield

centres and also by entering into partnership arrangements and undertaking

selective acquisitions. This strategy is similar to HCG’s expansion.

The company intends to invest in building the Milann brand through

targeted media campaigns focusing on building patient awareness on

fertility treatment primarily through patient testimonials and socially relevant

messages. Besides this, it plans to undertake various direct consumer

marketing activities, including advertising in print, television, outdoor and

digital media.

Exhibit 5: Milann centres


Location Year

No of

BedsIVF

Endoscopy

Operation

Theatre

Embryology

Laboratory

Neonatal

ICU

Shivananda Circle, Bengaluru 1989 38 √ √ √ √

Jayanagar, Bengaluru 2010 26 √ √ √ √

Indiranagar, Bengaluru 2012 6 √ √ √ -

MSR Nagar, Bengaluru 2015 6 √ √ √ -

Delhi 2016 4 √ √ √ -

Chandigarh 2016 3 √ √ √ -

Ahmedabad 2018 6 √ √ √ -

Whitefield, Bengaluru 2018 6 √ - √ -

The prevalence of infertility in India has been rising

owing to 1) demographic changes with an increase

in the number of women of reproductive age, 2)

lifestyle changes, 3) prevalence of several known

clinical factors, and 4) ethnicity




Key financials

Exhibit 6: Revenues expected to grow at 17% CAGR over FY19-22E


Exhibit 7: Adds seven hospitals in past 18 months


Exhibit 8: EBITDA expected to grow at 25% CAGR in FY19-22E


519.4584.2

700.1

828.8

976.0

1159.1

1336.2

1545.3

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E

Revenues (| crore)

CAGR 17.1%

CAGR 16.6%

993

1146

1364

1569

1872

0

500

1000

1500

2000

FY15 FY16 FY17 FY18 FY19

beds (Nos.)

CAGR 17.2%

76.384.8

105.0115.5 111.6

137.1

174.1

216.8

0.0

50.0

100.0

150.0

200.0

250.0


EBITDA (| crore)

CAGR 10.0%

CAGR 24.8%




Exhibit 9: Aggressive capex on account of new centre additions


Exhibit 10: Aggressive capex and IndAs 116 to impact profitability


Exhibit 11: Elevated leverage ratio due to aggressive capex


Exhibit 12: Aggressive expansion and IndAs 116 to impacts return ratios


3.7

209.8

192.3

259.9

214.4

0.0

50.0

100.0

150.0

200.0

250.0

300.0

FY15 FY16 FY17 FY18 FY19

Capex (| crore)

5.4 4.6

22.2

9.8

-24.8

-97.2

-69.6

-35.1

-120.0

-100.0

-80.0

-60.0

-40.0

-20.0

0.0

20.0

40.0


Net Profit (| crore)

1.2

0.61.0 0.9

1.4

1.8 1.8 1.7

4.6

3.84.0 4.0

5.95.7

4.6

3.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0


D/E (x) Debt/EBITDA (x)

6.4

5.3

5.9

5.1

3.0

1.2

2.5

4.3

-1.0

1.0

3.0

5.0

7.0


ROCE (%)

ROCE (%)




Valuation & Outlook

We expect revenues and EBITDA to grow at a CAGR of 16% and 20%,

respectively, during FY19-22E. This is expected to be driven by a ramp up

in new hospitals commissioned in past two years and commissioning of

three new hospitals (Mumbai, Delhi and Kochi) in the next two years. We

expect near term margins to remain under pressure mainly due to

continuous addition of new hospitals.

Cancer as a therapeutic category remains largely underpenetrated in India

despite a conducive business environment with growing awareness and

better diagnosis. HCG, with its integrated, one-stop-solution and focused

model, is well poised to capture the growing potential with a pan-India focus.

With an army of oncologists at its disposal who are well-versed with modern

technological advancements besides cutting-edged latest machines, the

ecosystem is well set for future growth.

We are optimistic on the company’s growth prospects amid strong business

model and unmet needs in both cancer and fertility treatment in India.

However, due to aggressive expansion (seven centres in the past 18

months), the company’s balance sheet has been leveraged significantly

(D/E: 1.4x and debt/EBITDA: 5.9x). This, besides weaker return ratios has

been a major overhang on the stock. We initiate coverage on HCG with a

HOLD recommendation and a target price of | 110 (10x FY22E EV/EBITDA).

Moderation of capex and improvement in return ratios are key triggers that

may lead to a re-rating of the stock.

Exhibit 13: One-year forward EV/EBITDA

Source: ICICI Direct Research, Bloomberg

0

2000

4000

6000

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

(|

crore)

HCG 30.4x 29.1x 26.3x 18.0x 12.4x

We expect revenues and EBITDA to grow at a CAGR

of 16% and 20%, respectively, during FY19-22E

HCG, with its integrated, one-stop-solution and

focused model, is well poised to capture the growing

potential of cancer care treatment with a pan-India

focus

We are optimistic on the company’s growth

prospects amid strong business model and unmet

needs in both cancer and fertility treatment in India

We initiate coverage on HCG with a HOLD

recommendation and a target price of | 110 (10x

FY22E EV/EBITDA).




Risk & Concerns

High leverage

Due to aggressive capex, the company’s leverage ratios remained stretched

(D/E: 1.4x and debt/EBITDA: 5.9x in FY19). Further addition of new hospitals

(South Mumbai, Delhi and Kochi) in the next two years and repurchase of

remaining share of Milann are likely to stretch leverage further with a

significant likely impact on free cash flows. Any delay in ramp up of new

hospitals can lead to a further deterioration in the cash flow situation with a

potential negative impact on the company’s multiple.

Government regulations

In February 2019, the National Pharmaceutical Pricing Authority (NPPA) has

brought 42 non-scheduled anti-cancer drugs under price control, capping

the trade margin at 30%. HCG generates 20-25% of revenues from the

pharmacy business located in the hospital premises. However, as per the

management, the regulation impact on pharmacy business was minimal.

However, the overhang remains, especially if the government decides to

bring most procedures, including cancer treatment, under a cap. This can

be detrimental to HCG where a small negative swing in margins may cause

a significant impact on the overall financials.




Financial Summary

Exhibit 14: Profit and loss statement | crore

Year-end March FY19 FY20E FY21E FY22E

Total Operating Income 976.0 1,159.1 1,336.2 1,545.3

Growth (%) 17.8 18.8 15.3 15.6

Raw Material Expenses 218.6 259.7 299.3 346.2

Gross Profit 757.4 899.5 1,036.9 1,199.1

Gross Profit Margins (%) 77.6 77.6 77.6 77.6

Employee Expenses 184.5 216.8 236.6 265.9

Other Expenditure 461.3 545.5 626.2 716.4

Total Operating Expenditure 864.5 1,022.0 1,162.1 1,328.5

EBITDA 111.6 137.1 174.1 216.8

Growth (%) -3.4 22.9 27.0 24.5

Interest 69.9 122.7 117.1 111.5

Depreciation 85.1 122.8 136.8 149.1

Other Income 10.1 9.3 8.0 7.7

PBT before Exceptional Items -33.4 -99.1 -71.7 -36.1

Less: Exceptional Items 0.0 0.0 0.0 0.0

PBT after Exceptional Items -33.4 -99.1 -71.7 -36.1

Total Tax -2.5 -5.0 -3.6 -1.8

PAT before MI -30.9 -94.1 -68.1 -34.3

PAT -30.9 -94.1 -68.1 -34.3

Growth (%) -282.2 205.0 -27.7 -49.6

EPS (Adjusted) -2.8 -11.0 -7.9 -4.0

Source: ICICI Direct Research

Exhibit 15: Cash Flow Statement | crore


Profit/(Loss) after taxation -70.4 -97.2 -69.6 -35.1

Add: Depreciation & Amortization 85.1 122.8 136.8 149.1

Net Increase in Current Assets -44.1 -41.3 -33.1 -33.7

Net Increase in Current Liabilities 46.2 56.5 57.7 66.1

Others 81.7 122.7 117.1 111.5

CF from Operating activities 98.5 163.6 208.7 258.0

Investments -5.2 0.0 0.0 0.0

(Purchase)/Sale of Fixed Assets -214.4 -715.6 -150.0 -80.0

Others 29.6 87.6 10.5 12.1

CF from Investing activities -189.9 -628.0 -139.5 -67.9

(inc)/Dec in Loan 0.0 706.0 -63.3 -61.6

Other 83.5 -122.7 -117.1 -111.5

CF from Financing activities 83.5 583.2 -180.4 -173.1

Net Cash Flow -7.9 118.8 -111.1 17.0

Cash and Cash Equivalent 28.8 20.9 139.6 28.5

Cash 20.9 139.6 28.5 45.5

Free Cash Flow -115.9 -552.0 58.7 178.0


Exhibit 16: Balance Sheet | crore


Equity Capital 87.9 87.9 87.9 87.9

Reserve and Surplus 388.7 291.6 221.9 186.9

Total Shareholders funds 476.7 379.5 309.9 274.8

Total Debt 657.9 1,363.9 1,300.6 1,238.9

Deferred Tax Liability 4.0 4.4 4.8 5.3

Minority Interest 45.6 50.1 55.1 60.6

Long-Term Provisions 5.6 6.2 6.8 7.5

Other Non Current Liabilities 57.5 157.9 173.6 191.0

Source of Funds 1,247.2 1,961.9 1,850.8 1,778.2

Gross Block - Fixed Assets 1,088.1 1,723.7 1,923.7 2,053.7

Accumulated Depreciation 227.2 349.9 486.7 635.9

Net Block 860.9 1,373.7 1,437.0 1,417.8

Capital WIP 152.6 232.6 182.6 132.6

Fixed Assets 1,013.5 1,606.4 1,619.6 1,550.4

Goodwill on Consolidation 109.3 109.3 109.3 109.3

Investments 49.1 49.1 49.1 49.1

Deferred Tax Assets 26.9 29.5 31.0 32.6

Long Term Loans and Advances 130.1 143.2 150.3 157.8

Other non-Current Assets 51.7 54.3 57.0 59.8

Inventory 26.8 31.8 36.6 42.4

Debtors 156.9 186.3 207.1 226.8

Loans and Advances 46.4 51.1 56.2 61.8

Other Current Assets 22.0 24.2 26.6 29.3

Cash 20.9 139.6 28.5 45.5

Total Current Assets 273.0 433.0 355.1 405.7

Creditors 181.7 215.7 248.7 287.6

Provisions 7.3 8.0 8.8 9.7

Other Current Liabilities 217.3 239.1 263.0 289.3

Total Current Liabilities 406.3 462.9 520.5 586.6

Net Current Assets -133.4 -29.8 -165.5 -180.9

Application of Funds 1,247.2 1,961.9 1,850.8 1,778.1


Exhibit 17: Ratio Analysis | crore


Per share data (|)

Reported EPS -2.8 -11.0 -7.9 -4.0

Cash EPS -2.8 -11.0 -7.9 -4.0

BV per share 53.8 42.8 35.0 31.0

Cash per Share 2.4 15.8 3.2 5.1

Dividend per share 0.0 0.0 0.0 0.0

Operating Ratios (%)

Gross Profit Margins 77.6 77.6 77.6 77.6

EBITDA margins 11.4 11.8 13.0 14.0

PAT Margins -2.5 -8.4 -5.2 -2.3

Cash Conversion Cycle 0.7 0.7 -1.4 -4.4

Asset Turnover 0.9 0.7 0.7 0.8

EBITDA conversion Rate 88.3 119.3 119.9 119.0

Return Ratios (%)

RoE NA NA NA NA

RoCE 3.0 1.2 2.5 4.3

RoIC 2.5 0.9 2.3 4.3

Valuation Ratios (x)

P/E NA NA NA NA

EV / EBITDA 13.8 15.5 12.5 9.7

EV / Net Sales 1.6 1.8 1.6 1.4

Market Cap / Sales 0.9 0.8 0.7 0.6

Price to Book Value 1.9 2.4 2.9 3.3

Solvency Ratios

Debt / EBITDA 5.9 9.9 7.5 5.7

Debt / Equity 1.4 3.6 4.2 4.5

Current Ratio 0.6 0.6 0.6 0.6

Quick Ratio 0.6 0.6 0.6 0.5





RATING RATIONALE

ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorises them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as

the analysts' valuation for a stock

Buy: >15%;

Hold: -5% to 15%;

Reduce: -5% to -15%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




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