3QFY2013 Result Update | Capital Goods

February 5, 2013

Jyoti Structures
Performance Highlights
Quarterly Highlights (Standalone)
(` cr) Revenue EBITDA EBITDA margin (%) Reported PAT 3QFY13 620 63 10.1 13 3QFY12 587 59 10.1 14 % chg (yoy) 5.5 5.2 (3)bp (3.0) 2QFY13 593 57 9.7 12 % chg (qoq) 4.5 9.3 44bp 12.3

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Capital Goods 333 506 1.4 59/36 118,020 2 19,660 5,957 JYTS.BO JYS@IN

`41 `49
12 Months

Source: Company, Angel Research

For 3QFY2013, Jyoti Structures (Jyoti)s top-line performance was in-line with our expectations, posting a subdued 5.5% yoy growth to `620cr due to slow execution and revenue deferrals. However, the Management is confident of strong execution in 4QFY2013 as the company has received clearances for its upcoming projects. The EBITDA margin came in flat yoy at 10.1%. Jyotis interest coverage multiple remains under stress, declining from 2.0x in 4QFY2012 to 1.6x presently. The increase in receivables has led to higher working capital borrowing, elevating the interest cost. Consequently, the PAT declined by 3.0% yoy to `13cr. Weak order inflow: The company reported weak order inflow of `433cr in 3QFY2013. However, the Management believes order inflow will improve going forward as the company expects few orders from PGCIL and overseas markets to be finalized soon. Jyotis order backlog stood at `4,605cr, up 7.1% yoy implying an order coverage of 1.8x trailing four quarter revenues. The order backlog was spread across transmission (57%), substation (14%) and rural electrification (29%) segments. Client-wise, the backlog mainly comprised of orders by PGCIL (26%), West Bengal (14%), Maharashtra (27%), Madhya Pradesh (4%), overseas (20%) and the private sector (3%). The company received major orders from Nigeria and Kenya, which boosted its overseas segments contribution to the top-line. Outlook and valuation: Jyotis robust order book and recent focus to scale up its overseas operation to insulate itself from domestic headwinds will benefit the company in the medium to long term. The stock is currently trading at 3.7x our FY2014E EPS. Given the attractive valuation, we maintain our Buy rating on the stock, assigning a multiple of 4.5x FY2014E EPS, to arrive at a target price of `49.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 27.8 18.7 13.8 39.7

Abs. (%) Sensex JYS

3m 4.8

1yr 11.7

3yr 24.5 (74.6)

(6.5) (16.6)

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 2,400 12.7 100 18.4 11.2 12.1 3.3 0.6 19.5 26.3 0.3 2.7

FY2012 2,678 11.6 92 (8.0) 11.0 11.2 3.6 0.5 16.2 24.8 0.3 2.9

FY2013E 2,802 4.6 63 (31.5) 9.5 7.7 5.3 0.5 10.0 19.2 0.3 3.5

FY2014E 3,074 9.7 89 42.1 9.8 10.9 3.7 0.4 12.8 20.3 0.3 3.0

Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

Jyoti Structures | 3QFY2013 Result Update

Exhibit 1: Quarterly performance (Standalone)

(` cr) Net Sales Other operating income Total income Stock adjustments Raw Material (% of total income) Erection and sub contracting exp. (% of total income) Employee Cost (% of total income) Other Expenses (% of total income) Total Expenditure EBITDA (EBITDA %) Interest Depreciation Other Income PBT (% of total income) Total Tax (% of PBT) Reported PAT (PAT %) EPS (`)
Source: Company, Angel Research

3QFY13
619 1 620 4 371 60.6 109 17.7 20 3.2 52 8.4 557 63 10.1 38 6 1 19 3.3 7 33.5 13 2.2 1.6

3QFY12
587 0 587 (7) 276 45.8 166 28.3 19 3.3 73 12.5 527 59 10.1 35 6 3 22 3.7 8 36.1 14 2.4 1.7

% chg (yoy)
5.3 5.5 34.6 1482.1 (34.2) (1067.2) 4.0 (28.9) (406.7) 5.6 5.2 10.4 5.6 (76.2) (13.1) (13.3) (3.0)

2QFY13
592 1 593 4 320 54.6 125 21.0 23 3.8 64 10.8 535 57 9.7 35 6 2 18 3.0 6.0 33.6 12 2.0 1.5

% chg (qoq)
4.5 4.5 16.2 (12.2) (12.0) (19.1) 4.0 9.3 8.6 (1.9) (72.1) 4.4 12 12.3 12.3

9MFY13
1,864 3 1,867 19 1,041 56.7 381 20.4 66 3.5 177 9.5 1,684 184 9.8 107 19 3 61 3.3 21 35.1 40 3.8 5.2

9MFY12
1,857 1,857 (20) 1,017 53.7 411 22.1 59 3.2 192 10.3 1,659 198 10.6 93 17 6 94 5.1 32 33.9 62 6.1 7.6

% chg (yoy)
0.4 0.6 2.3 (7.2) 10.6 (7.7) 1.5 (7.0) 15.9 10.0 (34.9) (32.7) (36.1) (31.3)

Exhibit 2: Actual vs Estimates

(` cr) Revenue EBITDA PAT
Source: Company, Angel Research

Actual 620 63 13

Estimates 617 65 18

Var (%) 0.5 (3.4) (25.1)

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Exhibit 3: Trend in revenues

800 700 600 500 400 300 551 722 638 632 587 735 655 593 620 200 100 0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 7.9 31.8 16.5 13.0 6.5 1.9 2.7 (6.2) 5.5 35 30 25 20 15 10 5 0 (5) (10)

Exhibit 4: Trend in EBITDA

90 80 70 60 50 40 30 20 63 84 70 68 59 82 64 57 10 0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 6 4.1 3.5 2.4 2.6 2.0 2.2 4.3 5 4 3 2 25 35 26 22 14 31 17 12 13 1 0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 63 11.4 11.6 14 11.0 10.8 10.1 11.2 9.8 9.7 10.1 12 10 8 6 4 2 0

Sales (` cr, LHS)

Growth (yoy %, RHS)

EBITDA (` cr, LHS)

EBITDAM (%, RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Subdued revenue growth

Jyotis revenues were in-line with our expectations, posting a subdued 5.5% yoy growth to `620cr. The EBITDA margin came in flat at 10.1%. Jyotis interest coverage multiple remains under stress, declining from 2.0x in 4QFY2012 to 1.6x presently. The increase in receivables has led to higher working capital borrowing, elevating the interest cost. Consequently, the PAT declined by 3.0% yoy to `13cr. The debtor days continue to be as high as 228 days, mainly due to pending receivables from Maharashtra (`250cr), Tamil Nadu (`68cr) and Rajasthan (`58cr) discoms. In light of the deteriorating working capital cycle (higher levels of working capital borrowing), we expect interest costs to remain elevated going forward.

Exhibit 5: Interest coverage ratio

3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 1.7 2.5 3.2 3.1 3.0 2.6 2.2 2.0 1.9 1.6

Exhibit 6: Trend in PAT

40 35 30 25 20 15 10 5 4.5 4.8

Adj. PAT (` cr, LHS)

PATM (%, RHS)

Source: Company, Angel Research

Source: Company, Angel Research

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Order inflow expected to remain stable, although weak for quarter

The company reported weak order inflow of `433cr in 3QFY2013. However, the Management believes order inflow will improve going forward as the company expects few orders from PGCIL and overseas markets to be finalized soon. Jyotis order backlog stood at `4,605cr up 7.1% yoy implying an order coverage of 1.8x trailing four quarter revenues. The order backlog was spread across transmission (57%), substation (14%) and rural electrification (29%) segments. Client-wise, the backlog mainly constituted of orders by PGCIL (26%), West Bengal (14%), Maharashtra (27%), Madhya Pradesh (4%), overseas (20%) and the private sector (3%). The company received major orders from Nigeria and Kenya which boosted its overseas segments contribution to the top-line.

Exhibit 7: Order Book coverage ratio

2.0 1.9 1.9 1.8 1.8 1.7 1.7 1.6 1.6 1.5 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 1.9 1.9 1.8 1.8 1.7 1.7 1.7 1.8 1.9

Exhibit 8: Order backlog growth

5,000 4,800 4,600 4,400 4,200 4,000 3,800 3,600 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 1.7 4,100 4,500 4,470 8.4 8.9 2.9 4.9 2.9 9.7 7.1 17 12 7 2 4,375 4,300 4,340 (3.6) 4600 4800 4605 -3 -8

Order backlog

Growth (yoy %, RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Investment arguments
Growth opportunity on cards: Globally the thumb rule entails that for every rupee invested in generation, an equivalent amount is to be invested in transmission and distribution (T&D). However, India has spent only 50% on T&D of what has been spent on generation in recent years, thus creating a huge opportunity for players in the T&D space. PGCIL has envisaged a T&D capex of `1 lakh cr for the 12th plan, 55% of which is expected to be deployed in transmission and substation projects, thus providing an array of opportunities for Jyoti, given its strong foothold in the T&D segment. Diversification to gradually materialize: Jyoti has been actively tapping the overseas markets by entering into JVs in South Africa and the Gulf. In addition, the company recently forayed into the US by setting up a transmission tower plant (revenue potential of ~`340cr annually - @100% capacity utilization). We believe these ventures will benefit the company in the long run, thereby insulating it from domestic headwinds. Outlook and valuation: Jyotis robust order book and recent focus to scale up its overseas operation to insulate itself from domestic headwinds will benefit the company in the medium to long term. The stock is currently trading at 3.7x our FY2014E EPS. Given the attractive valuations, we maintain our Buy rating on the stock, assigning a multiple of 4.5x FY2014E EPS, to arrive at a target price of `49.

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Exhibit 9: Peer comparison

Company ABB* BHEL BGR Energy Crompton Greaves JSL KEC International Thermax Reco. Reduce Neutral Neutral Buy Buy Buy Neutral CMP (`) 658 212 237 105 41 59 580 Tgt. price (`) 573 129 49 75 Upside (%) (12.9) 23.0 20.8 27.9 P/BV(x) FY13E 5.2 2.6 9.6 1.8 0.5 1.3 3.7 FY14E 4.6 2.2 8.8 1.7 0.4 1.1 3.3 P/E(x) FY13E 75.7 8.8 9.6 31.7 5.3 10.9 21.4 FY14E 29.8 10.2 8.8 15.2 3.7 7.0 19.2 FY2012-14E EPS CAGR 59.1 (15.3) (7.1) 8.7 (1.4) 1.8 (5.5) RoE (%) FY13E 7.1 32.9 0.0 5.8 9.6 17.0 18.5 FY14E 16.5 23.6 0.0 11.5 12.1 22.8 18.2

Source: Company, Angel Research;*Note: December year ending

Exhibit 10: One year forward PE Band

350 300 250 200 150 100 50 0 May-07 May-08 May-09 May-10 May-11 May-12 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 16x Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Share Price (`) Source: Company, Angel Research

4x

8x

12x

Company background
Jyoti is one of the leading EPC players in the transmission line and substation segments with business presence across transmission line towers, substation and rural electrification. The company offers a wide range of services in design, engineering, tower testing, manufacturing, construction and project management. In addition to its strong domestic presence, Jyoti is also exploring T&D capex opportunities on the global front through recent overseas JVs and investments (Jyoti America and Gulf Jyoti).

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Profit and loss statement (Consolidated)

Y/E March (` cr) Operating income % chg Total Expenditure Raw Materials Mfg costs Personnel Costs Other Costs EBITDA % chg (% of Net Sales) Depreciation& Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of asso. Less: Minority interest (MI) Prior period items PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 1,839 33.9 1,632 1,204 220 46 162 208 18.0 11.3 10 198 17.2 10.7 69 6 4.2 134 9.0 0 134 49 36.7 85 0 85 85 14.2 4.6 10.4 10.4 13.5 2,130 15.8 1,901 1,250 378 72 201 229 10.2 10.7 18 211 6.7 9.9 80 6 4.6 138 2.3 1 137 53 38.7 83 0 83 84 (0.9) 4.0 10.3 10.3 (1.3) 2,400 12.7 2,132 1,345 459 77 250 268 17.2 11.2 21 247 17.1 10.3 96 5 3.1 156 13.5 0 156 56 36.1 100 0 (0) 100 100 18.4 4.2 12.1 12.1 18.2 2,678 11.6 2,383 1,370 620 101 292 295 10.1 11.0 23 272 10.2 10.2 144 8 5.5 136 (12.9) 0 136 43 31.6 93 1 92 92 (8.0) 3.4 11.2 11.2 (8.0) 2,802 4.6 2,534 1,556 594 104 280 267 (9.4) 9.5 27 240 (11.7) 8.6 154 7 7.5 93 (31.5) 0 93 30 32.5 63 0 63 63 (31.5) 2.2 7.7 7.7 (31.5) 3,074 9.7 2,772 1,702 649 114 307 302 12.9 9.8 31 271 12.7 8.8 147 9 6.8 132 42.1 0 132 43 32.5 89 0 89 89 42.1 2.9 10.9 10.9 42.1

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Balance sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Deferred Tax Asset Current Assets Cash Loans & Advances Inventories Debtors Others Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 190 55 135 4 17 1,133 39 228 153 712 550 583 1 740 244 69 175 2 17 1,350 54 185 247 863 665 684 0 878 283 87 196 8 17 1,572 67 181 231 1,093 764 808 42 1,071 325 106 219 177 22 2,141 54 220 295 1,569 4 1,085 1,057 56 1,423 365 133 232 177 22 1,857 38 213 258 1,347 719 1,138 56 1,518 420 164 256 177 22 2,001 26 212 348 1,415 836 1,164 56 1,566 16 402 419 313 9 740 16 475 491 369 18 878 16 560 576 449 18 1,071 16 644 660 1 581 12 1,423 16 697 714 1 635 12 1,518 16 777 793 1 609 12 1,566 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Cash Flow statement (consolidated)

Y/E March (` cr) Profit before tax Depreciation (Inc)/Dec in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec.in Fixed Assets (Inc.)/Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 134 10 (70) (6) (49) 20 (80) (7) 6 (81) 0.1 88 (9) 7 79 25 14 39 138 18 (86) (6) (53) 10 (58) 0 6 (52) 0.1 56 (10) 10 47 15 39 54 156 21 (110) (5) (56) 6 (50) 0 5 (45) 0.0 80 (14) (12) 65 13 54 67 136 23 (198) (8) (43) (90) (211) (5) 8 (208) 0 273 (10) 21 263 (13) 67 54 93 27 (97) (7) (30) (14) (40) 0 7 (33) 0.0 54 (10) (13) 44 (16) 54 38 132 31 (39) (9) (43) 73 (55) 0 9 (46) 0.0 (26) (10) (4) (35) (12) 38 26

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets OB/Sales Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis(%) EBIT margin Tax retention ratio (%) Asset turnover (x) RoIC (Pre-tax) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) (X) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to Equity Net debt to EBITDA Interest Coverage 0.7 1.3 2.9 0.6 1.4 2.6 0.7 1.4 2.6 0.9 1.8 1.9 0.9 2.2 1.6 0.8 1.9 1.8 12.1 23 120 91 101 9.8 34 135 111 101 9.1 36 149 116 104 8.8 36 181 134 119 8.1 36 190 122 137 7.8 36 164 95 133 30.2 31.7 22.6 26.1 27.8 18.6 26.3 27.8 19.5 24.8 26.1 16.2 19.2 20.3 10.0 20.3 21.3 12.8 10.7 63.3 2.9 31.5 19.9 16.2 0.6 22.4 9.9 61.3 2.8 27.7 17.0 14.3 0.6 18.7 10.3 63.9 2.7 27.7 17.7 14.9 0.7 19.6 10.2 68.4 2.4 24.0 16.4 19.1 0.8 14.3 8.6 67.5 2.1 17.6 11.9 17.1 0.9 7.3 8.8 67.5 2.1 18.7 12.6 16.0 0.8 9.8 10.4 10.4 11.6 0.9 51.3 10.3 10.3 12.5 1.0 59.8 12.1 12.1 14.7 1.5 70.1 11.2 11.2 14.0 1.0 80.3 7.7 7.7 11.0 1.0 86.8 10.9 10.9 14.7 1.0 96.5 3.9 3.5 0.8 2.2 0.3 2.9 0.8 2.0 3.9 3.3 0.7 2.5 0.3 2.8 0.7 1.9 3.3 2.8 0.6 3.7 0.3 2.7 0.7 1.9 3.6 2.9 0.5 2.5 0.3 2.9 0.7 1.6 5.3 3.7 0.5 2.5 0.3 3.5 0.7 1.7 3.7 2.8 0.4 2.5 0.3 3.0 0.7 0.0 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 5, 2013

Jyoti Structures | 3QFY2013 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Jyoti Structures No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 5, 2013

10