VISIT NOTE 30 JUN 2018

Take Solutions
NOT RATED
INDUSTRY IT Niche ‘tech’
Take Solutions (TAKE) is a niche technology-led core. TAKE has a broad presence across therapeutic
CMP (as on 29 Jun 2018) Rs 227
service provider for the Life Sciences industry (91% of segments, clustered around the faster growing
Fair Value Rs 280 revenue). The company provides IP-based solutions in therapeutic segments (4 of top-5). TAKE’s presence
clinical, regulatory, safety and consulting processes to in LS is in specialised/functional areas (higher
Nifty 10,714
global Life science companies across multiple growth) as compared to IT services cos’ LS portfolio
Sensex 35,423 therapeutic areas. TAKE will benefit from (1) Large (TAKE’s LS business has grown at 37% CAGR vs 13%
KEY STOCK DATA addressable market (favourable global trends), (2) CAGR for tier-1 IT LS & healthcare over past 3 yrs).
Bloomberg TAKE IN Broad and high-growth portfolio (therapeutic
No. of Shares (mn) 148 segments) within Life science, (3) Strong growth  TAKE’s LS order-book stands at USD 179mn and has
visibility (order book, pipeline), and (4) Marquee grown >3.5x in the past three years (52/32% CAGR
MCap (Rs bn) / ($ mn) 34/490
clients (9 of top 10 global pharma giants) with low over 3/5 years). We have factored 30% CAGR in LS
6m avg traded value (Rs mn) 118
client concentration risk. order-book over FY18-20E, supported by a strong
STOCK PERFORMANCE (%) deal pipeline (currently at 2.5x order book). Clinical
We expect TAKE’s USD revenue/EPS CAGR at 20/22%
52 Week high / low Rs 308/125 over FY18-20E, factoring 24/30% CAGR in Life Sciences segment (29% of revs) is expected to drive growth
3M 6M 12M revenues/order book (37/53% CAGR in the trailing ahead supported by wins across Phase-II, III, IV and
Absolute (%) 38.7 40.9 45.9 three years). TAKE trades at 15.7/13x FY19/20E EPS. its ‘One Clinical’ platform.
Relative (%) 31.3 36.9 31.1 Based on 16x FY20E EPS, TAKE’s fair value is Rs 280,
 Focus for TAKE is mid-to-small innovator
supported by (1) ~15% RoIC and 22% EPS CAGR, (2)
SHAREHOLDING PATTERN (%) companies (a segment accounting for 48% of drug
Likely value unlocking (SCM business divestment), (3)
Promoters 66.80 launches). TAKE’s top-10 accounts concentration is
Midcap-IT valuations at 16.5x FY20E and global Life
FIs & Local MFs 1.29 substantially lower at 26% of revenue compared to
science tech/CRO valuations at 16x. Working capital
FPIs 13.41 intensity (an industry phenomenon) is a concern. midcap IT at ~50%.
Public & Others 18.50  TAKE’s Life Science (LS) business has a large Financial Summary
Source : BSE addressable market at USD 86bn with 37% YE March (Rs bn) FY16 FY17 FY18 FY19E FY20E
(expected to increase) of it being currently Net Sales 10.30 13.45 15.87 20.78 24.11
outsourced. Global pharma trends (in R&D spend, EBITDA 2.13 2.62 3.06 4.02 4.78
Apurva Prasad APAT 1.20 1.43 1.60 2.14 2.59
apurva.prasad@hdfcsec.com Patent cliff, New Molecular Entities approval) are
Diluted EPS (Rs) 9.0 10.7 11.7 14.5 17.5
+91-22-6171-7327 favourable for TAKE. LS R&D outsourcing is P/E (x) 25.3 21.1 19.3 15.7 13.0
supported by factors like (1) Reduction in cost of EV / EBITDA (x) 16.6 13.2 10.7 8.4 7.0
Amit Chandra drug development, (2) Lower time-to-market, and RoE (%) 20.7 18.6 14.3 15.1 15.9
amit.chandra@hdfcsec.com
+91-22-6171-7345 (3) Increasing management bandwidth to focus on Source: Company, HDFC sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
 TAKE SOLUTIONS : VISIT NOTE

TAKE’s Addressable Market USD 33bn

Drug Pre-Clinical Clinical Trials (Ph Regulatory Outsourced
Drug Life cycle Post Approval
Discovery Trials I-IV) Approvals Market
Duration ~5 years ~ 1 year ~ 7 years ~ 1.5 years Continuous
BASIC R&D
Molecule formulation
identified to combat disease
Life science segment 91% of CLINICAL TRIALS USD 28bn
TAKE’s revenue Molecule testing for safety
and efficacy
REGULATORY SUBMISSION USD 3bn
Findings submitted to
regulator at each stage
SAFETY MONITORING USD 2bn
Molecule monitored for
adverse events across stages
MANUFACTURING
Approved Drugs Mass
produced
Source: Company, HDFC sec Inst Research, Note: Shaded region represents TAKE’s presence

TAKE’s LS Service Mix

Within Life science, Clinical
29% of rev, Regulatory &
Safety 59% of rev and
Consulting 12% of rev
SEGMENTS
Clinical
Strategic Clinical Consulting
Full service clinical trials (Phase
2-3 Trials)
Medical imaging services
BA-BE Studies (Generics)
Biologics & Biosimilar studies
Non-interventional studies
Clinical data services
One Clinical
% of Revenue
29%
Source: Company, HDFC sec Inst Research
Regulatory
Strategic Regulatory Consulting
Submission & Report publishing
Labeling & Artwork services
Labeling assessment express
Regulatory information
management
License maintenance
Regulatory strategy & support
Regulatory industry network
20%
59%
Safety
Strategic Safety consulting
Safety industry networks
End-to-end pharmacovigilance
services
Pharmacovigilance technology
39%
Consulting
Strategic clinical consulting
Strategic regulatory consulting
Strategic safety consulting
Medical governance
Medical devices
12%

Page | 2
 TAKE SOLUTIONS : VISIT NOTE

Global Pharma R&D Expenditure Trend Worldwide Pharma Sales at Risk From Patent
Expiration
(USD bn) (USD bn) 10-yr AVG
220 80
70
200
60
180 50

160 40

204
199

67
194
30

188
183
140

177

52

51
172
165

43
20

41
39

39
34

32
31
31
29
120

27
24
10

18

17
17
100 0

CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18E
CY19E
CY20E
CY21E
CY22E
CY23E
CY24E
CY17

CY18E

CY19E

CY20E

CY21E

CY22E

CY23E

CY24E
Source: Evaluate Pharma, HDFC sec Inst Research Source: Evaluate Pharma, HDFC sec Inst Research

LS Revenue Growth vs IT Services (FY13-18 CAGR) Growth Projection In Worldwide Drug Sales by
TAKE’s presence in 4 of the Therapy Area (CY17-24 CAGR %)
top 5 therapy areas by 25% Immunosuppressants 15.7%
growth Dermatologicals 13.0%
Oncology 12.2%
20% Anti-fibrinolytics 7.1%
Vaccines 7.1%
Top 15 6.3%
15% Total Prescription & OTC 6.1%
Other 5.9%
Anti-hyperlipidaemics 5.5%
10% 20% Anti-coagulants 4.6%
17% Anti-diabetics 3.7%
15% Sensory Organs 3.2%
Bronchodilators 2.5%
5%
Anti-hypertensives 0.8%
Anti-rheumatics 0.2%
MS therapies -0.8%
0% Anti-virals -0.9%
TAKE Cognizant IT services aggregate
-4.0% 0.0% 4.0% 8.0% 12.0% 16.0%

Source: Company, HDFC sec Inst Research Source: Evaluate Pharma, Company, HDFC sec Inst Research

Page | 3
 TAKE SOLUTIONS : VISIT NOTE

TAKE’s Client Portfolio

Pfizer, Novartis are large

accounts

Source: Company

Page | 4
 TAKE SOLUTIONS : VISIT NOTE

Large addressable market in Pharma/Life science

Outsourcing share in Phase I
to IV expected to increase
from 37% to 45% in CY21
 Global trends in Life sciences/pharma is the large
macro-driver for TAKE with 91% of its revenue
derived from Life science industry.
 Global pharma R&D (USD 165bn in CY17) is expected
to grow at 3.1% CAGR over CY17-24E, as per Evaluate
Pharma. The CY17 spend included USD 86bn on
Phase I to Phase IV (addressable segment for TAKE)
clinical development in CY17, as per ISR.
 Outsourcing penetration stood at 37% for Phase I to
Phase IV as per ISR/PRA Health Science and expected
to increase to 45% by CY21.
 As per Quintiles, 225 NMEs (New molecular entities)
are expected to be approved over CY18-22E, as
compared to 208 over CY12-16, and 149 over CY07-
CY11.
 Development of a new drug takes anywhere from 10-
15 years, ~USD 2bn and exploration of 10-15,000
molecules in order to produce a single FDA-approved
drug. The core outsourcing proposition to address
this is (1) Reduction in cost of drug development, (2)
Lower time-to-market, and (3) Increasing
management bandwidth to focus on core.

 Worldwide prescription sales at risk from patent  Worldwide CRO (Clinical Research Organisation)
expiry stands at USD 251bn over CY18-24, as per market is expected to grow from USD 32bn in CY16 to
Evaluate Pharma. Replenishment of revenue lost USD 44bn in CY21 (7% CAGR) driven by R&D spend
from the patent cliff is a key driver for R&D spend in and increasing level of clinical development
Global Pharma. outsourcing.
TAKE’s Revenue Trend LS Segment Growth vs. Large IT Cos’ LS (YoY %)
Revenue (USD mn) Large IT LS segment growth TAKE's LS growth
400 50%
357 42.9%
350 308 36.2%
40%
300 31.4%
246
250 30%
200 22.0%
200 157 19.9%
20%
150 119
10.2%
100 10% 6.6%
3.8%
50
- 0%

FY15

FY16

FY17

FY18
FY15

FY16

FY17

FY18

FY19E

FY20E

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research, Large IT aggregate of
Cognizant, TCS, INFY, Wipro, HCLT

Page | 5
 TAKE SOLUTIONS : VISIT NOTE

Healthy order-book provides growth visibility

3.5x growth in LS order book
in last 3 years
 TAKE’s Life science (LS) order-book stands at USD
179mn and has grown >3.5x in the past three years
(52/32% CAGR over 3/5 years). The average contract
duration is 7 to 9 months.
 Within the LS order-book, Clinical segment comprises
~60% of the total LS order-book, Regulatory segment
comprises ~20% and Safety segment comprises ~20%.
Duration in clinical segment can be >1.5 years.
 We have factored 30% CAGR in the LS order-book
over FY18-20E, based on strong pipeline (currently at
2.5x order book), and supplemented by growing
pipeline in biosimilars. The recent surge in order-
book is supplemented by APAC geography.
 We’ve factored book-to-bill at 0.86/0.93x for
FY19/20E as compared to 0.87x currently (similar to
last 3 years’ average book-to-bill), based on our
expectation of faster growth in clinical order book
resulting in higher in annuity component ahead.
 TAKE is present in the higher growth segment within
the LS value chain. TAKE has increased its revenue-
share as compared to larger IT services peers’
healthcare & Life Science segments (including
Cognizant, TCS, Wipro, HCLT, INFY aggregate). TAKE’s
LS revenue has grown at 20% CAGR as compared to
15% CAGR for large IT services peers aggregate, over
last three years.
 TAKE’s LS offerings are more specialised and in
functional services (competes with CROs) as
compared to IT services’ LS portfolio that spans
across ADM, IMS.

TAKE’s LS Order-book Trend (USD mn) TAKE’s LS Revenue Growth Trend (USD mn)
350 400
300 335
350
250 284
300
200 250 217
150 303 200 165
235 150 121
100 179 85
132 100
50 90
43 50 50
-
-
FY14

FY15

FY16

FY17

FY18

FY19E

FY20E

FY15

FY16

FY17

FY18

FY19E

FY20E
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Page | 6

22 new logos added in FY18
taking the total client base to
400
Clinical segment expected to
drive growth ahead
TAKE positioned to avail
growth opportunities that
span across CRO and tech
platform providers
Strong client portfolio and lower client concentration risk
 TAKE’s active client base stands at 400 (22 logos
added in FY18) and it has provided solutions to 9 of
the top 10 global pharma companies. Contribution
from top-10 accounts of TAKE is substantially lower at
26% of revenue as compared to midcap IT at ~50% of
revenue.
 The focus area for the company is mid-to-small
innovator companies (USD 1 to 5bn revenue), which
offers a large addressable opportunity based on
higher growth in R&D spend and lower investments
in captives. As per the company, small and midsize
pharma companies comprised 48% of drug launch
over FY15-17.
 TAKE’s focus on longer tenure service contract with
high annuity component is expected to improve the
book-to-bill ahead (expected to trend to 1x from
0.87x currently).
 Clinical segment is expected to drive growth ahead
driven by wins across Phase-II/III/IV studies and ‘One
TAKE’s Services Mix in LS
Consulting
11%
Clinical
29%
Regulatory
59%
Source: Company, HDFC sec Inst Research
TAKE SOLUTIONS : VISIT NOTE
Clinical’ platform. The segment contributes 29% to
revenue and management expects its share to
increase to 50-60% of revenue in three years
supported by growth in clinical trials and BA-BE
studies.
 Growth in the regulatory segment driven by
increased compliance to regulatory changes and on
vendor consolidation.
 TAKE’ positioning is between a full-fledged CRO
(Quintile) and a Life Science platform provider
(Medidata). Medidata (USD 546mn rev) has grown at
20% CAGR over the trailing 10 years (17.6% trailing 3-
year CAGR) and has guided for 18-20% CAGR over
CY17-20E.
 Medidata has a higher book-to-bill (1.6x) than TAKE,
based on higher annuity-based contract. Quintiles is
the largest competition at USD 8bn revenue (2nd
largest CRO after LabCorp) as TAKE competes with
CROs in its clinical segment.
Top Client % of Revenue
Top-5
17%
Top-6 to 10
9%
Non top 10
74%
Source: Company, HDFC sec Inst Research
Page | 7
 TAKE SOLUTIONS : VISIT NOTE

Strong delivery and presence in high-growth therapy segments

 TAKE has a global delivery presence (total 1,600 has presence across 18 therapeutic areas which are
employees) with 800 employees located in India segments that have the highest growth rate. TAKE
(~600 in Chennai) and 400 each in US and Europe. has presence in 5 of the top 6 fastest growing
Nearly 30% of TAKE’s talent pool consists of therapy areas such as Immunosuppressant,
TAKE’s presence in Oncology, and Dermatology.
specialist from Pharma sector (Doctors, PhD and
therapeutic segments have Pharma graduates).
the highest growth rate  TAKE’s acquisitions have been aimed at expanding
 Within the India strength, ~350 are in Clinical the service offering and geographical presence. WCI
segment operating largely from Bangalore and Consulting, acquired in FY11, improved the
Mangalore centers. company’s consulting practice and expanded its
 TAKE’s delivery was augmented by its acquisition of presence in Europe.
Ecron Acunova in FY16. TAKE has expanded its
facility in Chennai, Columbia and continues to add  Ecron Acunova, acquired in 2015, further
subject-matter experts to augment consulting. strengthened its presence in Europe with a larger
addressable market in the clinical segment (doubled
 TAKE specializes in therapeutic areas such as TAKE’s total addressable market with expertise in
Revenue spans across oncology which accounts for 12% of global biosimilars). The recent capital infusion of Rs 2.5bn
geographies including US prescription sales and 33% of incremental growth by preferential placement to promoters will be
(80%), APAC (13%) and over CY16-22E, as per Evaluate Pharma. TAKE also utilised for inorganic expansion.
Europe (7%)
Revenue by Geography TAKE’s Employee-Mix
Science Others CA
Europe
MBA Engg 38 13
6.5%
129 graduates Arts &
67
Doctors & Science
APAC PhDs Grads
13.4% 136 319

Science - Pharma
Post grads Grads
165 281
Computer
Engg
US graduates
80.1% 252

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Page | 8
 TAKE SOLUTIONS : VISIT NOTE

Peer Comparison
MCap P/E (x) EV/EBITDA (x) RoE (%) EPS CAGR%
Company
(USD mn) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18-20
Take Solutions 490 19.3 15.7 13.0 10.7 8.4 7.0 14.3 15.1 15.9 22%
India Tier-1 IT* 18.4 17.1 15.4 13.1 11.8 10.4 23.6 23.2 23.3 9%
India Midcap IT* 23.2 19.9 16.5 16.0 13.0 10.6 22.6 22.4 23.4 18%

High receivable days of peers Global Peer-set

such as Quintile, PRA, Veeva IQVIA Holdings (Quintiles) 20,068 18.3 16.2 14.4 13.6 12.6 11.7 12.9 14.7 16.1 13%
PRA Health Sciences 5,944 22.5 19.3 16.9 16.3 14.2 12.7 20.8 22.2 23.9 16%
Syneos Health 4,815 17.4 14.9 13.0 12.9 11.6 10.6 9.1 10.1 10.8 15%
Charles River Lab 5,329 19.1 17.0 15.4 12.0 10.7 10.1 21.6 20.0 18.8 11%
Veeva 10,930 83.4 55.6 47.8 44.0 35.7 30.6 18.3 24.8 18.8 32%
Medidata 4,688 48.9 38.6 30.4 29.0 22.4 18.3 13.8 16.3 15.8 27%
Global CROs & Life Science Tech^ 20.8 18.2 16.1 14.9 13.4 12.2 16.1 18.2 17.4 15%
Source: HDFC sec Inst Research, Bloomberg, ^ Median, * Mean

Rs 2.5bn equity infusion for

Key Assumptions
acquisitions
Particulars FY14 FY15 FY16 FY17 FY18 FY19E FY20E
Life Science Revenue Growth (%) (6.0) 3.8 42.9 36.2 31.4 30.9 18.0
SCM Revenue Growth (%) (18.7) (35.1) 4.5 (2.7) (16.8) (17.0) (6.9)
Life Science Order book Growth (%) (3.8) 17.5 78.2 46.8 36.2 31.1 28.6
Total Revenue Growth (%) (11.5) (11.6) 31.7 27.2 22.9 25.2 16.0
USD-INR Rate (Rs) 60.4 61.2 65.5 67.2 64.5 67.5 67.5
EBITDA margin 13.2% 15.1% 20.7% 19.5% 19.3% 19.3% 19.8%
Source: HDFC sec Inst Research
TAKE’s residual SCM business
(USD 26mn revenue) SCM Business Divestment Sensitivity Key Risk
expected to be divested in Current Post Divestment Impact %  Contract termination by large accounts and increase in
FY19 Revenue (USD mn) 357 335 -6.3% DSO is a downside risk
EBITDA margin (%) 19.8% 21.3% 144bps
 Unfavourable acquisition is a downside risk to
EPS (Rs) 17.5 18.2 3.8%
earnings, however TAKE’s historical acquisitions (0.8-
Source: HDFC sec Inst Research, FY20 estimates
1.2x EV/rev) suggests prudence
 Sale of the residual SCM business is expected to be
~4% earnings accretive, assuming deal valuation at 0.5x  Increase in tax rate (currently 15% ETR) is a risk to
revenue earnings

Page | 9
 TAKE SOLUTIONS : VISIT NOTE

Income Statement(Consolidated) Balance Sheet (Consolidated)

Year ending March (Rs bn) FY16 FY17 FY18 FY19E FY20E Year ending March (Rs bn) FY16 FY17 FY18 FY19E FY20E
Net Revenues (USD mn) 157 200 246 308 357 SOURCES OF FUNDS
Growth (%) 31.7% 27.2% 22.9% 25.2% 16.0% Share Capital - Equity 0.12 0.13 0.15 0.15 0.15
Net Revenues 10.30 13.45 15.87 20.78 24.11 Reserves 6.19 8.98 13.14 14.99 17.30
Growth (%) 41.0% 30.5% 18.0% 31.0% 16.0% Total Shareholders Funds 6.31 9.11 13.28 15.14 17.45
Direct Expenses 5.75 7.83 9.03 11.88 13.78 Minority Interest 0.40 0.42 0.08 0.08 0.08
SG&A Expenses 2.42 2.99 3.77 4.88 5.55 Long Term Debt 0.68 0.49 0.55 0.55 0.55
EBITDA 2.13 2.62 3.06 4.02 4.78 Short Term Debt 2.50 1.72 2.53 2.53 2.53
EBITDA Margin (%) 20.7% 19.5% 19.3% 19.3% 19.8% Total Debt 3.18 2.21 3.08 3.08 3.08
EBITDA Growth (%) 93.7% 23.0% 16.8% 31.2% 19.0% Net Deferred Taxes 0.20 0.20 0.30 0.30 0.30
Depreciation 0.74 0.87 1.04 1.45 1.69 Long Term Provisions & Others 0.11 0.12 0.04 0.05 0.06
EBIT 1.39 1.75 2.02 2.56 3.10 TOTAL SOURCES OF FUNDS 10.20 12.05 16.79 18.66 20.97
Other Income (Including EO Items) 0.21 0.13 0.06 0.21 0.24 APPLICATION OF FUNDS
Interest 0.15 0.23 0.21 0.25 0.29 Net Block 2.87 3.19 3.49 4.76 5.61
PBT 1.45 1.65 1.88 2.52 3.04 CWIP 0.02 0.06 0.01 0.01 0.01
Tax (Incl Deferred) 0.20 0.19 0.28 0.38 0.46 Goodwill & intangibles 2.56 2.50 2.81 2.81 2.81
Minority Interest 0.05 0.03 (0.01) - - Investments 0.20 0.07 0.07 0.06 0.06
RPAT 1.20 1.43 1.60 2.14 2.59 LT Loans & Advances 0.22 0.08 0.24 0.26 0.27
APAT 1.20 1.43 1.60 2.14 2.59 Total Non-current Assets 5.87 5.90 6.62 7.90 8.77

APAT Growth (%) 71.2% 19.6% 12.2% 33.5% 20.8% Debtors 3.01 4.36 4.69 5.98 6.74
Inventories 0.22 0.17 0.17 0.22 0.25
Adjusted EPS (Rs) 9.0 10.7 11.7 14.5 17.5
Other Current Assets 1.73 2.12 2.98 3.64 4.10
EPS Growth (%) 70.8% 19.5% 9.4% 23.3% 20.8%
Source: Company, HDFC sec Inst Research Cash & Equivalents 1.30 1.13 3.94 2.93 3.32
Total Current Assets 6.26 7.79 11.78 12.76 14.42
Creditors 0.50 0.46 0.49 0.65 0.75
Other Current Liabilities & Prov. 1.43 1.18 1.12 1.36 1.46
Total Current Liabilities 1.93 1.64 1.61 2.01 2.21
Net Current Assets 4.33 6.15 10.16 10.75 12.21
TOTAL APPLICATION OF FUNDS 10.20 12.05 16.79 18.66 20.97
Source: Company, HDFC sec Inst Research

Page | 10
 TAKE SOLUTIONS : VISIT NOTE

CashFlow(Consolidated) Key Ratios(Consolidated)

Year ending March (Rs bn) FY16 FY17 FY18 FY19E FY20E FY16 FY17 FY18 FY19E FY20E
Reported PBT 1.45 1.65 1.88 2.52 3.04 PROFITABILITY (%)
GPM 44.2 41.8 43.1 42.8 42.8
Non-operating & EO items 0.02 0.10 (0.12) (0.00) (0.00)
EBITDA Margin 20.7 19.5 19.3 19.3 19.8
Interest expenses 0.15 0.23 0.21 0.25 0.29
APAT Margin 11.6 10.6 10.1 10.3 10.7
Depreciation 0.74 0.87 1.04 1.45 1.69 RoE 20.7 18.6 14.3 15.1 15.9
Working Capital Change (0.29) (3.61) (1.21) (1.61) (1.06) RoIC (or Core RoCE) 15.7 15.6 14.5 15.3 15.8
Tax Paid (0.20) (0.19) (0.28) (0.38) (0.46) RoCE 14.8 14.7 12.3 13.3 14.3
OPERATING CASH FLOW ( a ) 1.87 (0.94) 1.52 2.24 3.51 EFFICIENCY
Tax Rate (%) 13.9 11.4 15.0 15.0 15.0
Capex (1.50) (1.36) (1.56) (1.53) (1.54)
Fixed Asset Turnover (x) 1.7 2.1 1.9 2.1 2.1
Free cash flow (FCF) 0.37 (2.30) (0.04) 0.71 1.97
Inventory (days) 8 5 4 4 4
Investments (0.15) 0.10 (0.15) 0.01 - Debtors (days) 107 118 108 105 102
INVESTING CASH FLOW ( b ) (1.65) (1.26) (1.72) (1.52) (1.54) Other Current Assets (days) 61 58 69 64 62
Debt Issuance/(Repaid) 1.59 (0.97) 0.87 - - Payables (days) 18 12 11 11 11
Interest Expenses (0.15) (0.23) (0.21) (0.25) (0.29) Other Current Liab & Provns (days) 51 32 26 24 22
Cash Conversion Cycle (days) 107 136 143 137 134
FCFE 1.81 (3.50) 0.62 0.45 1.67
Debt/EBITDA (x) 1.5 0.8 1.0 0.8 0.6
Share Capital Issuance 0.00 1.81 2.51 0.00 -
Net D/E (x) 0.9 0.4 (0.3) 0.0 (0.1)
Dividend (0.15) (0.16) (0.18) (0.18) (0.18) Interest Coverage (x) 9 8 10 10 11
FINANCING CASH FLOW ( c ) 1.29 0.45 3.01 (0.43) (0.47) PER SHARE DATA (Rs)
NET CASH FLOW (a+b+c) 1.52 (1.75) 2.81 0.29 1.50 EPS 9.0 10.7 11.7 14.5 17.5
Closing Cash & Equivalents 1.30 1.13 3.94 2.93 3.32 CEPS 13.1 15.6 17.9 24.3 28.9
Source: Company, HDFC sec Inst Research Dividend 1.0 1.0 1.6 1.6 1.6
Book Value 43 62 90 102 118
VALUATION
P/E (x) 25.3 21.1 19.3 15.7 13.0
P/BV (x) 5.3 3.7 2.5 2.2 1.9
EV/EBITDA (x) 16.6 13.2 10.7 8.4 7.0
EV/Revenues (x) 3.4 2.6 2.1 1.6 1.4
OCF/EV (%) 5.3 -2.7 4.6 6.6 10.5
FCF/EV (%) 1.1 -6.6 -0.1 2.1 5.9
FCFE/Mkt Cap (%) 5.4 -10.4 1.9 1.3 5.0
Dividend Yield (%) 0.4 0.4 0.7 0.7 0.7
Source: Company, HDFC sec Inst Research

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1YR PRICE MOVEMENT

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Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

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Disclosure:
We, Apurva Prasad, MBA & Amit Chandra, MBA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject
issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to
the specific recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have
beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities
Ltd. or its associate does not have any material conflict of interest.
Any holding in stock –No
HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon
information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its
accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their
securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or
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If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced,
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Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition,
investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail
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HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report,
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deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.

HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve
months.
HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or
co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business.
HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor
Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any
compensation/benefits from the subject company or third party in connection with the Research Report.

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022)
2496 5066
Compliance Officer: Binkle R. Oza Email: complianceofficer@hdfcsec.com Phone: (022) 3045 3600

HDFC Securities Limited, SEBI Reg. No.: NSE-INB/F/E 231109431, BSE-INB/F 011109437, AMFI Reg. No. ARN: 13549, PFRDA Reg. No. POP: 04102015, IRDA Corporate Agent License No.: HDF 2806925/HDF
C000222657, SEBI Research Analyst Reg. No.: INH000002475, CIN - U67120MH2000PLC152193

Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.

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HDFC securities
Institutional Equities
Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,
Senapati Bapat Marg, Lower Parel,Mumbai - 400 013
Board : +91-22-6171 7330www.hdfcsec.com
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