22032016115700JK Tyre Intiating Coverage

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JK Tyre Industries

BUY
Target Price `153

CMP `84

FY18E P/E 3.29X

JK Tyre & Industries Ltd. (JK Tyre), a part of the JK Group of


Sensex
25,285 Companies, is a leading tyre manufacturer in India. It enjoys a
Nifty
7,704 leadership position in the domestic radial tyres segment with a market
Industry
Tyres share of 31% (as at end FY15). It has 9 manufacturing plants -- 6 in India
and 3 in Mexico, through its subsidiary Tornel, which it acquired in 2008.
JK Tyre is in a sweet spot with the fall in crude oil prices and vehicle
sales showing signs of a recovery. We are optimistic about the company
Scrip Details
MktCap (` cr)
1916.6 given that:
BVPS (`)

61.7
22.6
0.25
133/77
1.8
2.0

O/s Shares (Cr)


AvVol(Cr)
52 Week H/L
Div Yield (%)
FVPS (`)

Shareholding Pattern
Shareholders
Promoters
DIIs
FIIs
Public
Total

%
52.3
1.7
10.5
35.5
100.0

JK Tyres vs. Sensex


120

110
100
90

80
70

JK Tyres

4-Jan-16

25-Jan-16

2-Nov-15

14-Dec-15

12-Oct-15

23-Nov-15

21-Sep-15

31-Aug-15

10-Aug-15

8-Jun-15

20-Jul-15

29-Jun-15

6-Apr-15

27-Apr-15

18-May-15

2-Feb-15

16-Mar-15

23-Feb-15

60

i) Volume kicker through capacity expansions: JK Tyre is expanding its


capacity from 20.5 mn to 23.1 mn units. The incremental capacity, 2.6
mn units at the Chennai plant, is expected to come on-stream by FY17.
While realizations are dwindling due to a partial pass through of the fall
in input prices, volumes are expected to receive a boost through the
expansion. Overall, we expect revenues to expand at a 3 year CAGR of
3.4% to Rs 8,156 crore by FY18.
ii) Margin expansion to drive earnings growth: Prices of crude oil and its
derivative, i.e. rubber (key input), have slumped in the past one year
owing to subdued demand and excess inventory. Correspondingly, JK
Tyre reported an EBITDA margin of ~16.8% in 9MFY16, a jump of 460
bps YoY. We believe that the sharp slump in crude oil prices is overdone and a rebound is likely, given the output caps being put in place.
However, the three digit prices of crude are a distant reality given the
weak global economy. Prices could rebound to the $40 range and
accordingly margins would dip too. We have factored in an EBITDA
margin in the range of 15-15.5% over our forecast period.
iii) Increasing proportion of radialisation: The proportion of JK Tyres
revenue that comes from radial tyres has increased to 52% in FY15 from
35% in FY13. It plans to further increase the proportion to 65% in the
coming 2-3 years. Higher sales from value added radial tyres provide a
cushion to margins even if raw material prices reverse their downtrend.

Sensex

We initiate coverage on JK Tyre as a BUY with a Price Objective of Rs


153 over a period of 18 months. The target price is arrived at by
assigning a PE of 6x to the FY18E EPS of Rs 25.5. The target price
translates to an upside of 82% from the CMP of Rs 84.
Key Financials (` in Cr)
Net
Y/E Mar
EBITDA
Sales
2015
7384
931
2016E
6948
1,081
2017E
7555
1,135
2018E
8156
1,223
-1-

PAT
329.66
439.22
496.41
579.13

EPS
(`)
14.54
19.36
21.89
25.53

EPS
Growth (%)
-33.4
27.1
13.4
35.3

RONW
(%)
18%
18%
20%
20%

ROCE
(%)
18%
20%
20%
21%

P/E
(x)
7.3
4.3
3.8
3.3

EV/EBITDA
(x)
5.6
4.0
3.7
2.7
nd

Tuesday, 22

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March, 2016

STOCK POINTER

Index Details

Company Background
JK Tyre & Industries (JK Tyre), incorporated in 1974 is engaged in the manufacture
of automotive tyres (passenger car, commercial, farm and off-the-road), tubes and
flaps. It enjoys a leadership position in the domestic radial tyres segment, with a
market share of 31% (as on FY15). It has 9 manufacturing plants -- 6 in India and 3
in Mexico (after acquisition of Tornel in 2008). It has a wide distribution network with
143 selling points and 4000+ dealers across India.

JK Tyres Business Structure


Total Revenue of JK Tyre
FY 15- Rs 8042 Crore

Indian Operation

Mexican Operation

Revenue
- Rs 6784 Crore
Revenue Share - 84%
Net Profit
-Rs 253 Crore

Revenue
- Rs 1258 Crore
Revenue Share - 16%
Net Profit
-Rs 71 Crore

Segment wise Revenue

Commercial - 84%

Passengers -14 %

Customer Wise
Revenue

Replacement - 58%
OEMs

- 23%

Exports

-19%

Others - 2%

Source: JK Tyre , Ventura Research

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March, 2016

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JK Tyres Manufacturing Location

Kakroli, Rajasthan
(3 plants)
Banmore, Madhya
Pradesh

Chennai,
Tamil Nadu
Mysore,
Karnataka

Source: JK Tyre , Ventura Research

JK Tyre client base

Source: JK Tyre Ventura Research

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March, 2016

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Key Investment Highlights

Expect modest revenue growth, robust margin expansion

JK Tyres revenues have grown at a 5-year CAGR of 10% to Rs 7,383 crore in


FY15, backed by healthy demand, the launch of new premium products in the
passenger and commercial categories and an increasing proportion of radial
product sales. Going forward, we expect revenues to grow at a CAGR of 3.4% to
Rs 8,156 crore by FY18E. The higher proportion of radialisation and capacity
expansion are expected to be the key revenue drivers. However, due to a partial
pass-through of the sharp fall in crude oil prices, lower realizations will limit growth
in revenues.
Revenue Growth trend
Rs cr
9000
8000

Revenue growth: 31%


Demand: Strong
Crude Prices: Sharp
recovery from $30 to $96/
barrel as global economy
started to pick-up

Revenue growth: 6.2%


Demand: Started to slowdown
owing to policy logjam and halt in
capex cycle
Crude Prices: Consolidated
between $100-$110/barrel

Revenue growth: 3.4%


Demand: Recovering
Crude Prices: Sharp slump back to $30/barrel;
expected to settle at around $40/barrel

40%
30%

7000
6000

20%

5000
10%
4000
3000

0%

2000
-10%
1000
0

-20%
FY10

FY11

FY12

FY13

Revenue

FY14

FY15

FY16E

FY17E

FY18E

Revenue Growth (RHS)

Source: JK Tyre Ventura Research

JK Tyres EBITDA and PAT have grown at a 5 year CAGR of 11% and 8% to Rs
948 crore and 324 crore respectively in FY15. During the period FY10-FY15, the
EBITDA margin has averaged at 9-10%, while the PAT margin has averaged at
~3-4%. With the softening of crude oil prices, its key input, the EBITDA margin
touched 16.8% in 9MFY16, a jump of 460 bps YoY. Going forward, we expect
crude oil prices to settle at $40/barrel and have factored in EBITDA margins of
15%-15.5% over our forecast period of FY16-18.
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Profitability trend
1,400

1,200

in Rs crore
RM as a % of revenues reduced from
76% to 64% in FY14;strong demand
and stable crude prices helped
recovery in EBITDA margin from 5% in
FY12 to 12% in FY14

RM as a % of revenues
increased from 62% to 71%
in FY11; as crude prices
could not be entirely passed
on, EBITDA margin fell from
13% to 6% in FY11

RM as a % of revenues to remain in the range of 60-61%; slump in


crude oil prices resulted in a jump in EBITDA margins in 9MFY16,
we expect crude oil prices to stabilize at $40/barrel and EBITDA
margin to remain at 15-15.5% over the forecast period.

18%
16%
14%

1,000
12%
800

10%

600

8%
6%

400

4%
200
2%
FY10

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

FY18E

(200)

0%
-2%

EBITDA

PAT

EBITDA margin (RHS)

PAT margin (RHS)

Source: JK Tyre Ventura Research

Capacity expansion to drive volumes

JK Tyre currently has a capacity of ~20.6 mn units per annum, of which 6.6 mn
units are based in its Mexican subsidiary Tornel (acquired in 2008).
The capacity of JK Tyres Indian operations has grown at a 3 year CAGR of 11%.
The average capacity utilization is around 100% in the Truck/Bus radials (TBR)
category and around 85-90% in the Passenger Car Radials (PCR) category. Going
forward, the company plans to enhance its Indian capacity (Chennai plant) by 2.6
mn at a total cost of Rs 1,430 crore, which is expected to be commissioned by
FY17. With existing capacities operating at optimum utilization levels, coupled with
improvement in demand, we believe the expansion will yield higher volumes with a
minimal lag, post commissioning. This is likely to offset the impact of lower
realizations on account of the partial pass-through of reduced crude oil prices and
lead to an overall revenue CAGR of 3.4% over FY16-FY18.

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March, 2016

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Domestic Plant Capacity and Utilization trend


160

Tyres in lakhs

80%
78%

140

76%

120

74%

100

72%

80

70%

60

68%

66%

40

64%

20

62%

60%
2011-12

2012-13

Annual Capacity

2013-14

Effective Capacity

2014-15

Capacity Utilisation (%)

Source: JK Tyre Ventura Research

There have been no expansions in the Mexican subsidiary, Tornel, since its
acquisition. The Tornel plant is operating at a utilization of 60%-70% in the PCR
category. The company is planning to increase the capacity in Tornel by 1.65 mn
units going forward. However, since the expansion is only in the planning phase,
we have not considered the same into our projections.
Acquisition of Cavendish Industries gets CCI nod
In September 2015, JK Tyre and its wholly owned subsidiary, JK Asia Pacific
Singapore, entered into an agreement with Kesoram Industries to acquire a 100%
stake in Cavendish Industries (CIL) (a 99% subsidiary of Kesoram) for Rs 2,200
crore. In February 2016, the deal received the CCI nod. CIL, with a capacity of ~5
mn tyres, manufactures a range of tyres, tubes and flaps at its plant located in
Haridwaar. The acquisition will be funded by a combination of debt and equity by
JK Tyre and its group companies; JK Tyre is to have the largest shareholding with
an investment of Rs 450 crore. The acquisition will:
i) help the company expand its presence in the TBR market
ii) provide an entry point into the fast growing two and three wheeler tyre market
iii) and help earn marketing and distribution margins

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Radialisation and soft commodity prices to boost margins

JK Tyres EBITDA margin has increased from 9% in FY13 to 12.8% in FY15 with a
higher proportion of revenues stemming from value-added radial tyres. The
management expects radialisation penetration to increase to 65% in the coming
years. With the higher radialisation coupled with softening of rubber prices (crude
oil derivative), we expect EBITDA margins to expand to 15.2% by FY18 from FY 15
levels.
EBITDA and EBITDA margin trend
Rs cr
1400

18.0%

1200

16.0%
14.0%

1000

12.0%

800

10.0%

600

8.0%
6.0%

400

4.0%
200

2.0%

0.0%
FY12

FY13

FY14

EBITDA

FY15

FY16E

FY17E

FY18E

EBITDA margin (RHS)

Source: JK Tyre Ventura Research

Higher Proportion of Radialisation


The proportion of JK Tyres revenue that comes from radial tyres has increased to
52% in FY15 from 35% in FY13. It plans to further increase the proportion to 65%
in the coming 2-3 years. Radial tyres enjoy high margins and a higher proportion of
the same in the revenue mix is likely to boost JK Tyres profitability, going forward.
In the tyre industry, both in the global and domestic markets, radial technology has
caught up at a quick pace, with the usage of cross ply being strictly restricted to
trucks and buses. This is because of the lower price of cross ply and the poor
quality of roads in India which limits the benefit of radial tyres.

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According to the Automotive Tyre Manufacturers Association (ATMA),


radialisation is touted as perhaps the most important innovation in tyre
technology, and its future in India depends on user education, overload control,
road development, retreading infrastructure and the cost-benefit ratio. Although
Indias passenger vehicle segment has adopted radial technology, a large part of
the country continues to use cross-ply as the level of radial penetration is rather
dismal in the commercial vehicle segment. The advantages of radial tyres remains
undisputed. Radial tyres:
Are susceptible to fewer punctures,
Have a shorter braking distance and flexible sidewalls, and hence offer
better control
Save fuel and show greater resistance to wear
Despite the cost and operational benefits these tyres offer, Indian fleet operators
are hesitant to adopt this technology because of the state of Indian road
infrastructure, which is often well below standard norms.
I
In India, radialisation in the TBR (truck and bus radial) segment is ~18%, much
lower than the world average of ~68%, signifying huge growth potential. Going
forward, we expect demand for radial tyres, especially in the TBR segment, to pick
up given:

Increasing push from OEMs for new launches


Radial tyres, which offer higher life and fuel efficiency, are being pushed by
the OEMs for new launches. Radial tyres enjoy relatively higher margins
viz. 300-400 bps than cross ply tyres. JK Tyre, being the market leader in
radial tyres in India, will be the biggest beneficiary of the increasing shift of
the industry towards radial tyres.

. radial tyre market is growing at the rate of 5%-6% annually due to high
In India, the
demand from OEMs. Demand from OEMs stands at 70% in the TBR segment and 30% in
the aftermarket segment. According to a study conducted by Continental, the Indian truck
tyre replacement market has a volume of approximately 14 million units per year, out of
which almost 4 million units are radial tyres, whereas the other 10 million are bias tyres.

-8-

Improvement in road infrastructure


The Modi government has placed high importance on upgrading the road
infrastructure in India. For instance, the government will convert eight

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March, 2016

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national highways into world-class expressways; a total cost of Rs 16,800


crore has been ear-marked for construction of 1000 kms of expressways.

Revival of stalled road projects


New roads will pep-up demand for radial tyres, which offer better
performance, speed and durability.

Penalty on overloading
Radial tyres are not preferred for unscrupulous practice of over-loading of
trucks. The government has imposed stringent penalties on over-loading
10 times the toll rates and immediate off-loading of the excess luggage.
Adequate penalties on over loading will ensure higher penetration.

Commercial Vehicle segments to recover


With the pick-up in industrial activity, growth in the MHCV (medium-heavy
commercial vehicle) space is expected to result in 8.3% growth in the CV
segment in FY16. The growth will be driven by:
i) Union Budget 2016-17 has spelled out a number of agri-oriented
measures, including higher allocations for irrigation and soil testing, thrust
to organic farming along with adequate physical and digital infrastructure
support. With higher spends on agriculture, demand for tractors and trucks
will revive.
ii) In order to curb air pollution, the Government is seeking to ban
commercial vehicles older than 15 years and will force all such trucks offroad effective April 2016. This is likely to pep-up CV demand.
iii) Declining fuel prices and expected recovery in industrial sectors such as
coal, cement and steel will boost CV sales.
iv) Sales of buses are also expected to remain healthy, led by the
replacement of buses under the Jawaharlal Nehru National Urban Renewal
Mission (JNNURM) phase II.

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Commercial Vehicle sales expected to grow at a 5 year CAGR of 12%


in units

-10%

200,000

-20%

-30%

Total Sales

2019-20

400,000

2018-19

0%

2017-18

600,000

2016-17

10%

2015-16

800,000

2014-15

20%

2013-14

1,000,000

2012-13

30%

2011-12

1,200,000

2010-11

40%

2009-10

1,400,000

Growth (RHS)

Source: CMIE, JK Tyre Ventura Research

Soft commodity prices


JK Tyre clocked an EBITDA margin of 16.8% in 9MFY16, a jump of 460 bps YoY,
led by lower raw material costs which fell from 62% in FY15 to 56% in H1FY16.
Prices of crude oil have slumped below $30/barrel from $103/barrel in April 2014.
Crude oil is the key input in the manufacturing of synthetic rubber used in tyre
manufacturing. Prices of rubber, (45% of the raw material cost), are hovering at
$157/100kg, down 46% from April 2014. Rubber prices are expected to remain
soft, owing to weak demand and surplus global inventory. The company is only
passing on the benefit of low prices partially and thereby enjoying high margins in
the current environment.

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Slump in domestic and global rubber prices


350

160

Rubber INR/100kg

300

and crude oil prices


Prices in $

140

292

120

250

239

100

200

191

185

80

126

150

109
100
95

60
96

40

50

20
-

We believe that the sharp slump in crude oil prices are over-done and a rebound is
likely, given the output caps being put in place. However, the three digit prices of oil are
a distant reality given the weak global economy. Prices could rebound to the $40/barrel
range and accordingly, margins would dip too. We have factored in EBITDA margins in
the range of 15-15.5% over our forecast period.

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March, 2016

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Mar-16
Nov-15

Source JK Tyres, Ventura Research

Jul-15

Mar-15
Nov-14

Jul-14

Mar-14
Nov-13

Jul-13

Mar-13
Nov-12

Jul-12

Mar-12
Nov-11

Jul-11

Mar-11
Nov-10

Jul-10

Mar-10
Nov-09

Jul-09

Mar-09
Nov-08

Mar-08

Source JK Tyres, Ventura Research

International Price

Jul-08

Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Domestic Price

Key Risks
Volatile crude prices
Crude prices may have already bottomed out and there is the possibility that the low
cost environment may become a thing of the past. Global oil supplies are likely to be
maintained at January levels. This deal has the support of 15 OPEC and non-OPEC
members (the notable exclusion being Iran), which together account for 73% of
international output. The deal is to be finalized in a meeting scheduled in April 2016.
Controlled supply could lead to a bounce back in crude oil to around $40/barrel and
result in a rise in raw material costs, given that 45% of raw material costs are linked to
crude.
Curbs on rubber imports to inflate costs marginally
To protect the domestic rubber plantations the import of cheap natural rubber from
China has been banned from Jan 21, 2016 to March 31, 2016. Further continuation of
this ban could lead to higher raw material costs.

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Financial Performance
In Q3FY16, the revenue of JK Tyres reported a de-growth of 12% YoY to Rs
1,617 crore on account of a sharp fall in realizations in-line with the fall in crude
prices. Further, volumes were hit on account of Chinese dumping of tyres.
However raw material prices were only partially passed on, the EBITDA shot
up by 20% YoY to 268 crore (Rs 254 crore in Q3FY15). Despite higher
depreciation and taxation, the PAT jumped 21% YoY to111 crore.

Consolidated Quarterly Financial Performance (Rs crores)


Description

Q3FY16

Net Sales

1617.1

Growth (%)

-12.0

Total expenditure

Q3FY15
1837.8

FY201503

FY201403

7383.7

7651.8

-3.5

1349.6

1584.2

6453.0

6780.5

267.5

253.6

930.8

871.3

Margin (%)

16.5

13.8

15.5

15.1

Depreciation

50.6

40.0

157.8

179.5

217.0

213.6

773.0

691.8

3.6

4.5

16.9

18.3

220.6

218.1

789.9

710.2

Margin (%)

13.6

11.9

10.7

9.3

Finance Cost

59.7

61.2

257.4

276.2

EBITDA

EBIT (Ex. OI)


Non-Operating Income
EBIT

Extraordinary Items

-10.5

-30.0

-46.9

-59.5

PBT

150.4

126.8

485.6

374.4

Margin (%)
Provision for Tax
Profit after Tax

9.3

6.9

6.6

4.9

45.1

36.2

161.7

118.8

105.3

90.6

323.9

255.6

Margin (%)

6.5

4.9

4.4

3.3

Share of Associates

5.3

1.2

5.8

7.4

110.6

91.8

329.7

263.0

Consolidated Net Profit

Source JK Tyre , Ventura Research

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March, 2016

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Financial Outlook:
We expect JK Tyres revenues to grow at a 3 years CAGR of 3.4% to Rs 8,156
crore by FY18, driven by an expansion of the existing capacity in radialisation,
which will help boost volumes. The acquisition of CIL, which has not been
factored in, is an upside trigger to our estimates. The EBITDA is expected to
grow at a CAGR of 9.5% by FY 18 to Rs 1,223 crore from Rs 931 crore in
FY15. At the PAT level, the company is expected to grow at a CAGR of 21% by
FY 18 to clock a PAT of Rs 579 crore.
Consolidated Revenue, Gross & PAT margins

Strong RoCE & RoE margins


40%

9,000

Rs in Cr

18

30%

16

8,000

14

7,000

20%

12

6,000

10

10%

5,000
8

0%

FY12

FY13

Net Sales

FY14

FY15

FY16E

Operating Margin

FY17E

PAT Margin

Source: JK Tyre, Ventura Research

Net working capital days

D/E ratio expected to be around 0.7x


3.5
3.0
2.5
2.0
1.5
1.0
0.5
-

Debt/Equity(x)

Source Jk Tyre , Ventura Research

Tuesday, 22

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March, 2016

FY 18 E

FY 7E

FY 16 E

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

FY18E

FY17E

FY16E

Mar-15

Mar-14

Source: Jk Tyre, Ventura Research

Mar-13

No. of Days

Mar-12

Sundry Debtors Days

Trade Payables Days

Mar-11

Inventory Days

Mar-10

Mar-09

No. of days

- 14 -

ROCE

FY18E

Source: JK Tyre, Ventura Research

80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
-

FY18E

FY11

FY17E

ROE

(2)
FY10

FY16E

Mar-15

1,000

Mar-14

-10%

Mar-13

2,000

Mar-12

3,000

Mar-11

Mar-10

4,000

Valuation
We initiate coverage on JK Tyre as a BUY with a price objective of Rs 153, representing a
potential upside of 82% from the CMP of Rs 84 over a period of 18 months. We have used
the PE multiple approach to value JK Tyre and assigned a multiple of 6x on FY18 EPS of Rs
25.53 to arrive at the target price. We are upbeat on the prospect of the company due to the
following aspects:

Capacity expansion to drive volume growth


Softening of rubber and oil prices
Change in product mix with a greater focus on radialisation.
CV cycle on the verge of a turn around

JK Tyre P/E Trend


200
150
100
50
0
Sep-13
-50

Mar-14

CMP

2X

Sep-14
4X

Mar-15
6X

Sep-15

8X

10X

Source : JK Tyres, Ventura Research

JK Tyre P/BV Trend

JK Tyre EV/EBITDA Trend

200

3000
2500

150

2000

100
1500

50

1000

500

0
Sep-10

Sep-11

CMP

Sep-12

0.5X

Sep-13

1X

1.5X

Sep-14

2X

Sep-15

2.5X

0
Sep-10
EV

Source : JK Tyres, Ventura Research


- 15 -

Sep-11
3.5X

Sep-12

Sep-13

6X

8.5X

Sep-14
11X

Source : JK Tyres, Ventura Research


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March, 2016

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Sep-15
13.5X

JK Tyre v/s CEAT P/E Trend


14.00
12.00
10.00
8.00

6.00
4.00
2.00

CEAT PE

JK Tyre PE

CEAT median PE

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

JK Tyre Median PE

Source : JK Tyres, Ventura Research

Historically, JK Tyre has traded at a median PE multiple of 4.3x, at a discount of ~30% to Ceats median PE multiple.
However, this discount has widened to more than 100% currently, with JK Tyre trading at 4.2x, while Ceat is trading at
9.3x. Ceat enjoys a premium multiple over JK Tyre considering:
i) Substantially less geared The FY15 DE of Ceat was 0.48x v/s JK Tyres 2.12x, and
ii) Better RoCe Ceats FY15 RoCE was 26.4% v/s JK Tyres 18.1%
However, with a higher sales and margin profile and a comparable RoE, we believe the steep discount to JK Tyres
multiple is unwarranted. Our assigned multiple of 6x is at a discount of 20% to Ceats FY18 multiple.

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Tuesday, 22

nd

March, 2016

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Peer Comparison

Y/E March
JK Tyre

EBITDA
Margin
(%)

PAT
Margin
(%)

ROE(%)

P/E

P/BV

EV/
EBITDA

Sales

EBITDA

PAT

2015

7,383.7

930.8

329.7

12.6%

4.5%

17.6%

7.3

1.7

5.6

2016E

6,947.6

1,081.2

439.2

15.6%

6.3%

18.2%

4.4

1.0

4.1

2017E

7,554.8

1,135.4

496.4

15.0%

6.6%

19.7%

3.9

0.8

3.7

2018E

8,155.7

1,222.5

579.1

15.0%

7.1%

20.4%

3.4

0.7

2.8

Apollo
2015

12,725.7

1,930.0

977.6

15.2%

7.7%

20.3%

7.7

1.5

3.6

2016E

11,944.0

1,990.0

1,085.7

16.7%

9.1%

19.0%

7.0

1.2

3.6

2017E

12,980.2

2,078.3

1,104.7

16.0%

8.5%

16.2%

6.8

1.1

3.5

2018E

14,672.5

2,320.5

1,179.4

15.8%

8.0%

15.4%

6.4

0.9

3.1

2015

5,754.8

797.0

317.2

13.8%

5.5%

23.4%

11.5

2.2

4.9

2016E

5,867.0

834.7

414.6

14.2%

7.1%

22.0%

8.5

1.7

4.7

2017E

6,567.8

890.3

465.9

13.6%

7.1%

19.8%

7.9

1.5

4.4

2018E

7,263.0

965.8

520.7

13.3%

7.2%

18.7%

7.5

1.3

4.1

CEAT

TVS Srichakra ( Standalone)


2015

1,881.5

294.7

103.8

15.7%

5.5%

43.3%

16.5

6.2

5.5

2016E

2,115.3

286.2

190.0

13.5%

9.0%

44.6%

10.3

4.2

6.0

2017E

2,350.8

315.2

207.0

13.4%

8.8%

36.1%

9.4

3.1

5.4

2018E

NA

NA

NA

NA

NA

NA

NA

NA

NA

MRF (Standalone) Sept Closing


2015

13,525.5

2,008.0

1,563.7

14.8%

11.6%

29.5%

8.6

2.2

5.6

2016E

20,452.2

4,361.1

2,331.9

21.3%

11.4%

32.4%

6.5

1.9

3.6

2017E

15,519.2

2,944.2

1,529.1

19.0%

9.9%

20.3%

8.8

1.6

5.5

2018E

17,612.0

2,976.4

1,558.6

16.9%

8.8%

17.4%

8.7

1.4

5.7

Source : JK Tyres, Ventura Research

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Tuesday, 22

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March, 2016

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Financials and Projections

Y/E March, Fig in ` Cr

FY15

FY16E

FY17E

Net Sales

7383.7

6947.6

7554.8

-3.5

-5.9

8.7

6453.0

5866.4

6419.5

% Chg.

-4.8

-9.1

9.4

EBDITA

% Chg.
Total Expenditure

FY18E

Y/E March, Fig in ` Cr

FY15

FY16E

FY17E

FY18E

Per Share Data (Rs)

Profit & Loss Statement

8155.7 Adj. EPS


8.0 Cash EPS
6933.1 DPS
8.0 Book Value

14.5

19.4

21.9

25.5

21.2

26.4

29.3

32.4

1.1

1.1

1.2

1.2

61.8

82.3

105.4

132.1
0.7

930.8

1081.2

1135.4

EBDITA Margin %

12.6

15.6

15.0

15.0 Debt / Equity (x)

2.1

1.5

1.1

Other Income

16.9

16.8

17.3

18.6 Current Ratio (x)

0.9

0.9

1.0

1.0

PBDIT

947.6

1097.9

1152.6

26%

27%

23%

22%

Depreciation

157.8

171.9

175.1

163.7 ROCE (%)

18%

20%

20%

21%

Interest

257.4

247.8

231.9

207.1 Dividend Yield (%)

0.0

0.0

0.0

0.0

Exceptional items

-46.9

-39.9

0.0

PBT

485.6

638.3

745.7

870.4 P/E

Tax Provisions

161.7

210.9

257.3

300.3 P/BV

Reported PAT

323.9

427.4

488.4

570.1 EV/Sales

Minority Interest
PAT

1222.5 Capital, Liquidity, Returns Ratio

1241.2 ROE (%)

0.0 Valuation Ratio (x)

EV/EBIDTA

7.3

4.3

1.7

3.8

1.0

0.7

0.8

0.6

0.6

3.3
0.6
0.4

5.6

4.0

3.7

2.7

323.9

427.4

488.4

PAT Margin (%)

4.4

6.2

6.5

7.0 Inventory (days)

44.2

45.0

44.2

44.0

Share of Associate

5.8

11.8

8.0

9.0 Debtors (days)

67.5

71.9

70.6

70.7

329.7

439.2

496.4

579.1 Creditors (days)

53.3

51.5

50.0

51.6

45.4

45.4

45.4

1355.7

1820.9

2344.3

Consolidated Net profit


Balance Sheet
Share Capital
Reserves & Surplus
Minority Interest
Long Term Borrowings
Deferred Tax Liability
Other Non Current Liabilities

570.1 Efficiency Ratio (x)

Cash Flow Statement

0.0

0.0

0.0

1503.6

1646.0

1474.0

319.8

298.8

272.1

45.4 Profit Before Tax


2950.4 Depreciation
0.0 Working Capital Changes
1274.0 Others
290.1 Operating Cash Flow

638.3

745.7

870.4

171.9

175.1

163.7
147.4

-50.6

34.6

48.9

141.4

90.5

-117.8

-30.7

734.2

935.4

851.9

1150.8
-80.0

410.7

411.0

426.0

-799.6

-308.7

-1.0

Total Liabilities

3635.1

4222.0

4561.7

5050.9 Other Investment Activities

-0.3

10.0

-435.7

18.6

Gross Block

4827.8

5566.8

5667.8

5747.8 Cash Flow from Investing

-799.9

-298.6

-436.7

-61.4

Less: Acc. Depreciation

2126.5

2298.4

2473.5

2637.2 Changes in Share Capital

0.0

0.0

0.0

0.0

Net Block

2701.3

3268.4

3194.3

3110.6 Changes in Borrowings

252.9

-223.0

-172.8

-505.0

Capital Work in Progress

830.3

400.0

300.0

300.0 Dividend and Interest

-267.2

-273.8

-258.9

-234.1

Other Non Current Assets

216.1

228.0

691.0

681.0 Cash Flow from Financing

-7.2

-496.7

-431.7

-739.1

-299.1

138.7

176.4

769.3 Net Change in Cash

-72.9

140.0

-16.5

350.4

186.5

187.0

200.0

190.0 Opening Cash Balance

235.6

162.8

302.9

286.3

3635.2

4222.0

4561.7

5050.9 Closing Cash Balance

162.8

302.9

286.3

636.7

Net Current Assets


Long term Loans & Advances
Total Assets

- 18 -

491.0 Capital Expenditure

485.6
157.8

Tuesday, 22

nd

March, 2016

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Disclosures and Disclaimer


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issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura
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Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai 400079

- 19 -

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