#1Stock Note Gujarat Mineral Development Corporation Ltd (GMDC) August 08, 2022 RETAILRES RETAILRESEARCH stlite Lault taker fundamental ANALYSIS_ HDFC securities 20+ Click. Invest. Grow. YEARS#2furtisments HV-RYE GMDC Ltd. HDFC securities G Click. Invest. Grow. YEARS Industry LTP Industrial Minerals Rs 161.7 HDFC Scrip Code BSE Code NSE Code Bloomberg CMP August 05, 2022 Equity Capital (Rs Cr) Equity Share O/S (Cr) Face Value (Rs) Recommendation Base Case Fair Value Bull Case Fair Value Time Horizon Buy on dips in Rs 160-163 band and add on dips in Rs 144-147 band Rs 179 Rs 195 2-3 quarters GUJMINEQNR Our take: 532181 GMDCLTD GMDC IN 161.7 63.6 2 31.8 5142.1 149.9 3749003 228.4 57.6 Market Cap (Rs Cr) Book Value (Rs) Avg. 52 Wk Volumes (NSE) 52 Week High 52 Week Low Share holding Pattern % (Jun, 2022) Promoters 74.0 Institutions 5.7 Non Institutions Total HDFCsec Retail research stock rating meter for details about the ratings or at the end of the report * Refer at the end for explanation on Risk Ratings Fundamental Research Analyst Pranav Jain [email protected] 20.3 100.0 Gujarat Mineral Development Corporation Ltd. (GMDC) is one of India's leading mining and mineral processing companies. is India's second largest Lignite-producing company. The company is also involved in the exploration of Bauxite, Fluorspar, Manganese, Silica Sand, Limestone, Bentonite and Ball Clay and also has a sizeable presence in energy sector. In FY22, the company posted its best ever annual results over the last 5 years and the 2nd best in the company's life so far after posting a shocking net loss in FY21. The company has embarked on a major transformative exercise to change its fortunes and has roped in four top global management consulting firms- Boston Consulting Group (BCG), McKinsey & Co, AT Kearney and Deloitte to achieve its targeted objectives, production diversity and increased profitability. Being the only miner of Lignite in Gujarat places it is at an advantageous position with regards to its customers. Purchasing of coal from Coal India located about 700 km away proves to be a logistic issue as well as high transportation cost. Hence, they prefer Lignite produced by GMDC though lignite carries lower calorific value. GMDC's customers mainly comprise of small to medium players whose boilers are designed to run on domestic lignite. In FY22, ~90% of the revenue comes from mining. Valuation & Recommendation: A change in the top management last year proved effective in turning around the company in FY22. Also, rise in prices of international coal prompts users to shift to cheaper sources like lignite, thereby raising demand. Further, the Russia-Ukraine war has shot up coal prices and global coal prices are expected to remain robust in the medium term as natural gas has become scarce due to export cutback by Russia. The demand for lignite in Gujarat is about 25-28 million tons (mt) and GMDC produces about 8.5mt. Hence, there is a huge scope for growth, given that the company targets volumes of about 10 MT for FY23. It is working on six new mining projects (having reserves of 540mt) with a capex of Rs 670 crores for FY23. Management's focus is to diversify the revenue base of the company from lignite and so the company plans to foray into manufacturing of rare-earth elements, and non-lignite businesses such as silica sand, Fluorspar, multi metal, and limestone for which it has roped in BCG for feasibility study. In the coming years, it aims to earn at least ~50% revenue from the non-lignite portfolio. This will help the company to mitigate the risk of dependence on a single commodity and also improve the ESG rating of the company. The company is planning to develop 6 new mines over next 1.5-2 years to ensure that production stays above 10 million tons per annum (mtpa). Further, there is a distinct focus on value added products in Bauxite and other minerals. 2 FRETAILRES RETAILRESEARCH#33 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS We believe the base case fair value of the stock is Rs 179 (6.25x FY24E EV/EBITDA) and the bull case fair value of the stock is Rs 195 (6.85x FY24E EV/EBITDA). Investors can buy the stock in Rs 160-163 band (5.6x FY24E EV/EBITDA) and add on dips in Rs 144-147 (5x FY24E EV/EBITDA) band. Financial Summary (Consolidated): Particulars (Rs cr) Operating Income Q4FY22 1057 Q4FY21 566 YoY (%) Q3FY22 QoQ (%) FY21 FY22 FY23E FY24E EBITDA 420 APAT 177 32 -185 86.9 1220.2 725 45.9 1,339 2,732 3,276 3,565 201 108.6 -10 679 770 848 150 18.1 -39 405 608 679 Diluted EPS (Rs) 27.7 -28.8 23.4 18.1 -1.2 12.7 19.1 21.3 RoE-% 9.2 12.2 12.4 P/E (x) 12.7 8.5 7.6 EV/EBITDA 7.4 6.5 5.6 (Source: Company, HDFC sec) Q4FY22 Result Update: Financial Performance: Consolidated Figures: Revenue from operations during the quarter stood at Rs 1057.3 crores, up by ~86.9% YoY. EBITDA during the quarter stood at Rs 420 crores, up by ~1220.2% YoY (Rs.31.8 crores in Q4FY21). EBITDA margin for the quarter was at ~39.7%. Adjusted PAT for the quarter stood at Rs 177 crores during the quarter vs net loss of Rs 184.6 crores in Q4FY21. Operational Performance: Particulars Sales Volume (Lakh MT) Mining- Lignite & Bauxite Power Generated (million units) Thermal, Solar & Wind Key developments & triggers: Q4FY22 Q4FY21 YoY (%) Q3FY22 QoQ (%) 26.2 26.7 -1.7 23.0 13.9 289.1 110.7 161.1 227.6 27.0 (Source: Company, HDFC sec) Change in leadership to strengthen existing operations & develop diversified business Appointment of Mr. Raj Kumar (Add. Chief Secretary of Home Department, Government of Gujarat., Gujarat) as the Director and Chairman in July'22 and Mr. Roopwant Singh (The Commissioner of Geology and Mining, Gujarat) in June'21 (post a dismal performance in FY21) has been crucial in the company's turnaround plans. They have taken steps to maximize the strength of existing operations and also develop FRETAILRESE RETAILRESEARCH#44 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS diversified businesses and explore the rare earth business. While some of the endeavors are still in the bud, we believe that structured and earnest approach is likely to result in creation of long term shareholder value. Embarked on major transformative exercise GMDC posted a shocking loss in FY21- its first ever in 59-year history. The main reason for this loss was the company's Akrimota Thermal Power Station in Kutch, for which the company recorded impairment loss as it had incurred cash losses during the year. Since then the company has embarked on a major transformative exercise to change its fortunes and has roped in four top global management consulting firms- BCG, McKinsey, AT Kearney and Deloitte to achieve its targeted objectives, production diversity and increased profitability. Each of the four consulting firms have been allotted a specific role. BCG has been asked to look into the company's strategic transformation, from being known as a coal miner to its aspiration of becoming a diverse mineral resources player having interests in niche as well as volume segments. McKinsey & Co has been given the task to help the company build a portfolio of Rare Earth Elements (REE). AT Kearney will help the company to transform its thermal power projects. Deloitte's task is to speed-up its six new lignite mining projects. Plans to increase share of Rare Earth Elements (REM) and non-lignite minerals in its product portfolio The management intends to build-on its capabilities in other minerals and metals including REMs. In the associated minerals, GMDC has resources in silica sand, fluorspar, multi-metal, limestone which finds application across various industries like electronics, defence, laser and radar systems, etc. The company aims to increase the share to ~50% from these non-lignite segments. Currently, lignite business has ~90% share in its operations and will continue to be the major source of revenue for the company's operations. Top global management consulting firm-McKinsey & Co has been roped in to help the company to develop its product portfolio in REM space. There are plenty of non-lignite prospects as Gujarat's northern district of Banaskantha has base metal deposits and GMDC holds a mining lease on about 184 hectares in the area. GMDC is in a process of starting a geological study of this area followed by geophysical mapping and drilling, having the base metal deposit of around ~10% out of which ~1.5% is copper, ~3.5% lead and rest is zinc. This in the management's view, will drive the company's objective to venture into high-value products. In a reply to a question in the Lok Sabha on February 02, 2022, the Central Government said that as on Jan'22 end, rare earth oxide reserves in Ambadongar area of Chota Udepur district in Gujarat is pegged at 737,283 tons. This is more than twice the initial estimate of 346,000 tonw, mentioned by the Atomic Minerals Directorate in a report dated Nov/20. In the same reply, the government has mentioned about greater self-reliance in rare earth production and is targeting increasing rare earth oxide mining capability by 3x by CY32. The biggest advantage here is that rare earth deposits are contiguous to fluorspar deposits that GMDC is currently mining. Hence, we believe that GMDC will have a major role to play in any such Government's endeavor. Management expressed confidence that the initial indications are positive and concentration of rare earths in the contiguous areas is higher than the global average of 2%. FRETAILRES RETAILRESEARCH#55 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS It is expected that government may allow private companies to mine the Rare Earth minerals in the country. As of now, India has explored a small Lithium Reserve in Karnataka. GMDC could be beneficiary of the same as it is having proven 11.6 million tons of Fluorite reserves and Rare Earth reserves, that has high concentration of Cerium (A rare Earth Mineral), in Ambaji Dungar in Gujarat, and is looking for global partnership for mining that. It would be interesting to see how the company proceeds with development, exploitation and commercialization of rare earths deposits. The company would need to augment its manpower and equipment fleet adequately. Furthermore, there might be radioactive elements as well whose disposal and handling requires specialization and advanced waste management techniques. Mining of Fluorspar is another area where GMDC intends to foray into. It has got some good mines in Kadipani of Fluorspar Mineral. It has already floated an RFP (Request for Proposal) for PMC (Project Management Contract) of the plant. Fluorspar finds applications in industries like steel, aluminum, welding electrodes etc. Transformation of loss-making thermal power projects The company has decided to rope in Chicago-headquartered AT Kearney to transform its thermal power projects in order to achieve better efficiency and profitability. The consultant has completed the technical study, financial assessment of the plant with recommendations on improvements required. For the turnaround of its operation to remain sustainable, the company has realized it needs to strongly address the cash-burn operations, which includes, its 250 megawatt (2x125 MW) thermal power plant in Kutch. Even though the company uses its own lignite as fuel for the power plant, its performance was affected severely in FY21. The company has certain short term and long terms plans in respect of its thermal plants. For the short term, it has corrected its major equipment defect like boilers and turbines as a trade auxiliary and found improvement in PLF. Power operations: FY21 FY22 % Project Thermal Power Wind Power Installed Capacity (MW) 250 200.9 MU's Generated Plant Load Factor (PLF) Rs in Cr MU's Generated Plant Load Factor (PLF) Rs in Cr Change in Quantity Change in Sales 435.05 282.96 20% 71 15% 115 589.69 326.27 27% 141 36% 99% 19% 126 21% 9% Solar Power 5 6.02 14% 9 7.03 16% 10 16% 17% Total 723.93 195 922.99 277 (Source: Company, HDFC sec) RETAILRESEARCH FRET#66 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS Focus on increasing bauxite sales Bauxite operations are located in districts of Kutch as well as Devbhoomi Dwarka. The Bauxite deposits of Gujarat are clustered deposits with numerous pocket deposits present in near-by vicinity. GMDC is currently mining nine Bauxite deposits, of which eight are in Kutch and one is in Devbhoomi Dwarka. GMDC has started the process to aggressively sell inventories of 1.1mt of Bauxite which are lying at the various stacks since long and for that a Pan India Advertisement regarding the tender notice has been published. The company is getting responses and at the same time it's trying to analyses how it can attract the end users or customer for the same and so it has engaged BCG and is also chalking out the plan to actually increase the sale of bauxite in a big way. Favorable demand scenario going forward Against the mineral demand of 25-28mt, GMDC produces 8.5mt, giving the company a comfortable demand environment. Apart from that there are certain associated minerals in over burden in these blocks. The major is the limestone deposit and in one of the blocks it's are also getting silica sand. These blocks will be developed one by one within the next couple of years. GMDC has large amount of reserves of Limestone to the tune of 2000mt at its upcoming Lakhpat Punrajpur Mining, Panandhro Extension & Bharkandam and is approaching various cement companies across India for setting up of cement plant where GMDC will be a long term limestone supplier. As the market of overburden minerals like Silica Sand, Ball Clay & Bentonite is increasing, entering into the beneficiation Industry of these overburden minerals will have a larger scope in terms of revenue, customer base and market share and hence it is planning to enter into this beneficiation Industries by the way of long term supplies of respective minerals. Lignite volume ramp-up due to surge in demand GMDC will expand its lignite coal production to gain from Small and Medium Enterprises (SMEs) looking for cheaper fuel. GMDC produced 8.5 million tons of lignite in FY22 and plans to reach 10 million tons in FY23. In the last few months, the company has added 400 more customers. Its customer base among Micro, Small and Medium Enterprises (MSMEs) in textiles, chemicals, and ceramics along with captive power plants is increasing since coal prices continue to remain high. GMDC'S existing mines have reserves of 110mt and average life of mine is 12 years. Two mines-Umarsar and Rajpardy are expected to exhaust their reserves within next 4-5 years. Average Gross calorific value (GCV) of lignite at Rajpardy mine is 5,000kcal and therefore, realization from this mine is much higher as compared to other mines on average. It is essential for the company to develop new mines as exhaustion of Rajpardy mine will have significant impact on the company's profitability. The company will add six more mines, leaving it with a total of nine in the next 4-5 years (with 3 out of 6 current mines reaching end of life). It has around 540 million tonnes of lignite reserves in these 6 new blocks. GMDC has appointed Deloitte for fast-tracking these new lignite mining projects. Management expects to develop these 6 new mines over next 1.5-2 years to ensure that production stays above 10mtpa. RETAILRESEARCH FRETAILRES#77 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS Mines Reserves (MT) Mata No Madh 30 Life of the mine (Years) 9 New mines Location Panandhro Extension Kutch Rajpardi 2 4 Bharkandam Kutch Tadkeshvar 6 Ghala Surat Bhavnagar 60 40 Lakhpat Punrajpur Kutch Umarsar 10 4 EFG block Valia Bharuch Damlai Bharuch (Source: Company, HDFC sec) Mining operations: FY21 FY22 % Location MT (Lakh) Rs (in cr) MT (Lakh) Rs (in cr) Mata No Madh 22.94 416 34.84 931 Change in Quantity 51.9 Change in Sales 39.6 Rajpardi 5.78 156 7.11 319 23.0 54.2 Tadkeshwar 12.73 260 8.99 279 -29.4 20.9 Bhavnagar 4.92 96 16.37 460 232.7 92.5 Umarsar 13.67 233 18.2 486 33.1 34.6 Total - Lignite 60.04 1161 85.51 2475 42.4 40.2 Bauxite (Gadhsisa & Bhatia) 3.89 53 3.96 67 1.8 16.2 Total 63.93 1214 89.47 2542 39.9 38.8 (Source: Company, HDFC sec) Approval to mine up to 135 meters at Tadkeshwar lignite mine in Surat The Union Ministry of Environment and Forest approved an amendment to its environment clearance to GMDC, to mine up to a depth of 135 meters from its earlier approved depth of 94 meters from the lignite mines in Tadkeshwar of Surat district. The Lignite Mines in Tadkeshwar is strategically located in Surat, a large industrial belt. This is indeed a good development and will help the company cater to the constantly increasing demand-supply gap and the energy requirements in the state and across the country." RETAILRESEARCH FRETAILRES#88 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS Capex and new projects GMDC plans to invest Rs 670 crores in FY23. It looks to invest Rs 200 crores towards setting up beneficiation plants, with the remaining being land acquisition costs (including compensation) for new and old mining projects. The management said around Rs 270 crores will be spent towards the land acquisition cost for new mining projects, while another Rs 200 crores will be for existing or ongoing projects. The company is in the process of setting up a Fluorspar Beneficiation plant at Kadipani, (a JV with Gujarat Fluorochemicals and Navin Fluorine International) having a capacity will be 40,000 tons per annum. Two bauxite beneficiation plants are expected, too, with an investment between Rs 15 crores and Rs 45 crores. Coal beneficiation plants are expected to come up in Bhavnagar and Kutch of Gujarat, each with an expected investment of Rs. 25-30 crores. Coal beneficiation plants will ensure a better price for its lignite offerings, especially considering the mineral is expected to witness an increased demand in the coming days. Beneficiation will lead to lesser clogging in furnaces and so it can easily command a better price at the auction. Better quality lignite also ensures higher customer retention. The management highlighted that most of the investments are going to be from internal accruals and the company aims to remain debt free. Tenders for the beneficiation plants are already in the process. For the Bhavnagar coal beneficiation plant, the Eol is live, while for the Kutch one, it is expected to go live soon. Investments would also be made to ensure increased production of lignite from its Bhavnagar mines. During FY22, lignite production at Bhavnagar was 16.37 lakh tons, an increase of 11.45 lakh tons, as against 4.92 lakh tons in FY21. Net-debt free company GMDC is a net-debt free with cash and investments worth Rs 668 crores at the end of Mar'22. Key risks & concerns: Competition from coal - local and imported: GMDC faces competition from local and imported coal which puts pressure on lignite price. Also, increase in supply of cheaper Russian coal can have significant downward pressure on lignite prices. Lignite has lower calorific value and hence could face demand reduction when coal prices fall significantly. Regulatory risk: Changes in royalty, DMF and NMET regulations could affect the comparable cost efficiency of lignite vis-à-vis other competing fuels. Environmental concerns: Lignite has high ash and sulphur content. ESG concerns can reduce lignite usage over the medium term. Land acquisition delays and impediments: Delay in land acquisition and impediments by the state government can affect the operations of the company. FRETAILRES RETAILRESEARCH#96 furtisments HVH-LYEL GMDC Ltd. 2100 2000 1900 1800 1700 1600 1500 Apr 21 May 21 Decline in lignite prices: Fall in lignite prices will have a significant impact on revenue and profitability of the company. Lignite Price Trend-G11 (Rs/ton) Jun'21 Jul 21 Aug 21 Sep21 Oct 21 Nov'21 Dec'21 Jan'22 Feb'22 Mar 22 (Source: Ministry of Coal) Investment in Gujarat State Financial Services: Investment of Rs 700 crores in Gujarat State Financial Services (bearing interest @5.25% p.a.) due to directions of the State Govt may not be in the best interest of GMDC. Involvement of State Govt: State Govt interference in the working/investment matters may not be in the interest of the minority shareholders. Change in leadership: A change in top management can affect the performance of the company. Delay in encashment of rare earth minerals opportunity and/or delay in mine ramp up could postpone the revenue and profit growth. Peer Comparison Company M Cap (in Rs. Cr.) NLC India GMDC 10122.4 5142.1 Revenue (Rs cr) FY21 FY22 9846 11947.9 1469.8 2732.1 EBITDA Margins (%) FY21 FY22 APAT (Rs cr) FY21 ROE (%) 27.7 34.8 1323 8.2 24.8 -39.1 FY22 FY21 1386.6 405 8.1 FY22 7.7 9.2 EV/EBITDA(x) P/E(x) FY21 FY22 FY21 FY22 6.49 7.15 5.33 8.08 7.4 RETAILRESEARCH FRETAILRES 12.7 20+ HDFC securities Click. Invest. Grow. YEARS#10furtisments HVH-LYEL GMDC Ltd. 10 10 HDFC securities 20 Click. Invest. Grow. YEARS About the company: Gujarat Mineral Development Corporation is primarily engaged in 2 sectors i.e. mining and power. It is involved in the exploration of Bauxite, Fluorspar, Manganese, Silica Sand, Limestone, Bentonite. Lignite mining continues to be the main operation of the company. The company operates over six lignite mines, namely, Panandhro, Mata-No-Madh, Rajpardi, Tadkeshwar, Bhavnagar and Umarsar, of which Panandhro is exhausted. Other than Lignite, GMDC is also operating Bauxite mines in Gujarat. The bauxite operations are located in districts of Kutch (8 mines) as well as Devbhoomi Dwarka (1 mine). GMDC Power Division consists of ATPS Thermal Power Plant, Wind Power Plants and Solar Power Plants. The thermal power capacity of GMDC is 250MW at Akrimota Thermal Power Station. GMDC operates wind and solar power in Gujarat with capacity of 200.5MW and 5MW capacity respectively. About Lignite: Lignite coal, also known as brown coal, is the lowest grade coal with the least concentration of carbon out of all the coal ranks (~25%-35%). Lignite has a low heating value and a high moisture content and is mainly used in electricity generation. Group Structure: Name of Entity Ownership interest-% Relationship Nature of business Wholly-owned GMDC Science & Research Centre 100 Mine research & development entity Gujarat Mineral Research & Industrial Consultancy Society Wholly-owned 100 Technical support for mineral administration entity Wholly-owned GMDC Gramya Vikas Trust 100 CSR Activities entity 50 Joint Venture Coal mining Flurospar benefication Incubation center for 50 Joint Venture entrepreneurship &development 26 Associate 26 Associate Bauxite beneficiation Cement manufacturing (project not yet started) Manganese beneficiation Naini Coal Co Ltd Swarnim Gujarat Fluorspar Pvt Ltd Gujarat Foundation for Entrepreneurial Excellence Gujarat Jaypee Cement Infrastructure Ltd Gujarat Credo Mineral Industries Ltd Aikya Chemicals Pvt Ltd 1.05 Joint Venture 26 Associate (Source: Company, HDFC sec) RETAILRESEARCH FRETAILRES#11furtisments HV-RYEL GMDC Ltd. Story in charts: HDFC securities 20+ Click. Invest. Grow. YEARS Revenue Trend EBITDA Trend Adjusted Profit After Tax (Rs cr) 4000 3500 3000 2500 2000 1500 100% 900 30% 800 800 80% 25% 700 1000 500 0 H TH 700 60% 600 600 20% 40% 500 500 15% 20% 400 400 300 10% 0% 300 200 5% -20% 100 200 -40% 0% 100 FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY18 FY19 FY20 FY21 FY22 FY23E FY24E 0 Revenue (Rs cr) Growth YoY (%) (RHS) EBITDA (Rs cr) EBITDA Margin (%) (RHS) FY18 FY19 FY20 FY21 FY22 FY23E FY24E -100 Physical Metrics Sales Volume-Mining: Lignite & Bauxite (Lakh MT) 6 Bauxite Sales (Lakh MT) (Source: Company, HDFC sec) Power Generated- Thermal, Solar & Wind (Million units) 4.9 2000 120 109.7 93.7 100 5 109 96 89.5 4 3.6 4.7 1732 4.3 1800 1623.3 3.9 3.96 1600 1400 1154 74.3 80 1200 63.9 3 1000 60 1095 980 923 724 2 1.7 800 40 600 1 400 20 200 0 0 0 FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY18 FY19 FY20 FY21 FY22 FY23E FY24E 11 (Source: Company, HDFC sec) FRETAILRES RETAILRESEARCH SEAR#12furtisments HV-RYE GMDC Ltd. Financials (Consolidated): HDFC securities 20 Click. Invest. Grow. YEARS Income Statement Balance Sheet (Rs cr) FY20 FY21 FY22 FY23E FY24E As at March FY20 FY21 FY22 FY23E FY24E Net Revenues 1521 1339 2732 3276 3565 SOURCE OF FUNDS Growth (%) -19.1 -11.9 104 19.9 8.8 Share Capital 64 Operating Expenses 1395 1349 2054 2506 2716 Reserves 4032 64 4003 64 64 64 4703 5168 5688 EBITDA 126 -10 679 770 848 Shareholders' Funds 4096 4067 4767 5232 5751 Growth (%) -63.2 -107.6 - 13.4 10.2 Minority Interest 0 0 0 0 0 EBITDA Margin (%) 8.3 -0.7 24.8 23.5 23.8 Total Debt 0 1 1 1 1 Depreciation 92 94 98 108 120 Net Deferred Taxes 111 -55 81 81 81 Other Income 173 153 158 174 182 Other Non-current Liab. 78 59 55 66 86 EBIT 207 49 739 835 910 Total Sources of Funds 4285 4072 4904 5380 5919 Interest expenses 2 2 2 3 3 APPLICATION OF FUNDS PBT 205 -349 737 833 907 Tax 58 -308 332 225 228 Net Block & Goodwill CWIP 2058 1585 1522 1524 1699 4 6 12 6 6 PAT 146 -42 405 608 679 Investments 264 299 596 596 596 Share of Asso./Minority Int. 0 3 0 0 0 Other Non-Current Assets 1266 1357 2115 2300 2406 Adj. PAT 146 -39 405 608 679 Total Non-Current Assets 3592 3247 4244 4425 4707 Growth (%) -5.4 -126.7 50.1 11.7 Inventories 95 99 90 108 117 EPS 4.6 -1.2 12.7 19.1 21.3 Debtors 140 145 205 246 267 Cash & Equivalents 97 267 90 145 390 Other Current Assets 1134 1156 1288 1663 1868 Total Current Assets 1465 1667 1672 2162 2643 Creditors 137 176 209 260 313 Other Current Liab & Prov 635 665 803 947 1118 Total Current Liabilities 772 841 1012 1207 1431 Net Current Assets 693 826 660 955 1212 Total Application of Funds 4285 4072 4904 5380 5919 12 12 RETAILRESEARCH FRETA#13furtisments HV-RYE GMDC Ltd. HDFC securities 20+ Click. Invest. Grow. YEARS Cash Flow Statement Key Ratios (Rs Cr) FY20 FY21 FY22 FY23E FY24E (Rs Cr) FY20 FY21 FY22 FY23E FY24E Reported PBT 203 -350 735 833 907 Profitability Ratios (%) Non-operating & EO items -36 387 -12 -174 -88 EBITDA Margin 8.3 -0.7 24.8 23.5 23.8 Interest Expenses -93 -78 -90 3 3 EBIT Margin 13.6 3.7 27 25.5 25.5 Depreciation 92 94 98 108 120 APAT Margin 9.6 -2.9 14.8 18.6 19 Working Capital Change -6 -26 -724 -239 -13 RoE 3.5 9.2 12.2 12.4 Tax Paid -159 128 -224 -225 -228 ROCE 4.9 1.2 16.7 16.7 16.6 OPERATING CASH FLOW (a) 1 156 -215 306 702 Solvency Ratio (x) Capex -10 -12 -40 -110 -295 Net Debt/EBITDA Free Cash Flow -9 144 -256 196 407 Net D/E -0.8 28 -0.1 -0.2 -0.5 0 -0.1 0 0 -0.1 Investments 0 0 0 0 0 PER SHARE DATA (Rs) Non-operating income 93 90 63 81 89 EPS 4.6 -1.2 12.7 19.1 21.3 INVESTING CASH FLOW (b) 84 78 23 -29 -206 CEPS 7.5 1.7 15.8 22.5 25.1 Debt Issuance / (Repaid) 0 0 0 0 0 BV 128.8 127.9 149.9 164.5 180.9 Interest Expenses 0 0 0 -3 -3 Dividend 2 0.2 4.3 4.5 5 FCFE 85 234 -193 274 492 Turnover Ratios (days) Share Capital Issuance 0 0 0 0 0 Debtor days 34 39 23 25 26 Dividend -77 -64 -6 -143 -159 Inventory days 23 26 13 11 12 Others 0 0 0 -75 -89 FINANCING CASH FLOW (c) -77 -64 -7 -221 -251 NET CASH FLOW (a+b+c) 8 170 -199 56 244 Creditors days VALUATION P/E P/BV EV/EBITDA 30 43 26 26 29 35.1 12.7 8.5 7.6 1.3 1.3 1.1 1 0.9 40.2 7.4 6.5 5.6 EV / Revenues 3.3 3.6 1.8 1.5 1.3 Dividend Yield (%) 1.2 0.1 2.7 2.8 3.1 Dividend Pay-out (%) 43.4 -16.3 33.8 23.5 23.4 (Source: Company, HDFC sec) 13 33 RETAILRESEARCH FRETAILRES#1414 furtisments HV-RYE GMDC Ltd. Stock Price Chart 250 200 150 100 50 Aug-21 Aug-21 Sep-21 Oct-21 Oct-21 Nov-21 One Year Price Chart Dec-21 Dec-21 Jan-22 Feb-22 Mar-22 Mar-22 Apr-22 May-22 May-22 Jun-22 Jul-22 Jul-22 PRANAV DHIRAJ JAIN HDFC securities Click. Invest. Grow. YEARS Digitally signed by PRANAV DHIRAJ JAIN Date: 2022.08.08 08:57:35 +05'30' HDFC Sec Retail Research Rating description Green Rating stocks This rating is given to stocks that represent large and established business having track record of decades and good reputation in the industry. They are industry leaders or have significant market share. They have multiple streams of cash flows and/or strong balance sheet to withstand downturn in economic cycle. These stocks offer moderate returns and at the same time are unlikely to suffer severe drawdown in their stock prices. These stocks can be kept as a part of long term portfolio holding, if so desired. This stocks offer low risk and lower reward and are suitable for beginners. They offer stability to the portfolio. Yellow Rating stocks This rating is given to stocks that have strong balance sheet and are from relatively stable industries which are likely to remain relevant for long time and unlikely to be affected much by economic or technological disruptions. These stocks have emerged stronger over time but are yet to reach the level of green rating stocks. They offer medium risk, medium return opportunities. Some of these have the potential to attain green rating over time. Red Rating stocks This rating is given to emerging companies which are riskier than their established peers. Their share price tends to be volatile though they offer high growth potential. They are susceptible to severe downturn in their industry or in overall economy. Management of these companies need to prove their mettle in handling cyclicality of their business. If they are successful in navigating challenges, the market rewards their shareholders with handsome gains; otherwise their stock prices can take a severe beating. Overall these stocks offer high risk high return opportunities. FRETA RETAILRESEARCH#15furtisments HV-RYE GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS Disclosure: I, Pranav Jain, Research Analyst, CA, 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. SEBI conducted the inspection and based on their observations have issued advise/warning. The said observations have been complied with. 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. 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