3QFY2013 Result update | Power Cables

February 15, 2013

Finolex Cables
Performance Highlights
Y/E March (` cr) Total operating income EBITDA EBITDA Margin (%) Adj. PAT
Source: Company, Angel Research

BUY
CMP Target Price
2QFY13 % chg (qoq) 586 71 12.0 57 (8.8) (39.1) (400)bp (58.3) 3QFY12 % chg (yoy) 499 44 8.8 14 7.0 (2.4) (77)bp 75.0

`50 `61
12 Months

3QFY13 534 43 8.0 24

Investment Period
Stock Info Sector Market Cap (` cr) Net Debt Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Cables-Power 770 (155.3) 0.6 64 / 29 81,501 2 19,468 5,686 FNXC.BO FNXC.IN

Finolex Cables (FCL) reported a mixed set of numbers for 3QFY2013. Its top-line reported a marginal growth of 7.0% yoy to `534cr, as compared to our estimate of `580cr. The EBITDA dipped marginally by 2.4% yoy to `43cr while EBITDA margin was down by 77bp on a yoy basis to 8.0%. Nevertheless the adjusted PAT grew by a whopping 75% yoy to `24cr vis--vis our estimate of `18cr, on the back of low interest cost (lower by 67.2% yoy) and exceptional item (lower by 42.4% yoy) of losses derived from derivative contracts. PAT margin too expanded from 2.7% in 3QFY2012 to 4.5% in 3QFY2013. Growth in user industries to drive growth: FCL serves varied user industries, considering the wide usage of cables. With customers increasingly demanding high-quality and branded wires, FCL is poised to grow. The company, with its wide distribution reach and penetration in the market, is well poised to meet increase in demand. Further, we expect the companys initiatives like- 1) increase in advertisement spends 2) setting up of a solar power plant for captive consumption, and 3) reduction in sale of copper rods to third party, to boost its top-line and enhance profitability going forward. Outlook and valuation: We expect the companys sales to post an 11.3% CAGR over FY201214 to `2,559cr, and EBITDA to register a CAGR of 21.0% over the same period with margin at 10.0% in FY2014E. However, PAT is expected to post a higher CAGR of 25.6% over the same period owing to closure of the derivatives contracts (included in exceptional items). With the recent correction, FCL is available at PE of 5.0x for FY2014E and hence the stock is upgraded to Buy with a target price of `61 based on target PE of 6x FY2014E earnings. Key financials
Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA Margin (%) FDEPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 35.7 29.3 4.9 30.2

Abs.(%) Sensex Finolex

3m 5.4 (1.9)

1yr 7.2 40.3

3yr 20.0 (2.0)

FY2011 2,036 25.8 87 50.7 7.5 7.4 8.9 1.1 12.1 20.9 0.3 3.6

FY2012 2,064 1.4 98 13.0 8.5 8.0 7.8 1.0 12.3 18.7 0.3 3.7

FY2013E 2,268 9.9 137 39.6 9.5 9.0 5.6 0.8 14.8 20.5 0.3 2.9

FY2014E 2,559 12.8 155 13.1 10.0 10.1 5.0 0.7 14.6 23.3 0.2 2.3

Twinkle Gosar
+91 22 3935 7800 Ext: 6848 Gosar.twinkle@angelbroking.com

Please refer to important disclosures at the end of this report

Finolex Cables | 3QFY2013 Result update

Exhibit 1: 2QFY2013 performance highlights

Y/E March (` cr) Total operating income Net raw material (% of Sales) Employee cost (% of Sales) Other Expenses (% of Sales) Total expenditure EBITDA EBITDA Margin (%) Interest Depreciation Other income PBT (excl. exceptional items) Exceptional items PBT (incl. exceptional items) (% of Sales) Tax (% of PBT) Adjusted PAT PATM (%)
Source: Company, Angel Research

3QFY13 534.3 393.2 73.6 20.1 3.8 78.1 14.6 491.3 42.9 8.0 2.6 10.8 1.6 31.1 2.3 28.8 5.4 4.8 16.8 24.0 4.5

2QFY13 586.0 432.2 73.8 19.1 3.3 64.1 10.9 515.4 70.5 12.0 2.2 10.7 14.2 72.0 6.2 65.8 11.2 8.3 12.6 57.5 9.8

% chg (qoq) (8.8) (9.0) 4.9 21.8 (4.7) (39.1) (400)bp 22.8 0.9 (88.9) (56.7) (56.2) (41.8) (58.3)

3QFY12 499.5 384.3 76.9 17.3 3.5 53.9 10.8 455.5 44.0 8.8 8.1 12.8 4.0 27.1 10.6 16.5 3.3 2.8 17.0 13.7 2.7

% chg (yoy) 7.0 2.3 15.8 45.0 7.9 (2.4) (77)bp (67.2) (16.1) (60.3) 14.9 74.6 72.2 75.0

9MFY2013 1,638.3 1,203.3 73.5 58.9 3.6 213.8 13.1 1,476.0 162.3 9.9 8.3 31.9 17.6 139.6 15.0 124.6 7.6 18.1 14.5 106.5 6.5

9MFY2012 1,459.2 1,115.4 76.4 51.0 3.5 174.6 12.0 1,340.9 118.3 8.1 17.6 32.3 27.0 95.4 28.9 66.4 4.6 12.8 19.2 53.7 3.7

% chg 12.3 7.9 15.5 22.5 10.1 37.2 180bp (53.2) (1.2) (35.0) 46.4 87.7 42.0 98.5

Exhibit 2: Actual v/s Estimates

Actual v/s Angel's Estimates Total Income (` cr) EBITDA (`cr) EBITDA Margin (%) Adjusted PAT (` cr)
Source: Company, Angel Research

Actual (` cr) 534 43 8.0 24

Estimate (` cr) 580 50 8.6 18

% variation (7.9) (13.6) (53)bp 34.7

FCL reported a mixed set of numbers for 3QFY2013. Its top-line reported a flat yoy growth of 7.0% to `534cr, as compared to our estimate of `580cr. The EBITDA dipped marginally by 2.4% yoy to `43cr while EBITDA margin was down by 77bp on a yoy basis to 8.0%. Raw material cost drop by 335bp yoy, however, was offset by total expansion of 336bp yoy in selling & administration and other expenses. Nevertheless the adjusted PAT grew by a whopping 75% yoy to `24cr on the back of low interest cost (lower by 67.2% yoy) and exceptional item (lower by 42.4% yoy) of losses derived from derivative contracts. The PAT margin too expanded from 2.7% in 3QFY2012 to 4.5% in 3QFY2013.

February 15, 2013

Finolex Cables | 3QFY2013 Result update

Exhibit 3: Net sales growth trend

700 600 500 21.4 16.3 (6.6) 12.1 1.7 (2.6) 12.4 17.4 7.0 25 20 15

Exhibit 4: High Advertisement spends dent margin

80 70 60 50 9.9 7.4 7.5 8.0 8.8 9.6 9.4 8.0 12.0 15 12 9 6 3

(` cr)

(` cr)

300 200

5 0

(%)

30 20 10 0

513

539

461

499

499

605

518

586

51

40

34

40

44

58

49

71

43

100 -

534

(5) (10)

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

Revenue (LHS)

Revenue growth yoy (RHS)

EBITDA (LHS)

EBITDA Margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Segment-wise performance
For 3QFY2013, the electrical cables segment reported a 12.3% yoy growth in sales to `469cr. The contribution of the segment stands at 88% in 3QFY2013 vis-vis 84% in 2QFY2012. The EBIT for the segment came in at `49cr (`45cr in 3QFY2012), 8.5% higher yoy. However, EBIT margin fell by 37bp yoy to 10.5%. The communication cables segment posted a growth of 13.1% yoy in its top-line, with sales of `46cr (`41cr in 3QFY2012) and contributed 9% to the total revenue. The margin of the segment expanded significantly by 564bp yoy to 11.8% from 6.2% in same quarter previous year. The copper rods segment reported a decline of 11.1% in its top-line to `136cr (`153cr in 3QFY2012) during the quarter. The segments contribution has been declining gradually since the company is reducing its exposure to third party owing to thin margins. The EBIT for the segment came in at `0.8cr, while margin stood at 4.1%, 233bp higher yoy.

Exhibit 5: Segment-wise performance

Y/E March (` cr) Total Revenue A) Electrical Cables B) Communications Cables C) Copper Rods D) Others Total Less: Inter-Segmental Rev. Net Sales EBIT Margin (%) A) Electrical Cables B) Communications Cables C) Copper Rods D) Others
Source: Company, Angel Research

3QFY13 469 46 136 38 688 154 534 10.5 11.8 4.1 (1.1)

2QFY13 514 48 175 44 780 194 586 12.2 19.1 4.1 (1.5)

3QFY12 % chg (qoq) % chg (yoy) 417 41 153 31 642 142 499 10.9 6.2 1.8 (7.3) (8.9) (4.1) (22.5) (12.0) (11.8) (20.7) (8.8) bp chg (169) (732) 1 39 12.3 13.1 (11.1) 22.3 7.3 8.4 7.0 bp chg (37) 564 233 613

February 15, 2013

3QFY13

(%)

400

10

40

Finolex Cables | 3QFY2013 Result update

Recent developments in the company

Reducing third party sale of copper rods to boost margins
The copper rods segment was initially set up as backward integration for the cables segment. The excess production after the captive consumption is sold off to third parties at market price. However, owing to thin and declining margins from third party transactions, FCL is gradually reducing its exposure in the segment. The contribution of the segment to the top-line has decreased from 21% in FY2010 to ~8% currently. This trend is expected to continue, thereby improving the overall EBIT margin of the company.

Increasing ad spends to enhance brand visibility

FCL is putting in efforts to improve its brand visibility by increasing its marketing expenses, which have risen steadily from 4.9% of the total sales in FY2009 to 6.7% in FY2012. FCL is expected to continue with such focus, thereby incurring higher expenses towards advertising and marketing. In 3QFY2013, S&A expenses as a percentage of sales rose by 130bp yoy to 6.6% on back of expenditure on TV advertisements during the airing of some recent cricket matches. These efforts are expected to transpire into a higher top-line for the company, going forward.

New solar power plant to reduce power & fuel expenses by one-third
FCL is setting up a solar power plant at its Urse manufacturing unit with a capex of ~`40cr, scheduled to be operational in the coming six months. This power plant is expected to reduce the power cost of the company by one-third which will add to the EBITDA margin.

February 15, 2013

Finolex Cables | 3QFY2013 Result update

Investment arguments
Capex plans to complement rising demand
FCL has its manufacturing facilities located at Pune, Goa and Roorkee. Excluding the older plants, the new plants with updated technology have been operating optimally at ~85-90% capacity utilisation. With customers increasingly demanding high-quality and branded wires, FCL is poised to grow. The company, with its wide distribution reach and penetration in the market, is well poised to meet increase in demand. The company has planned a total capex of ~`100cr over the next 18 months (~`40-50cr in FY2013E) to expand the Roorkee plant and double its current capacity so as to support the rising demand. The same will lead to top-line growth for the company.

Product portfolio additions to facilitate growth & widen reach

FCL has a substantial market share of ~15-16% in both, electrical and telecommunication cables segments. The company has a wide range of products in its offering, ranging within 1.1kv to 66kv. Moreover, the company launched a new range of speaker wires in the communication cables segment and latest versions of T5 tube lights and fittings were launched in the lighting division. Additions in the product portfolio by the company on the back of extensive research and development are expected to facilitate growth in top-line for the company going forward.

Strong growth in user industry to drive top-line

FCL serves varied user industries considering the wide usage of cables due to electrification. The contribution from the construction sector is the largest while other segments include industrial, automotive, power and agriculture. The electrical cables segment contributes ~83% to the total revenue. Of this ~60% revenue comes in from channel sales and 40% through institutional sales. On the other hand, the telecommunication cables segment, which accounts for ~6-7% of the top-line, derives its revenues majorly from institutional sales. The balanced revenue mix in regards to user industry as well as institutional sales reduces the concentration risk.

Closure of Forex contracts in current year

FCL had entered into foreign exchange derivative contracts in FY2007, where it incurred huge losses in FY2008 and FY2009; which since then, the company has been writing off consistently. These contracts are to end in the current fiscal, as per the Management. With closure of these contracts and losses thereof, the profit margins are expected to improve.

February 15, 2013

Finolex Cables | 3QFY2013 Result update

Financials
Exhibit 6: Key Assumptions
Particulars (%) Total Sales Growth Finished Products Volume growth Electrical cables Telephone Cables-Jelly Filled Optical Fibre Cables Continuous Cast Copper Rod Realisation growth Electrical cables Telephone Cables-Jelly Filled Optical Fibre Cables Continuous Cast Copper Rod Raw Material Volume growth Realisation growth
Source: Company, Angel Research

FY2013E 9.9

FY2014E 12.8

12.7 45.0 45.0 (45.0) 3.0 5.0 5.0 7.0 1.6

11.0 5.0 5.0 (10.0) 3.0 5.0 5.0 9.5 3.4

Exhibit 7: Revised Estimates

Y/E March Net Sales (`cr) EBITDA Margin (%) EPS (`)
Source: Angel Research

Earlier estimates FY2013E 2304 9.9 9 FY2014E 2552 9.1 10

Revised estimates FY2013E 2268 9.5 9 FY2014E 2559 10.0 10

% change FY2013E (1.6) (45)bp 1.9 FY2014E 0.3 90bp 1.1

Net sales to grow at CAGR of 11.3% over FY2012-14E

Owing to strong growth in varied user industries, additions in the product portfolio, and strategic alliances entered into by the company, the top-line is expected to post a CAGR of 11.3% over FY2012-14E to `2,559cr in FY2014E.

Exhibit 8: User industry growth to drive volumes

3,000 2,500 2,000 20.7 9.9 12.8 25.8 1.4 30 25 20

Exhibit 9: Segmental contribution

2,500 2,055 2,000 1,771 1,407 1,109 511 204 207 205 236 112 260 101 FY2014E 2,350

1,500 1,000

15 10

(` cr)

(`cr)

(%)

1,500 1,000 500 -

1,619

2,036

2,064

2,268

500 -

2,559

5 0

362 176 FY2010

FY2010

FY2011

FY2012

FY2013E

FY2014E

FY2011

FY2012 Communication

FY2013E CCC rods

Net sales (LHS)

Net sales growth (RHS)

Electrical cables

Source: Company, Angel Research

Source: Company, Angel Research

February 15, 2013

Finolex Cables | 3QFY2013 Result update

Revenue from the electrical cables segment is assumed to grow at CAGR of 15.2% while the communication cables segment (telephone jelly cables and optic fibre cables) is expected to post a CAGR of 12.1% over FY2012-14E. CCC rods (net of inter segmental) contribution is however expected to dip by CAGR of 29.7% for the same period.

EBITDA to post CAGR of 21.0% over FY2012-14E

FCLs EBITDA, on back of healthy top-line growth and improved operational efficiency is expected to post a CAGR of 21.0% over FY2012-14E. EBITDA is to rise from `175cr in FY2012 to `256 in FY2014E. EBITDA margins are expected to expand from 8.5% in FY2012 to 9.5% in FY2013E and further to 10.0% in FY2014E on account of lower contribution by copper rods segment and reduced power & fuel cost (owing to solar power plant).

Exhibit 10: EBITDA margin to normalise

300 250 200 5.2 7.5 9.5 8.5 10.0 10 8 12

Exhibit 11: PAT and PAT growth

180 160 140 120 100 80 60 40 20 0 FY2010 FY2011 PAT (LHS) FY2012 FY2013E FY2014E PAT growth (RHS) (262.4) 50.7 13.0 39.6 100 13.1 50 0 (50) (100) (150) (200) 58 87 98 137 155 (250) (300)

(` cr)

(` cr)

150 100 50 195 0 FY2010 FY2011 EBITDA (LHS) FY2012 FY2013E FY2014E EBITDA margin (RHS) 173 175 214 256

6 4 2 0

Source: Company, Angel Research

(%)

Source: Company, Angel Research

Closure of derivative contracts to help surge in PAT by 25.6%

A robust top-line coupled with healthy EBITDA is expected to aid PAT CAGR of 25.6% over FY2012-14E. Moreover, derivatives contract are expected to be closed by FY2013 . However, tax rate is expected to increase from 10.1% in FY2012 to 15.0% in FY2013E and 28.0% in FY2014E owing to end of 100% tax exemption on the Roorkee plant (30% exemption from FY2014E). As a result, the bottom-line is believed to rise from `98cr in FY2012 to `155cr in FY2014E.

Strong balance sheet position

The company has repaid an ECB of JPY3.5 billion which had been originally drawn in FY2007. The repayment was done out of internal accruals without resorting to any roll-over or substitute loan.

February 15, 2013

(%)

Finolex Cables | 3QFY2013 Result update

Concerns
Competition from the un-organized sector is a concern since the products available from them are relatively cheaper and thus cannibalize into market volumes. Fluctuation in the price of copper which is the essential raw material (~86% of total raw material) is a key concern as it would directly impact operational efficiency. Although prices have fallen recently, but the volatility in commodity market persists.

Exhibit 12: Copper Prices on an uptrend; to dent margins

460 450 440 430

('000 `/ MT)

420 410 400 390 380 370 360

Dec-11

Mar-12

Aug-12

Dec-12

Sep-12

Feb-12

Oct-12

Nov-11

May-12

Nov-12

Source: Bloomberg

Competition
The cables industry, both electrical and tele-communication, is highly competitive, with co-existence of both - organised and un-organised players. FCL has a market share of ~15-20% each in the electrical and telecommunication cables segments.

Exhibit 13: Relative Valuation

TTM- Dec12 Sales (` cr) OPM (%) PAT (` cr) EPS ROIC (`) (%) PE (x) PBV (x) EV/ EBITDA (x) EV/ Sales (x)

FCL Torrent Cables KEI Inds

2,243

8.7

174 353 31

11.4 28.3 4.4

21 24

4.4 3.1

0.9 4.9 0.4

3.2 14.9 2.8

4,104 13.0 1,740 10.3

48 24.6

Source: Capital Line, Angel Research

February 15, 2013

Feb-13

Jan-12

Jun-12

Apr-12

Jan-13

Jul-12

0.3 1.9 0.3

Finolex Cables | 3QFY2013 Result update

Outlook and Valuation

We remain positive on the companys prospects going ahead, given the strong growth in user industries, which shows no sign of abating. Strong growth in user industry, additions in product portfolio, and strategic alliance are all to aid the company in posting a CAGR of 11.3% in the top-line over FY2012-14E to `2,559cr in FY2014E. EBITDA is expected to post a CAGR of 21.0% while margins are to stabilize at 10.0% in FY2014E. PAT growth, owing to healthy operating performance, coupled with closure of derivative contracts in FY2013 is expected to post a CAGR of 25.6% over FY2012-14E. With the recent correction, FCL is available at PE of 5.0x for FY2014E and hence the stock is upgraded to Buy with a target price of `61 based on target PE of 6x FY2014E earnings.

Exhibit 14: One-year forward PE

120 100 80

(`)

60 40 20 0

Feb-09

Feb-10

Feb-11

Feb-12

Aug-09

Aug-10

Aug-11

Price
Source: Company, Angel Research

4.0x

6.5x

9.0x

11.5x

February 15, 2013

Aug-12

Feb-13

Finolex Cables | 3QFY2013 Result update

About the company

FCL is Indias largest manufacturer of electrical and communication cables. The company mainly operates through 4 divisions; 1) Electrical Cables (80%) 2) Communication cables (6.5%) 3) Continuous Cast Copper rods (9.5%) and 4) Others (4%)- comprising PVC sheets, switches and compact fluorescent lamps manufactured through its facilities set up at Roorkee, Goa, and Pune (at Pimpri, Urse).

Exhibit 15: Segments detail

Segments

Electrical Cables

Communication Cables

Others

LDEC

Copper Based

PVC

Power Cables

Optic Fibre/ Glass based

Switches

Traditional JFTC's
Source: Company

Compact Fluoroscent Lamps

Exhibit 16: Applications of different types of cables

Cables Electrical Cables LDEC Power Cables Communication cables Copper based LAN- high speed networks Coaxial- content input to TV sets PE Insulated to connect telephone instruments V-Sat- Dish to base station Optic Fibre/ glass based Maximum bandwidth and high speed Trunk cables Distribution by telecom companies Multi service organisation and service provider Traditional JFTC PVC Sheets Laid underground 4 connecting land line telephone to exchanges Corrugated PVC Sheets Rigid PVC Sheets
Source: Company, Angel Research

Applications Electrification in residential, commercial and industrial establishments Underground usage, main power supply

February 15, 2013

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Finolex Cables | 3QFY2013 Result update

Profit and loss statement

Y/E March (` cr) Gross sales Less: Excise duty Net Sales % chg Net Raw Materials % chg Personnel % chg Other Mfg costs % chg Other % chg Total Expenditure EBITDA % chg EBITDA Margin Depreciation& Amort. EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of Net Sales) Recurring PBT % chg Exceptional Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2010 1,727 108 1,619 20.7 1,179 13.8 59 11.1 72 15.1 114 26.5 1,424 195 95.6 5.2 37.23 157 159.0 9.7 19 24 1.5 139 388.7 74 89 32 35.4 58 58 (262.4) 3.6 6.9 6.9 169.6 FY2011 2,186 151 2,036 25.8 1,575 33.6 65 9.3 82 14.7 140 23.2 1,862 173 (10.9) 7.5 39 135 (14.5) 6.6 19 26 1.3 116 (16.8) 34 107 20 19.0 87 87 50.7 4.3 7.4 7.4 7.2 FY2012 2,182 118 2,064 1.4 1,568 (0.4) 69 7.3 84 2.6 167 18.8 1,889 175 0.8 8.5 39 135 0.5 6.6 26 36 1.8 109 (5.5) 36 109 11 10.1 98 98 13.0 4.8 8.0 8.0 8.5 FY2013E 2,404 136 2,268 9.9 1,679 7.1 82 17.5 113 34.3 179 7.4 2,053 214 22.7 9.5 44 171 26.1 7.5 12 27 1.2 159 45.1 22 163 26 15.0 137 137 39.6 6.0 9.0 9.0 12.0 FY1204E 2,711 152 2,559 12.8 1,901 13.2 92 12.8 107 (5.2) 202 12.8 2,303 256 19.4 10.0 46 210 22.9 8.2 14 22 0.9 196 23 217 62 28.0 155 155 13.1 6.1 10.1 10.1 13.1

February 15, 2013

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Finolex Cables | 3QFY2013 Result update

Balance sheet
Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Total Loans Other Long term liability Net Deferred tax liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Long term Loans & Adv. Investments Current Assets Cash Loans & Advances Other Inventory Debtors Other current assets Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 802 384 419 29 280 415 37 86 292 221 71 193 222 950 826 422 403 19 14 245 538 21 106 411 281 130 291 247 928 871 442 429 12 4 237 534 49 90 395 281 114 194 340 1,022 915 486 429 12 4 259 631 46 102 483 358 125 187 444 1,148 970 532 438 12 4 277 715 49 115 551 410 141 207 508 1,239 31 613 643 275 32 950 31 687 717 126 54 31 928 31 770 800 155 35 33 1,022 31 893 923 147 45 33 1,148 31 1,033 1,064 136 18 21 1,239 FY2010 FY2011 FY2012 FY2013E FY2014E

February 15, 2013

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Finolex Cables | 3QFY2013 Result update

Cash flow statement

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 FY2010
89 37 (24) (69) (32)

FY2011
107 39 (26) (40) (20)

FY2012
109 39 (36) (65) (11)

FY2013E
163 42 (25) (107) (26)

FY1204E
219 44 (22) (61) (63)

2
(29) 34 24

59
(13) 21 26

36
(39) 18 36

47
(44) (21) 27

118
(55) (18) 22

29
0 (11) (9)

34
0 (96) (11)

16
0 11 (12)

(38)
0 3 (14)

(51)
0 (50) (14)

(22)
9 28 37 89

(109)
(16) 37 21 107

(24)
28 21 49 109

(11)
(3) 49 46 27

(64)
3 46 49 22

February 15, 2013

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Finolex Cables | 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 Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) 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) 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 (EBIT/Int.) (0.1) (0.2) 8.4 (0.2) (0.8) 7.0 (0.2) (0.8) 5.2 (0.2) (0.7) 14.1 (0.2) (0.7) 14.8 2.0 41 15 47 34 2.5 45 18 47 37 2.4 50 16 47 37 2.5 49 16 47 64 2.6 47 16 47 65 16.6 26.1 9.0 14.5 20.9 12.1 13.2 18.7 12.3 14.9 20.5 14.8 16.9 23.3 14.6 9.7 0.6 2.7 16.9 4.4 (0.1) 16.0 6.6 0.8 3.2 17.0 12.3 (0.2) 16.0 6.6 0.9 2.9 16.8 15.2 (0.2) 16.5 7.5 0.9 2.7 17.4 7.0 (0.2) 15.7 8.2 0.7 2.8 16.8 7.5 (0.2) 15.1 14.4 14.4 17.2 0.6 42.1 25.0 25.0 28.2 0.7 46.9 6.4 6.4 9.0 0.8 52.3 9.0 9.0 11.8 0.8 60.4 10.1 10.1 13.2 0.8 69.6 13.4 8.1 1.2 1.2 0.4 3.7 0.8 8.9 6.1 1.1 1.4 0.3 3.6 0.7 7.8 5.6 1.0 1.6 0.3 3.7 0.6 5.6 4.3 0.8 1.8 0.3 2.9 0.5 5.0 3.8 0.7 1.8 0.2 2.3 0.5 FY2010 FY2011 FY2012 FY2013E FY1204E

February 15, 2013

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Finolex Cables | 3QFY2013 Result update

Research Team Tel: 022 - 39357800

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

Finolex Cables 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 15, 2013

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