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CMP 1562.

00
Target Price 1718.00
ISIN: INE069A01017
SEPTEMBER 10
th
2014

ADITYA BIRLA NUVO LTD
Result Update (CONSOIDATED BASIS): Q1 FY15
BUY BUY BUY BUY
Index Details
Stock Data
Sector Diversified
BSE Code 500303
Face Value 10.00
52wk. High / Low (Rs.) 1577.00/1030.00
Volume (2wk. Avg.) 17000
Market Cap (Rs. in mn.) 203184.96
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 258933.90 279648.61 299224.01
EBITDA 49370.70 54386.31 58986.31
Net Profit 11428.80 12287.97 13409.06
EPS 87.86 94.46 103.08
P/E 17.78 16.54 15.15
Shareholding Pattern (%)

1 Year Comparative Graph

ADITYA BIRLA NUVO LTD S&P BSE SENSEX

SYNOPSIS
Aditya Birla Nuvo Ltd. (ABNL), a US$ 4 billion
diversified conglomerate by revenue size, is a part
of Aditya Birla Group, a US$ 40 billion Indian
business house.
Consolidated revenue for the quarter rose by 8.05%
to Rs. 62071.30 mn from Rs. 57445.40 mn, when
compared with the prior year period.
During the quarter, consolidated net profit stood at
Rs. 2637.00 mn against Rs. 3313.30 mn in the
corresponding quarter ending of previous year.
During Q1 FY15, EBITDA is Rs. 12727.60 mn as
against Rs. 11738.70 mn in the corresponding
period of the previous year, grew by 8.42%.
During the Q1 FY15, Aditya Birla Financial Services
consolidated revenue was at Rs.16562.9 mn
registered a 21% growth. It posted earnings before
tax of Rs.2200 mn.
The lending book of Aditya Birla Finance expanded
by 50% to about Rs.126000 mn as on 30 Jun, 2014.
Revenue of Fashion & Lifestyle business rose by
18% to Rs.15292.9 mn and EBITDA by 53% to
Rs.1090 mn.
Idea revenue grew by 16% to Rs.75609.9 mn and
EBITDA rose by 20% to Rs.25105.8 mn.
The revenue from the manufacturing businesses at
Rs.8626.8 mn grew by 10% and EBITDA at Rs.880
mn is up by 4%.
For fiscal 2014-15, ABNL has earmarked a capital
expenditure plan of around Rs.500 crore. The
company plans to invest about Rs.350 crore in the
Financial Services Business besides subscribing to
the rights issue of Pantaloons.
Net Sales and PAT of the company are expected to
grow at a CAGR of 5% and 6% over 2013 to 2016E
respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Aditya Birla Nuvo Ltd 1562.00 203184.96 87.86 17.78 1.82 70.00
Balmer Lawrie & Co.Ltd 617.15 17589.20 51.58 11.96 2.15 180.00
3M IndiaLtd 6042.00 68063.60 49.58 121.86 9.73 0.00
Empire Industries Ltd 962.50 5775.00 62.45 15.41 4.83 240.00

QUARTERLY HIGHLIGHTS (CONSOLIDATED)

Results updates- Q1 FY15,

Aditya Birla Nuvo Limited, together with its
subsidiaries, engages in the financial services,
telecom, fashion and lifestyle, IT-ITeS, and
manufacturing businesses in India and worldwide,
reported its financial results for the quarter ended
30
th
June, 2014.

Months Jun-14 Jun-13 % Change
Net Sales 62071.30 57445.40 8.05%
PAT 2637.00 3313.30 -20.41%
EPS 20.27 27.56 -26.44%
EBITDA 12727.60 11738.70 8.42%
The companys net profit declines to Rs. 2637.00 million against Rs. 3313.30 million in the corresponding
quarter ending of previous year, a decrease of 20.41%. Revenue for the quarter rose by 8.05% to Rs. 62071.30
million from Rs. 57445.40 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 20.27 a share during the quarter, registering 26.44% decreased over previous year period.
Profit before interest, depreciation and tax is Rs. 12727.60 million as against Rs. 11738.70 million in the
corresponding period of the previous year.

Break up of Expenditure

Break up of
Expenditure
Rs. Millions

Q1 FY15 Q1 FY14
%
Change
Cost of Material
Consumed
7568.40 6539.60 16%
Purchase of Stock in
Trade
4365.90 3915.30 12%
Employee Benefit
Expenses
7261.90 9061.00 -20%
Depreciation &
Amortization Expense
4049.90 3876.80 4%
Other Expenditure 23193.20 21671.00 7%
Benefits paid - Life
Insurance Business
9976.00 9874.60 1%






Segment Revenue

Quarterly Business-wise performance
Aditya Birla Financial Services
Aditya Birla Financial Services (ABFS) ranks among the top five fund managers (excluding LIC) in India. Its
funds under management grew by 21 per cent to US$22.4 billion (Rs.1342160 mn). Its consolidated revenue
at Rs.16562.9 mn registered a 21% growth. It posted earnings before tax of Rs.2200 mn.
Among the private life insurers, new business premium market share of Birla Sun Life Insurance (BSLI) is up
from 6.7% to 9.5% and its ranking improved from 7 to 5 led by strong growth in the group business. Birla
Sun Life Asset Management (BSAMC) cemented its position as the fourth largest player in India with an
improved market share of 9.98% up from 9.42% a year ago. The lending book of Aditya Birla Finance
expanded by 50% to about Rs.126000 mn as on 30 Jun, 2014.
Fashion & Lifestyle
During the quarter, 66 stores were opened to reach 1,791 exclusive brand outlets/stores, spanning
nationwide across 4.4 million square feet. Its revenue rose by 18% to Rs.15292.9 mn and EBITDA by 53% to
Rs.1090 mn led by revenue growth and margin expansion across formats.
Madura revenue surged by 23% to Rs.7870 mn and EBITDA soared by 66% to Rs.620 mn. EBITDA margin
stands expanded by 200 basis points. The revenue of Pantaloons grew by 12% to Rs.3860 mn.
Jaya Shree attained its highest ever quarterly earnings led by expansion in linen segment. To strengthen its
market leadership, it is further expanding its linen yarn capacity from 3,400 to 6,400 tonnes per annum.

Telecom
Idea ranks as the sixth largest cellular operator in the world, in terms of subscribers based on operations
in a single country. In India, it ranks third with an improved revenue market share at 16.6% up from
15.7% a year ago. Idea revenue grew by 16% to Rs.75609.9 mn and EBITDA rose by 20% to Rs.25105.8
mn.
The cash profit generation of Rs.20.2 billion and equity infusion of Rs.3,000 crore raised in June 2014
through the QIP. In July 2014, Idea raised Rs.750 crore through the issue of equity shares on preferential
basis to Axiata.
Manufacturing
The revenue from the manufacturing businesses at Rs.8626.8 mn grew by 10% and EBITDA at Rs.880 mn is
up by 4%.
Latest Updates
For fiscal 2014-15, ABNL has earmarked a capital expenditure plan of around Rs.500 crore. The company
plans to invest about Rs.350 crore in the Financial Services Business besides subscribing to the rights issue of
Pantaloons.
COMPANY PROFILE
Aditya Birla Nuvo is a ~US$4 billion conglomerate operating in the services and the manufacturing sectors,
where it commands a leadership position. Its service sector businesses include Financial Services (Life Insurance,
Asset Management, NBFC, Private Equity, Broking, Wealth Management and general insurance advisory), Fashion
& Lifestyle (Branded apparels & Textiles) and Telecom. Its manufacturing businesses comprise the Agri, Rayon
and Insulators Businesses.
Aditya Birla Nuvo is part of the Aditya Birla Group, a US$40 billion Indian multinational. The Group operates in
36 countries across the globe, is anchored by an extraordinary force of about 120,000 employees belonging to 42
nationalities and derives more than 50 per cent of its revenue from its overseas operations.
Aditya Birla Financial Services (ABFS) ranks among the top five fund managers (excluding LIC) in India. Its funds
under management grew by 21 per cent to US$22.4 billion (Rs.1342160 mn). The lending book of Aditya Birla
Finance expanded by 50% to about Rs.126000 mn as on 30, June, 2014.
Selling two branded apparels every second, Fashion & Lifestyle Business is one of the largest branded apparel
players in India. Louis Philippe and Van Heusen continue to be the best selling brands in India. It opened one
store per day to expand its retail presence to 1,750 exclusive brand outlets/stores, spanning nationwide across
4.3 million square feet.
Business Area and its Brands
Garments Madura Fashion & Lifestyle
a) Louis Philippe
b) Van Heusen
c) Allen Solly
d) Peter England
e) Espirit
f) People
g) The Collective- Retailing International Brand
Viscose Filament Yarn Indian Rayon
Garments Madura Fashion & Lifestyle
Carbon Black Hi-Tech Carbon
Agri solutions Indo Gulf Fertilisers, Birla Shaktimaan
Textiles Jaya Shree Textiles
Insulators Aditya Birla Insulators
Joint Ventures and Subsidiaries
Life Insurance Birla Sun Life Insurance Company Limited (A 74:26 joint venture between ABNL and
Sun Life Financial, Canada)
Asset Management Birla Sun Life Asset Management Company Limited (A 50:50 joint venture
between ABNL and Sun Life Financial, Canada)
NBFC - Aditya Birla Finance Limited (100 per cent subsidiary of ABNL)
Other Financial services Aditya Birla Capital Advisors Private Limited (Private Equity), Aditya Birla
Money Limited (Broking), Aditya Birla Money Mart Limited (Wealth Management), Aditya Birla
Insurance Brokers Limited (General Insurance Advisory)
Telecom Idea Cellular Limited (A joint venture, ABNL owns 25.27 per cent)





FINANCIAL HIGHLIGHT (CONSOLIDATED) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March31, 2013 -2016E
ADITYA BIRLA NUVO LTD. FY13A FY14A FY15E FY16E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 1203.10 1301.80 1301.80 1301.80
Reserves and Surplus 90398.70 110585.60 123552.28 137585.76
Money Received against Share Warrants 2236.20 0.00 0.00 0.00
1. Sub Total - Net worth 93838.00 111887.40 124854.08 138887.56
2. Preference Share issued by Subsidiary and Joint Venture
Companies
4.90 4.90 5.19 5.45
3. Minority Interest 9404.30 7781.20 7003.08 7353.23
Non Current Liabilities

long term borrowing 88957.10 118956.10 137989.08 154547.77
Deferred Tax Liabilities 4495.40 5522.30 6295.42 6924.96
Other Long term liabilities 5114.70 5651.30 6103.40 6469.61
Long term Provisions 1300.90 2426.90 3154.97 3628.22
Policyholders' Fund 210747.30 232771.20 251392.90 266476.47
Fund for Future Appropriations 667.70 184.90 203.39 213.56
4. Sub Total - Non Current liabilities 311283.10 365512.70 405139.16 438260.58
Current Liabilities

Short term borrowings 71939.20 65342.50 62728.80 59592.36
Trade payables 31729.30 30911.60 32611.74 33916.21
Other Current liabilities 45757.70 42856.90 41142.62 42788.33
Short term Provisions 2761.40 3425.50 3939.33 4333.26
Policyholders' Fund 2920.10 2069.90 2318.29 2503.75
Fund for Future Appropriations 1428.00 548.40 597.76 633.62
5. Sub Total - Current liabilities 156535.70 145154.80 143338.53 143767.53
Total Liabilities (1+2+3+4+5) 571066.00 630341.00 680340.04 728274.36
APPLICATION OF FUNDS

Non-Current Assets

Fixed Assets 118394.20 142383.40 158045.57 169740.95
Goodwill on consolidation 36046.70 37606.40 39110.66 40283.98
Non-current investments 33382.10 38355.60 42191.16 45566.45
Assets Held to Cover Linked Liabilities of Life Insurance
Business
162157.10 169998.80 173398.78 177560.35
Deferred Tax Assets (Net) 212.50 480.20 566.64 645.97
Long-term Loans and Advances 46511.80 65264.90 77012.58 88564.47
Other non-current assets 45.70 439.50 531.80 611.56
1. Sub Total - Non Current Assets 396750.10 454528.80 490857.18 522973.72
Current Assets

Current Investment 28696.40 14360.20 15509.02 16439.56
Assets Held to Cover Linked Liabilities of Life Insurance
Business
31213.60 36345.50 40343.51 43167.55
Inventories 18150.30 15422.20 14188.42 15039.73
Trade receivables 33645.80 26426.90 22991.40 22043.93
Cash and Bank Balances 8243.90 7186.20 7832.96 8381.27
Short-terms loans & advances 47464.00 68495.90 80663.49 91956.38
Other current assets 6901.90 7575.30 7954.07 8272.23
2. Sub Total - Current Assets 174315.90 175812.20 189482.86 205300.64
Total Assets (1+2) 571066.00 630341.00 680340.04 728274.36

Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 254902.00 258933.90 279648.61 299224.01
Other Income 3606.20 3388.60 3490.26 3629.87
Total Income 258508.20 262322.50 283138.87 302853.88
Expenditure -217085.00 -212951.80 -228752.56 -243867.57
Operating Profit 41423.20 49370.70 54386.31 58986.31
Interest -13211.60 -15613.30 -17486.90 -19235.59
Gross profit 28211.60 33757.40 36899.41 39750.73
Depreciation -12954.90 -16088.60 -17697.46 -19113.26
Exceptional Items 0.00 54.20 -133.30 0.00
Profit Before Tax 15256.70 17723.00 19068.65 20637.47
Tax -3417.80 -5505.00 -6101.97 -6603.99
Profit After Tax 11838.90 12218.00 12966.68 14033.48
Minority Interest -1250.00 -789.20 -678.71 -624.42
Net Profit 10588.90 11428.80 12287.97 13409.06
Equity capital 1202.10 1300.80 1300.80 1300.80
Reserves 90398.70 110585.60 123552.28 137585.76
Face value 10.00 10.00 10.00 10.00
EPS 88.09 87.86 94.46 103.08
Quarterly Profit & Loss Statement for the period of 31
st
Dec, 2013 to 30
th
Sep, 2014E
Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E
Description 3m 3m 3m 3m
Net sales 65448.00 71118.30 62071.30 68278.43
Other income 725.30 961.70 746.00 783.30
Total Income 66173.30 72080.00 62817.30 69061.73
Expenditure -53208.20 -59445.90 -50089.70 -55646.92
Operating profit 12965.10 12634.10 12727.60 13414.81
Interest -3557.10 -4718.00 -4087.90 -4374.05
Gross profit 9408.00 7916.10 8639.70 9040.76
Depreciation -4071.30 -4299.40 -4049.90 -4252.40
Exceptional Items 0.00 -186.40 -133.30 0.00
Profit Before Tax 5336.70 3430.30 4456.50 4788.36
Tax -1577.30 -1601.30 -1676.00 -1762.12
Profit After Tax 3759.40 1829.00 2780.50 3026.24
Minority Interest -306.70 -67.70 -143.50 -154.98
Net Profit 3452.70 1761.30 2637.00 2871.26
Equity capital 1300.80 1300.80 1300.80 1300.80
Face value 10.00 10.00 10.00 10.00
EPS 26.54 13.54 20.27 22.07

Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 88.09 87.86 94.46 103.08
EBITDA Margin (%) 16.25% 19.07% 19.45% 19.71%
PBT Margin (%) 5.99% 6.84% 6.82% 6.90%
PAT Margin (%) 4.64% 4.72% 4.64% 4.69%
P/E Ratio (x) 17.73 17.78 16.54 15.15
ROE (%) 12.92% 10.92% 10.39% 10.10%
ROCE (%) 21.54% 22.10% 22.14% 22.12%
Debt Equity Ratio 1.76 1.65 1.61 1.54
EV/EBITDA (x) 11.05 10.84 10.31 9.87
Book Value (Rs.) 762.01 860.14 959.82 1067.70
P/BV 2.05 1.82 1.63 1.46
Charts



OUTLOOK AND CONCLUSION
At the current market price of Rs.1562.00, the stock P/E ratio is at 16.54 x FY15E and 15.15 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.94.46 and
Rs.103.08 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 5% and 6% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 10.31 x for FY15E and 9.87 x for FY16E.
Price to Book Value of the stock is expected to be at 1.63 x and 1.46 x respectively for FY15E and FY16E.
For fiscal 2014-15, ABNL has earmarked a capital expenditure plan of around Rs.500 crore. The company plans
to invest about Rs.350 crore in the Financial Services Business besides subscribing to the rights issue of
Pantaloons. The cash flow from operations and proceeds from the divestment of Minacs will support the growth
plans of ABNL. Hence, we recommend BUY in this particular scrip with a target price of Rs.1718.00 for Medium
to Long term investment.
INDUSTRY OVERVIEW
Financial Services in India
The Indian Life insurance industry currently comprises 23 life insurers and one public sector life insurer LIC.
The top 7 out of 23 private players contributed to 74% of the private sectors total new business premium in
2013-14.

In 2013-14, the industrys new business premium was up by 3% to Rs. 59,041 Crore. LIC grew by 8% while
private players de-grew by 5%. Consequently, the share of private players in the total pie declined from 40% to
37%. In terms of Individual Life new business, private life insurers as well as LIC de-grew by 3%. (Source: IRDA)
Given the macro-economic environment and product transition to meet regulatory guidelines, sales growth
across the industry was impacted.
Following major regulatory changes in 2009, there has been a perceptible slowdown in the industry. However,
this has given an opportunity to existing insurance players to review their operating models to drive towards
higher efficiencies and focus on more balanced growth objectives.
Branded Apparels and Accessories
In the organised retailing market, clothing and fashion retailing is the largest and the most penetrated segment.
The organised apparel market is growing at a faster pace than the overall apparel retail market driven by
multiple factors including significant growth in discretionary income and changing lifestyles. Easy availability of
credit and use of plastic money have contributed to a strong and growing consumer culture in India. Expansion
in the size of the upper middle class and higher advertisement outlays have led to high brand consciousness and
more spending on luxury products.
Within the organized apparel market, mens category is the largest segment with more than 50% share.
Menswear will continue to dominate the market in the years to come, however, the womenswear and kidswear
are expected to grow faster and enhance their share in the overall expanding pie. (Source Industry Research
Reports)
In fiscal 2013-14, persistently high inflation coupled with a slow down in the economy had a bearing on the
clothing and fashion retailing segment too due to subdued consumer discretionary spending.
Indian Telecom Industry
The mobile telecommunications industry in India is divided into 22 Service Areas three metro Service Areas,
and 19 other Service Areas. As of March 31, 2014, India had a total reported subscriber base of 904.5 million and
a VLR (active) subscriber base of 790.9 million. As of March 31, 2014, mobile tele-density was at 72.9% based on
reported subscriber and 63.8% based on VLR subscribers. In fiscal 2013-14, the gross revenue of the Indian
wireless sector grew year-on-year by 10% to Rs. 1,651 billion (USD 28 billion). The top three cellular operators
in India, Bharti Airtel, Vodafone and Idea Cellular, garnered 70% revenue market share up from 68% a year ago.
(Source: TRAI).
The competitive intensity in the industry has decreased since the quashing of the licenses and the associated
spectrum by the Supreme Court of India in February 2012. Small operators are forced to exit or reduce their
presence in India. The number of licensees has therefore decreased to 6-10 mobile operators per Service Area. In
addition, increasing losses have forced operators to start rationalizing tariffs to protect their investments. As a
result, realizations have started to improve.















Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates 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. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.








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