4QFY2011 Result Update | Infrastructure

May 30, 2011

Nagarjuna Construction BUY

CMP `83
Performance Highlights Target Price `109
Y/E March (` cr) 4QFY11 4QFY10 3QFY11 % chg (yoy) % chg (qoq) Investment Period 12 Months
Net sales 1,450.4 1,522.7 1,335.5 (4.7) 8.6
Operating profit 130.9 152.7 127.6 (14.3) 2.6 Stock Info
Sector Infrastructure
Net profit 35.7 102.6 40.5 (65.3) (12.0)
Market Cap (` cr) 2,140
Source: Company, Angel Research
Beta 1.3
For 4QFY2011, Nagarjuna Construction’s (NCC) numbers came below our and
street expectations, and management missed its yearly guidance. For FY2011, 52 Week High / Low 197/80
extended monsoons, delays in payment by clients and lower order booking were Avg. Daily Volume 162,291
cited as reasons impacting the top line. We are downgrading our FY2012 and Face Value (`) 2
FY2013 estimates to reflect the weak results and general macro headwinds faced BSE Sensex 18,232
by the sector. However, owing to attractive valuations and diversified order book
Nifty 5,473
with exposure to most growth sectors, we maintain our Buy view on NCC.
Reuters Code NGCN.BO
Numbers disappoint on all fronts: On the top-line front, NCC reported a 4.7% yoy
Bloomberg Code NJCC@IN
decline to `1,450cr (`1,523cr), below our estimates of `1,742cr. EBITDAM dipped
by 100bp and stood at 9.0% (10.0%) for the quarter against our estimates of
10.0%, which was mainly on account of lower top-line growth. PAT fell by 65.3%
Shareholding Pattern (%)
yoy to `35.7cr (`102.6cr), against our expectation of a 33.6% decline. Poor
bottom-line performance was due to lower-than-expected top-line growth, higher Promoters 20.0
interest cost (65.3% yoy/31.3% qoq increase; attributed by increased debt levels MF / Banks / Indian Fls 26.7
and hardening of interest rates) and higher tax rate (41.0%), in line with our tax FII / NRIs / OCBs 38.9
assumption of 40% for the quarter.
Indian Public / Others 14.3
Outlook and valuation: The current o/s order book of NCC stands at `16,180cr.
Going ahead, we expect NCC’s interest cost to increase on the back of higher
debt requirements to fund its investments in the power project and on potential Abs. (%) 3m 1yr 3yr
winning of road BOT projects. We have downgraded the P/E multiple for the stock Sensex 2.3 8.1 11.1
(from 12x earlier to 10x currently) in light of increased debt levels and
NCC (17.1) (51.4) (57.8)
disappointing order inflow (`600cr in 4QFY2011) along with a gloomy macro
environment and pressure on earnings growth in the near to medium term.
However, at the current price, the stock is trading at attractive valuations (6.6x
FY2013E earnings adjusted for its investments and subsidiaries) and at 0.8x
FY2013E on P/BV basis. Hence, we maintain Buy on the stock with a revised
target price of `109.
Key financials (Standalone)
Y/E March (` cr) FY2010 FY2011 FY2012E FY2013E
Net sales (incl. op. income) 4,778 5,074 5,856 6,939
% chg 15.1 6.2 15.4 18.5
Adj. net profit 200.3 159.7 148.7 196.0
% chg 30.2 (20.3) (6.9) 31.8
FDEPS (`) 7.8 6.2 5.8 7.6
EBITDA margin (%) 10.1 9.6 9.3 9.7
P/E (x) 10.7 13.4 14.4 10.9
Shailesh Kanani
RoAE (%) 10.2 6.9 6.1 7.6 022-39357800 Ext: 6829
RoACE (%) 12.8 9.7 9.0 9.8 [email protected]
P/BV (x) 1.0 0.9 0.9 0.8
EV/Sales (x) 0.7 0.9 0.8 0.8 Nitin Arora
022-39357800 Ext: 6842
EV/EBITDA (x) 7.2 9.2 8.9 8.4
[email protected]
Source: Company, Angel Research

Please refer to important disclosures at the end of this report 1

 NCC | 4QFY2011 Result Update

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) 4QFY11 4QFY10 3QFY11 % Chg (yoy) % Chg (qoq) FY2011 FY2010 % Chg
Net Sales 1450.4 1522.7 1335.5 (4.7) 8.6 5073.7 4777.8 6.2
Total Expenditure 1319.5 1370.0 1207.9 (3.7) 9.2 4586.1 4294.4 6.8
Operating Profit 130.9 152.7 127.6 (14.3) 2.6 487.6 483.4 0.9
OPM (%) 9.0 10.0 10.3 (100)bp (130)bp 9.6 10.1 (50)bp
Interest 57.5 34.8 43.8 65.3 31.3 168.2 196.0 (14.2)
Depreciation 18.6 13.7 17.5 36.1 6.2 68.5 52.5 30.4
Non Operating Income 5.6 0.0 2.3 - 145.8 14.6 68.6 (78.7)
Nonrecurring items 0.0 50.8 0.1 - - 0.1 33.6 -
Profit Before tax 60.5 155.1 68.7 (61.0) (12.0) 265.7 337.1 (21.2)
Tax 24.8 52.5 28.2 (52.7) (11.9) 102.1 116.4 (12.2)
Reported Net Profit 35.7 102.6 40.5 (65.3) (12.0) 163.6 220.8 (25.9)
PAT (%) 2.5 6.7 3.0 (420)bp (50)bp 3.2 4.6 (140)bp
FDEPS (`) 1.4 4.0 1.6 (65.3) (12.0) 6.4 8.6 (25.9)
Source: Company, Angel Research

Exhibit 2: 4QFY2011 – Actual vs. Estimates

Estimates Actual Variation (%)
Net Sales (` cr) 1,741.5 1,450.4 (16.7)
OPM (%) 10.0 9.0 (100)bp
PAT (` cr) 68.1 35.7 (47.6)
Source: Company, Angel Research

Execution slows down once again

For 4QFY2011, NCC’s numbers came below our and street expectations. On the
top-line front, the company reported a 4.7% yoy decline to `1,450cr (`1,523cr),
below our estimates of `1,742cr. The muted revenue performance was due to
lower order booking during the year and delayed payments from clients (read
public sector).

On the order booking front, the company faced huge slowdown. The company
bagged orders of mere `577cr for the quarter against the guidance of `3,750cr.
This is despite the fact that the company had maintained this guidance during the
last concall (mid-February 2011) and cited huge L1 orders (~`3,000cr) as one of
the comforting factors.

May 30, 2011 2

 NCC | 4QFY2011 Result Update

Exhibit 3: Subdued top-line growth a worrying factor... Exhibit 4: ...with declining signs of order booking
1,600 54.5 60 3,500 102.1 120.0
100.0
1,400 39.0 50 3,000 59.5 80.0
1,200 31.1 40 2,500 31.5 60.0
25.2
40.0
1,000 30 2,000 0.9
16.1 20.0
800 12.612.6 20 (21.3) (16.1)
8.6 1,500 (32.7)(28.8) (29.5) 0.0
4.6 2.0 (20.0)
600 0 0 0 0 10
(4.7) 1,000 (72.1) (40.0)
400 (11.1) 0 (60.0)
500
200 -10 (80.0)
- (100.0)
0 -20

4QFY11
2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
Sales (` cr, LHS) Growth (yoy %, RHS) Order Booking (` cr, LHS) Growth (yoy %, RHS)

Source: Company, Angel Research Source: Company, Angel Research

Subdued EBITDAM, with net margin under severe pressure

Operating margin for the quarter, on a standalone basis, came in at 9.0%, below
our estimate of 10.0%, mainly on account of lower top-line growth.

PAT fell by 65.3% yoy to `35.7cr (`102.6cr), against our expectation of a 33.6%
decline. Poor bottom-line performance was due to lower-than-expected top-line
growth, higher interest cost (65.3% yoy/31.3% qoq increase; attributed by
increased debt levels and hardening of interest rates) and higher tax rate (41.0%),
in line with our tax assumption of 40% for the quarter. Further, management has
indicated that it has fully provided (`14.5cr) for the tax raid faced during the year
in FY2011 accounts and going ahead the tax rate is expected to be on normal
lines.

Exhibit 5: EBITDAM expected to be under pressure Exhibit 6: PATM to be under pressure as well
140.0 12.0 60.0 4.0 4.1 4.0 4.5
3.8 3.8 3.8
11.5 3.5 3.5 4.0
120.0
10.4 10.4 10.2 10.3 11.0 50.0
3.0 3.5
100.0 9.9 10.5
9.7 9.6 2.7
10.0 40.0 2.5 3.0
80.0
9.0 9.5 2.5
8.8 30.0
60.0 9.0 2.0
40.0 8.5 20.0 1.5
7.6
8.0
20.0 1.0
7.5 10.0
0.0 7.0 0.5
0.0 0.0
2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

EBITDA (` cr, LHS) EBITDAM (%, RHS)

PAT (` cr, LHS) PATM (%, RHS)

Source: Company, Angel Research Source: Company, Angel Research

May 30, 2011 3

 NCC | 4QFY2011 Result Update

Order book analysis

NCC’s order book, which stands at `16,180cr (3.2x FY2011 revenue) as of
FY2011, is spread across nine verticals and the major contributors include the
building, water and road segments. The company has missed its guidance for the
yearly order inflow for FY2011 by 32% with order booking of mere `6,800cr.
Going ahead, management expects the road, building and captive power
segments to gather momentum and add significantly to the order book.

Exhibit 7: Order backlog of `16,180cr (as of FY2011, ` cr)

Roads
485 2,265 809
Buildings
971 Water
5,663
1,618 Irrigation

Electricals

Power
1,780
2,103 Oil/gas etc
485
Metals

International

Source: Company, Angel Research

Change in estimates

Going ahead, we expect NCC’s interest cost to increase on the back of higher debt
requirements to fund its investments in the power project and on potential winning
of road BOT projects. Therefore, this will significantly impact the company’s
bottom-line growth, given the limited cushion from top-line growth.

Exhibit 8: Change in estimates to factor in lower top-line growth and higher interest cost
FY2012E FY2013E
Earlier estimates Revised estimates Variation (%) Earlier estimates Revised estimates Variation (%)
Revenue 6,192.1 5,856.1 (5.4) 7,439.2 6,939.2 (6.7)
EBITDA margin (%) 10.1 9.3 (80)bp 9.7 9.7 -
PAT 226.9 148.7 (34.5) 247.0 196.0 (20.7)
Source: Company, Angel Research

May 30, 2011 4

 NCC | 4QFY2011 Result Update

Outlook and valuation

NCC’s current o/s order book stands at `16,180cr. Going ahead, we expect the
company’s interest cost to increase on the back of higher debt requirements to
fund its investments in the power project and on potential winning of road BOT
projects. We have downgraded the P/E multiple for the stock (from 12x earlier to
10x currently) in light of increased debt levels and disappointing order inflow
(`577cr in 4QFY2011), along with a gloomy macro environment and pressure on
earnings growth in the near to medium term. However, at the current price, the
stock is trading at attractive valuations (6.6x FY13E earnings adjusted for its
investments and subsidiaries) and at 0.8x FY13E on P/BV basis.

We have valued NCC on an SOTP basis with a target price of `109/share by

assigning 10x FY2013E earnings (standalone). The company’s real estate venture
has been valued on P/B basis and its BOT assets have been valued on DCF basis.
Our target price implies an upside of ~31.3% from current levels. Hence, we
maintain our Buy view on the stock with a revised target price of `109.

Exhibit 9: Derivation of SOTP-based target price for NCC (FY2013E)

Business Segment Methodology Remarks ` cr Rs/share % to TP
Core Construction - Parent P/E 10x FY2013E Earnings 1,960 76.4 69.8
NCC International (Construction) P/E 7x FY2013E Earnings 308.0 12.0 11.0
Real Estate P/BV 0.5 of equity invested; NCC's share 80.0% 48.0 1.9 1.7
Road BOT Projects 215.1 8.4 7.7
Brindavan Infra NPV CoE -14%, NCC's share 33.3% 12.4 0.5 0.4
Bangalore Elevated Tollway NPV CoE -14%, NCC's share 35.4% 55.3 2.2 2.0
Western UP Tollway NPV CoE -14%, NCC's share 30.0% 28.3 1.1 1.0
OB Infra NPV CoE -14%, NCC's share 64.0% 47.1 1.8 1.7
Pondicherry Tindivanam NPV CoE -14%, NCC's share 49.0% 72.0 2.8 2.6
Power venture 278.2 10.8 9.9
Himachal Sorang P/BV 1.0x FY11E equity invested; NCC's share 67.0% 103.2 4.0 3.7
NCC Power P/BV 0.5x FY11E equity invested; NCC's share 55.0% 125.0 4.9 4.5
Himalaya Green P/BV 1.0x FY11E equity invested; NCC's share 54.0% 50.0 1.9 1.8
Total 2,809 109.5 100.0
CMP (Rs) 83.4
Upside (%) 31.3
Source: Company, Angel Research

Exhibit 10: Key assumptions – Order inflow is expected to get a boost in FY12 on account of captive power order
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
Order inflow 4,745 7,571 4,951 7,948 6,800 11,691 12,820
Revenue 2,871 3,473 4,151 4,778 5,074 5,856 6,939
Order backlog (Y/E) 7,302 11,400 12,200 15,370 16,180 24,549 29,930
OB-to-sales ratio (x) 2.5 3.3 2.9 3.2 3.2 4.2 4.3
Source: Company, Angel Research

May 30, 2011 5

 NCC | 4QFY2011 Result Update

Exhibit 11: Angel EPS forecast v/s consensus

Angel forecast Bloomberg consensus Variation (%)
FY2012E 5.8 8.6 48.6
FY2013E 7.6 10.3 34.3
Source: Company, Angel Research

Exhibit 12: Recommendation summary

Company CMP TP Rating Top-line (` cr) EPS (`) Adj. P/E OB/
FY11E FY12E FY13E CAGR (%) FY11E FY12E FY13E CAGR (%) FY11E FY12E FY13E Sales(x)
CCCL 33 - Neutral 2,199 2,433 2,946 15.7 2.5 2.6 4.3 29.4 13.0 12.8 7.8 2.3
HCC 31 - Neutral 4,084 4,722 5,485 15.9 1.2 1.1 1.6 16.6 1.0 1.1 0.7 4.0
IRB Infra 155 215 Buy 2,438 3,387 4,325 33.2 13.6 14.1 15.5 6.6 4.1 3.9 3.6 -
IVRCL 70 100 Buy 5,651 6,275 7,494 15.2 5.9 6.7 8.7 20.9 6.8 6.0 4.7 4.2
JP Assoc. 83 107 Buy 13,217 15,860 18,708 19.0 3.1 5.1 6.8 48.8 26.9 16.1 12.2 -
Punj Lloyd 58 - Neutral 8,129 10,048 11,362 18.2 (1.0) 3.1 3.8 - - 19.0 15.3 3.4
NCC 83 109 Buy 5,074 5,856 6,939 16.9 6.2 5.8 7.6 10.8 8.1 8.7 6.6 3.2
Sadbhav 141 161 Accu. 2,209 2,602 2,865 13.9 8.0 8.4 9.7 10.3 8.5 8.1 7.0 3.2
Simplex In. 303 438 Buy 4,842 5,370 6,909 19.5 25.9 24.9 39.8 23.8 11.7 12.2 7.6 2.8
Patel Engg 143 - Neutral 3,499 3,272 3,587 1.2 18.4 15.5 23.0 11.8 3.3 3.9 2.6 4.1
Madhucon 99 117 Buy 1,705 2,069 2,632 24.3 6.9 7.5 8.7 12.6 7.6 6.9 6.0 3.7
L&T 1,631 2,033 Buy 43,905 53,705 66,160 22.8 58.3 68.5 82.6 19.0 20.0 17.0 14.1 3.0
ITNL 194 308 Buy 4,049 5,103 7,100 32.4 22.3 24.0 29.7 15.5 1.0 0.9 0.8 5.5
Source: Company, Angel Research

Exhibit 13: SOTP break-up

Company Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total
` % to TP ` % to TP ` % to TP ` % to TP ` % to TP `
CCCL 38 100 - - - - - - - - 38
HCC 13 30 23 55 6 15 - - - - 43
IRB Infra 88 41 - - 123 57 5 2 - - 215
IVRCL 69 69 - - - - 30 31 - - 100
JP Assoc. 32 30 31 29 - - - - 44 41 107
Punj Lloyd 94 100 - - - - - - - - 94
NCC 76 70 2 2 8 8 - - 23 21 109
Sadbhav 87 54 - - 73 46 - - - - 161
Simplex In. 438 100 - - - - - - - - 438
Patel Engg 61 43 47 33 16 11 - - 19 14 143
Madhucon 70 60 2 2 33 28 - - 12 10 117
L&T 1,569 77 - - - - 464 23 - - 2,033
ITNL 136 44 - - 148 48 - - 24 8 308
Source: Company, Angel Research

May 30, 2011 6

 NCC | 4QFY2011 Result Update

Profit & loss statement (Standalone)

Y/E March ( ` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
Net Sales 3,473 4,151 4,778 5,074 5,856 6,939
Other operating income - - - - - -
Total operating income 3,473 4,151 4,778 5,074 5,856 6,939
% chg 21.0 19.5 15.1 6.2 15.4 18.5
Total Expenditure 3,113 3,778 4,294 4,586 5,312 6,265
Net Raw Materials 1,096 1,304 1,807 1,561 1,822 2,154
Other Mfg costs 1,704 2,084 2,066 2,554 2,954 3,482
Personnel 140 189 184 216 243 281
Other 173 201 237 256 293 348
EBITDA 360 374 483 488 544 674
% chg 33.4 3.9 29.4 0.9 11.5 23.9
(% of Net Sales) 10.4 9.0 10.1 9.6 9.3 9.7
Depreciation& Amortisation 48 53 53 68 81 97
EBIT 312 320 431 419 463 576
% chg 29.9 2.8 34.5 (2.7) 10.4 24.6
(% of Net Sales) 9.0 7.7 9.0 8.3 7.9 8.3
Interest & other Charges 112 162 196 269 361 427
Other Inc. (incl pft from Ass/JV) 45 70 69 112 119 140
(% of PBT) 18.4 30.7 22.6 42.7 54.0 48.3
Recurring PBT 245 228 303 262 220 290
% chg 12.1 (6.9) 33.0 (13.7) (15.9) 31.8
Extraordinary Expense/(Inc.) - - (34) - - -
PBT (reported) 245 228 337 262 220 290
Tax 81 74 116 102 71 94
(% of PBT) 33.1 32.6 34.5 39.0 32.4 32.4
PAT (reported) 164 154 221 160 149 196
Add: Share of earnings of asso. - - - - - -
Less: Minority interest (MI) - - - - - -
Prior period items 2.2 - 4.1 - - -
PAT after MI (reported) 162 154 217 160 149 196
ADJ. PAT 162 154 200 160 149 196
% chg 40.0 (5.0) 30.2 (20.3) (6.9) 31.8
(% of Net Sales) 4.7 3.7 4.2 3.1 2.5 2.8
Basic EPS (`) (Reported) 6.9 6.5 8.4 6.2 5.8 7.6
Fully Diluted EPS (`) (Diluted) 6.3 6.0 7.8 6.2 5.8 7.6
% chg 40.0 (5.0) 30.2 (20.3) (6.9) 31.8

May 30, 2011 7

 NCC | 4QFY2011 Result Update

Balance sheet (Standalone)

Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
SOURCES OF FUNDS
Equity Share Capital 46.0 45.8 51.3 51.3 51.3 51.3
Preference Capital - - - - - -
Reserves& Surplus 1,526 1,640 2,178 2,327 2,434 2,588
Shareholder’s Funds 1,572 1,686 2,230 2,379 2,485 2,639
Minority Interest - - - - - -
Total Loans 894 1,244 1,530 2,484 2,863 3,733
Deferred Tax Liability 17 19 25 31 31 31
Total Liabilities 2,483 2,948 3,785 4,894 5,379 6,403
APPLICATION OF FUNDS
Gross Block 662 623 756 958 1,138 1,363
Less: Acc. Depreciation 142 164 202 271 352 449
Net Block 519.7 459.2 553.8 687.1 785.8 913.4
Capital Work-in-Progress 14.3 28.1 43.4 34.4 39.3 45.7
Investments 565 740 941 1,201 1,501 1,849
Current Assets 3,029 3,361 4,092 4,946 5,365 6,443
Inventories 549 750 754 896 939 1,107
Sundry Debtors 868 1,026 1,299 1,454 1,685 2,091
Cash 233 135 184 140 173 196
Loans & Advances 1,372 1,448 1,852 2,447 2,563 3,044
Other 6.1 3.0 3.2 9.3 4.6 5.5
Current liabilities 1,644 1,641 1,845 1,974 2,311 2,848
Creditors/Adv/Other Liabilities 1,073 1,088 1,270 1,249 1,494 1,838
Mobilisation Advance & Others 483.3 466.6 479.8 560.5 679.3 845.2
Provisions 88.0 86.7 95.7 114.8 137.8 165.3
Net Current Assets 1,384 1,721 2,247 2,971 3,053 3,595
Mis. Exp. not written off 0.0 0.0 - - - -
Total Assets 2,483 2,948 3,785 4,894 5,379 6,403

May 30, 2011 8

 NCC | 4QFY2011 Result Update

Cash flow statement (Standalone)

Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
Profit before tax (excl MI) 245 228 337 262 220 290
Depreciation 48 53 53 68 81 97
Change in Working Capital 608 435 477 768 48 519
Less: Other income 45 70 69 112 119 140
Direct taxes paid 112 132 116 102 71 94
Cash Flow from Operations (472) (355) (272) (652) 63 (366)
(Inc.)/ Dec. in Fixed Assets (159) (7) (148) (193) (185) (231)
(Inc.)/ Dec. in Investments (88) (175) (201) (260) (300) (348)
Other income 45 70 69 112 119 140
Cash Flow from Investing (202) (113) (280) (341) (366) (439)
Issue of Equity 429 - 361 - - -
Inc./(Dec.) in loans 257 350 286 954 379 870
Dividend Paid (Incl. Tax) 23 35 39 42 42 42
Others (1) 55 (6) 37 - -
Cash Flow from Financing 663 370 602 948 337 828
Inc./(Dec.) in Cash (10) (98) 49 (44) 33 23
Opening Cash balances 243 233 135 184 140 173
Closing Cash balances 233 135 184 140 173 196

May 30, 2011 9

 NCC | 4QFY2011 Result Update

Key ratios
Y/E March FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
Valuation Ratio (x)
P/E (on FDEPS) 13.2 13.9 10.7 13.4 14.4 10.9
P/CEPS 10.2 10.3 8.5 9.4 9.3 7.3
P/BV 1.4 1.3 1.0 0.9 0.9 0.8
Dividend yield (%) 1.6 1.3 1.6 1.7 1.7 1.7
EV/Sales 0.8 0.8 0.7 0.9 0.8 0.8
EV/EBITDA 7.8 8.7 7.2 9.2 8.9 8.4
EV / Total Assets 1.1 1.1 0.9 0.9 0.9 0.9
Order Book to Sales 3.3 2.9 3.2 3.8 4.2 4.3
Per Share Data (`)
EPS (Basic) 6.9 6.5 8.4 6.2 5.8 7.6
EPS (fully diluted) 6.3 6.0 7.8 6.2 5.8 7.6
Cash EPS 8.2 8.1 9.9 8.9 9.0 11.4
DPS 1.3 1.1 1.3 1.4 1.4 1.4
Book Value 61.3 65.7 86.9 92.7 96.9 102.9
DuPont Analysis
EBIT margin 9.0 7.7 9.0 8.3 7.9 8.3
Tax retention ratio 0.7 0.7 0.7 0.6 0.7 0.7
Asset turnover (x) 1.9 1.6 1.5 1.2 1.2 1.2
ROIC (Post-tax) 11.3 8.5 8.8 6.1 6.3 6.8
Cost of Debt (Post Tax) 9.8 10.2 9.3 8.2 9.1 8.7
Leverage (x) 0.4 0.5 0.6 0.8 1.0 1.2
Operating ROE 11.9 7.6 8.5 4.5 3.3 4.5
Returns (%)
ROACE (Pre-tax) 14.9 11.8 12.8 9.7 9.0 9.8
Angel ROIC (Pre-tax) 16.9 12.7 13.4 10.0 9.3 10.1
ROAE 12.4 9.4 10.2 6.9 6.1 7.6
Turnover ratios (x)
Asset Turnover (Gross Block) 6.0 6.5 6.9 5.9 5.6 5.5
Inventory / Sales (days) 50 57 57 59 57 54
Receivables (days) 76 83 89 99 98 99
Payables (days) 144 137 126 131 127 128
WC cycle (ex-
89 120 139 176 178 165
cash/mob.adv)(days)
Solvency ratios (x)
Net debt to equity 0.4 0.7 0.6 1.0 1.1 1.3
Net debt to EBITDA 1.8 3.0 2.8 4.8 4.9 5.2
Interest Coverage 2.8 2.0 2.2 1.6 1.3 1.4

May 30, 2011 10

 NCC | 4QFY2011 Result Update

Research Team Tel: 022 - 39357800 E-mail: [email protected] 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 NCC

1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

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