Pratibha Industries reported financial results for the fourth quarter of fiscal year 2010 that were in line with expectations. Operating margins improved significantly due to a reduction in raw material costs, boosting the bottom line. However, the company paid taxes at the marginal rate rather than claiming tax benefits. While the results were decent, the analyst maintains a neutral outlook on the stock given that positives are already reflected in the price.

1. 4QFY2010 Result Update I Infrastructure
May 11, 2010
Pratibha Industries NEUTRAL
CMP Rs399
Performance Highlights Target Price -
Investment Period -
Pratibha Industries (PIL) 4QFY2010 performance was in line with our
expectations. The quarter saw improvement in Operating Margins, which lent Stock Info
a boost to Bottom-line. The company paid Tax at marginal rate as against Sector Infrastructure
claiming Sec80IA benefits. However, at the CMP, we believe that most of the
positives are factored in the stock price. Hence, we maintain our Neutral view Market Cap (Rs cr) 666
on PIL. Beta 0.8
52 WK High / Low 433/95
Reports decent performance: For 4QFY2010, PIL reported in-line Top-line
growth of 34.4% to Rs302.5cr. OPM improved by 360bp yoy to 15.8% Avg Daily Valume 66594
primarily on account of the 694bp reduction in Raw Material costs, as
percentage to Sales, and exceeded our expectations. Interest and Face Value (Rs) 10
Depreciation costs were also in line with our estimates. PIL paid Tax at the rate BSE Sensex 17,142
of 28% as against claiming Sec80IA benefits. Expansion in OPM aided 72.0%
increase in Bottom-line to Rs20.9cr. Nifty 5,136
Reuters Code PRTI.BO
Outlook and Valuation: PIL results were in line with our estimates. OPM
Bloomberg Code PRIL@IN
expansion aided Bottom-line growth. PIL paid Tax at 26.3% for FY2010 as
against claiming benefits under Sec80IA. We would adopt a cautious view on Shareholding Pattern (%)
the stock, as any Tax pay outs with retrospective effect can have a negative
Promoters 62.0
impact on the company’s Cash flows going ahead. We have valued PIL on a
consolidated Target P/E multiple of 8x on FY2012E estimates and have MF/Banks/Indian FLs 12.0
arrived at a Fair Value of Rs358. At the CMP, we believe that most of the
positives are factored in the stock price. Hence, we maintain our Neutral view FII/NRIs/OCBs 10.6
on the stock. Indian Public 15.4
Abs (%) 3m 1yr 3yr
Sensex 6.1 46.7 24.2
Pratibha 21.0 309.2 79.4
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 806 1,013 1,294 1,650
% chg 42.6 25.8 27.7 27.5
Net Profit 44.8 56.5 61.3 74.6
% chg 30.7 26.2 8.5 21.6
FDEPS (Rs) 26.8 33.9 36.8 44.7
EBITDA Margin (%) 11.4 14.1 13.5 13.2
P/E (x) 14.9 11.8 10.9 8.9 Shailesh Kanani
RoE (%) 21.9 22.6 20.1 20.3 Tel: 022 – 4040 3800 Ext: 321
RoCE (%) 21.2 21.6 19.6 19.3 E-mail: shailesh.kanani@angeltrade.com
P/BV (x) 3.0 2.4 2.0 1.7
Aniruddha Mate
EV/Sales (x) 1.0 1.0 0.8 0.8
Tel: 022 – 4040 3800 Ext: 335
EV/EBITDA (x) 9.2 6.8 6.3 5.7
E-mail: aniruddha.mate@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Pratibha Industries I 4QFY2010 Result Update
Exhibit 1: 4QFY2010 Performance (Consolidated)
Y/E March (Rs cr) 4QFY10 4QFY09 % chg FY2010 FY2009 % chg
Net Sales 302.5 225.1 34.4 1013.4 807.3 25.5
Total Expenditure 254.8 197.7 28.9 870.5 714.1 21.9
Operating Profit 47.7 27.4 74.1 142.9 93.2 53.3
OPM (%) 15.8 12.2 360bp 14.1 11.5 260bp
Interest 14.7 7.0 109.3 52.2 34.1 53.4
Depreciation 3.9 3.0 32.1 14.0 7.1 97.1
Non Operating Income - 0.0 - 0.0 3.4 -
Non recurring items - - - - - -
Profit Before Tax 29.0 17.4 66.9 76.6 55.4 38.2
Tax 8.1 5.2 54.8 20.1 10.7 -
Reported PAT 20.9 12.2 72.0 56.5 44.7 26.3
PAT (%) 6.9 5.4 150bp 5.6 5.5 10bp
EPS (Rs) 12.5 7.3 72.0 33.9 26.8 26.3
Source: Company, Angel Research
Retrospective Tax Payments – A Concern
PIL’s Tax payments have being varying between 12.2% (1QFY2009) to 30.1%
(4QFY2009) reverting back to 20.0% (3QFY2010) levels, as the company
claims Section 80IA benefits. For FY2010, PIL paid tax at 26.3% as against
19.3% in FY2009. We believe that PIL claiming Tax benefits under Section
80IA will be a dampener going ahead, as it may have to pay Tax at the
marginal tax rate, with retrospective effect thereby affecting cash flows.
Exhibit 2: PIL – Lowest Tax payers among peers
40.0
30.1
35.0
27.9
26.9
30.0
20.0
19.6
25.0
20.0
12.4
12.2
15.0
10.0
5.0
-
1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 2QFY10 3QFY10
Pratibha Industries Patel Engineering IVRCL Infra Nagarjuna Const.
Source: Company, Angel Research
May 11, 2010 2

3. Pratibha Industries I 4QFY2010 Result Update
Strong Order Book
PIL has an outstanding Order Book position of around Rs3,600cr or 3.5x
FY2010E Revenues. The Order Book is spread across the verticals of Water,
Urban Infrastructure and Road Segments
Outlook and Valuation
Infrastructure development is top priority with the Government of India.
Hence, the government in the Eleventh Five-Year Plan has allocated US
$500bn towards the sector. Irrigation, Water Supply and Sanitation together
account for almost 20% of this projected outlay. State governments like
Andhra Pradesh have also been focusing on developing Irrigation facilities.
PIL stands to gain from the government’s focus on the Infrastructure Sector
particularly, Water related segments.
PIL is primarily focused on Water Supply related infrastructure projects.
At Rs399, the stock trades at 8.9x FY2012E Earnings and 1.7x FY2012E
P/BV. We have valued PIL at a Target P/E multiple of 8x on FY2012E
consolidated numbers and have arrived at a Fair Value of Rs358. We
believe that the current price discounts most of the positives. Our talks with
management indicates that PIL is in the midst of a fund raising exercise and
any further developments on this front could pose an upside risk to our
estimates. We maintain our Neutral view on the stock.
May 11, 2010 3

4. Pratibha Industries I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Net Sales 300.8 565.1 805.8 1,013.4 1,294.0 1,649.8
Other operating income - - - - - -
Total operating income 300.8 565.1 805.8 1,013.4 1,294.0 1,649.8
% chg 72.5 87.9 42.6 25.8 27.7 27.5
Total Expenditure 263.8 499.1 714.1 870.5 1,119.3 1,432.8
Net Raw Materials 238.3 445.0 615.3 771.2 980.9 1,255.5
Other Mfg costs - - - - - -
Personnel 8.3 17.3 34.6 38.5 50.5 64.3
Other 17.2 36.8 64.3 68.3 88.0 112.7
EBITDA 36.9 66.0 91.7 142.9 174.7 217.1
% chg 78.1 78.6 38.9 55.9 22.2 24.3
(% of Net Sales) 12.3 11.7 11.4 14.1 13.5 13.2
Depreciation& Amortisation 1.1 3.6 7.1 14.0 15.1 17.8
EBIT 35.8 62.4 84.6 128.9 159.6 199.3
% chg 78.3 74.2 35.5 52.4 23.8 24.9
(% of Net Sales) 11.9 11.0 10.5 12.7 12.3 12.1
Interest & other Charges 12.3 22.3 34.1 52.2 73.6 94.5
Other Income - 0.1 5.0 - 5.5 6.6
(% of PBT) - 0.1 9.0 - 6.1 5.9
Share in profit of Associates - - - - - -
Recurring PBT 23.5 40.2 55.5 76.6 91.5 111.3
% chg 72.5 71.1 38.1 38.1 19.4 21.6
Extraordinary Expense/(Inc.) - - - - - -
PBT (reported) 23.5 40.2 55.5 76.6 91.5 111.3
Tax 3.1 5.9 10.7 20.1 30.2 36.7
(% of PBT) 13.3 14.7 19.3 26.3 33.0 33.0
PAT (reported) 20.4 34.3 44.8 56.5 61.3 74.6
Add: Share of earnings of associate - - - - - -
Less: Minority interest (MI) - - - - - -
Prior period items - - - - - -
PAT after MI (reported) 20.4 34.3 44.8 56.5 61.3 74.6
ADJ. PAT 20.4 34.3 44.8 56.5 61.3 74.6
% chg 62.3 68.3 30.7 26.2 8.5 21.6
(% of Net Sales) 6.8 6.1 5.6 5.6 4.7 4.5
Basic EPS (Rs) 12.2 20.5 26.8 33.9 36.8 44.7
Fully Diluted EPS (Rs) 12.2 20.5 26.8 33.9 36.8 44.7
% chg 62.5 68.3 30.7 26.2 8.5 21.6
May 11, 2010 4

5. Pratibha Industries I 4QFY2010 Result Update
Balance Sheet (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 14.3 16.7 16.7 16.7 16.7 16.7
Preference Capital - - - - - -
Reserves& Surplus 80.6 167.2 208.1 259.6 316.1 385.7
Shareholders Funds 94.9 183.9 224.8 276.3 332.7 402.4
Minority Interest - - - - - -
Total Loans 132.8 132.8 248.4 433.4 572.6 747.3
Deferred Tax Liability 0.5 1.8 6.2 6.2 6.2 6.2
Total Liabilities 228.2 318.5 479.4 715.9 911.5 1,155.9
APPLICATION OF FUNDS
Gross Block 24.5 99.0 168.3 267.6 335.6 403.1
Less: Acc. Depreciation 3.3 6.9 13.9 28.0 43.1 60.9
Net Block 21.3 92.1 154.4 239.6 292.5 342.2
Capital Work-in-Progress 28.0 31.5 60.7 35.0 20.0 20.0
Goodwill - - - - - -
Investments 11.9 85.3 0.1 0.1 0.1 0.1
Current Assets 238.3 437.8 561.8 771.8 1,059.3 1,374.3
Cash 39.6 56.8 72.1 126.7 139.1 169.4
Loans & Advances 23.2 120.2 138.5 192.6 245.9 297.0
Other 175.5 260.8 351.1 452.6 674.3 907.9
Current liabilities 71.3 328.3 297.7 330.6 460.3 580.7
Net Current Assets 167.0 109.5 264.1 441.2 599.0 793.6
Misc. Exp. not written off 0.1 0.1 0.3 - - -
Total Assets 228.2 318.5 479.4 715.9 911.5 1,155.9
Cash Flow Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit Before Tax 23.5 40.2 55.5 76.6 91.5 111.3
Depreciation 1.1 3.6 7.1 14.0 15.1 17.8
Change in Working Capital 45.3 (74.7) 139.3 122.5 145.4 164.4
Less: Other income - 0.1 5.0 - 5.5 6.6
Direct taxes paid 2.8 4.6 6.3 20.1 30.2 36.7
Cash Flow from Operations (23.4) 113.8 (88.0) (52.0) (74.5) (78.6)
(Inc.)/ Dec. in Fixed Assets (36.8) (78.0) (98.6) (73.5) (53.0) (67.5)
(Inc.)/ Dec. in Investments 17.6 (73.4) 85.2 - - -
(Inc.)/ Dec. in loans and advances - - - - - -
Other income - 0.1 5.0 - 5.5 6.6
Cash Flow from Investing (19.3) (151.3) (8.4) (73.5) (47.5) (60.9)
Issue of Equity (4.5) 58.8 - - - -
Inc./(Dec.) in loans 82.5 (0.0) 115.6 184.9 139.2 174.7
Dividend Paid (Incl. Tax) 3.2 3.9 3.9 5.0 4.9 4.9
Others 4.2 (0.2) - - - -
Cash Flow from Financing 79.1 54.7 111.7 180.0 134.3 169.8
Inc./(Dec.) in Cash 36.3 17.2 15.4 54.5 12.4 30.3
Opening Cash balances 3.3 39.6 56.8 72.2 126.7 139.1
Closing Cash balances 39.6 56.8 72.2 126.7 139.1 169.4
May 11, 2010 5

6. Pratibha Industries I 4QFY2010 Result Update
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 32.7 19.4 14.9 11.8 10.9 8.9
P/CEPS 26.6 17.6 12.8 9.4 8.7 7.2
P/BV 6.0 3.6 3.0 2.4 2.0 1.7
Dividend yield (%) 0.5 0.5 0.5 0.8 0.8 0.8
EV/Sales 2.8 1.3 1.0 1.0 0.8 0.8
EV/EBITDA 22.6 11.2 9.2 6.8 6.3 5.7
EV / Total Assets 36.6 23.3 17.6 13.6 12.1 10.8
Per Share Data (Rs)
EPS (Basic) 12.2 20.5 26.8 33.9 36.8 44.7
EPS (fully diluted) 12.2 20.5 26.8 33.9 36.8 44.7
Cash EPS 15.0 22.7 31.1 42.3 45.8 55.4
DPS 2.0 2.0 2.0 3.0 3.0 3.0
Book Value 66.4 110.2 134.7 165.6 199.4 241.2
Dupont Analysis
EBIT margin 11.9 11.0 10.5 12.7 12.3 12.1
Tax retention ratio 86.7 85.3 80.7 73.7 67.0 67.0
Asset turnover (x) 1.3 2.1 2.0 1.7 1.6 1.6
ROIC (Post-tax) 13.6 19.5 17.1 15.9 13.1 12.9
Cost of Debt (Post Tax) 8.1 14.3 14.4 11.3 9.8 9.6
Leverage (x) 1.0 0.5 0.6 0.9 1.1 1.3
Operating ROE 19.1 21.8 18.6 19.9 16.9 17.1
Returns (%)
ROCE (Pre-tax) 15.7 22.8 21.2 21.6 19.6 19.3
Angel ROIC (Pre-tax) 20.3 35.4 29.0 25.9 23.4 22.7
ROE 21.5 24.6 21.9 22.6 20.1 20.3
Turnover ratios (x)
Asset Turnover (Gross Block) 12.3 9.2 6.0 4.6 4.3 4.5
Inventory / Sales (days) 26.3 66.2 89.1 74.3 63.7 62.0
Receivables (days) 187 75 49 70 95 113
Payables (days) 84 134 147 120 118 122
Working capital, ex-cash (days) 203 89 85 127 147 154
Solvency ratios (x)
Net debt to equity 1.0 0.4 0.8 1.1 1.3 1.4
Net debt to EBITDA 2.5 1.2 1.9 2.1 2.5 2.7
Interest Coverage (EBIT / Interest) 2.9 2.8 2.5 2.5 2.2 2.1
May 11, 2010 6

7. Pratibha Industries I 4QFY2010 Result Update
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Disclosure of Interest Statement Pratibha Industries
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 Rs 1 lakh for Angel and its Group companies.
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
May 11, 2010 7