1) Bombay Dyeing owns 65 acres of prime real estate in central Mumbai that it intends to develop over the next 8-10 years, which could unlock significant value for shareholders. 2) The company's textile and polyester manufacturing businesses are showing signs of improvement, with lower losses in textiles and a profit in polyesters in the most recent period. 3) The analyst values Bombay Dyeing's real estate business at Rs. 940/share and manufacturing business at Rs. 112/share, for a total net asset value of Rs. 1,052/share. Based on this, the analyst recommends buying the stock with a target price of Rs. 894/share

1.
Quick take
Bombay Dyeing BUY
CMP `624
Vintage gains Target Price `894
We believe that Bombay Dyeing monetising its legacy land bank in a timely Investment Period 12 Months
manner will be a key trigger for its stock performance. Moreover, recovery in its
manufacturing (textile and polyester units) business will be an additional catalyst Stock Info
for the stock. We have valued the real estate business at `940/share and Sector Diversified
manufacturing business at 0.5x of its asset value fetching `112/share. Hence, we Market Cap (` cr) 2,410
recommend a Buy on the stock with a Target Price of `894/share, which is at 15% Beta 1.3
discount to our NAV. 52 Week High / Low 692/344
Legacy land bank at prime location to unlock value: Bombay Dyeing has ~65 Avg. Daily Volume 253,826
acres of historical mill land located in Central Mumbai. Both the properties have Face Value (`) 10
~9mn sq ft of saleable area (1mn sq ft already developed), which the company BSE Sensex 19,872
intends to develop (mixed) over the next 8-10 years. The company has already Nifty 5,982
entered into a contract with L&T to develop the properties. By end 2HFY2011, Reuters Code BDYN.BO
company intends to launch 1mn sq ft for residential purposes at Spring Mills Bloomberg Code BD@IN
(Dadar). In 1HFY2011, the company’s real estate segment reported EBIT of
`41.4cr.
Shareholding Pattern (%)
Signs of improvement in manufacturing business: Bombay Dyeing has undertaken
measures to improve profitability of its manufacturing business by reducing Promoters 47.1
inventory, initiating cost reduction measures viz. switching over from liquid fuel to MF / Banks / Indian Fls 19.0
natural gas, shifting its manufacturing base and launching new products. FII / NRIs / OCBs 12.7
Consequently, EBIT loss was lower for Textile division at `14.4cr in 1HFY2011 v/s Indian Public / Others 21.2
`22.3cr in 1HFY2010 while the Polyester division reported a profit of `9.1cr in
1HFY2011 v/s a loss of `39.6cr in 1HFY2010. Further, the demand has been
reviving in the domestic segment, which has improved utilisation levels. Abs. (%) 3m 1yr 3yr
Sensex 11.2 15.4 13.2
Trading at attractive valuations: We have conservatively assumed execution
Bombay Dyeing 22.2 45.6 2.0
period of ten years for the 8mn sq ft of saleable area. Further, the promoters
recently issued 4mn warrants at `527.83/share, which will increase their stake
from 47.1% to 52.1% post conversion. At the CMP, the stock is trading at 41%
discount to our NAV. Hence we recommend Buy.
Key Financials (Standalone)
Y/E March (` cr) FY2007 FY2008 FY2009 FY2010
Net sales 505 973 1,324 1,652
% chg 92.6 36.1 24.8
Net profit 36 17 (195) 18
% chg (53.6) -
EBITDA (%) 14.7 7.3 0.1 15.6
EPS (`) 9.3 4.3 (50.4) 4.8
Param Desai
P/E (x) 67.1 144.5 - 130.8
022-40403800 Ext:310
P/BV (x) 6.0 5.9 6.5 11.5
paramv.desai@angelbroking.com
RoE (%) 9.2 4.1 (50.0) 6.3
RoCE (%) 4.7 2.2 (2.8) 9.7 Mihir Salot
EV/Sales (x) 6.8 3.9 3.0 2.5 022-40403800 Ext:307
EV/EBITDA (x) 46.1 52.9 4,996.4 16.1 mihirr.salot@angelbroking.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1

2. Quick take
Bombay Dyeing
Valuation - Trading at significant discount to NAV
Spring Mill valued at `954/share: We have assumed 5mn sq ft as saleable
area from the 40 acre Spring Mill project. The selling price has been assumed
at `20,000/sq ft for the residential project and rental of `125/sq ft for the
commercial segment. From FY2012 onwards, we have factored in 5% price
escalation in the construction, capital and rental value of this project. We have
assumed that Bombay Dyeing will develop the entire Spring Mill project by
FY2021.
Worli Mill valued at `720/share: We have assumed 3mn sq ft as saleable
area from its 20 acre Worli Mill project. The selling price has been assumed at
`25,000/ sq ft for the residential project and rental of `150/sq ft for the
commercial segment. From FY2012 onwards, we have factored in 5% price
escalation in the construction, capital and rental value for this project. We
have assumed that Bombay Dyeing will develop the entire Worli Mill project by
FY2021.
We have assigned 15% WACC and 10% capitalisation rate
We have assumed `4,000/sq ft of construction cost currently
We have assumed tax rate of 33% for its real estate business
Exhibit 1: Buy with a Target Price of `894
Valuation Summary (`/ share)
Spring Mill 954
Worli Mill 720
Textile and Polyester assets (0.5x its asset value) 112
GAV 1,785
Less Net debt (414)
Less: Present value of taxes (320)
NAV/share 1,052
Target Price (15% discount to NAV) 894
Source: Angel Research
Exhibit 2: Segment-wise break-up
(` cr) FY2007 FY2008 FY2009 FY2010 1HFY11
Revenue
Textiles 368 351 321 294 182
Polyester 30 387 766 819 539
Real Estate 124 240 273 562 144
EBIT
Textiles (29) (17) (66) (38) (14)
Polyester (9) (54) (73) (66) 9
Real Estate 111 140 159 346 41
Source: Company, Angel Research
October 20, 2010 2

3. Quick take
Bombay Dyeing
Scenario Analysis
Best case: We retain our base case pricing assumption (5% increase yoy from
FY2012 onwards), and assumed an 8-year execution pipeline. Further, we expect
recovery in the manufacturing business at a faster pace and thereby valuing it at
1x its assets. This gives an NAV of `1,480/share (including `224/share for its
manufacturing segment)
Base case: We have factored in 5% price escalation from FY2012 onwards in the
construction, capital and rental values for the Spring Mill and Worli Mill projects.
We have assumed that Bombay Dyeing will develop the projects entirely by
FY2021. This gives an NAV of `1,052/share (including `112/share for its
manufacturing segment, valuing it at 0.5x its assets).
Worst case: We have assumed 10% correction in the rental and capital values in
FY2012, 0% in FY2013 and 5% increase from FY2014 onwards. We have
assumed a two-year delay in complete execution pipeline from the Base case
scenario. We have assigned zero value to its manufacturing business. This gives an
NAV of `554/share.
Exhibit 3: Scenario Analysis
Assumptions Best case Base case Worst case
Residential pricing in FY2011
Spring mill, Dadar 25,000 20,000 20,000
Worli mill 30,000 25,000 25,000
Commercial rentals
Spring mill, Dadar 125 125 125
Worli mill 150 150 150
Increase in rental and capital values from FY12 onwards (%) 5 5 (10)
Execution of entire 2 properties FY19E FY21E FY23E
Manufacturing business valuation 1.0x its assets 0.5x its assets Zero value
1-yr forward NAV 1,480 1,052 554
Source: Angel Research
October 20, 2010 3

4. Quick take
Bombay Dyeing
Profit & Loss Statement (Standalone)
Y/E March (` cr) FY2007 FY2008 FY2009 FY2010
Gross sales 509 998 1,368 1,699
Less: Excise duty 4 25 44 46
Net Sales 505 973 1,324 1,652
Other operating income - - - -
Total operating income 505 973 1,324 1,652
% chg - 92.6 36.1 24.8
Total Expenditure (431) (902) (1,323) (1,395)
Cost of construction incl land costs (1) (75) (88) (196)
Other Mfg costs (315) (667) (831) (834)
Personnel (38) (35) (51) (50)
Other (77) (125) (353) (316)
EBITDA 74 71 0.8 257
% chg - (4.3) (98.9) 32,041.2
(% of Net Sales) 14.7 7.3 0.1 15.6
Depreciation & Amortisation (17) (35) (56) (60)
EBIT 57 36 (55) 198
% chg - (37.1) - (459.7)
(% of Net Sales) 11.3 3.7 (4.1) 12.0
Interest & other Charges (32) (73) (187) (207)
Other Income 27 47 50 33
(% of PBT) 51.8 520.9 (26.1) 141.8
Recurring PBT 52 9 (192) 24
% chg - (82.9) - (112.3)
Extraordinary Expense/(Inc.) (12) 9 (2) (1)
PBT (reported) 40 18 (194) 22
Tax (4) (1) (1) (4)
(% of PBT) 11.1 7.4 (0.5) 17.0
PAT (reported) 36 17 (195) 18
Less: Minority interest (MI) - - - -
PAT after MI (reported) 36 17 (195) 18
ADJ. PAT 48 8 (193) 20
% chg - (84.1) - -
(% of Net Sales) 9.5 0.8 (14.5) 1.2
Basic EPS (`) 9.3 4.3 (50.4) 4.8
Fully Diluted EPS (`) 8.9 4.1 (48.0) 4.5
% chg - (53.6) - -
October 20, 2010 4

5. Quick take
Bombay Dyeing
Balance Sheet (Standalone)
Y/E March (` cr) FY2007 FY2008 FY2009 FY2010
SOURCES OF FUNDS
Equity Share Capital 39 39 39 39
Warrants/Share App. Money - 12 - -
Reserves& Surplus 364 357 332 172
Shareholder’s Funds 403 408 370 210
Minority Interest - - - -
Total Loans 1,052 1,413 1,711 1,775
Deferred Tax Liability 2 - - -
Total Liabilities 1,457 1,821 2,081 1,985
APPLICATION OF FUNDS
Gross Block 655 1,060 1,160 1,183
Less: Acc. Depreciation 513 124 179 231
Net Block 142 937 981 952
Capital Work-in-Progress 736 304 219 208
Goodwill - - - -
Investments 154 127 60 60
Current Assets 661 751 1,167 1,092
Cash 36 54 124 34
Loans & Advances 199 267 253 278
Other 426 430 791 779
Current liabilities 302 300 347 327
Net Current Assets 359 451 820 765
Mis. Exp. not written off 67 3 1 -
Total Assets 1,457 1,821 2,081 1,985
October 20, 2010 5

6. Quick take
Bombay Dyeing
Cash Flow Statement (Standalone)
Y/E March (` cr) FY2007 FY2008 FY2009 FY2010
Profit before tax 40 18 (194) 22
Depreciation 17 35 56 60
Other Adjustments (48) 33 199 207
Change in Working Capital 7 (20) (47) (201)
Less: Direct taxes paid (6) (11) (5) (13)
Cash Flow from Operations 11 55 9 75
Inc./ (Dec.) in Fixed Assets (455) (279) (80) (15)
Inc./ (Dec.) in Investments 18 31 70 0
Other income 23 (5) 8 2
Cash Flow from Investing (413) (252) (2) (12)
Issue of Equity/Sh appl. Money 0 12 - -
Inc./(Dec.) in loans 494 359 270 60
Dividend Paid (Incl. Tax) (22) (23) (16) (5)
Others (66) (134) (191) (207)
Cash Flow from Financing 406 214 63 (152)
Inc./(Dec.) in Cash 3 18 70 (90)
Opening Cash balances 33 36 54 124
Closing Cash balances 36 54 124 34
October 20, 2010 6

7. Quick take
Bombay Dyeing
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010
Valuation Ratio (x)
P/E (on FDEPS) 67.1 144.5 - 130.8
P/CEPS 47.4 48.6 - 32.5
P/BV 6.0 5.9 6.5 11.5
Dividend yield (%) 0.8 0.5 0.2 0.4
EV/Sales 6.8 3.9 3.0 2.5
EV/EBITDA 46.1 52.9 4,996.4 16.1
EV / Total Assets 2.4 2.1 1.9 2.1
Per Share Data (`)
EPS (Basic) 9.3 4.3 (50.4) 4.8
EPS (fully diluted) 8.9 4.1 (48.0) 4.5
Cash EPS 13.2 12.9 (34.3) 19.2
DPS 4.8 3.3 1.0 2.4
Book Value 104 106 96 54
Dupont Analysis
EBIT margin 11.3 3.7 (4.1) 12.0
Tax retention ratio 88.9 92.6 100.5 83.0
Asset turnover (x) 35.6 55.1 67.6 84.7
ROIC (Post-tax) 3.6 1.9 (2.8) 8.4
Cost of Debt (Post Tax) 3.5 5.5 12.0 9.9
Leverage (x) 2.0 2.9 3.8 5.7
Operating ROE 3.7 (8.8) (59.0) (0.1)
Returns (%)
ROCE (Pre-tax) 4.7 2.2 (2.8) 9.7
Angel ROIC (Pre-tax) 13.3 2.8 (3.3) 11.3
ROE 9.2 4.1 (50.0) 6.3
Turnover ratios (x)
Asset Turnover (Gross Block) 0.8 1.1 1.2 1.4
Inventory / Sales (days) 139 59 72 58
Receivables (days) 148 101 95 115
Payables (days) 115 92 60 48
Working capital cycle (ex-cash) (days) 389 248 240 232
Solvency ratios (x)
Net debt to equity 2.5 3.3 4.3 8.3
Net debt to EBITDA 13.7 19.1 1,984.1 6.8
Interest Coverage (EBIT / Interest) 1.8 0.5 (0.3) 1.0
October 20, 2010 7

8. Quick take
Bombay Dyeing
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
DISCLAIMER
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Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
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refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and
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Disclosure of Interest Statement Bombay Dyeing
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies' Directors ownership of the stock Yes
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%)
October 20, 2010 8

9. Quick take
Bombay Dyeing
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel: (022) 3952 4568 / 4040 3800
Research Team
Fundamental:
Sarabjit Kour Nangra VP-Research, Pharmaceutical sarabjit@angelbroking.com
Vaibhav Agrawal VP-Research, Banking vaibhav.agrawal@angelbroking.com
Vaishali Jajoo Automobile vaishali.jajoo@angelbroking.com
Shailesh Kanani Infrastructure, Real Estate shailesh.kanani@angelbroking.com
Anand Shah FMCG, Media anand.shah@angelbroking.com
Deepak Pareek Oil & Gas deepak.pareek@angelbroking.com
Sushant Dalmia Pharmaceutical sushant.dalmia@angelbroking.com
Rupesh Sankhe Cement, Power rupeshd.sankhe@angelbroking.com
Param Desai Real Estate, Logistics, Shipping paramv.desai@angelbroking.com
Sageraj Bariya Fertiliser, Mid-cap sageraj.bariya@angelbroking.com
Paresh Jain Metals & Mining pareshn.jain@angelbroking.com
Amit Rane Banking amitn.rane@angelbroking.com
John Perinchery Capital Goods john.perinchery@angelbroking.com
Srishti Anand IT, Telecom srishti.anand@angelbroking.com
Jai Sharda Mid-cap jai.sharda@angelbroking.com
Sharan Lillaney Mid-cap sharanb.lillaney@angelbroking.com
Naitik Mody Mid-cap naitiky.mody@angelbroking.com
Amit Vora Research Associate (Oil & Gas) amit.vora@angelbroking.com
V Srinivasan Research Associate (Cement, Power) v.srinivasan@angelbroking.com
Mihir Salot Research Associate (Logistics, Shipping) mihirr.salot@angelbroking.com
Chitrangda Kapur Research Associate (FMCG, Media) chitrangdar.kapur@angelbroking.com
Pooja Jain Research Associate (Metals & Mining) pooja.j@angelbroking.com
Yaresh Kothari Research Associate (Automobile) yareshb.kothari@angelbroking.com
Shrinivas Bhutda Research Associate (Banking) shrinivas.bhutda@angelbroking.com
Sreekanth P.V.S Research Associate (FMCG, Media) sreekanth.s@angelbroking.com
Hemang Thaker Research Associate (Capital Goods) hemang.thaker@angelbroking.com
Nitin Arora Research Associate (Infra, Real Estate) nitin.arora@angelbroking.com
Technicals:
Shardul Kulkarni Sr. Technical Analyst shardul.kulkarni@angelbroking.com
Mileen Vasudeo Technical Analyst vasudeo.kamalakant@angelbroking.com
Derivatives:
Siddarth Bhamre Head - Derivatives siddarth.bhamre@angelbroking.com
Jaya Agarwal Derivative Analyst jaya.agarwal@angelbroking.com
Institutional Sales Team:
Mayuresh Joshi VP - Institutional Sales mayuresh.joshi@angelbroking.com
Abhimanyu Sofat AVP - Institutional Sales abhimanyu.sofat@angelbroking.com
Nitesh Jalan Sr. Manager niteshk.jalan@angelbroking.com
Pranav Modi Sr. Manager pranavs.modi@angelbroking.com
Sandeep Jangir Sr. Manager sandeepp.jangir@angelbroking.com
Ganesh Iyer Sr. Manager ganeshb.Iyer@angelbroking.com
Jay Harsora Sr. Dealer jayr.harsora@angelbroking.com
Meenakshi Chavan Dealer meenakshis.chavan@angelbroking.com
Gaurang Tisani Dealer gaurangp.tisani@angelbroking.com
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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
October 20, 2010 9