SRS Ltd| BSE Scrip Code: 533569
Other Apparels & Accessories
September 20, 2012
Equity Statistics
Current Market Price
Rs.
44.1
52 Week High / Low
Rs.
48.40/38.00
Market Capitalisation
Rs. crores
614.3
Free Float
Rs. crores
167.5
Dividend Yield
%
2.3
0.6
One Year Regression Beta Times
BSE Volumes Trend - Average = 368.0 Thousand
SRS initially was engaged in the trading of FMCG goods. In 2004, the
company shifted its focus to establishing malls (SRS malls), cinema
screens (SRS Cinema) and food courts (SRS 7 dayz). It also set-up
fashion and retail stores in 2008 which marked the beginning of its
retail and cash & carry business.
SRS today is majorly into retailing and manufacturing of jewellery
product (SRS Jewells.) During FY12, the segment contributed around
79% to the net sales and has proved to be most profitable segment
over the past 4 years.
16-Aug-12
16-Jul-12
16-Jun-12
16-May-12
16-Apr-12
16-Mar-12
16-Feb-12
16-Jan-12
16-Dec-11
16-Nov-11
16-Sep-11
16-Oct-11
in '000s
600.00
400.00
200.00
0.00
Business Summary
SRS Ltd (SRS) was incorporated as a public limited company - SRS
Commercial Company Ltd. in August 2000 (name changed to current
i.e. SRS in July 2008) at New Delhi. The company has a diversified
portfolio comprising of gems & jewellery, retail and cash & carry,
cinema exhibition and food and beverages. The company issued
shares to the public through an IPO in September 2011.
In FY12, SRS reported net sales of Rs.2,265 crore and net profit of
Rs.44.4 crore.
During the year, the company initiated exports to international
market, mainly Dubai which contributed to 13.9% of its revenue.
Strategic presence of the company in Tier I and Tier II cities and
presence in four segments aiding to cross-selling opportunities are
the core strengths of SRS.
Relative Returns
150.00
125.00
100.00
SRS is currently trading at 12.3 times FY12 EPS and 1.2 times
adjusted book value.
75.00
Sensex
Returns (%)
Absolute
Relative to Sensex
SRS
1M 3M 6M 1Yr
11% 25% 50% 38%
9% 17% 47% 30%
Shareholding Pattern
100%
50%
0%
Sep '11
Promoter
Dec '11
DII
Mar '12
FII
Jun '12
Others (Public)
Board of Directors
Person
Role
Dr. Anil Jindal
Chairman
Sh. Sunil Jindal
MD
Sh. Raju Bansal
WTD
Sh. Vinod Kumar
WTD
Sh. Praveen Kumar Kapoor NED
Sh. Jitendar Kumar Garg
NED
Sh. Praveen Gupta
NED, Independent
Sh. Shiv Mohan Gupta
NED, Independent
Sh. Nishant Goel
NED, Independent
Sh. Joginder Lal Chhabra
NED, Independent
Sh. Kailash Kumar
NED, Independent
Sh. Lalit Kumar
NED, Independent
Source: AR and CARE Research
Note: MD: Managing Director, WTD: Whole time Director ED:
Executive Director, NED: Non Executive Director
Source: BSE, Capitaline and CARE Research
1
Initiative of the BSE Investors’ Protection Fund
Background
SRS was incorporated as SRS Commercial Company Ltd (which was changed to SRS Ltd. in July 2008) in August 2000 by
Mr. Sunil Jindal engaged in trading of FMCG goods. Later in 2004, the company ventured into construction of malls and
multiplexes and launched its SRS Mall in Faridabad with 3-screen cinema (SRS Cinema) and food court (SRS 7 Dayz). The
company further diversified its portfolio by entering into retail & cash and carry business by setting up retail outlets, fashion
wear stores. In the year 2008, the company started whole-sale and retailing of gems & jewellery products under the brand
name ‘SRS Jewels’. The cinema exhibition brand, SRS Cinema operates a chain of cinema spread across five cities with 23
screens and 5,802 seats. The food & beverages run under the SRS 7dayz operates a chain of 10 food courts, 3 fine dining
restaurants, and catering services. SRS Value Bazaar offers various FMCG products including food and groceries, apparels,
cosmetics/home care/personal care products, crockery, appliance, accessories, etc. SRS Fashion Wear sells multi-brand
apparels through 27 retail stores in North India.
On March 16, 2012, SRS Holdings India ltd. (formerly known as BTL Industries Ltd.) increased its percentage of holding to
54.91% from 19.7% in FY11, thus becoming the holding company of SRS.
The company has its malls/screens/stores set-up mostly in Tier II and Tier III cities like Indore, Bijnor, Fardiabad,
Gorakhpur, Punjab, Ludhiana, Ghaziabad, Palwal etc.
Business overview
SRS’ gems & jewellery vertical is proving to be the company’s top performing business segment in terms of revenues,
profitability and growth potential. During FY12, the jewellery operations reported a turnover of Rs.1800.5 crore, contributing
79% to the total revenue. The profitability (Rs.105.31 crore) gained through the vertical covered for the losses incurred in
F&B segment (Rs.250 crore). During FY12, in an effort to improve the operations of F&B, the company shut down food
courts which had low footfalls and consumed higher rentals and focused its concentration on premium hotels expecting
higher return on investment. Retail and cash & carry is the second most profitable vertical contributing 17% to the total
turnover. During the year the company has taken measures to improve the product fill rate by adding new products and
brands to improve the profitability derived from this segment.
Gold is the key raw material (forming around 98.8% of the total cost of raw materials consumed in FY12) for SRS. The
expenditures made towards other verticals are mainly capital intensive which were funded through term loans availed from
different bankers.
Strengths and growth drivers
 Core strength of the company is its presence in multiple consumer segments which provides revenue diversification
preventing it from the negative effects of seasonality.
 The company further targets the Tier II and Tier III cities where the growth prospects are expected to be higher going
forward.
 The company’s strong financials provide room for expansion year-after-year. In FY12, the company launched 2 premium
jewellery stores and 1 wholesale jewellery outlet, 3 screens at 1 cinema property and 6 retail outlets.
Risk and concerns
 The gems & jewellery business in India is highly unorganized and fragmented, preventing the companies from achieving
economies of scale and compete in the global arena.
 The Indian companies might face further competitive threats from China (the second-largest diamond processing centre)
as many diamond manufacturers from Belgium and Israel are setting up their facilities in China.
Future strategy and expansion plans
 The company plans to further expand its global footprint by exporting gems & jewellery products to other countries such
as USA, UK, Doha, Singapore and Hongkong.
 The company intends to have additional premium stores in the retail vertical and work towards improving the profitability
of the segment.
Industry outlook
The Indian gems and jewellery industry has increased by about 5% at Rs2,000 billion in 2011-12, as compared to Rs1,950
billion in 2010-11. The growth in the sector was primarily driven by gold jewellery which registered an increase of 30% in FY
12. The exports grew from Rs57,747.67 crore in 2010-2011 to Rs.7,9430.26 crore in 2011-2012. The industry contributed
approximately 14.1% to the country’s total export earnings. Out of the total diamonds sold around the world, more than 90%
diamonds are cut and polished in India because of the low-cost and highly skilled labour. In the same line, India continues to
be the largest consumer of gold in the world with an average of 700 tonnes per annum. The total gem & jewellery industry
2
Initiative of the BSE Investors’ Protection Fund
exports were recorded at Rs.204,823 crore in FY11-12 as compared to Rs.195,735 crore in April 2010 – March 2011 (an
increase of around 5%). CARE Research expects the export market for the diamond jewellery to grow by 12% y-o-y for the
next 4 years compared to the 18-20% y-o-y growth expected in the gold jewellery segment. As per industry estimates the
branded jewellery market is expected to grow at a CAGR of more than 41% in the next 3 years till FY15, given the changing
lifestyle and urbanization in India.
The urbanized lifestyle of the people coupled with increasing disposable income will prove to be beneficial for the businesses
in consumer segments such as malls, food joints, retail outlets etc.
Peer comparison
Income statement (Rs. crore)
SRS
Total income
2,270.5
Net sales
2,265.0
EBITDA
105.6
Ordinary PAT
44.4
Adjusted PAT
44.4
Per share data (Rs.)
Adjusted BVPS
38.3
Diluted EPS
3.6
Growth (Y-o-Y) (%)
Growth in total income
9.3
Growth in net sales
11.0
Growth in EBITDA
86.0
Growth in adjusted PAT
19.1
Growth in EPS*
0.6
Profitability ratio (%)
EBITDA margin
4.7
Adjusted PAT margin
2.0
Valuation ratios (Times)
Price/EPS (P/E)
12.3
Price/Book value (P/BV)
1.2
Enterprise value (EV)/EBITDA
6.0
Source: BSE, Capitaline and CARE Research
FY12 financials for all companies are based on abridged results
NA-Not Available
Quarterly financials
Income statement (Rs. crore)
Total income
Net sales
EBITDA
Ordinary PAT
Adjusted PAT
Growth (Q-o-Q) (%)
Growth in net sales
Profitability ratio (%)
EBITDA margin
Adjusted PAT margin
Source: BSE, Capitaline and CARE Research
3
Q1FY13
482.3
472.9
18.0
12.7
12.7
Year ended March 31, 2012
Rajesh Exports
Shrenuj & Co.
2,572.0
3,159.7
2,572.6
3,150.6
67.9
202.0
40.7
68.6
40.7
70.3
135.7
13.8
49.5
9.3
23.3
23.4
56.7
64.2
64.2
28.0
28.2
31.6
23.8
23.3
2.6
1.6
6.4
2.2
8.5
1.7
NA
6.1
1.1
0.1
Quarter ended June 30, 2012
Q4FY12
Q3FY12
Q2FY12
512.3
633.9
516.8
510.1
632.2
514.2
17.0
42.6
22.1
4.8
23.5
6.4
4.8
23.5
6.4
(7.3)
(19.3)
22.9
(15.3)
3.8
2.6
3.3
0.9
6.7
3.7
4.3
1.2
Initiative of the BSE Investors’ Protection Fund
Q1FY12
607.8
606.9
24.5
9.7
9.7
4.0
1.6
Financial analysis
 In FY12, SRS reported net sales of Rs.2265 crore – up 11.0% y-o-y. Total income witnessed a growth of 9.3% during the
same period.
 Raw materials (gold being 98.8%) forms the largest portion of cost for SRS. In FY12, raw materials cost as a percentage of
net sales was at around 59.3%.
 The company reported EBITDA margins of 4.7% in FY12, improving from 2% in FY11. In the same line, the PAT
margins improved to 2% from 1.8% in FY11.
 During the year, the company’s capital structure was comfortable marked by minimal leverage with debt to equity ratio of
0.2 times as on March 31, 2012. The total debt as on March 31, 2012 was at Rs.80.4 crore (FY11: Rs.273.8 crore) compared
to an adjusted networth of Rs.533.9 crore (FY11: Rs.313.2 crore).
 SRS exhibited a cash conversion cycle of around 81 days, i.e. around 3 months in FY12.
 Operating cash flows for the company have been positive in each of the last four years (i.e. period considered for analysis).
 The company has announced a dividend of Re.1 per share for FY12 which would result in a dividend yield of 2.3% at the
current market price of Rs.44.1 per share.
Annual financial statistics
FY08
FY09
FY10
FY11
FY12
Income statement (Rs. crore)
Total income
187.8
514.5
1,329.9
2,077.7
2,270.5
Net sales
171.6
500.4
1,307.8
2,041.0
2,265.0
EBITDA
8.3
10.6
45.1
56.8
105.6
Depreciation and amortization
2.8
6.5
8.5
12.0
13.1
EBIT
5.4
4.1
36.6
44.8
92.4
Interest
5.3
10.4
16.7
24.5
39.5
PBT
16.3
7.9
42.0
57.0
58.4
Ordinary PAT
10.5
5.6
25.9
37.3
44.4
Adjusted PAT
8.1
5.2
25.9
37.3
44.4
Balance sheet (Rs. crore)
Adjusted networth
164.0
221.2
277.0
313.2
533.9
Total debt
128.3
154.3
162.3
273.8
80.4
Cash and bank
10.2
2.6
18.5
30.5
58.1
Investments
Net fixed assets (incl. CWIP)
190.9
234.8
215.0
232.0
236.9
Net current assets (excl. cash, cash equivalents)
97.9
146.7
217.4
338.2
294.2
Per share data (Rs.)
Adjusted BVPS
22.7
20.8
26.6
30.0
38.3
Diluted EPS*
1.5
0.1
2.5
3.6
3.6
DPS
0
0
0
0
0
Growth (Y-o-Y) (%)
Growth in total income
174.0
158.5
56.2
9.3
Growth in net sales
191.5
161.4
56.1
11.0
Growth in EBITDA
28.2
323.8
26.0
86.0
Growth in adjusted PAT
35.4)
396.9
43.6
19.1
Growth in EPS*
(95.9)
4,050.0
43.4
0.6
Key financial ratio
EBITDA margin (%)
4.8
2.1
3.4
2.8
4.7
Adjusted PAT margin (%)
4.3
1.0
2.0
1.8
2.0
RoCE (%)
0.5
4.9
4.8
12.9
RoE (%)
2.9
10.4
12.6
10.5
Gross debt - equity (times)
0.8
0.7
0.6
0.9
0.2
Net debt - equity (times)
0.7
0.7
0.5
0.8
0.0
Interest coverage (times)
1.0
0.4
2.2
1.8
2.3
Current ratio (times)
8.7
8.1
8.4
7.2
2.0
Inventory days
16.4
22.6
21.5
24.2
Receivable days
13.2
18.5
33.2
58.9
Source: BSE, Capitaline and CARE Research. Note: Financial Year (FY) refers to period from April, 1 to March, 31. Financials for FY10-FY12 is on
consolidated basis (includes it subsidiary SRS Jewels Ltd). FY08 and FY09 financials are on standalone basis. FY12 financials are based on abridged results.
4
Initiative of the BSE Investors’ Protection Fund
DISCLOSURES


Each member of the team involved in the preparation of this grading report, hereby affirms that there exists no
conflict of interest that can bias the grading recommendation of the company.
This report has been sponsored by the BSE Investors’ Protection Fund.
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
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