Re-shaping India
Post Conference Report
CEO Track
9 CEO presentations
10 Thematic presentations
Macro Drive - Delhi
Mining & Metals Dig -
Chhattisgarh & Odisha
Financials Deep Dive - Mumbai
Takeaways from company
interactions
InSites: Intriguing site visit
Company Connect

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10 Annual Global Investor Conference
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CEO Track
CEO
Mr Pawan Munjal,
Vice Chairman & Managing Director
Mr Tom Albanese,
Chief Executive Officer
Mr Nilesh Gupta,
Managing Director
Mr Gopal Vittal,
MD & CEO (India & South Asia)
Mr Ravi Uppal,
MD & CEO
Mr Aditya Puri,
MD & CEO
Mr UB Pravin Rao,
Member of Board
Mr V C Sehgal,
Chairman
Dr Rajiv Lall,
Chairman
Mr Himanshu Kapania,
Managing Director
Company
Hero MotoCorp
Sesa Sterlite
Lupin
Bharti Airtel
Jindal Steel & Power
HDFC Bank
Infosys
Motherson Sumi System
IDFC
Idea Cellular
Page
5
6
7
8
10
11
12
13
14
15
Thematic/Special Presentations
India Investment Insights & Frameworks
Mr Raamdeo Agrawal,
Co-founder, Motilal Oswal Financial Services
India - Winds of Change
Mr Nitin Gadkari,
Union Minister for Road, Transport & Shipping
Investment Cycle: At the Cusp of a Revival
Mr SN Subrahmanyan,
Member of Board, Larsen & Toubro
The Making of Modi Campaign
Mr Kunal Jeswani,
Chief Digital Officer, O&M
Towards a Sustainable Society
Mr KR Lakshminarayana,
Chief Endowment Officer, Azim Premji Foundation
E-Commerce in India: at an Inflection Point
Mr Rajan Anandan,
Managing Director, Google India
India Consumer 360 Degrees – 2020
Mr Prashant Singh,
Managing Director, Nielsen India
Transformation – Life & Work
Swami Sukhabodhananda,
Corporate & Spiritual Guru
Roadmap of Indian Financial Sector
Mr S S Mundra,
Deputy Governor, Reserve Bank of India
16
18
20
21
23
25
27
28
29
InSites: Intriguing site visit
MACRO DRIVE – Delhi
MINING & METALS DIG – Chhattisgarh & Odisha
FINANCIALS DEEP DIVE – Mumbai
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Company Connect
Takeaways from company interactions
Investors are advised to refer through disclosures made at the end of the Research Report.
September 2014
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Indian economy has started showing signs of improvement! On the macro, inflationary
pressure is receding, IIP and GDP growth rebounding, and the twin deficits remains under
control. On the corporate performance, earnings growth is showing signs of acceleration
with FY15 growth estimated at 15% and FY16 at 20%. On the politics, the Modi-led NDA
government has completed their 100 days and have infused a new ray of hope and
confidence in the system.
Amidst this encouraging backdrop, we hosted our
10th Motilal Oswal Annual Global
Investor Conference
– “A Decade of Insights” during August 25-29 at the Grand Hyatt in
Mumbai.
Motilal Oswal Annual Global Investor Conferences
are arguably the biggest in India, a
trend which continued in 2014 as well. During the conference top management of over
100 leading Indian companies interacted with more than 700 investors from all over the
world, translating into 3,600+ company-investor meetings. During the last three days
(Aug 27-29), we also had insightful visits to the power corridors in Delhi, a deep dive into
the Financials sector and site visits to Chhattisgarh and Odisha.
Conference Highlights
CEO Track:
During the first two days of the conference, 19 of India's leading CEOs
shared their vision, strategies and success stories.
Thematic presentations:
by eminent experts covering a range of topics — from
politics to society to economics … even spirituality!
Shri Nitin Gadkari,
Union Minister for Road Transport & Shipping, shared his
views on
India – Winds of change
Mr. Kunal Jeswani, Chief Digital Officer, O&M, provided insights into
The
making of Modi campaign
Mr. K R Lakshminarayana, Chief Endowment Officer, Azim Premji Foundation,
spoke on
Towards a sustainable society
Mr. Rajan Anandan, MD, Google India, presented on
E-commerce in India – At
an inflection point
Swami Sukhabodhananda, Corporate & Spiritual Guru, threw light on
Transformation – life & work
Mr. SS Mundra, Deputy Governor, RBI, shared his views on
Roadmap of Indian
financial Sector
Insites:
During Aug 27-29, we had organized two itineraries i) Macro Drive – Delhi
where investors met policy makers including politicians and senior bureaucrats and
ii) site visits to Chattisgarh and Odisha to see the processes, scope and operations at
some of the largest aluminum & steel plants and coal mines.
Financials Deep Dive:
On Aug 28, we took a deep dive into the business
fundamentals for the granular understanding of the financial sectors and emerging
themes.
We also set up a unique evening on the opening day (Aug 25) -
Breathless! – A dance-
dinner extravaganza
– a Bollywood musical by India’s hottest dancing sensations
combined with an opportunity to network over dinner.
We received extremely positive feedback which makes us believe that the conference
indeed lived up to its theme of
Re-shaping India,
leaving global investors with several
incisive insights, winning themes, high conviction on sectors and the best investment
ideas.
We thank you for the active participation at the event. We will host the
11th Motilal
Oswal Annual Global Investor Conference
in August-September 2014 and look forward
to your participation.
Navin Agarwal
CEO – Institutional Equities
Rajat Rajgarhia
Managing Director – Institutional Equities
September 2014
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CEO Track takeaways
10 CEOs, 9 Thematics, InSites - Intriguing site visit
September 2014
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Hero MotoCorp
CEO TRACK
Mr Pawan Munjal is a key
architect of India’s two-
wheeler (2W) revolution. He is
MD & CEO of Hero MotoCorp,
which produces nearly half of
India’s motorcycles and
scooters and a ninth of global
output. Under his stewardship,
the company has once again
retained its distinction as the
world’s largest 2W company in
volume terms, now for the
13th consecutive year. During
his time at the helm (since
2002), the company’s turnover
has gone up from ~USD1b to
~USD4b.
Mr Munjal believes in India’s
manufacturing prowess. He has
chaired various committees of
the apex body of India’s
automobile sector, SIAM, has
headed groups on technology
& innovation at CII, and sits on
government bodies that chalk
out policies on automobiles
and trade. A World Economic
Forum regular, he has also co-
chaired forum meetings. He is
also a sports aficionado, and
his passion in this area has
seen Hero MotoCorp at the
forefront of promoting talent
in Hockey, Cricket, and Golf.
Mr Pawan Munjal
Vice Chairman & Managing Director
Hero MotoCorp
Takeaways from CEO Track presentation
Significant opportunity for 2Ws still exists in India, with ~1/3 penetration of
comparable peers like Indonesia or Thailand. Penetrations can be 2x or 3x, driven
by strong rural growth and increasing spend on commuting as disposable income
increases.
EXPORT FOCUS:
Currently #1 globally based on India volumes. Focus to scale-
up exports for being truly #1 globally. Target of 10% of FY20 volumes to be
exports or ~1.2m units.
Historically, period of low growths followed by strong spurt in demand. After
FY13-14 muted volumes, FY15-16 can be strong growth period for 2Ws.
Focus on expanding product portfolio to address new segments likes
premium motorcycle, 125/150cc scooters etc.
Four pronged strategy to achieve Vision 2020 (12m units, $10b revenues and
10% exports):
Expand the core: Increase domestic share, sell 9m units. Expand product
portfolio by entering new segments, new tecchnology and innovative
marketing.
Improve margins by 300-400bps to 18% by FY18: Very confident of
achieving target, as entire roadmap in place and target is conservative!
Grow exports to 10% of exports: Currently in 20 countries, expand it to
over 40 countries. Think global, but act local approach with offering
customized localized products.
Technology leadership: Have strategic alliances and in-house R&D to
attain technology leadership. Hiring top talent...appointed Mr Markus
Braunsperger as CTO (ex BMW for 25 years).
Other highlights
15 new launches in Oct-14
35 products over next 3 years
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Chirag Jain
+91 22 3982 5418
Chirag.Jain@MotilalOswal.com
September 2014
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Sesa Sterlite
CEO TRACK
Mr Thomas Albanese is the Chief
Executive Officer of Vedanta
Resources Plc and its subsidiary
Sesa Sterlite Limited. He is also
the Chairman of the Board of
Vedanta Resources Holdings
Limited and Director of Vedanta
Resources Plc. Mr Albanese is also
on the Board of Directors of
Franco Nevada Corporation, a
Toronto-based gold-focused
royalty and metal streaming
company with assets around the
world.
Previously, Mr Albanese served as
the Chief Executive of Rio Tinto
Group and as its Head of
Exploration. He also served as the
Director of Group Resources at
Rio Tinto and as the Managing
Director of North Limited. In
2009, he joined the Board of
Visitors for the Fuqua School of
Business at Duke University in
North Carolina.
Mr Albanese received the ‘Mining
Foundation of the Southwest’
2009 American Mining Hall of
Fame Award for his dedication,
knowledge, leadership, and
inspiration to his peers in the
Mining industry.
Mr Tom Albanese
Chief Executive Officer
Sesa Sterlite
Capital allocation gaining focus; India resource potential untapped
Resource companies globally are focusing on initiatives to reduce their cost
base and improve productivity given the volatility in commodity prices
Capital discipline, cash flow generation, divestments, and portfolio
simplification have become the focus area of investors
Shareholders are giving preference for return on capital through dividends,
buybacks etc
Gaining license to operate would be the key differentiator for companies
amidst the evolving regulatory framework and their entry into new frontiers
India’s per capita consumption of commodities remains well below world
average and about 1/10th that of China
Favorable demographics in terms of increase in urbanization and expanding
labor forces would drive resource requirement
While infrastructure in India is a major roadblock, recent policy actions
around increasing spending on infrastructure are positive trends forward
India’s resource potential remains largely unexplored despite it being
amongst the top 5 to 8 countries globally in term of reserves of iron ore,
bauxite, zinc and coal.
India’s share of global non-ferrous exploration spending at 0.2% was the
lowest amongst the BRIC nations.
Mining sector in India has high employment elasticity to GDP of 0.52x higher
than even manufacturing and services. Thus pickup in resource exploration
activity would be a key growth enabler.
Recent policies initiatives – like revenue share based incentive regime and
uniform licensing policy for hydrocarbons, formulation of mining policies,
roadmap for coal linkages to nearest plants – indicates a more investor
friendly approach for resource exploration and utilization
Sesa Sterlite being the largest resource explorer in India is likely to benefit
from both improvement in demand and easing regulatory environment
Outlook and potential by sectors (a) Oil & Gas – in-place potential reserves of
about 10bnboe in Rajasthan. Targets 100mmscfd of gas production from
Rajasthan by FY17 (b) Zinc-Lead-Silver – lowest quartile cost-positioning,
development of Rampura Agucha mine progressing well (c) Iron Ore – Expect
mining operations to resume in 2HFY15; government formulating policy on
mining; Karnataka iron ore operations have resumed (d) Aluminum –
Korba/Jharsuguda smelter expansion on track; coal availability major concern
(e) Power – Coal availability remains an issue.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
September 2014
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Lupin
Thematic
Presentation
Mr Nilesh Gupta
Managing Director
Lupin
CEO TRACK
Mr Nilesh D Gupta has been
Managing Director of Lupin since
September 2013. Before this, he
served as its Group President
since July 2006, and was
responsible for driving the
Advanced Markets business.
In his present profile, he is
driving all research initiatives of
Lupin, comprising of Drug
Discovery, Process Research,
Formulation Research, and the
IP Group. He is also in charge of
LupinRss supply chain, comprising
of all API and finished product
manufacturing locations, and
heads the Regulatory, Quality,
and Projects functions.
Mr Gupta graduated from the
Wharton School, USA, where he
specialized in Healthcare,
Strategic Management, and
Finance.
Increased focus on specialty business; plan to enter key emerging
markets
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
In less than a decade, Lupin has transformed itself from a largely India-
focused, anti-tuberculosis company to a leading pharma player diversified
across geographies as well as therapies.
Lupin now aspires to be the 5thlargest company globally in terms of revenue
as well as market capitalization. This is in line with their long term revenue
guidance of USD5b by FY19E.
During his presentation, Mr. Gupta laid out the roadmap the company plans
to follow to realize their aspiration: building a global generics company with a
strong focus on specialty business.
Key ingredients to create as global generic company are (1) strong presence in
significant geographies, (2) excellent R&D and regulatory capabilities, (3)
world class manufacturing setup and (4) proven execution track record. Lupin
has already shown strong progress in all of these areas.
The company is now working towards increasing its focus on specialty
business. These opportunities are step-up after the plain-vanilla generic
business in terms of (1) limited competition, (2) high revenue visibility as well
as sustainability in earnings and (3) better profitability. Global competitors
like Watson (now Actavis) and Mylan have already seen success by
transforming into a specialty-focused business model.
As such, an established specialty business is a stepping stone into the Big
Pharma game. However, entry into these areas entails high investments in
R&D with long gestation period to realize the benefits.
What make these benefits sustainable are the significant barriers to entry: (1)
Difficult to identify such niche therapies, with most of them being the domain
of Big Pharma; (2) Targeted products need to have a clear medical advantage
over existing substitutes; (3) High development costs due to the clinical trials
involved; and (4) Short product lifecycle which can render the opportunity
economically unviable.
To this end, Lupin will continue to develop, build and acquire capabilities for
complex generics and specialty areas (e.g. long-acting injectables, inhalation,
derm and biosimilars). It may also acquire a specialty product portfolio.
While US will remain their biggest market, the company will leverage its
position in India to capitalize on the long-term opportunity. Japan business is
expected to grow by leveraging the existing base and channel relationships. In
Europe, the company will focus on select markets through direct &
partnership model. Lupin also indicated its interest to enter the key emerging
markets of LatAm and Russia.
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Bharti Airtel
CEO TRACK
Mr Gopal Vittal is the MD & CEO
of Bharti Airtel for India and
South Asia. He is responsible for
defining and delivering the
business strategy and providing
overall leadership for Airtel’s
India and South Asia operations.
He moved into this role from
Bharti Enterprises, where he was
the Group Director - Special
Projects (April 2012 - February
2013). In this capacity, he worked
towards formulating and
supporting Airtel’s International
strategy and data expansion.
Prior to this, he was at Hindustan
Unilever, where he was heading
the Home and Personal Care
Division. During the various global
and national responsibilities he
held during his 20-year stint at
Unilever, Mr Vittal gathered a
wealth of experience in
assimilating the consumer
mindset, managing operations
efficiently, winning with the
customer, building brands, and
innovating to secure market
leadership.
Mr Gopal Vittal
MD and CEO (India & South Asia)
Bharti Airtel
‘Multiple Games’ on; Bharti well-placed in all
-
-
Industry has transformed from ‘Start-up’ (1995-2000) and ‘Land grab’ (2001-
2010) to ‘Multiple Games’ 2011 onwards.
Growth potential exists at customers 20% ‘under-served’ customers for voice,
80% for data, and 99.5% for services like mobile money transfer
Key opportunities
1) Underpenetrated geographies,
2) Market share improvement in specific circles,
3) Voice pricing to improve on secular basis (significant gap between realized
rate of 38p/min and headline rate of 65-70p, both including incoming),
4) Customer mix improvement,
5) Enterprise market (USD 8b market of which Bharti currently more focused on
top USD4b),
6) Data (10% smart phone penetration in India vs Asia Pac average of 39%).
Airtel strategy based on five pillars
Go to market excellence:
Measures like improving quality of subscriber
acquisitions using scientific approach resulting in churn coming down to 2.7%
and driving INR10b savings in subscriber acquisition costs.
Winning with Data:
Sharing 60-70% of data revenue with content providers
vs 30% earlier, positioning Airtel as the ‘smartphone’ network, and
‘technology leadership’ by launching India’s first 4G network.
Focus on valuable customers:
Rolled out ‘My Plan’ for post-paid so that
subscribers can customize their billing pans – same concept is now being
extended to pre-paid through ‘myPack’. Focus on own retail stores, home
broadband, DTH, and Enterprise segment to increase engagement with high
value customers.
War on waste:
Increasing operating and capital productivity by improving
cost efficiencies.
Winning with people:
Empowered circle level teams.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key considerations/challenges
Low spectrum allocation on overall industry basis and per operator
basis:
Total spectrum allocated to industry in India is 280MHz vs global
standard of 750MHz. Average spectrum per operator is 15-17MHz in India vs
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global norm of ~46MHz. Further, significant amount of spectrum is not
contiguous, which is not a big issue for 2G but is a key requirement for 3G/4G.
Taxation:
Industry pays 22-26% of revenue as taxes in the form of service tax,
licence fee, spectrum usage charges etc.
Preparing for upcoming competition from new entrant by
Understanding
4G
technology
well
and
gaining
first-hand
experience/leadership in 4G
Focusing on re-shaping customer experience by restructuring the legacy
processes
Continued efforts to improve cost efficiencies
September 2014
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Jindal Steel & Power
CEO TRACK
Mr Ravi Uppal is the MD &
Group CEO of Jindal Steel &
Power. He brings with him 36+
years of work experience in the
Engineering and Infrastructure
segments. He has successfully
set up several new businesses
and turned around low
performing units. Previously, he
has served as the Country Head
– India for ABB, where he led a
seven-fold increase in business.
He was Founding Managing
Director of Volvo India. He was
CEO of L&T’s Power Division.
He is a member of the CII’s
National Council and heads CII's
National Committee on
Industrial Policy. He has been
conferred the Royal Order of
the Polar Star and named a
Knight of Order by the King of
Sweden. He serves as the Non-
Executive Director on the Board
of BAE Systems, plc, UK, and is
Chairman of the India Advisory
Board of Schindler, Switzerland.
Mr Ravi Uppal
MD and CEO
Jindal Steel & Power
Distribution reforms hold key, focus on meeting latent demand
The last few years have been very challenging for three sectors - Mines and
minerals, steel and manufacturing.
Continues to grow at 15-20GW every 5 years. Emergence of private sector in
power changed thing.
Transmission is a bigger problem – Chhattisgarh, Orrissa and Gujarat have
excess generation but have transmission problems
Almost 35% of the power generated is with Private sector. This has increased
from 11%, 10 years back. Generation was the key focus area, while lack of
integrated thinking meant that transmission was never covered well.
T&D losses should never exceed 10%, however there are huge amount of
losses.
Lack of co-ordination between Centre and State persists.
New government has started to bring the various ministries together to get
everyone on board, put the policy framework in place.
Low-hanging fruits that can be addressed fast are: 1) Eliminate cross-
subsidisation of power; 2) Higher distribution reforms through privatization to
lower T&D losses.
Merchant power rates have raised to INR6.50 because of shut down in North
India
Reported power deficit shortage does not include large load shedding; actual
deficit very high
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
September 2014
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HDFC Bank
CEO TRACK
Mr Aditya Puri has been the MD
of HDFC Bank since September
1994. He has nearly 40 years of
experience in the banking sector
in India and abroad. Prior to
joining HDFC Bank, he was the
CEO of Citibank, Malaysia.
Mr Aditya Puri
MD & CEO
HDFC Bank
Economy to pickup over the medium term:
While the overall demand
environment has been weak over the last couple of years, a few greenshoots
are visible in the manufacturing sector. The reduction in fiscal deficit, key
reforms, widespread rainfall and improvement in government functioning
and accountability hold the key for medium term growth improvement.
Interest rate to be stable over next 9-12months:
Over the last 4-5 years, RBI
maintained an anti-inflationary monetary policy stand. Central bank has been
successful in softening the WPI inflation to ~6% from 9-10% in 2011. As the
economy embarks upon the next phase of growth, interest rates are likely to
witness a gradual reduction once RBI achieves its CPI target of 8% by Jan
2015.
Banking industry poised for better days ahead:
An expected improvement in
economic activity has revived the growth prospects for the Indian Banking
Industry – which had been going through a lean phase over the last couple of
years. While the higher proportion of stress loans in the system is an issue,
banks are better equipped to handle them. Although, the stress is expected to
ease over the next few quarters, the upgrade cycle is still some time away.
Government and regulator are working together towards structurally
strengthening Indian Banks. Consolidation in the PSU banks is the need of the
hour.
Customer centric HDFC Bank model:
The bank undertook several structural
and cultural initiatives over the last 3-4 years to transform the organization
from a product centric bank to a customer centric one. The growth mantra of
the bank is based on 3Ps: a) Purpose – Single point of contact for a client b)
Product – customizable product structure with fastest turnaround time c)
Price – Offer most competitive price after considering the risk/return tradeoff
Improved growth prospects:
Retail segment would continue to remain the
key growth driver for the bank in near term. However, working capital loans
shall pickup over the next 18-24 months as the economic demand picks up.
On a steady state basis, bank will maintain equal proportion of retail and
wholesale assets, with a +/-5% shift based on the economic scenario. The
digital medium to become an important sourcing channel and its share will
increase multifold over the next decade.
The boards of HDFC Bank and HDFC limited both have not yet
considered/discussed merger proposal as yet. In the current form it does not
look lucrative for HDFC bank.
11
Mr Puri has contributed
significantly to enable HDFC Bank
scale phenomenal heights. During
his tenure, he has led the Bank
through two major mergers – the
merger of Times Bank and
Centurion Bank of Punjab with
itself. Under his stewardship,
HDFC Bank’s growth, profitability,
and rankings have been amongst
the best in India.
The numerous awards won by Mr
Puri and the Bank are testimonies
to the tremendous credibility that
Mr Puri has built for himself and
the Bank over the years.
Top Achiever, Sunday
Standard Best Banker Awards
Banker of the Year 2013,
Business Standard
Best Executive in India, Asia
Money 2013
Best Banker, FE Best Bank
Awards
Best CEO, Institutional
Investor
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
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Infosys
CEO TRACK
Mr UB Pravin Rao is the COO and
Board Member of Infosys. He is
responsible for driving growth
and differentiation across a
portfolio that includes – Retail,
Consumer Goods, Logistics, Life
Sciences, Resources & Utilities,
Cloud and Mobility, Quality and
Productivity, Services, Growth
Markets, and Infosys Labs. In
addition, he is responsible for
Global Delivery and Service
Innovation.
Mr UB Pravin Rao
Member of Board
Infosys
To invest in technology innovations; few segments incrementally better
Demand from few segments incrementally better:
While the overall demand
environment remains stable, there is some uptick incrementally in Financial
Services, Manufacturing and Communication & Energy. Retail and Life
Sciences remain a little challenged. The company remains comfortable with
its current guidance of 7-9% YoY growth in USD revenues.
USD100m allocated towards new technologies will see priority:
Dr. Sikka has
called out his intention to utilize the USD100m funds allocated towards new
technologies. Infosys is looking at acquiring or funding the start-ups, with a
clear aim to gain an edge in technology innovation.
India advantage intact:
While countries like China have been building
capabilities, there is very little visible presence in the international market.
Barring voice BPO in Philippines, there is very limited pressure from outside.
Where there have been sporadic instances of in-sourcing, there continue to
be mature captives that are up for sale.
Any strategy change will be clearer by October:
While the leadership has
changed, it is still early to suggest if there would be any big shift in strategy.
Any changes can only be better articulated by October 2014.
Crucial to adapt to the changing role of Enterprise IT:
The role of IT in
Enterprises is undergoing significant shift – they owned assets earlier, which is
changing with the emergence of cloud. Applications too, are moving to cloud
with software-as-a-service slowing becoming mainstream, and Bring-your-
own-device (BYOD) is the potential future. As clients consume infrastructure
around technology not owned by them, the opportunity in IT services is
around integrating multiple hybrid systems (SI), and making the shift a
seamless experience.
Attrition should start coming down:
Attrition of ~19% in the previous quarter
remains on the higher side. Infosys has been taking measures to improve the
predictability of rewards to people. Attrition should start coming down with
the softer aspects like distraction around CEO succession now behind the
company. However, it will be a few quarters before it recedes to 13-15%.
Growth remains the priority over margins:
Outlook for margins in the near
term is 24-26%. As improvement in growth remains the priority, the company
would be willing to be aggressive in traditional commoditized business and
invest further in improving growth. Expansion in margins will be difficult
unless growth improves.
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Mr Rao is also Director of the
Infosys Leadership Institute,
which is responsible for the
selection, development, research,
and succession of senior and
high-potential leaders. Since
joining Infosys in 1986, he has
held a number of senior
leadership roles such as Head of
Infrastructure Management
Services, Delivery Head for
Europe, and Head of Retail,
Consumer Packaged Goods,
Logistics and Life Sciences.
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Siddharth Vora
+91 22 3982 5585
Siddharth.Vora@MotilalOswal.com
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Motherson Sumi System
CEO TRACK
Mr Sehgal established Motherson
in 1975 and has been the
Chairman of Motherson Sumi
Systems Limited since 2012. The
group, which has a partnership
with Japan’s Sumitomo Wiring
Systems, is one of India’s largest
exporters of auto parts.
It now has revenues of USD4.6
billion and employs 60,000
people across 25 countries.
Under his leadership, the
company is expanding
internationally in Europe, South
America and South East Asia. Post
the Lehamn crisis, when the
world was looking inwards, Mr
Sehgal initiated a string of
overseas acquisitions to expand
and establish his business. In just
five years, his company has
grown more than 10 times and it
is today India’s largest auto
component maker.
Mr V C Sehgal
Chairman
Motherson Sumi System
Stoneridge acquisition to be one of the key growth drivers
Motherson Sumi’s progress can be explained in 3 phases:
# Phase 1 (Upto 1997): Learning of manufacturing and focus only on India
and OEMs.
# Phase 2 (1997-2003): Going global based on existing OEM relations
# Phase 3 (2003 onwards): Acquisition as route came with its restrictions.
Acquisitions helped to own intellectual property.
MSSL has always focused and never diverted on its vision i.e to be globally
preferred solution provider. Due to its focus on QCDDMSES (Quality, Cost,
Delivery, MANAGEMENT, Safety, Environment and Sustainability), the
company scores very highly on it with all customers.
At promoter level, there is clear distinction between ownership and
management. There is complete decentralization of decision making, as there
is complete authority at plant level based on deliverables decided by the
corporate office.
As a strategy, there is complete derisking as it follows strategy of 3Cx15 i.e no
customer, country and component will contribute over 15% of revenues.
It has over 42,000 employees in India. Interestingly, there are no labor unions
at any of its plant in India.
It follows BYBY philosophy i.e By Yourself, Better Yourself. They are focused
on internal benchmarking and doesn’t benchmark with any of its competitors.
It is setting-up very aggressive target for 2020, which it would be disclosed
with FY15 annual report.
Stoneridge acquisition to open US market for non-PV wiring harness business.
This acquisition can be one of the key drivers of growth and profitability.
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Chirag Jain
+91 22 3982 5418
Chirag.Jain@MotilalOswal.com
September 2014
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IDFC
CEO TRACK
Dr Rajiv Lall, Chairman of IDFC,
has had an international career
spanning the World Bank, the
Asian Development Bank, and
Wall Street institutions. He
became CEO of IDFC in 2005 and
embarked on the task of
successfully listing the company
and transforming it into India’s
premier infrastructure-focused
financial conglomerate. He is now
working on converting it into a
commercial bank.
Dr Rajiv Lall
Chairman
IDFC
Reforms picking up; IDFC’s bank to leverage technology for rapid growth
Post elections, Expectations were running ahead of reality from the new
government. The government has done a good job in attacking the structural
issues in the system. The fact that various departments of the government
are working together to resolve systemic issues is encouraging.
The coordinated efforts on some of the important reforms like pricing of
agriculture produce, GST, Infrastructure and capitalization of banks are
encouraging. However, results in the form of pickup in aggregate demand,
investments and exports will come with a lag over the next few quarters.
The new government is doing good balancing act by being “Pro-Business”
without being “Anti-poor”. It is determined to smoothen the centre-state
relations with lesser confrontations. Bureaucrats have been given higher
Dr Lall straddles the policy making
autonomy and are working with renewed vigor and zeal.
and finance worlds. He chairs the
Global Agenda Council on
While there has been a lot of chatter relating to banking sector reforms, but it
Infrastructure of the World
is still work in progress. This year’s Union Budget also was disappointing for
Economic Forum, chairs the
the banking sector.
Infrastructure Council, and is a
Indian Public Sector Banks are currently starved of capital. Considering the
member of the Economic Policy
Council of CII. He was India's
asset quality and capitalization, PSU banks will require at least INR2.4-3.0tn of
representative to the G20
capital over next 4 years to meet the Basel III regulations. Additionally,
Workgroup on Infrastructure and
reforms to improve governance practices of PSU banks are the need of the
a member of the City of London's
hour.
Advisory Council on India. He has
IDFC Bank – plans ahead
New bank will be listed from day one. IDFC will become the holding company
of the bank. IDFC Bank will invest heavily in state of the art technology
platform, which will be instrumental in gaining market share from other
banks
The recent RBI guideline on the issuance of long tenure bonds for
Infrastructure and affordable housing are positive for IDFC.
Clarification on treatment of current Infra book of IDFC is awaited by
management. If the current loan book is treated as it is and shifting of loans is
not treated as new loans then 30% of existing loans will get benefit in
CRR/SLR and PSL at the time of becoming a bank. It would take around 24-36
months for the entire book to become eligible.
also been a member of several
government advisory panels on
Infrastructure Finance, Transport
Sector Development,
Modernization of Indian Railways,
and the Reserve Bank of India’s
Committee on NBFCs.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
September 2014
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Idea Cellular
CEO TRACK
Mr Himanshu Kapania is the
Managing Director of Idea
Cellular, a pan-India mobile
operator. He has been
responsible for strengthening
Idea’s dominance in established
service areas, while launching
services in new service areas and
expanding brand presence in
other major markets in India.
Mr Kapania is a Telecom industry
veteran. He was the Chairman of
the Cellular Operators
Association of India (COAI), the
body representing the interest of
GSM operators in India.
Mr Himanshu Kapania
Managing Director
Idea Cellular
From ‘No 3’ to ‘one among the three’
Industry revenue growth can accelerate to from ~10% to ~15% led by
Continued subscriber growth:
While industry has reached ~800m active
subscribers, it can continue to add 70-80m subscribers per year given
significant penetration gap between India and developed markets.
Voice price increases led by declining competitive intensity:
Significant
gap exists between headline tariffs and realized rates. Voice RPM to
continue improving given declining competitive intensity.
Data opportunity:
Mobile internet is the biggest growth story with
~230m of the ~250m internet connections in India on mobile. The
industry has potential to add another ~500m mobile internet users.
New revenue streams like M2M/Mobile banking/commerce:
These
revenue streams are currently small but expected to ram up significantly
over next 2-3 years.
Significant spectrum investments in-place; well-funded for upcoming
renewal
Significant spectrum investments already in-place:
Idea has already
invested ~INR210b during last three spectrum auctions to secure
~158MHz spectrum across bands/geographies.
Well-funded for renewal:
The company is well-placed and funded for its
upcoming spectrum renewals.
Confident of market share gains & operating leverage led margin
improvement
Market share gains to continue:
Idea has gained 400bp revenue market
share over past four years to reach 17%. Idea’s incremental revenue
market share during FY14 was ~30%, almost similar to other two
incumbents.
Operating leverage benefit can continue:
Idea’s market share gains have
driven operating leverage led margin improvement of 700bp+ over past
three years. Margin expansion to continue as Idea is growing at 1.6-1.8x
industry growth rate.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
September 2014
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India Investment Insights & Frameworks
Thematic
Presentation
Mr Raamdeo Agrawal
Co-founder
Motilal Oswal Financial Services
Mr Raamdeo Agrawal is the Jt
Managing Director of Motilal
Oswal Financial Services Limited
(MOFSL). MOFSL is a well-
diversified financial services firm
offering a range of products and
services in securities,
commodities, investment banking,
asset management and venture
capital. A subsidiary of MOFSL,
MOSL is engaged in stock broking
and retail wealth management. It
has been consistently rated by
Asia Money Broker’s Poll as one of
the leading equity research houses
in India. Mr Agrawal is the key
driving force behind MOSL’s
strong research capability. Stock
picking is his passion.
Many businesses will continue to grow exponentially in Modi-fied India;
disciplined investing should lead to superior portfolio performance
of India. He is a member of the
National Committee on Capital
Markets of the Confederation of
Indian Industry. He has been
authoring the annual Motilal
Oswal Wealth Creation Study
since its inception in 1996. He has
featured on ‘Wizards of Dalal
Street on CNBC TV 18’. He wrote
‘Corporate
Numbers Game’
along
with co-author Mr Ram K Piparia.
When per capita GDP doubles,
discretionary spend likely to
expand 10-fold
World continues to prosper; China, India big winners
Mr Raamdeo Agrawal stated that World GDP has gone up 2.3x in past 13
years growing at 6.5% CAGR. The world has continued to prosper in the past
despite various global cycles and the coming years will not be any different.
Of all the countries, China has been the biggest growth story. During this
same period, China has almost jumped 7.7x growing at 17% CAGR.
India has been the second biggest success story with GDP growth at 3.9x at a
CAGR of 11%.
Despite lower GDP growth, India’s stock market returns are much higher than
that of China. BSE Sensex return CAGR is 14% in the past 13 years, while
Shanghai Composite is almost flat.
In past 35 years of Sensex’s existence, there are 23 years where Sensex has
delivered positive returns and 12 years of negative returns. Further, all big
Mr Agrawal is an Associate of the
years of negative returns, i.e., 1987-1988, 1993, 2001 and 2009 are preceded
Institute of Chartered Accountants
by consecutive years of huge positive returns.
India’s linear NTD journey spells exponential opportunity
India took 58 years to clock its first trillion dollar GDP in FY08. However, the
Next Trillion Dollar (NTD) economy should take only 7 years (USD2t GDP in
current year FY15), the NTD only 5 years (USD3t GDP in FY20), and the
following NTD in 4 years (USD4t GDP in FY24).
Even as GDP and per capita GDP grows linearly, discretionary spend expands
exponentially, spelling massive opportunity for several sectors.
Apart from domestic demographic advantage, India also enjoys global
competitive advantage in certain sectors like IT/ITeS and Healthcare. Thus,
Indian IT has grown 20x in 14 years (from USD5b in 2000 to USD100b in
2014), even as global IT is up just 2x (from USD500b to USD960b). Going
forward too, Indian IT’s global share is expected to double from 10% in 2014
to 20% in 2020.
Tested Investment Frameworks facilitate stock-picking
Mr Agrawal presented certain tested investment frameworks which enable
confident stock-picking and superior portfolio performance:
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1) Winner categories
This framework states that sectors where high growth is coupled with
consolidated competition will definitely do well in the long-run.
From this perspective, Alcoholic beverages, 2-Wheelers, Credit rating and
Telecom are among the best placed sectors.
2) Great, good, gruesome companies
There are three kinds of companies which can be equated with three types of
“savings accounts” –
The ‘Great’ one pays an extraordinarily high interest rate that will rise as the
years pass.
The ‘Good’ one pays an attractive rate of interest that will be earned also on
deposits that are added.
The ‘Gruesome’ account both pays an inadequate interest rate and requires
you to keep adding money at those disappointing returns.
Even as investors continue searching for Great and Good companies, key to
successful investing is completely avoiding Gruesome companies.
3) Uncommon Profit: Emergence & Endurance
Uncommon Profit means profit in excess of cost of capital.
Economic theory suggests that in the normal course, competition should level
off all profits to cost of capital. So, companies which earn Uncommon Profit
over a sustained period of time clearly enjoy certain competitive advantages.
Such companies are worth investing, especially in the early stage i.e. when
they “emerge” into the Uncommon Profit zone.
In the Indian context, cost of equity is 15%; so any company which hits 15%
RoE for the first time signals potential “Emergence” of the company. The next
challenge is “Endurance” i.e. sustaining RoEs above 15% for several years.
Some key criteria help decide whether a company is likely to successfully
emerge or not. Industry-level criteria include large profit pool and high
bargaining power, whereas company-level criteria include strong corporate-
parent and consumer advantage (rather than production advantage, which is
more easily replicable).
4) QGLP: “Quality-Growth-Longevity-Price”
Mr Agrawal said he personally followed the QGLP approach derived from Warren
Buffett’s four basic tenets of stock-picking – (1) Business we understand, (2)
Favorable long-term economics, (3) Able management, and (4) Sensible price tag.
Indian stock market outlook
Indian markets are trading at new highs, but valuations are nowhere close to
bubble. Typically, markets have peaked at P/E levels of 24-25x, whereas currently
Indian markets are at 16x, slightly above the long-term average of 15x. Market
Cap to GDP is also at LPA of 72%, which in the past has hit as high as 180%.
Corporate profit to GDP stood at 4.3% in FY14; estimates suggest reversion to
mean of 5.5%. Thus, there is enough room for markets to rise, led by steady
earnings growth and valuation re-rating.
September 2014
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India - Winds of Change
Thematic
Presentation
Mr Nitin Gadkari
Union Minister for Road
Transport & Shipping
Mr Nitin Gadkari is currently the
Transport, Drinking Water &
Sanitation, and Shipping
Minister. Mr Gadkari has a multi-
faceted personality – a young
activist, an able administrator, a
successful entrepreneur, and an
astute politician.
Road sector bottlenecks being addressed; inland waterways next focus
areas
As Public Works Minister of
Maharashtra (1995-99) he swiftly
completed mega projects like
the Mumbai-Pune
Expressway and the network
of 55 flyovers in Mumbai at costs
way below the estimated
expenditure. He pioneered the
concept of Public-Private
partnership in infrastructure
development. Establishment of
Maharashtra State Road
Development Corporation was
one of his innovative initiatives,
through which funds were raised
from the open market for the
first time in India.
Covering Analyst(s):
Ashish Gupta
+91 22 3982 5544
Ashish.Gupta@MotilalOswal.com
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
Infra’s contribution to GDP growth to be 200bp in two years:
India’s GDP is
currently at 4.8%. The Ministry of Road and Surface Transport aims to
contribute 200bp to GDP growth within two years.
Reasons for stuck projects:
Three reasons held up projects earlier including i)
projects were awarded even with merely 10% of the land acquisition, ii) the
detailed project reports (DPRs) document were highly imbalanced with rigid
clauses resulting in cost overruns in turn leading to low interest among
developers, iii) railway permissions for projects over its tracks.
Quick resolution:
In merely 90 days, the government has solved most of the
problems. Fresh tenders of INR1t are expected to be floated. Of the total
projects of INR1.8t stuck at various stages, ~INR1.4t have been resolved. The
Ministry had 350 cases stuck on account of railway clearences. Of these, 50
have been cleared. Even on account of forest clearences, more than 100
projects have been cleared.
The current approach:
The government has now taken two decisions.
To move from PPP to EPC.
Concrete roads at reasonable rates:
The government has decided to shift
to concrete road from Bitumen earlier. While some cement players
attempted to take advantage of the announcement by raising cement
price by INR25 per bag, the Minister has negotiated a price of INR160/bag
(which is substantially below market price). This would help many cement
players to utilize their capacity to nearly 90% from current 40-50%.
INR1.25t can be raised by NHAI securitization:
The Ministry has no problem
in raising funds; however, it is making efforts to raise funds as cheaply as
possible. NHAI has revenue through toll collection of INR60b in FY14; the
ministry expects revenues of INR100b by FY16 and later a target of INR150b.
If the Ministry securitizes this toll collection, INR1.24t can be raised.
Major thrust to waterways:
The transport cost for one km of travel varies
under three different mode as follows: i) by road INR1.5, by railways INR1 and
waterways INR0.5. Thus, waterways is the most economical and
environmentally friendly mode of transport. The government is
contemplating the following for enabling this.
Barrage at every 100km in Ganges (with terminals)
Dry ports at Surat, Augrangabad and Wardha (near Nagpur)
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Promoting amphibious vehicles (like seaplanes, buses that ply on both
road and water)
Busports and sea ports
Focus on ship building, ship breaking, etc.
Promoting tourism cruise ships and light weight high speed boats
Vision for the road sector:
The Government has a comprehensive vision of
development of roads in the country with many associated facilities including
the following:
Tunnel technology:
India’s capacity to build tunnels has increased with
30-40 contractors now. Hence the government is considering of making
undersea tunnels in place of sea links, viaducts, etc.
Truckers’ club for drivers:
Facilities for drivers to be created after every
50km with restaurants, resting areas and other amenities.
E-toll collections:
In the next two months, government intends to have
350 tolls as e-tolls. ICICI Bank has been roped as the partner for this
project.
Satellite monitoring of traffic systems:
Traffic violations are to be
monitored by satellite with penalties levied and reached at the offender’s
address directly.
Green initiative:
Wants private sector manufacturers to come up with
ethanol based vehicles. The Ministry has urged for incentives for green
vehicles with Finance Ministry.
Global practices:
All international standards will be adopted for Indian
roads with comprehensive planning to avoid accidents, repair, etc.
Gas, telecom, electricity grid through roads:
Along the highways the
government plans to put gas, telecom, electricity and even iron ore slurry
pipeline.
Mumbai vision:
Plans to connect Vadodara-Mumbai expressway all the
way to Bombay Port Trust (BPT) and then to JNPT by forming a ring road.
Have plans to convert BPT into a major tourist attraction.
Strategic road:
Government plans to undertake major road constructions
in border and hilly states. The current alignment along the banks of the
river would be altered to make more durable roads.
September 2014
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Investment Cycle: At the Cusp of a Revival
Thematic
Presentation
Mr SN Subrahmanyan
Member of Board
Larsen & Toubro
Mr SN Subrahmanyan heads the
Infrastructure & construction
verticals at L&T, India’s largest
infrastructure company. He has
been a Whole-time Director of L&T
since 2011 and serves as Board
Member of several L&T group
companies.
L&T: ‘Design and Build’ key differentiation; Buildings, Railways, Water
witnessing traction
The key differentiation and success mantra has been the focus on ‘Design and
Build’ jobs. The Infrastructure business has a team of 3500 in-house
designers, which is by far the largest for any internal function in the industry.
This has enabled the business to be far ahead in terms of competition, with
focus on ‘single point’ responsibility in most segments.
Buildings and Factories continue to witness strong traction, particularly
Within India, he secured several
prestigious EPC contracts including
airports, elite residential, ITES, Hospitals, etc. L&T is working on 350 elite
four international airports and four
towers currently and has revenues of ~INR70b from this segment. Also,
metro rail projects. Outside India,
hospitals are fairly large contributor with revenues of ~INR30b.
he spearheaded the company’s
Key segments showing good promise includes: i) Railways (over last two years
transformation from a civil
contractor to a significant EPC
has been an important driver and target is USD1b revenues in next 2 years),
player and bagged several
Water and Effluent Treatment (revenues ~USD1b), etc.
prestigious orders including the
Overseas infrastructure projects as part of the order book are likely to be
Riyadh Metro and the Salalah
executed at margins in the target corridor range, and risk mitigation
Airport at Oman.
procedures have been fairly stringent.
He is a member of the Board of
Governors of Construction
Industry Development Council and
a member of the Working
Committee, Projects Exports
Promotion Council.
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
September 2014
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The Making of Modi Campaign
Thematic
Presentation
Mr Kunal Jeswani
Chief Digital Officer
O&M
Mr Kunal Jeswani is the Chief
Digital Officer for Ogilvy India.
Most recently, he has been
running OgilvyOne Worldwide,
India, which is the leading digital
agency in the country. Under his
leadership, OgilvyOne has won a
host of businesses and its
reputation has been bolstered by
winning the Yahoo Big Idea Chair,
being named Digital Agency of
the Year 2011 at Campaign
Magazine’s Asia Pacific Agency of
the Year Awards, and winning the
Digital Grand Prix at the 2012
Goafest.
Mr Jeswani has spent the last 18
years in the communications
business working across
categories with a range of clients
that include Unilever, Cadbury,
Vodafone and BCCI. He joined
Ogilvy India in 2005. In 2009, he
moved to the digital advertising
space as Head, Planning, New
Media, OgilvyAction and
OgilvyOne.
He also leads special projects that
require his expertise. In 2014, he
led one such project - The
National Election Campaign for
the BJP.
Making of the Modi Campaign: Keep it simple; keep it clear
Covering Analyst(s):
Ashish Gupta
+91 22 3982 5544
Ashish.Gupta@MotilalOswal.com
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
Biggest learning experience:
In the words of Mr Piyush Pandey, Director,
O&M, the Modi campaign has been the biggest learning experience and also
the most challenging for him.
Initial poll results not encouraging:
The first poll tracker by CNN-IBN in July
2013 stated NDA to be 20 seats ahead of Congress with the result as a hung
parliament. In Sept 2013, Modi was declared as the PM candidate and the
next polls in Oct 2013 said NDA ahead by 50 seats still 80 seats short of
majority. The prospect of another era of coalition politics was looming large.
Mission 272+:
To take up the mission to take the NDA tally to 272+ several
strategies were worked out. So in December 2013, O&M worked out ways to
position Modi and swing public sentiment.
Targeting the consumer sentiment graph:
When Ogilvy studied the prevailing
sentiments, they found that there was discontent amongst the people for
several issues (viz., inflation, corruption and unemployment, etc.) which they
needed to change to faith and thus votes for Modi. This moved in phases as
follows: i) discontent, ii) mistrust, iii) possibilities, iv) hope, v) confidence and
vi) faith.
Ab ki baar Modi Sarkar (Next time Modi Government):
To capture the
discontent and mistrust of the people they run a series of campaign focusing
on the basic issues with a tagline “Ab ki baar Modi Sarkar” implying one needs
to change the incumbent government and elect Modi as the Prime Minister of
the country.
Achche din aane wale hai (good days are coming):
To focus on the next
phase of consumer sentiments, viz., possibilities and hope, they run a series
of campaign that hinted at what change would be possible under Modi
government. These series made sure to end with prodding the viewer to vote
for Mr Modi, implicitly suggesting that to bring good days, one needs to come
out and vote for Mr Modi.
Highlight Modi’s track record:
A set of positive campaigning was done based
on the track records of positive sides of Modi to take the consumer sentiment
to the final levels, viz., confidence and faith. In this series, they highlighted
positive traits like decisiveness, development agenda, governance, etc.
Unique features of the campaign:
The campaign involved many a unique
aspects including the following.
Provide clarity on leadership (Presidential style campaigning)
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Portray the best of the Man and the Party
Use both personal outreach (rallies, 3D rallies, Chai pe Charcha) as well as
mass media outreach (television, radio, press, etc.) extensively
At every stage continuously follow the “Plan, Create and Deploy” strategy
The campaign need not be creative but must be clear
Bring real people to the forefront (i.e., using the consumer/voter directly
in the campaigning rather than showing leader asking for vote)
Bring regional elements (films have been reshot in 10 different languages)
Bring humor when required (light hearted campaigning when T-20 world
cup was going on)
Focus on local, region, state specific issues (law and order in UP, natural
calamity in Himachal Pradesh, cleaning of Ganga in Varanasi, etc.)
Soften the pitch at the height of shrill personal attack (e.g., Modi’s
contention of being in Varanasi for the call of ‘Maa Ganga’ herself)
September 2014
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Towards a Sustainable Society
Thematic
Presentation
Mr KR Lakshminarayana
Chief Endowment Officer
Azim Premji Foundation
Mr KR Lakshminarayana is the
Improving the reach of education system to create a just and equitable
Chief Endowment Officer at Azim
society
Premji Foundation, the largest
Azim Premji Foundation – A background
non-profit organization in the field
Azim Premji Foundation has been scaling up since 2012 with 1,100 education
of education in India. Prior to his
professionals and an endowment fund of about INR300b. All activities of the
current role, he served as Head of
foundation are entirely in collaboration with and for state government
Strategy and Mergers &
Acquisition at Wipro Technologies
schools.
Limited until January 2010.
Mr Lakshminarayana has
experience in various functions
including Quality, Resource
Management, and Management
Assurance, and has an in-depth
understanding of various business
issues. He also served as Chief
Financial Officer of the IT
businesses. He has been the Chief
Endowment Officer at Azim
Premji Foundation since January
2011, mostly focusing on funds
and financials. He is a certified Six
Sigma Black Belt.
Importance of education in society
There are five ways in which education impacts society including, 1) a key
enabler to society (e.g., educated mother taking better care of health of
family), 2) highest multiplier effect (opens up other avenues), 3) better
informed citizens, 4) builds citizens with desired value systems and 5)
promotes skill, attitude as well as rule of law.
Highlights of Indian public education system
Scale
1.5m schools: India has the highest number of primary schools in the world
(China has half of India)
~230m school children: ~10m out of school (perspective: Indonesia
population is ~240m)
76% of schools are government schools with 4.6m teachers (ecosystem of 7m
people along with administrators and support stuff)
Spread
644 districts; 2000 schools per district
356 living languages (780 languages if we relax the criteria of at least 10,000
people speaking) out of which 55 languages spoken by >1m people. However,
content and context are far more important than language. Hence curriculum
and pedagogy needs to be evolved accordingly.
98% rural population has a school in 1km radius
Success
63% schools have toilets – up 16% since 2006
School enrolment at 97% - up 18% since 2001
Covering Analyst(s):
Ashish Gupta
+91 22 3982 5544
Ashish.Gupta@MotilalOswal.com
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
September 2014
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Overall literacy 74%; up 22% in 2 decades; women literacy has increased from
35% to 65% in the same period.
Spend
Govt budget on school education is INR2.5t
This represents 68% of HRD Ministry spending
This is 3% of GDP (vs. 6% in OECD)
Challenges
Uniformity:
9% of the population are visually impaired; most schools don’t
have provisions for such differently abled people. Besides there are different
kind of minorities with unique characteristics (eg. a tribal village where the
number ‘8’ is a taboo).
Universal education:
Female literacy is lagging behind (82% male and 65%
females, overall literacy 74%).
th
Retention:
Only 39% children reach 10 grade; only 40% of these pass; and
only 20% reach the 12
th
grade.
Quality:
47% of children in Grade I cannot recognize letters; 74% of grade 2
children cannot do two-digit subtraction; 53% children in grade 5 cannot read
a grade 2 level text.
Equity:
9 states have over 10% out of school-girls
Growth of private schools:
Proliferation of private school is a problem. They
have grown by 29% but around 58% there are boys. People opt for private
schools more due to their status symbol, teachers come regularly, etc.
However, private schools rely on rote learning and research studies have
found that there is no significant difference in learning outcomes vis-à-vis
government school.
Strategies
Capacity creation
Create knowledge based system and bring best research in India
Build social pressure for teaching
Priorities
Strengthen teacher education system
Improve Direct Institutes of Education & Training and promote research
Build a cadre of education profession
Others (e.g. anganwadi/exam reforms)
September 2014
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E-Commerce in India: at an Inflection Point
Thematic
Presentation
Mr Rajan Anandan
Managing Director
Google India
Product commerce to grow by 10x from 2014 to 2020
Mr Rajan Anandan is the
Managing Director of Google India.
He is also …the co-founder of Blue
Era of connectivity explosion
Ocean Ventures and serves as its
It took 110 years for number of land-line consumers to reach 1b, 14 years for
Founding General Partner and
1b cellular users and 8 years for internet 1b internet users. The next
Chairman. He is an active angel
disruption is coming from smartphones. One needs to watch out for the
investor in India and focuses on
investing in internet, mobile, and
future for devices like Google glass and Google watch
SaaS companies.
Mr Anandan’s career includes
global leadership roles at
Microsoft, Dell, and McKinsey &
Company. Prior to Google, he was
Managing Director of Microsoft
India, responsible for all aspects of
Microsoft’s software, OEM, and
services business in India. Under
his leadership, Microsoft India was
recognized as the Number-1
subsidiary among the emerging
markets worldwide.
Mr Anandan is keen to work with
NASSCOM to dramatically
accelerate Internet penetration
and usage in India. This will
require many initiatives including,
expanding the domestic market
for Internet-based businesses and
promoting cloud computing to
further improve the globally
recognized strengths of the Indian
IT industry.
In 2014, there will be ~2.8b people on the internet, with ~1.75b smartphone
users. By 2020, this number will increase to 5b people, and there will be 40-
50b connected devices.
Disruption in India to be brought about by Mobile Internet
India had ~200m internet users in 2013. It is currently adding ~5m internet
users every month.
In the next one year, India will be the second largest population on the
internet, greater than the US, and only behind China. China today has 580m
internet users. By 2018, India should have 500m users on the internet.
~50% of the mobile users use internet on their phones. This number will
increase to ~65% by 2015.
India e-tailing to grow 10x by 2020 to USD45b
By the end of 2014, product commerce will be a USD4.5b market in India
(excludes travel). This number is set to increase to USD45b by 2020. If we
include travel, that will add another USD25b. The total size of Indian Retail is
estimated at USD450b.
GMV at Flipkart is ~USD1.5-2b. The company is seeing 100,000+ transactions
daily. Total number of transactions of electronic goods at Flipkart exceeds the
cumulative transactions across the top-3 offline electronics retailers in the
country.
India has 47m small businesses with <2% of them having web presence.
Today, 50% of the car buyers research online before going to dealers. 70% of
urban teenagers by online and 69% of users decide which mobile to purchase
in advance.
Classifieds is a USD350m industry today, set to grow to USD850m in the next
3-4 years. Today, ~100% of the jobs are online, ~50% of matrimony, 10% of
the Real Estate is online, and 10-15% of Education.
25
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Siddharth Vora
+91 22 3982 5585
Siddharth.Vora@MotilalOswal.com
September 2014

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Internet is also a USD8b opportunity for Telcos – split across USD6.2b in
media content and services, USD1.2b in mobile applications and USD0.4b in e-
stores and e-cares.
Capital intensity will be higher for Indian e-commerce players
~USD2.5b has been invested in the e-commerce companies in the country
across 54 companies. There will be further USD4-5b worth of capital needed
to achieve the scale anticipated. However, regulatory measures like FDI in e-
commerce is essential to sustain the inflow and fuel growth
Amazon, the global leader in e-commerce, made no money for the first 10
years and has been making very little money ever since. In India, even for
marketplace models, the capital intensity is likely to be higher, mainly due to
the limited infrastructure requiring them to invest into the ecosystem like
logistics. ~25-30% of the orders have to be rejected today due to no reach in
the respective pin codes.
September 2014
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India Consumer 360 Degrees – 2020
Thematic
Presentation
Mr Prashant Singh
Managing Director
Nielsen India
Mr Prashant Singh is the
Managing Director of Media
business at Nielsen India, which
spans television, print, online and
telecom. He also leads the Indian
Readership Survey (IRS), which
measures readership of
newspapers and magazines, as
well as the consumption of other
media.
In his long career with Nielsen,
Mr Singh has led multiple
businesses across measurement,
insights, client service, and
consumer profiles. He has
expertise ranging from rural
Indian consumer insights to social
media and smart phone analytics.
Distribution reforms hold key; focus on meeting latent demand
Consumer sentiments are improving and it will reflect in the numbers of
FMCG companies with a lag of two quarters.
Four drivers of consumption: 1) Acceptability of new categories (Toilet
Cleaner etc) 2) Indulgence to regular (indulgence of past is a regular of today)
3) Commodity to brands (Edible Oils) 4) Premiumization (Biscuits).
Urban India accounts for 65% of FMCG sector. Despite higher growth in Rural,
salience of rural has not changed meaningfully as urban India adopts new
categories.
Premiumization trend is well underway in FMCG industry and premium
segment is growing at 1.5x average category growth. Super premium segment
currently constitute 10% of the USD40b FMCG industry and is expected to
cross USD10b by 2020.
Within premium segment, Food, Personal Care and Beauty are key growth
drivers while Modern Trade and Chemist are preferred channels.
MNC’s perform better vs. local players in super premium segments due to
better quality of innovations.
Rural FMCG market accounts for 5m of total 8.4m outlets universe and should
touch USD35b in size by 2020; as much as of total FMCG today.
Within Rural India, local FMCG companies have snatched a higher share of the
pie. Growth was led by distribution expansion and better throughput with
local FMCG companies growing at 1.2x of MNCs.
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Uncovering the next billion dollar opportunity – Additional USD4-5b sales in
FMCG by 2020
Low Income Value Explorer (LIVE) and First Time Modern Trade Shopper (FTMTS).
These two segments are expected to add USD2b in sales each by 2020.
th
LIVE:
Earns INR72k/annum with total 10m+ urban households. Every 6
household in India is a LIVE household and is currently spending USD2.4b on
FMCG. This is expected to grow to USD3.5b by 2020. This shopper is more
confident that middle India shopper, indulges in impulse purchase and is
currently spending USD120m in Modern Trade.
th
FTMTS:
35% of FMCG spends of this segment happens at MT outlets. Every 4
Modern Trade shopper is a FTMTS and this segment is currently spending
USD280m at Modern Trade. Unlike popular perception, 1 in 2 buyers switch
brands and 40% end up buying more than planned budget.
27
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Transformation – Life & Work
Thematic
Presentation
Swami Sukhabodhananda
Corporate & Spiritual Guru
Swami Sukhabodhananda is the
Founder Chairman of Prasanna
Trust. He is one of the most
respected spiritual leaders of the
country and is often called
Corporate Guru. His expertise lies
in synthesizing ancient wisdom of
the East and modern vision of
West.
His books “Oh, Mind Relax
Please!”, “Oh, Life Relax Please!”
and “Manase Relax Please” are
best sellers.
He was invited as a dignitary on
five different panels at the World
Economic Forum in Davos,
Switzerland and was a special
invitee to the United Nations
World Millennium Summit of
nd
Spiritual Leaders. He is the 2
Indian to be honored at the
prestigious Lotus Millionaires
Intellectual Club at Manhattan,
New York. He was awarded
‘Karnataka’s Best Social Service
Award’ by Essel Group & Zee
Network.
Moving from success to satisfaction; success is the outer winner, while
satisfaction is inner winner
Covering Analyst(s):
Ashish Gupta
+91 22 3982 5544
Ashish.Gupta@MotilalOswal.com
Swami Sukhabodhananda explained that people need to distinguish their
actions from reactions.
While responsibility is the ability to respond, people should attempt to
respond and not react.
He mentioned that one should not take anything for granted but validate
what one has (e.g., ‘Namaste’ stands for oneness between the two persons
greeting). People need to create a sense of wonderment (Wows) about things
that they have got.
In the reaction mode people tend to become mechanical (as if an autopilot
has taken control).
More reaction means more tension and then everything tends to get messed
up. As predicted by WHO, depression would be the second biggest killer by
2020.
In reaction mode one does not experience the present (as our perceptions are
colored by the past experience). Listening is affected as everyone only listens
to his own ‘mess up’.
Swami Sukhabodhananda also informed that another name of Lord Buddha
was Tathagatha (meaning “Experience whatever it is”). Thus, Lord Buddha has
always preached to experience fully whatever one has.
Swami Sukhabodhananda then explained the difference between ‘success’
and ‘satisfaction’. He said that one can be successful but fulfillment is more
important because ultimately that brings satisfaction. Success is outer winner,
while satisfaction is inner winner. Getting what you like is success and liking
what you get is satisfaction.
Swamiji then mentioned the following five elements for success, i) Vision, ii)
Power, iii) Speed, iv) Skill and v) Strategy.
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
September 2014
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Roadmap of Indian Financial Sector
Thematic
Presentation
Mr S S Mundra
Deputy Governor, Reserve Bank of India
Mr SS Mundra is the Deputy
Governor of Reserve Bank of
India. Prior to this, he was the
Chairman and Managing Director
of Bank of Baroda.
Indian Banking: Stage is set- time for action
With the new government at the centre and improving sentiments in the
market a key positive.
Recovery in growth would essentially come from an improvement in the
investment climate through better governance, transparent, effective and
efficient regulatory and legal regimes, gains in technical efficiency,
Mr Mundra brings with him
institutional improvements, improved labor mobility and other reforms.
diverse experience in Treasury,
International Operations and
Indian banking sector capitalization remains healthy as of FY14 with overall
Credit. He held a range of
CRAR at 12.9% of which PSU banks are at 11.4% and Private and foreign banks
responsibilities in domestic as
at 16%+ which would help drive future growth.
well as international operations
RBI has taken various steps to contain asset quality performance by
of Union Bank of India, and was
implementation of Joint Lenders Forum, monitoring SMA I & II accounts,
elevated as its Executive Director
prudency in sale to ARC transaction.
in 2010. He was also the Chief
Executive of Bank of Baroda’s UK
Operations for three years.
Roadblocks on the way to growth
Covering Analyst(s):
Ashish Gupta
+91 22 3982 5544
Ashish.Gupta@MotilalOswal.com
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
Corporate governance: Recent events in the PSU banking space have spurred
concerns of corporate governance. However, one event cannot be
generalized for the entire banking system.
Risk management: Lack of prudence in risk management has led to increasing
stress asset creation which constraints capital creation.
Consumer protection: Curtailing wrong cross selling of products by financial
institutions in turn prevent moral hazard.
Human relation issues: Union labor issues, pensions, poor training facilities,
etc.
Operational Risk: Concern on fairness of the process of restructuring
Structural reforms to fuel the growth in the banking system
Much discussed structural reforms (mentioned below) will help fuel
qualitative growth in future
Bifurcation of Chairman and MD position
Holding company structure for PSU banks
Longer tenure for head of PSU banks and
Addressing PSU bank governance challenges
RBI is considering the P.J. Nayak Committee recommendation regarding
private banks chief age limit but no decision is taken as yet.
September 2014
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InSites: Takeaways from the Delhi trip
We rounded up AGIC 2014 Conference with a tour of Delhi to gauge the mood of the
policy makers including politicians and senior bureaucrats. We indeed came back
convinced that the new government has already made significant headways in many
areas of critical importance. Here is a brief.
BJP, National General Secretary, Ram Madhav
The priorities of the government include retaining investor confidence, making
India a manufacturing hub, employ economic diplomacy to the fullest and provide
a push to inclusive growth.
The government is attempting consensus building and so far the opposition has
cooperated in key economic legislations.
Politically, the bye poll results were a mixed bag but BJP is confident of winning all
the four upcoming state elections, including Jammu & Kashmir.
Ministry of Finance, Disinvestment Secretary
The FY15 disinvestment target of INR634b consists of three components (INR450b
for minority stake sale, INR150b for residual stake sale and INR50b other
miscellaneous sale). It does not include SUUTI or public sector banks’
disinvestment.
Disinvestment would start from Sep-Oct 2014. There would be retail participation
of at least 10% with 5-10% discount.
The potential pipeline of disinvestment aggregates INR3t. Further the government
would have to fulfill the SEBI norm of minimum 25% public holding within 3 years.
More PSUs are being listed too to expand the investible universe.
Ministry of Finance, Advisor
The leadership has infused an urge to change within the bureaucracy. In its
approach, the government would be relying on executive actions first, before
enacting legislative change and would also sequence the difficult reforms for later
period.
The current level of growth is unacceptably low. On the other hand, fiscal deficit
targets would be met.
The second budget would see more big bang reforms including Indian Financial
Code, repeal of outdated laws, DBT, GST, decontrol of urea, etc.
Ministry of Road Transport and Highways
The new government has placed a lot of emphasis on road building with Prime
Minister himself reviewing the Ministry thrice in three months. A lot of procedural
simplification and facilitating measures are underway to speed up projects.
The Ministry has set a target of 8,500 km (3,500 km PPP) for FY15. While there is
no shortage of funds for EPC, PPP remains the preferred mode of contracting
wherever traffic exceeds 10,000 PCU. However, there is relatively low interest in
PPP at present as the developers are equity constrained due to their exposure in
other sectors that have turned NPAs (notably power and airports).
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The dispute resolution is progressing apace with INR100b out of the total dispute
of INR260b taken up and settled amicably with 10% settlement ratio. Also 9 out of
23 cases of aggressive bids were salvaged with relaxed payment terms. ARC
mechanism is also being evolved.
Ministry of Railways, Railway Board
Railways is encouraging privatization in a big way through five modes, particularly
in the areas of freight stations, logistics terminals, amenities, etc. An unique
incentive offered by railways for BoT projects is to provide a revenue guarantee to
private developers upto 80-120%.
The Dedicated Freight Corridor (DFC) has taken off in a big way with 1,100 km out
of total 2,800 km contracted out already in FY14. FY15 target is another 1,000 km
with the balance to be awarded in FY16. These contracts involve few players and
have a construction period of 4 years from the time of award of contract. DFC
would allow even faster passenger traffic on the existing network by de-clogging
it that would allow quadrupling of the frequency of passenger train service in the
busy corridors.
Railway tariff board would raise traffic gradually as the cross subsidization
between the freight and passenger traffic is now around INR200b. Unlocking
potential of railway land however, is a slow process
.
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Metals Itinerary: Odisha and Chhattisgarh site visits (Aug 27-29)
Company visited:
Jindal Steel & Power
Sesa-Sterlite, Jharsuguda site
Key takeaways
We visited Chhattisgarh and Odisha to see the sites of Jindal Steel and Power (JSP)
and Sesa-Sterlite (SSLT). We visited all the assets of JSP at Raigarh, Tamnar and Angul
comprising of 5.5mtpa steel capacity, 12mtpa coal mining and 5,090MW power
plants. We covered SSLT’s Jharsuguda site on the way from Raigarh to Angul. SSLT has
3,615MW power plants and world’s largest single location 1.75mtpa aluminum
smelter at Jharsuguda. Key takeaways: -
DAY1 (27
th
Aug): Jindal Steel and Power, Raigarh
Steel capacity has expanded from ~3mtpa to 3.5mtpa with the expansion of old
blast furnace and slab caster. 3.2mtpa of saleable steel can be produced.
Hot metal capacity has increased from 1.7mtpa to 2.16mtpa. However, the coke
oven capacity is unchanged at 0.8mtpa. Blast furnaces have achieved high rates of
150-180kg/thm PCI injection in blast furnace. The coke rate has fallen to
350kg/thm. Therefore, the existing coke ovens will be able to feed the increased
hot metal capacity. At worst, there will be small mismatch.
Caster capacities are surplus (1mtpa Billet + 1.25mtpa slab + 1mtpa Beam
blank/Round + etc.) to accommodate varied product mix. Slab caster is under
modification (17th July to Sep 12) to increase width from 2600 to 3000mm. This
will allow rolling of wider plates. The plate mill through put will increase.
Rolling mills have capacity of 2.15mtpa (0.75mtpa RUBM + 0.6mtpa MSLM +
1mtpa Plate mill). Nearly 1mtpa of billets are sent to Patratu, Jharkhand for re-
rolling into long products.
Jindal Steel & Power, Raigarh: 100t EAF
Covering analyst(s)
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
September 2014
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DAY1 (27th Aug): Jindal Power and its coal mines, Tamnar
We visited Jindal Power’s captive coal blocks Gare Palma IV/2&3 at Tamnar. There
is simultaneous mining from 3 coal seams. The ash contents in one of the coal
seam are high, which is washed in coal washing plant. The washed and unwashed
coal is blended together and fed by pipe conveyor to 1000MW power project.
Cost of production of coal ranges from INR750-850/ton. This is inclusive of
INR90/t royalty.
The 1000MW power plants are running at 100% PLF.
3 units of 600MW each are commissioned. The fourth unit is still under
construction. One unit was operating at ~450MW rate.
Jindal Power’s captive coal mines: Gare Palma IV/2&3
Jindal power’s Tamnar-2: 3 units of 600MW each and ultra modern control room
DAY2 (&3): Jindal steel and power, Angul
Coal gasification plant (CGP) is now running at 40% capacity utilization. Cost of
production is around USD13/mmbtu, while average cost of coal is around
INR2000/t.
Gas based DRI, SMS, and plate mills are fully commissioned and were operational.
DRI unit has facility to supply hot DRI to SMS. This helps in energy savings and
effective increase in steel melting shop’s capacity from 1.8mtpa to 2.0mtpa.
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Jindal Steel & Power, Angul: Coal gasification plant
Jindal Steel & Power, Angul: 250ton EAF can produce 1.8-
2mtpa steel
Plate mill is producing API grade plates at 15kt per month rate. The steel/plate
production run rate is at ~40kt per month. The plate mill has capacity of 1.2mtpa
or 100kt per month.
Construction at 1mtpa Billet caster is in full swing. Although site staff is guiding
that billet caster will be ready in next 3-4months. However, we believe it will take
minimum of 6 months. The Billet caster will help in faster ramp up of steel
capacity utilization due to enhanced flexibility in product mix. Plate demand
growth is generally more gradual.
2 units of 135MW CPP were under operation. 4 units of 135MW each were idle.
Once the steel production ramps up fully, total internal consumption of power
will be met by 3 units.
Jindal Steel & Power, Angul: Arial view of CPP (left) and Steel melt shop and plate mill (right)
The civil work for next phase (1B) of expansion has commenced. 1.6mtpa of coke-
oven, 3mtpa (4500m3) blast furnace, 3.8mtpa BoF, 1.4mtpa bar mill and 2.5mtpa
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Naveen Strip Mill are part of phase 1B. The project is expected to be completed
over next 2 years.
DRI-2 is now on hold
Jindal Steel & Power, Angul: Phase 1B expansion plan
DAY2 (28th Aug): Sesa-Sterlite, Jharsuguda
1215MW CPP is running at full steam. It is getting 42.5% (i.e. 50% at 85% PLF)
linkage i.e. 2.7mtpa.
2400MW IPP is running at 35-40% PLF. It is getting linkage coal of ~5.7mtpa; one
of the turbines was down for maintenance. There are issues with turbine blade
failure. The Chinese supplier was replacing the blades under guarantee. Unit 2 is
dedicated to state and hence gets 80% (calculated at 85% PLF) of its coal
requirement through Coal India linkage. Unit 1 and 3 get 50% linkage (calculated
at 85% PLF).
500ktpa smelter is running at 110% PLF.
1.25mtpa new expansion: testing of pots is underway; pots are yet to be charged.
USD1.3b capex is outstanding (USD400m at Lanjigarh and USD900m Jharsuguda)
Balco is now left with only 20% linkage i.e. 900ktpa. This will taper as well to nil in
FY16.
TSPL: There are issues in coal supply chain. However, it is Punjab state’s
responsibility to secure coal. Import of coal too has been permitted by state to
bridge the gap. USD380m capex is outstanding.
September 2014
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Financial Deep Dive
Participating companies:
HDFC Bank
ICICI Prudential Life Insurance
IDFC
Indusind Bank
Mahindra Finance
Pheonix ARC
Shriram Housing
Yes Bank
Key takeaways
Eminent speakers from various financial institutions shared views on their businesses
and industry trends. Around 15 business heads from Banks, NBFCs, Insurance
Companies and ARCs participated in the event. We present key takeaways from these
discussions:
Greenshoots visible in the economy; corporate book to pickup by FY15-end
Economy is showing signs of pickup. Sentiments have improved post-elections;
huge comfort that all departments within the government are working together
to revive demand
However, corporate banking still under pressure with low credit growth; next
couple of quarters to be challenging post which the loan growth should pickup.
Corporate banking has become a commoditized product; focus is on providing
innovative service and solutions in addition to usual product offerings
Power sector is facing three major issues: Construction completion, Power
purchase agreements, Fuel supply. PPA issues expected to be resolved in next 3-4
months; but fuel supply is a bigger concern
Retail growth to continue
Over the last decade, retail banking has widened its scope and secured a
prominent portion of the loan portfolio of banks. Poor credit demand and adverse
asset quality experience in the corporate segment has further led to a higher
focus on this segment.
Growth in the mortgages continues to remain strong. Auto financing market to
pick up towards the end of this fiscal. CV segment - No replacement demand for
the past one and half years; pain to continue in the near term with recovery
expec ted in 1HCY15. Asset quality of ex-CV retail portfolio remains impeccable.
Technological platform a key for the next leg of growth. Sourcing through online
platforms currently forms around 10-15% of incremental customer additions.
Focused business model, strong liability franchise and customer friendly service to
be the key determinants of a successful retail banking model
Currently, most banks are focusing on acquiring the ‘right’ retail clients, especially
professionals starting their careers-life cycle and wealthy customers. Increasing
savings account float, cross-selling (minimum 3-4 products per customer) and
other fee based business would be the key focus areas over the next 5 years
GoI target of ‘Housing by 2022’ to ensure growth in the affordable housing space;
Regulators/govt need to facilitate long term sources of funds for the development
of real estate and HFC sectors
Covering analyst(s)
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@MotilalOswal.com
September 2014
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Company Connect
Sector, Company
Page
Sector, Company
Page
Automobiles
Mahindra & Mahindra ................... 38
Tata Motors ...................................... 39
TVS Motor Co. ................................... 40
Capital Goods
BHEL ................................................... 41
Crompton Greaves ........................... 42
Havells India ................................... 43
Larsen & Toubro ............................... 44
Thermax ............................................ 45
Va Tech Wabag ................................. 46
Voltas ................................................. 47
Cement
ACC ...................................................... 48
Ambuja Cements ............................. 49
Grasim / Ultratech .......................... 50
Consumer
Asian Paints ..................................... 51
Dabur India ...................................... 52
Emami ................................................ 53
Godrej Consumer ............................. 54
Hindustan Lever .............................. 55
Marico ................................................ 56
Pidilite Industries .......................... 57
Financials .............................................
Axis Bank .......................................... 58
Bajaj Finance ................................... 59
Bank of India ................................... 60
Canara Bank ..................................... 61
Federal Bank .................................... 62
HDFC ................................................... 63
HDFC Bank ........................................ 64
ICICI Bank .......................................... 65
IDFC .................................................... 66
Indiabulls Housing ........................ 67
IndusInd Bank ................................. 68
ING Vysya Bank ................................ 69
Kotak Mahindra Bank ..................... 70
LIC Housing ....................................... 71
Mahindra Finance ........................... 72
Punjab National Bank .................... 73
Reliance Capital .............................. 74
Shriram Transport ........................... 75
State Bank of India ......................... 76
Union Bank of India ....................... 77
Vijaya Bank ....................................... 78
Yes Bank ............................................ 79
Healthcare
Alembic Pharma .............................. 80
Cadila Healthcare ........................... 81
Dr Reddy's Labs ............................... 82
Glenmark Pharma ........................... 83
Ipca Labs ........................................... 84
Note:
All stock prices as on
September 2014
Sun Pharmaceuticals ...................... 85
Media
D B Corp ............................................. 86
PVR ..................................................... 87
Siti Cable Networks ........................ 88
Zee Entertainment .......................... 89
Metals
Hindalco ........................................... 90
Jindal Steel & Power ...................... 91
JSW Steel .......................................... 92
Sesa Sterlite ..................................... 93
Oil & Gas
BPCL .................................................... 94
Cairn India ........................................ 95
GAIL .................................................... 96
Indraprastha Gas ............................ 97
ONGC .................................................. 98
Reliance Industries ........................ 99
Real Estate
Jones Lang LaSalle ....................... 100
Prestige Estate Projects ............... 101
Sobha Developers ......................... 102
Retail .....................................................
Titan Company ............................... 103
Technology
HCL Technologies .......................... 104
Infosys ............................................. 105
Tata Consultancy Services ........... 106
Tech Mahindra ............................... 107
Wipro ............................................... 108
Telecom
Bharti Airtel .................................... 109
Idea Cellular .................................. 110
Utilities
CESC .................................................. 111
Coal India ....................................... 112
JSW Energy ...................................... 113
Power Grid Corporation ............... 114
Reliance Infra ................................ 115
Others
AIA Engineering ............................. 116
APM Terminals ............................... 117
Bata India ....................................... 118
Coromandel International .......... 119
Cox & Kings ..................................... 120
Delta Corp ....................................... 121
Jain Irrigation ................................ 122
Just Dial .......................................... 123
Kaveri Seeds ................................... 124
Lakshmi Machine Works .............. 125
Monsanto India ............................. 126
Tree House ..................................... 127
TTK Prestige .................................... 128
2 September 2014.
37

|
10 Annual Global Investor Conference
th
Mahindra & Mahindra
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
UV launches on track for FY16; new tractor platform launched in Aug-14
Consumer sentiments have improved, hopeful of demand recovery during festive
Demand for passenger vehicles (PVs) is recovering and expect PV industry to grow
4-6% in FY15. UV industry expected to continue to outperform PV industry led by
compact SUVs.
Management highlighted that UV as a category has potential to further rise
marginally as a share of PV industry. Currently it stands at 22-23% of PV volumes.
While M&M’s auto sales have remained weak, management is hopeful of demand
recovery festive season onwards led by positive consumer sentiments and
product action.
Product lifecycle turning favorable in UVs with 5 new products over 15 months
M&M plans to launch 5 new products, including 1 refresh over the next 15
months. Of the 4 new products, 2 would be compact SUVs and other two would
be LCVs.
Considering general industry practice of adopting aggressive launch prifing,
margins could be lower for newer products, but would improve as the product
matures and volume ramp-ups.
With relatively lower development cost vis-à-vis peers, its new launches (except
Quanto) in the past have been profitable meeting management’s IRR target.
Tractor demand growth to moderate to 5% in FY14 due to delayed monsoon
Tractor industry grew strongly at 20% in FY14 driven by higher crop prices
(minimum support prices), good monsoon, labour shortage and healthy
availability of finance.
Expects tractor industry to grow at ~5% for FY15 (v/s 20% in FY14) due to delayed
monsoon and high base. While tractor demand would see uptick during festive
season, it would remain stable till rabi crop season.
Other highlights
2W business plans to launch 7-8 new products over next 2-3 years. It expects to
break-even at 1m annual volumes.
It recently launched new tractor platform ‘Arjun Novo’, its second new tractor
launch in 14 years (launched Arjun in 2000). The new tractor is expected to be
game changer for M&M with superior value proposition for farmers. Unlike any
existing tractors, Arjun Novo can effectively do 40 key farming applications and
has high lift capacity of 2,200 kgs.
Any farm loan waiver in Andhra Pradesh will benefit tractor demand. M&M, with
its strong presence in AP, will be the biggest beneficiary of the same.
Ssangyong has lowered its volume guidance from 160k units in CY14 to 150.5k
units due to geo-political concerns in Russia. Ssangyong would launch X100 in
1QCY15 and expects strong volumes from this product.
Chirag Jain
+91 22 3982 5418
Chirag.Jain@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MM IN
615.9
859.9 /
1421/749
13/20/39
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
440.7 519.8 614.8
EBITDA
52.5
62.8
44.4
74.2
16.7
99.4
389
18.8
20.4
23.8
19.0
14.2
3.6
12.9
1.1
74.5
52.5
87.7
18.3
121.7
460
18.7
20.8
20.3
16.1
11.6
3.1
10.6
1.1
NP (incl.
38.0
)
Adj. EPS (INR) 63.6
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
Cons. P/E (x)
P/BV (x)
Div. Yield (%)
22.2
18.3
4.3
1.1
(2.6)
331
18.6
19.7
28.4
Cons. EPS.INR 77.1
EV/EBITDA (x) 15.8
September 2014
38

|
10 Annual Global Investor Conference
th
Tata Motors
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key takeaways
New XE to watch out for; JLR margin to normalize but would remain strong
Recent pricing cuts in China on top-end models have been post 12-18m of discussion
with regulatory authorities. With local production commencing by CY14-end of major
selling models and consequent ~15% price reduction, concerns on excessive pricing in
China should abate. JLR’s 1Q margins of ~20% were supported by robust
product/geographical mix considering capacity constraints. Guides margins of 14-16%
(ex Fx impact) over next 3-5 years, factoring Jaguar XE contribution. India business
seems past the worst and showing recovery signs.
Local production to abate concerns on excessive JLR pricing in China
China price cut of 7-8% on top end models were done post 12-18m of discussion
with regulators. No major financial impact seen due to this.
With local production commencing by CY14-end of major selling models and
consequent ~15% price reduction, concerns on excessive pricing in China should
abate.
JLR margins to normalize v/s 20% levels of 1Q; guides 14-16% range over 3-5 years
1Q margins of ~20% were driven by robust product/geographical mix considering
capacity constraints. Both product/geo mix to normalize going forward (we
estimate EBITDA margins for JLR to moderate to 19%/18.2%/16.5% in
2Q/3Q/40FY15). Capacity concerns to ease 4Q onwards.
Over 3-5 years, ex Fx margin guidance of 14-16%, factoring impact of Jag XE.
There could be benefit of ~150bp by FY18-19 due to modular platform strategy.
XE could be game change for Jaguar brand; potential for 3x jump in volumes
Jaguar portfolio has potential to go up 3x in volumes led by Jaguar XE (launch in
4QFY15; market size of over 1.5m units annually) and crossover (launch in FY16).
China JV to start operations by 4QFY15; capacity concerns to ease
China JV to start manufacturing operations by 4QFY15, starting with 3 models (XF,
Evoque & FL2/Discovery Sport).
These 3 models currently contribute 45-50% of China volumes, and can
potentially to go up 2.5x by FY17 on local production and consequent price
reduction of ~15%.
India business past the worst; recovery signs visible in truck demand
India business witnessing signs of recovery, with some uptick in over 25ton
category. Truck demand has shown marginal uptick in recent months.
Expect recovery in M&HCV from 4QFY15 and LCVs from 2QFY16.
Other highlights
Modular platform strategy is on track, with target of 4:1 car per platform (v/s 2:1
currently) by FY18-19.
Reliance on Euro imports will reduce upon commissioning of engine plant.
Chirag Jain
+91 22 3982 5418
Chirag.Jain@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
TTMT IN
2,736.7
1413.2 /
531/301
11/-1/29
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
8.1
2.0
3.7
0.4
6.2
1.5
2.8
0.4
5.3
1.2
2.1
0.6
2,733 3,289 3,749
470.5 585.6 676.2
206.5 269.7 316.3
64.2
40.2
27.2
26.5
3.8
83.8
30.6
27.1
28.2
2.9
98.3
17.3
24.7
27.3
3.7
267.2 350.3 446.6
September 2014
39

|
10 Annual Global Investor Conference
th
TVS Motor
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key takeaways
Aims 18% market share, double digit margins by FY18
TVS Motor (TVS) targets 18% market share and double digit EBITDA margins by FY18.
Launch of Victor 110cc executive motorcycle in 4QFY15 (~40% of 2W market)
together with ramp-up in scooter volumes would be key drivers. TVS has invested
heavily in building product brands over last few years; expect to continue in FY15 as
well considering major launches. However, FY16 onwards expect margins to improve
on operating leverage particularly on marketing spends. BMW project is on track and
expects to launch their first joint product in 1QCY16.
Strong scooter growth to continue, Scooty Zest launch completes scooter portfolio
TVS expects strong scooter growth to continue driven by a) continued
outperformance of scooters over motorcycles led by convenience and universal
appeal and b) complete product portfolio vis-à-vis competition.
With monthly volumes of 30k units, Jupiter is a successful product. TVS expects
recent launch of Scooty Zest (110cc variant) and refreshed Wego to further
provide boost to the scooter sales performance.
Launch of Victor 110cc motorcycle to fill critical gaps in product portfolio
With complete product portfolio in scooters, TVS has been able to register over
30% average growth in scooter sales over last few quarters.
TVS plans to repeat such strong performance in motorcycles as well with launch
of Victor 110cc motorcycle in 4QFY15 (~40% of 2W market).
With around 20% share in entry-level motorcycles (Star
Sports
and
City)
and 10%
in premium segment (Apache), TVS is confident of achieving 10% share in
executive segment with Victor.
Operating leverage, normalization of ad spends to drive double digit margins
TVS has invested heavily in building product brands over last few years. With
major launches, marketing spends expected to remain high in FY15 as well.
However, FY16 onwards as major brands stabilize expect margins to improve on
operating leverage particularly on marketing spends (currently over 6% v/s 2% for
Hero, 1.3% for Bajaj).
With improving volumes and scale, possibility of gross margin expansion also exist
through better negotiation with vendors.
Expect to be debt-free by FY15-end; Indonesia break-even expected in FY16
Despite high capex plan of INR2b (also towards BMW project) for FY15, TVS plans
to be debt-free by FY15-end (excl. interest free sales tax loan of INR3b).
Indonesia operations are improving with higher sales from the recently launched
Dazz Skubek. Focus remains to improve volumes, particularly through exports and
significantly reduce losses. TVS expects break-even by FY16.
Chirag Jain
+91 22 3982 5418
Chirag.Jain@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
TVSL IN
475.1
95.6 / 1.6
242/29
26/104/505
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
23.3
5.6
13.9
0.9
14.9
4.3
9.3
1.1
12.2
3.3
7.3
1.2
104.9 130.6 149.4
7.1
4.2
8.8
60.3
36.5
26.5
29.8
23.9
10.3
6.5
13.7
55.8
47.5
32.6
38.0
19.2
12.3
8.0
16.8
22.6
61.4
30.8
37.7
17.4
September 2014
40

|
10 Annual Global Investor Conference
th
BHEL
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
Project awards are expected to accelerate, largely led by central / state sector.
While pricing remain aggressive, there are various initiatives taken to lower the
material costs. Few of the stuck projects are seeing a pick-up in execution.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
BHEL IN
2,447.6
292/119
1/17/55
M.Cap. (INR b)/(USD b) 587.1 / 9.7
Expect project awards to pick-up in FY15, led by State / Central sector
During FY15, expect industry project awards (excluding the UMPP / Andhra
projects) at 15GW, of which BHEL is targeting intake at 10GW. This compares with
industry awards of ~6GW YoY in FY14. The targeted FY15 project award pipeline
of 15GW excludes the UMPP projects.
BHEL is L1 in ~4GW of projects including: i) 1320MW Ennore SEZ (EPC) ii)
6X196MW Pranhita Lift Irrigation iii) 500MW Tuticorin (BTG) iv) 1GW of Pakal
DUL Hydro power with Patel Engineering v) 4X111MW Vishnugad Pipalkoti Hydro
project, etc.
Another 5-6GW project bids on EPC have already been submitted (including
2.6GW NTPC, 1.3GW TN, 660MW Mahagenco) and are expected to be finalized in
next two quarters.
Gross margin & Staff costs
Pricing continues to remain aggressive, but the costs are also declining given
increased indigenization various initiatives (like design to cost), etc.
During FY15, expect retirements at 2,200 employees (current strength ~47,525)
and for Twelfth Plan, retirements are expected at ~10,000+ employees.
Execution picking up for few stuck projects
Execution is likely to improve, with few projects even in the private sector seeing
some pick up.
Also, for new intake, the company is offering a lower execution period of 42
months (vs earlier 48 months)
New Boiler launch is an important differentiation
BHEL has launched a new super critical boiler based on own design, which can
switch between 100% indigenous and imported coal. This could be an important
differentiation and the company is way ahead of competition.
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
EBITDA
Adj PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div Yield (%)
20.5
1.5
9.9
1.5
13.5
1.4
5.7
2.2
10.4
1.3
3.9
2.9
333.4 368.1 411.6
35.7
24.7
10.1
49.4
37.4
15.3
62.6
48.6
19.8
51.3 29.8
(3 )
141.6 151.5 164.4
7.3
10.6
30.0
10.4
14.9
30.0
12.6
17.9
30.0
September, 2014
41

|
10 Annual Global Investor Conference
th
Crompton Greaves
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
The standalone business is showing signs of improvement, with FY15
performance to be a reflection of acceleration in industrial and consumer
business. Overseas business has stabilized, with US Systems / Canada / Belgium
reporting EBIDTA breakeven; and should witness improvement in 2HFY15 as
contribution of high margin projects increase.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
CRG IN
626.7
219/82
0/23/90
M.Cap. (INR b)/(USD b) 126.9 / 2.1
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
145.8 165.4 190.7
EBITDA
Adj PAT
EPS(INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div Yield (%)
32.1
3.2
15.4
0.7
17.1
2.8
10.5
0.9
12.0
2.3
7.6
1.2
9.0
3.9
6.3
62.1
63.0
10.3
7.6
20.0
12.7
7.4
11.9
87.8
72.7
17.3
12.7
20.0
16.4
10.5
16.9
42.2
86.6
21.0
16.2
20.0
Standalone business showing signs of improvement
In Power, the key focus is margin expansion (given higher exports, increased
contribution of switchgears, etc).
Industry business has been impacted given the constrained investment climate.
Margins have been impacted by negative operating leverage, given the
commissioning of the HT Motors / Drives manufacturing facilities in July 2013. For
HT motors, the factory has received approvals from 10 global OEMs apart from
four large end users. These new factories should increasingly contribute to
revenues, as the process of obtaining pre-qualifications has been underway.
Consumer business margins in 1QFY15 stood at 12.6% (up 94bps YoY) largely led
by improved product mix towards fans and lighting. In the recent concall,
management stated that medium term targets for margins stands at 15%.
FY15 performance will largely be a reflection of the acceleration in industrial and
consumer business with improved economic activity.
Overseas business has stabilized, expect pick up in 2HFY15
Canada / US Systems business have nearly achieved EBIDTA breakeven in end
1QFY15. The initial phase of restructuring in Canada has been completed and the
strategy revolves around improvement in shop floor operations, cost
rationalization, improving labour productivity, focus on niche products etc.
Going forward, the execution of: i) transfer projects at Hungary, ii) recent order
wins in automation (INR3.7b) and systems (INR3.2b) business, which have high
margins becomes important monitorables. Given these factors, 2HFY15 could
witness margin expansion in the overseas business.
For FY15, the overseas business should maintain a double digit revenue growth.
Margins should also witness improvement in 2H as the recent order wins in
automation and systems business are executed.
Automation business witnessing strong projects pipeline
Automation business is witnessing good pipeline of projects globally, and CRG has
been bidding for several of these projects.
Increased order intake in automation business is driven by commencement of
ordering by Iberdrola in Spain, and also orders in Poland, Portugal, etc.
September, 2014
42

|
10 Annual Global Investor Conference
th
Havells
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
The standalone business is showing signs of improvement, with FY15 revenue
growth likely at 17 - 20% and EBIDTA margins of 13 - 13.5%. In Sylvania, the
management has guided for revenue growth of 2 - 3% with EBITDA margins of 5-
6%.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HAVL IN
124.8
34.4 / 0.6
300/119
12/52/81
Standalone business expect to maintain strong growth momentum
Expect revenue growth of 17 - 20% in the standalone business and EBIDTA
margins at 13 - 13.5%. 1QFY15 revenue growth stood at 21%.
Industrial cables business has started showing strong growth rates, and is
generally a lead indicator of a pick-up for other business segments.
Distribution network is being expanded to Tier 2 / 3 cities in most product
categories.
The management expects an uptick in the margins in most of the product
categories also, led by strong revenue growth and cost rationalization initiatives.
However, aggregate margins are likely to get impacted given the increased
contribution of cables.
Overseas business has stabilized
For FY15, management has guided for revenue growth of 2 - 3% with EBITDA
margins of 5 - 6%.
Europe has stabilized (with revenue growth of 6% YoY in 1QFY15); LEDs
contribute ~30% of the fixtures in Europe. In select countries like France
(Luminance) and UK (Concorde), HAVL has a dominating position.
LatAm operations witnessed revenue decline of 9% YoY (~4% in USD terms) in
1QFY15 and were impacted by the volatility in Argentina and Columbia.
Management expects to recoup the sales decline by end FY15.
Financial Snapshot (INR Billion)
Y/E Dec
2014E 2015E 2016E
Net Sales
EBITDA
Adj PAT
Adj EPS (INR)
EPS Gr. (%)
BV/Sh(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div Yield (%)
Consolidated
30.6
8.7
1.1
25.1
7.3
15.0
1.4
20.0
6.0
12.1
1.8
90.2
9.6
5.7
45.7
5.5
28.6
22.4
41.4
98.8 110.0
11.4
6.9
55.7
21.7
29.0
23.9
42.1
13.7
8.7
70.1
25.9
30.1
25.9
41.8
160.0 192.2 233.0
EV/EBITDA (x) 18.1
September, 2014
43

|
10 Annual Global Investor Conference
th
Larsen and Toubro
Covering analyst(s)
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
While the investment cycle in terms of new project awards continues to remain
constrained, there has been a new found optimism on the ground level.
Improving consolidated ROEs/ ROCEs is an important priority, and a key focus
area. Hydrocarbon losses have been led by the initial learning curve and expect
performance to stabilize.
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
LT IN
927.7
1462.8 /
1775/688
1/13/74
Investment cycle remains constrained, new found optimism at the ground level
While the investment cycle in terms of new project awards continues to remain
constrained, there has been a new found optimism on the ground level. The initial
round of highway project awards is likely to be on EPC basis. Most of the initial
project awards are likely to be by the public sector, while private capex will take
time to recover.
Key segments that can provide the initial round of project awards includes:
Multilateral Funded projects (DFCC, Water, etc), Cash Rich PSUs (including NHAI,
ONGC, PGCIL, etc), Cash rich private sector (in Real Estate, etc).
L&T Hydrocarbons: 1QFY15 losses a function of the initial learning curve; expect
performance to stabilize
L&T Hydrocarbons reported EBIDTA loss of INR8.9b in 1QFY15 and are pertaining
to 5 overseas customers (~INR100b). The unexecuted part of these projects
remains at ~INR50b to be completed by end FY15.
The management reiterated that the new orders factor in the initial learning in
the project bids and hence the business should move up to a more normalized
profit levels going forward.
Attempting to correct the capital structure; NWC also a key focus area
L&T IDPL has successfully raised funds: i) FDI Investment (Canada Pension Fund,
INR20b in two tranches) ii) Asset sale (Dhamra Port at EV of INR55b - 50% stake,
etc). Also, the management stated that the intent is to unlock value in L&T
Infotech and L&T Technology through a listing by July 2016.
Net Working Capital has deteriorated to 23% of revenues (vs 17.3% YoY) and is
largely driven by vendor support, lower customer advances, etc. Management
highlighted several process improvements to keep this number under check.
Real Estate business an important driver
During FY14, consolidated real estate business revenues increased to INR13b (vs
INR3.9b YoY), with EBIDTA margins of 63% in FY14, vs 56% YoY. Recent media
interview had highlighted that L&T Realty has a land bank of ~30-35msf to be
developed over the next 5-7 years.
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
625.6 775.1 951.7
EBITDA
Adj PAT *
EPS (INR)*
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)*
P/BV (x)
Div Yield (%)
Sales
*Consolidated
36.5
3.7
0.9
25.4
3.3
16.4
1.1
18.5
2.9
12.6
1.4
69.2
37.8
40.8
-6.0
13.7
12.0
26.9
81.0
54.2
58.5
43.4
14.9
13.1
26.9
99.1
74.7
80.6
37.7
16.5
14.5
26.9
403.6 453.1 515.4
EV/EBITDA (x) 19.8
625.6 775.1 951.7
September 2014
44

|
10 Annual Global Investor Conference
th
Thermax
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
Thermax expects growth across its core business to be supported by its competitive
pricing and servicing capabilities and be supported by the brand name, which it has
established over a period of time. Exports is seen to provide major thrust to its
growth plans, before ordering activity picks up in India. Globally, several players have
stooped investing in R&D for small boilers, as they have reached its peak heating
capacity and the small boiler market is expected to grow in the range of 8% - 10%.
Business drivers & growth opportunities
Brand loyalty, competitive pricing & servicing capabilities are the key strengths of
Thermax driving repeat business. Customers prefer vendors with localized service
capabilities as it leads to lower down time.
Growth opportunities are now expected to come from India, China, Middle East
and African nations. Consultant has already been hired for the same and
investment is expected to happen in a phased manner, once the plans are
finalized.
Indonesia is high on growth opportunity, but logistics is a major problem. Dubai is
planning to construct ~1000 hotels, which would drive demand for small boilers.
However, Indian boiler manufacturers cannot enter that market, as the major
decisions are taken by consultants. However, repeat orders from sectors like
paper mills, textiles can come to TMX.
Technology & Inorganic growth opportunities
In India, Thermax has 25% - 28% market share, in small boiler segment.
Inorganic growth opportunities are limited, as boiler is regulated equipment and
have to comply with strict emission norms. Typically, there are several litigations
going on because of emission norms in American / European companies. Hence,
acquisition can be very risky.
Boilers have reached their peak in terms of heating capacity and further scope of
improvement is very limited.
Competitive scenario
Market for small boilers has become stagnant in North America & Europe.
Considering the same, several boiler manufacturers have stopped investing in
R&D.
Indian boiler market is expected to report 5 year CAGR of 8% - 10%, while global
boiler market is growing by ~7.5%.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
TMX IN
119.2
990/526
-6/-11/16
M.Cap. (INR b)/(USD b) 103.4 / 1.7
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
56.1 65.5 80.6
EBITDA
4.2 6.1 8.5
Adj PAT
2.5 3.9 6.0
EPS (INR)
20.8 33.1 50.2
EPS Gr. (%) -10.0 59.0 51.7
BV/Sh. (INR) 185.2 205.5 242.8
RoE (%)
11.8 17.2 22.7
RoCE (%)
9.7 14.7 19.9
Payout (%)
44.9 38.9 25.6
Valuations
P/E (X)
41.7 26.2 17.3
P/BV (X)
4.7 4.2 3.6
EV/EBITDA
23.3 15.3 10.2
Div Yield (%)
0.9 1.3 1.3
September 2014
45

|
10 Annual Global Investor Conference
th
VA Tech Wabag
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
VA Tech Wabag maintained its guidance of reporting revenue in the range of INR26-
27b, with an annual order intake of INR32-34b. Incremental growth opportunities
expected in India would include second stage ordering of Nemmeli desalination plant
along with ordering from multiple states of India facing acute water shortage. Other
growth triggers in sight would be expected ordering from project Ganga. Globally, Al
Gubra project’s commissioning could get delayed by a few months.
Guidance maintained/cleaning of river Ganga to provide multiple opportunities
Management maintained its guidance of achieving revenue in the range of INR26-
27b, aided by order intakes of INR32-34b.
Initial allocation by the Government for cleaning river Ganga is worth INR20.4b,
which can increase multifold in the coming years as the project progresses.
An agency is expected to be appointed to oversee the project execution and
concrete decisions are expected to be taken in this regard in the next 10-12
months.
Second stage of Nemmeli desalination project on avail/desalination opportunity in
India to increase multifold
Ordering activity for the second stage of Nemmeli desalination plant is expected
to enter the tendering stage in 2HFY14.
Other desalination plants in Tamil Nadu on the drawing board stage would be
located at Tuticorin and Ramanathpuram. Incremental desalination opportunities
are expected to come from the states of Andhra Pradesh, Maharashtra, Uttar
Pradesh, Rajasthan, Karnataka, Delhi and Orissa.
Al Gubra project may get delayed/SAARC nations to report promising opportunities
The 191 MLD Al Gubra project being executed in Oman may get delayed by a few
months. Management had earlier kept an aggressive target of executing this
project in 22 months.
Globally, orders are expected to come from countries like Sri Lanka, Philippines,
Qatar, Latin America and European countries.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
VATW IN
26.7
37.9 / 0.6
1550/445
-5/82/177
September 2014
46

|
10 Annual Global Investor Conference
th
Voltas
Covering
Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Key takeaways
Room AC business is expected to remain in high growth trajectory for Voltas,
considering its strong brand recall, competitive pricing to capture mass market and
focus on making it affordable, in order to support volume growth. Incremental orders
in the project business are expected to come from midsized projects which can be
executed in twenty four months with minimum threshold margins of 5%.
Room AC business to remain in high growth trajectory
Improved power availability, competitive pricing to capture mass market,
improved product quality and strong focus on brand development and
maintenance are the key growth triggers for Voltas’s room AC business, in which
it has market share in excess of 20%.
Improvement in margins is a function of improved scale of volumes, favorable
product mix between split & windows AC’s and improved product quality, which
has resulted in lower warranty costs.
The next focus is on making air conditioner affordable by lowering its usage cost
and increasing its usage across non summer seasons. Hence, Voltas has started
advertising “All weather AC” is its advertisement campaigns.
Maintenance of margins in Rooms AC business (EBIT in the range of 10% - 11%) is
also subject to rational pricing strategy being adopted by its peers. Effectively
resulting in maintaining pricing levels, which can be remunerative for all players,
operating in market.
Project business shifts focus to midsized projects
In project business, focus is now on midsized projects, which can be executed in
maximum of 24 months, unlike the previous strategy of chasing iconic projects,
where the execution period is much higher.
Competition continues to be intense in project business and incremental orders
are expected to be bagged only with threshold margins in excess of 5%.
Improvement in EBIT margins across project business is a function of closure of its
legacy projects and increase pace of project execution, across its new orders
bagged with higher margins.
PE business to focus on O&M contracts
Focus of professional electronics division is now on bagging O&M contracts,
across Mozambique and other mineral rich nations, where Voltas had sold its
products earlier.
O&M aspect would also include, cost of spares and Voltas has to support its
operations.
Amit Shah
+91 22 3029 5126
Amit.Shah@MotilalOswal.com
Nirav Vasa
+91 22 3982 5422
Nirav.Vasa@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
VOLT IN
330.9
81.7 / 1.3
253/63
23/51/215
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
EBITDA
Adj PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div Yield (%)
33.1
4.0
21.1
1.0
24.7
3.6
15.9
1.3
19.4
3.1
12.1
1.6
56.9
2.7
2.5
9.7
30.4
61.8
15.7
15.3
30.0
66.9
4.9
4.1
12.3
26.7
70.4
17.4
17.8
30.0
78.3
6.2
5.1
15.4
25.4
81.2
19.0
20.0
30.0
September 2014
47

|
10 Annual Global Investor Conference
th
ACC
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key takeaways
ACC management indicated internal cost measures witnessing gradual progress,
which would drive INR150-200/ton savings by CY16. Jamul clinker plant will
commence operations by CY15. Going ahead, South and West (Maharashtra) are key
regions to aid volume lever are North and East plants of ACC are operating at close to
optimum utilizations.
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Internal cost measures witnessing gradual progress
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
ACC IN
187.7
1,565/914
7/6/20
M.Cap. (INR b)/(USD b) 291.4 / 4.8
Cost savings measures in energy and freight front are witnessing gradual
progress. It maintains guidance of INR150-200/ton savings by CY16 driven by rise
in pet coke/AFR/WHR mix, coal block, RFID/GPS, direct dispatch to dealers etc.
Plans to raise pet coke proportion to 20% by FY16% (10-14% currently)
While it awaits clarity on coal block allotted in MP, it doesn’t expect any
meaningful impact as it had won it through auction at market pricing. Also, at
current linkage coal pricing, coal from captive block would be expensive on
landed cost basis.
Volume growth hinges on south & west, Jamul clinker to commence by CY15
Financial Snapshot (INR Billion)
Y/E Dec
2014E 2015E 2016E
Sales
EBITDA
NP
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/Ton (x)
31.2
3.6
133
19.5
3.4
11.5
135
12.8
2.9
7.2
126
116.7 137.3 163.4
13.4
9.3
1.8
430
11.7
15.3
75.6
22.4
14.9
79.3
60.4
461
17.8
23.5
60.8
33.3
22.6
120.4
51.8
527
24.4
32.0
45.1
Adj. EPS (INR) 49.4
North and East plants of ACC are operating at close to optimum utilizations
(~90%). Therefore, South and West (Maharashtra) are key regions to aid volume
levers with plants operating ~65% utilizations.
Jamul clinker unit of 2.8mt is on track to commence by mid-CY15, followed by
1mt (gross 2.5mt and net of closure of 1.5mt of existing plant) grinding in CY15
and 2.5mt in CY16. Of INR30b of capex, it spent INR12b by June-2014.
Clarity on further expansion is limited and required Holcim board approval. ACC
had planned expansion of 5mt in UP/MP (Tikaria, and Ametha)
Focus to remain on profitable growth
EV/EBITDA (x) 18.3
Primary focus remains on improving profitability driven by internal cost saving
measures and synergies led by ACC-Ambuja restructuring.
Realizing synergy benefits may get delayed and requires re-evaluation with
Lafarge facilities. However there is not much clarity with the management on
implication of global Holcim-Lafarge merger on Indian operations.
Royalty revision due in October -2014, albeit expects no major revision
Valuation and views
Pan-India presence and a very strong brand make ACC one of the best proxies on
the Indian Cement industry. Considering its very high operating leverage, ACC’s
EPS is very sensitive to change in cement prices.
ACC is better vehicle to play cost synergies without issues of cash outflow (for
acquisition) or hold-co discount. ACC has the strongest B/S among large caps.
Multiple cost savings triggers are likely to narrow profitability discount to peers.
We maintain
Buy
with target price of INR1,713 (CY15E EV/ton of US$150)
48
September 2014

|
10 Annual Global Investor Conference
th
Ambuja Cements
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key takeaways
Ambuja management expects volume growth to bolster hereon with 6% and 8-9%
growth expectation in CY14 and CY15 respectively. Synergy benefits may get delayed
and expansion plan remains contingent due to global merger of Lafarge and Holcim.
Focus remains on profitable growth with cost saving measures underway.
Expects 6% volume growth in CY14, and 8-9% in CY15
Witnessed ~10% volume growth in July-14 in west and north, and mild negative in
east. Due to stronger YDTCY14, it expects 6% growth in CY14 and 8-9% for CY15.
Company’s focus remains on profitability followed by market share. However
management expects market share not to deteriorate hereon.
Synergy benefits could be delayed
Synergistic benefits of ACC-Ambuja restructuring is expected to percolate
completely in CY16, (delayed from earlier expectations). This was due to global
merger between Holcim and Lafarge which is likely to conclude by 1QCY15.
While the implication of global restructuring on Indian operations of ACC/Amubja
and Lafarge still lacks clarity, management is expected to re-evaluate operations
synergies including Lafarge now, thus aiding some delayed in realizing benefits.
Expansion plan slowed down on global development
Expansion plan in Marwah-Mundra (Rajasthan) of 4.5mt is running slow (land
acquisition not completed yet) and hinges on outcome of Holcim-Lafarge merger.
However grinding unit expansion is on track with Bhatapara (0.8mt) done,
Rabriyawas (0.8mt) likely by CY15 and Sankrail (0.8mt) in CY16. It expects 0.5mt of
de-bottlenecking in clinker capacity. It guides for INR8.25b and INR10.6b of capex
in CY14 and CY15 respectively.
Focused on individual cost saving measures
Ambuja is likely to witness adverse cost pressure in 3QCY15 due to rise in prices
of fly ash, slag and packing materials.
Increasing alternate fuel mix is major cost saving measures (aims to raise mix to
10% by CY16 v/s 4.4% now). ATF gives ~60% savings v/s current pet coke prices.
While bulk terminus, rise in sea route usage would likely to reduce lead distance
in select logistics, higher penetration plan into rural market will offset the same.
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
ACEM IN
1,547.2
244/151
0/0/-16
M.Cap. (INR b)/(USD b) 333.9 / 5.5
Financial Snapshot (INR Billion)
Y/E Dec
2014E 2015E 2016E
Sales
EBITDA
NP
Adj.EPS(INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/Ton (USD)
24.7
2.2
128
17.4
2.1
8.7
124
12.1
1.9
5.9
113
219.6 258.2 304.6
33.3
17.2
8.7
-5.1
9.3
17.1
65.0
50.1
24.4
12.3
42.0
12.4
23.4
52.6
69.8
34.9
17.7
43.0
16.2
30.6
43.2
95.5 102.8 114.9
EV/EBITDA (x) 13.0
Valuation and views
Ambuja offers favorable market mix (negligible exposure to southern market),
diversified fuel mix and efficient operations, translating into superior profitability.
Management expects to derive upto INR9b of synergy benefits (8-10% cost
savings) over the next 2-3 years. We are yet to factor in resultant synergies in our
estimates, which in our view may lead to 10-16% EPS accretion over CY14-15.
We value ACEM with target price of INR235 (at ~USD160/ton). Maintain Neutral.
49
September 2014

|
10 Annual Global Investor Conference
th
Grasim/Ultratech
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key takeaways
Grasim management expects strong recovery in cement demand in 2HFY15 onwards,
along with gradual recovery in VSF segment. In cement vertical, strengthening market
share remains primary focus and would be addressed by ongoing expansion plan. In
VSF the weaker dynamics have largely bottomed out, albeit recovery timeline could
be still a years’ ahead.
Cement outlook strong with double digit growth expectation in 2HFY15
Management believes strong demand recovery 2HFY15 onwards with double digit
industry volume growth expectations. Capacity addition is seen at 45-50mt over
FY15-17 (in line).
Recently acquired Jaypee plant in Gujarat offers synergistic opportunity in terms
of better branding (higher prices), pick in utilizations, cost efficiencies etc.
INR165/bag quoted by Mr. Gadkari is similar to ex factory realizations (pre taxes).
Therefore in case of correct interpretation of INR165/bag as ex factory
realizations, the downside risk is limited.
VSF dynamics worst out, but recovery timeline for realizations elusive
VSF realizations bottomed out but may remain subdued over near term (FY15)
due to over capacity in China, before anticipated improvement in FY16 (guidance
lower than est)
New cotton policy in China is likely to dent cotton prices which could remain
overhang for immediate uptick in VSF prices. However downside risk is limited
too. VSF prices have been stagnant in past 3-4 months.
VSF capacity addition decelerating; lower cotton price to moderate demand
No major capacity addition expected over next 2-3 years after ongoing expansion
of Grasim itself and Sateri (HK) in FY15. This aids gradual uptick in utilizations
FY16 onwards.
VSF industry volume growth may moderate from past trend of double digit due to
lower cotton prices. Long tetm growth expected at 6-7%. However, on the back of
ongoing expansion, Grasim is expected to post strong growth.
VSF cost has went up in 1QFY15 led by higher pulp prices, however pulp prices
have started moderated in 2Q, which should improve profitability.
Well placed on benefits from upcycle dynamics
Both the key businesses are bottom of the cycle operating performances. With
significant capacity addition in both business and being low cost producer, Grasim
is well placed to benefit from any recovery in these businesses, resulting in strong
earnings growth and balance sheet de-leveraging.
Maintain Buy with target price of INR4,142 (SoTP based, valuing economic
interest in cement business at USD200/ton & 40% hold-co discount and VSF at 4x
EV/EBITDA).
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Bloomberg
Equity Shares (m)
GRASIM IN
91.8
M.Cap.(INR b)/(USD b) 331.9 / 5.5
52-Week Range (INR) 3,755/2,121
1, 6, 12 Rel. Per (%)
6/10/15
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Ton (x)
14.9
1.4
8.9
10.0
1.2
5.9
6.2
1.0
3.9
96.0
338.0 403.3 470.5
54.3
28.5
12.4
9.4
12.7
10.0
79.5 107.9
44.5
49.2
12.4
17.6
7.1
72.7
61.6
16.8
22.3
5.0
Adj. EPS (INR) 241.8 360.8 582.9
2,571 2,906 3,460
128.0 113.0
September 2014
50

|
10 Annual Global Investor Conference
th
Asian Paints
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
Industry Dynamics
Organized sector now forms ~65% of the Indian paints Industry (up 1500bp from
FY05), with industry growth typically pegged at 1.5x-2x GDP growth.
Average per capita consumption is 2.5kgs/person in India as compared to
25kgs/person in US/Europe and 6-8kgs/person in some emerging regions.
Domestic economy exhibits mixed signals
Strong election mandate has resulted in improved consumer sentiments, though
inflation continues to be sticky and remains at higher end of comfort zone.
Domestic demand environment is expected to be better given the renewed
optimism in the economy though poor monsoon is a risk.
APNT is growing ahead of the industry with market share gains in North and East
India while shares in West and South India being stable. The management
believes competitive intensity has amplified given Berger and Kansai’s increased
focus on the Decorative segment.
Industrials segment is expected to benefit given the initial pickup in demand.
APNT has passed out some price increases in the Auto refinish segment.
Home Improvement: Synergies to drive growth
APNT will leverage existing paint dealers who want to expand their business with
Home improvement (Sleek and Ess Ess) offerings. The company initially plans to
streamline operations and expand existing network to grow the business.
International: Balanced performance; Egypt impacted by political disturbances
The company is looking for a Greenfield acquisition in Indonesia (fragmented
market with Nippon being the largest player) and Africa.
Outlook
Volume/Price:
APNT witnessed double digit growth though not comparable to
the volume performance (12%-14%) during FY14. The company witnessed uptick
in demand environment in some metros with strong performance across tier II
and tier III regions. APNT generally does not initiate prices increases during Sept-
Nov period as it is a key for decorative demand. During FY15 the company has
taken cumulative price hike of 2.2% in decorative paints business.
APNT expect margins to be stable in the 15%-16% band.
Dealer Count:
APNT has 35000 dealers of which 28000 dealers have tinting
machines. The company plans to expand its dealer base by 1500 annually.
Valuation and View
Consistent double digit decorative paints volume growth is a key positive for
APNT. At 33.4x FY16E EPS, valuation is expensive given historical comparison, in
our view. We maintain Neutral with a target price of INR560, valuing the stock at
30x FY16E.
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
APNT IN
959.2
650/400
-6/5/4
M.Cap. (INR b)/(USD b) 598.8 / 9.9
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
40.2
12.8
25.9
1.3
33.4
10.8
21.4
1.6
27.3
9.1
17.3
18.7
147.7 174.4 206.1
22.8
14.9
15.6
21.4
49.0
31.8
42.6
45.0
27.1
18.0
18.7
20.3
57.8
32.4
43.6
45.4
33.1
22.0
22.9
22.4
69.0
33.2
44.5
43.6
September 2014
51

|
10 Annual Global Investor Conference
th
Dabur India
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
Dabur management stated that sentiments are still subdued but the company is
expecting demand improvement in 2HFY15. Rural growth has slowed down and urban
has seen marginal uptick sequentially.
Category Performance: Mixed
Hair Oil: Hair Oil growth has come off with slowdown especially in the coconut
segment (15% of Hair Oil), incremental growth coming from VAHO portfolio.
Oral Care: Competitive intensity has reduced a bit but Dabur Red & Meswak are
growing ahead of the category.
Health Care: This is the key area for the company with focus being on general well
being and pain management. The company plans to launch OTC products and
leverage the chemist channel (Project CORE) to boost its performance.
Juices: Segment continues to grow at 20% in value terms, though raw material
inflation (tetra pack) is impacting margin expansion.
International operations: The segment would witness mid teens constant
currency revenue growth for the next three years with slight margin expansion.
Namaste business has now stabilized and Dabur is now focusing on its wet hair
portfolio in Africa.
New products performance (Hajmola anardana, Odonil gels) has been modest and
Dabur intends to maintain its product mix the near term at a healthy level to
sustain its existing operating margins.
Project CORE: First phase of the project is complete with direct chemist
distribution reach being 53,000, which it will scale up to ~70,000 (overall focus is
on the urban and semi urban areas). Overall distribution is 5.3m outlets with 1m
direct outlets.
Outlook
Volume growth guidance of 8-10% remains intact with margins to remain stable.
Currently some pressure is there due to raw material inflation which Dabur is
trying to mitigate through improving operational efficiencies.
Effective tax rate will remain at MAT levels for the next two years and Dabur will
start moving out to full tax regime by FY18.
Valuation and View
Consistent healthy volume growth in a weak macro backdrop is driven by
investments in distribution infrastructure and is noteworthy in our view. Dabur is
also attempting to partake in urban growth revival via distribution expansion
through specific channels. Dabur trades at a rich P/E multiple of 31.8x FY15 EPS
and 27.0x FY16 EPS, leaving little room for disappointment. We maintain our
Neutral rating with a target price of INR200.
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
DABUR IN
1,756.2
235/154
6/5/-8
M.Cap. (INR b)/(USD b) 398.6 / 6.6
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
31.8
10.7
24.9
1.3
27.0
8.9
21.2
1.6
22.7
7.5
17.7
1.9
81.9
13.6
10.8
6.2
17.8
18.4
33.8
37.8
42.7
94.7 109.7
15.7
12.7
7.3
17.7
22.0
33.2
39.4
42.7
18.5
15.1
8.7
19.1
26.4
33.0
40.3
42.7
September 2014
52

|
10 Annual Global Investor Conference
th
Emami
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
Emami’s business has been reorganized from four strategic business units (Boroplus,
F&H, Zandu and Boroplus) to three different business verticals (HealthCare, Consumer
Care and International)
Building capability-Three SBU now have their own CEOs
HMN has roped in senior management personnel from MNCs with their KPI being
revenue growth and product innovations.
Foray into mainstream categories: Distribution reach + ad push to spur growth
Hitherto a niche player, with presence in categories characterized by low MNC
competition and high gross margins, Emami is now entering mainstream
categories where there is no need for change in distribution approach and gross
margins are more than 50% so as to sustain the required brand investment and
still earn 20% operating margins (incremental return from existing brands would
be mere 10-12%, as per management)
As per management F&H brand equity was limited to body wash and face gels
categories, so the company launched HE range of deodorants. HMN will now
extend the brand into male grooming segment such as hair care, body care.
She Comfort to be launched in September with company planning to garner 4-5%
market share over the next 3-4 years by leveraging its existing chemist channel.
HealthCare to Philip growth
Management alluded that Zandu is going to be the key for the next leg of growth
with HMN launching few products under the Healthcare platform in 2HFY15.
International
The company plans to grow revenues at 25% with operating margin similar to the
domestic business. It is also keen to acquire brands in Africa and Sri Lanka and
invest in distribution.
Outlook
HMN has guided for 17-18% revenue growth over the next three years with A&P
spends largely to be in the 18-19% band. Most of the gross margin benefits have
come in and the management expects no major GM expansion for FY15.
HMN plans to spend INR2b over the next three years to streamline IT operations
which include updating of distributor systems and handheld devices for
salespersons.
The company will pay MAT tax rates for the next 5-6 years as it continues to
benefit from units located in tax exempt locations.
Barring acquisition HMN will maintain payout ratio at 40-50%.
The company will expand its total reach (currently 0.63m outlets) to 0.7m and
0.8m outlets by FY15 and FY16 respectively.
Valuation and View
Near-term expected margin disruption notwithstanding (due to aggressive new
launch pipeline), the runway for growth in the medium term looks attractive as it
scales up new products. Maintain Buy, with a target price of INR750.
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HMN IN
227.0
704/420
20/21/16
M.Cap. (INR b)/(USD b) 153.3 / 2.5
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yld (%)
34.7
15.0
29.0
1.1
29.9
12.8
24.6
1.3
25.1
10.6
20.4
1.5
21.7
5.2
4.5
19.8
11.1
45.9
46.4
51.1
45.4
25.5
6.0
5.2
23.0
16.1
53.9
46.1
51.6
45.8
30.1
7.1
6.2
27.4
19.0
64.9
46.1
52.5
43.6
September 2014
53

|
10 Annual Global Investor Conference
th
Godrej Consumer
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
India business
Management alluded that there has been sentiment improvement post election
results but it is yet to reflect in consumer spending (Demand is bottoming out and
gradual recovery is expected). With an improvement in actual income levels there
is the expectation that it will lead to actual spending.
Soaps:
Premium end of the category has been growing well while mass market is
facing challenges.
Household Insecticide:
Coil category is de-growing but it contributes 35% for
GCPL vs. 45% salience for industry. Overall market share in the category bordering
on 50% for the company. As of now, HI penetration is 30% in rural and 75% in
urban. Future growth drivers in HI: 1) Target insects other than mosquitoes 2) Full
day usage instead of just evening time and 3) Not just at home but even outdoor
solutions.
Hair Colors:
Expert Creme is performing well with company witnessing significant
up-trade into crème category from powders. New formats for hair color within
the creme space will be launched next year.
GCPL has partnered with 'B:Blunt' salon chain (had acquired 30% stake about a
year ago) to develop a new premium hair care range (INR 400-600 price point).
These products will be available in B:Blunt salons as well as retail market along
with higher end chain stores like Westside and Shoppers Stop. The entire range is
produced in India with in-house designing.
International
Indonesia (Megasari):
Operating margin pressure has come off and the margins in
FY15 will be relatively better than last year along with a strong revenue growth
momentum. (In the next two years Godrej Consumer can return to historic levels)
Latin America:
The Company had undertaken operational improvement project in
the region which will bear fruit with margin improvement this year.
Africa (Darling):
Management alluded that quarterly volatility will remain but
annual performance should be stable. GCPL will foray into new geographies like
Angola, Uganda and Ghana through royalty based agreements.
Outlook
Godrej Consumer will launch new products (in mid premium to premium space)
and explore different avenues to cross polinate their products and learning’s
across countries. The company intends to keep A&P spends in the 14-16% band.
Valuation and view
The stock trades at rich valuations of 40.9x FY15E and 33.4x FY16E EPS
respectively. Maintain Neutral with a target price of INR800 (25x FY16E EPS).
Recovery in domestic volume growth is a key monitorable.
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
GCPL IN
340.4
1,095/672
14/4/-20
M.Cap. (INR b)/(USD b) 341.7 / 5.6
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
40.9
9.1
27.9
0.9
33.4
7.8
23.3
0.9
27.5
6.5
19.6
0.9
87.6 102.5 118.9
13.6
9.0
26.4
18.7
22.3
27.8
37.8
16.2
11.0
32.4
22.5
23.3
29.4
30.9
19.0
13.4
39.2
21.3
23.6
30.0
25.5
118.3 139.0 166.5
September 2014
54

|
10 Annual Global Investor Conference
th
Hindustan Unilever
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
HUVR management alluded about continued softness in overall market with growth
in premium sub-segments remaining subdued. Inflation trends, GDP growth and
consumer sentiment drive sales. Sentiment is starting to change but has not yet
converted to sales.
Soaps and Detergents
Price led growth coming back in the Soaps category.
In Detergents, premium portfolio is doing well with strong performance by Surf
and Rin. Wheel’s performance is improving post its relaunch in FY14.
Personal Care
Skin: FAL is gaining momentum sequentially and HUVR is trying to regain the
penetration of the brand lost during packaging change.
Hair: Broad based growth since last 7-8 quarters except for ‘Clear’ brand which is
not performing well.
Oral: Category growth has slowed down due to curtailment of promotions. For
HUVR, Close Up is growing well while Pepsodent performance has been soft.
Color Cosmetics: HUVR plans to reposition Lakme as a premium color cosmetic
brand along with some new launches in the skin care segment.
Food and Beverages: Building categories of future
Food: Portfolio has been growing well with strong performance of Knorr instant
soups (doubled volumes in last few quarters) along with positive response for
Magnum launch
Beverages: For HUVR, tea portfolio is witnessing more challenges than coffee
given the raw material inflation.
Outlook
Management believes premiumization as a trend has seen a pause but on a mid-
term basis it remains a strong trend. Prior to 2012, premium segment (25% of
HUVR portfolio) was growing at 2x of regular segment.
Media intensity is coming off a bit due to raw material inflation. HUVR is looking
to leverage alternate media such as Radio, Print and Outdoor.
Separation of HPC in two divisions will aid in brand building and go to market
efforts without altering innovations.
HUVR has increased its distribution reach by 3x in the last three years and is now
looking at consolidating and reaping benefits for better performance. Current
total reach is ~7m outlets of which direct reach stands at 3.2m outlets. (1m+
stores under the perfect stores programme).
Valuation and View
Given the premium valuations HUVR trades at, (39.6x FY15 and 35.5x FY16 EPS)
we see little room, if any, for upside. Maintain Sell with a target price of INR620
(30x FY16 EPS).
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HUVR IN
2,163.1
1587.5 /
746/536
0/6/-28
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
Sales
EBITDA
Div. Yield (%)
39.6
42.4
1.9
52.3
1.9
35.5
38.1
25.6
2.2
59.4
2.2
31.9
34.6
22.1
2.5
68.5
2.5
308.8 348.7 400.9
52.3
40.1
10.2
17.3
59.4
44.7
20.7
11.5
19.3
68.5
49.8
23.0
11.4
21.2
Adj. EPS (INR) 18.5
114.3 113.1 113.8
148.0 149.3 155.6
75.5
77.4
78.2
EV/EBITDA (x) 29.2
308.8 348.7 400.9
September 2014
55

|
10 Annual Global Investor Conference
th
Marico
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
RM Inflation
Management alluded to gross margin pressures primarily led by RM inflation in
copra (up 131% YoY). MRCO has witnessed sequential hardening of copra prices,
given bad monsoon in Kerala.
The company has taken 19% price hike in Parachute in Q1FY15 with cumulative
price hike totaling 33% YoY. The company however plans to take price cuts in
certain recruiter packs if copra prices cuts.
Hair Oils:
The Hair Oil category is growing in low single digits with the company seeing 6-8%
volume growth for Parachute rigid packs while flexible pack volumes are
declining.
MRCO has four brands in the Hair Oils category with each contributing INR2b in
revenues. Incremental growth under the Hair oil portfolio is primarily driven by
Shanti Amla (INR2.5b brand, sells at 40% discount to Dabur Amla price point).
VAHO volume growth guidance at 13-15%, as per management.
Saffola: 10-12% volume growth in the medium term
Rice bran variant of Saffola is doing well.
Under Saffola foods MRCO will stick to Oats category and introduce new variants.
Youth Brands
Set Wet gels (INR2.5b category; category growth has come down) and Livon
serums gained market share while Deodorants portfolio maintained shares at 5%.
Initial response for Livon hair color has been weak, as per management.
International Business
MRCO international performance has been solid with the company guiding for 15-
20% constant currency organic revenue growth with operating margins in the
range of 14-15% in the medium term.
MRCO has rolled out the VAHO and Hair dye portfolio in Bangladesh and plans to
launch its entire portfolio in Bangladesh.
The company is also looking for inorganic acquisition opportunities in Indonesia
and East Africa region to penetrate further in these regions.
Outlook: Gradual pick-up in growth in 2HFY15 led by urban revival
MRCO has guided for 19% revenue growth with 8-10% domestic volume growth
in the medium term along with operating margins in the 14-15% band.
The company plans to keep A&P as a percent of sales at 11% with half of it spend
towards future growing categories (body lotions, oats etc).
Effective tax rate to be 28-29% for FY15 and FY16.
Rural India forms 30% of the revenues and is expected to increase to 35% with
expansion of reach. Current total reach stands at 4mn
Valuation and View
Notwithstanding near term margin challenges due to Copra inflation, we believe
Marico is well placed to capitalize on the potential urban recovery post elections.
We maintain Buy rating on the stock with a target price of INR300.
56
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MRCO IN
644.9
294/197
-2/3/-15
M.Cap. (INR b)/(USD b) 175.4 / 2.9
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
56.0 65.3 75.4
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
31.5
8.2
0.3
27.0
6.7
17.1
0.8
23.3
5.5
14.4
0.9
8.5
5.7
8.8
9.1
33.9
26.0
36.8
9.1
9.9
6.6
10.3
16.3
41.6
24.7
35.8
21.5
11.4
7.7
11.9
15.9
50.4
23.6
35.0
21.9
EV/EBITDA (x) 20.3
September 2014

|
10 Annual Global Investor Conference
th
Pidilite Industries
Covering Analyst(s):
Gautam Duggad
+91 22 3982 5404
Gautam.Duggad@MotilalOswal.com
Key takeaways
Domestic demand environment remains subdued
Management alluded that the demand environment continued to remain soft and
improved sentiments are yet to make any meaningful difference.
Construction chemicals portfolio is performing well with strong performance of Dr
Fixit and LW+ brands.
PIDI has set up a dedicated sales force team ‘Rurban’ focusing on increasing its
reach to villages with population greater than 50,000. Overall the company has a
strong distribution network with 4500+ dealers.
The Company has forayed into the waterproofing business under ‘Percept
Waterproofing’ with a focus on the B2B segment.
Elastomer Project: Search for strategic partner is still on
PIDI is scouting for a strategic partner for the Elastomer facility and does not
intend to run the plant on its own. It has invested INR 3.6b for the project.
VAM Prices (15-16% of RM cost): Another round of price hike likely in November
VAM prices continued to pose challenge with recent spike in prices to $1600. PIDI
has initiated multiple price hikes in the month of May and August to the tune of
5-6%. The company plans to roll out another price hike in the month of November
to offset the RM inflation.
PIDI typically enters into a three month contract for VAM supply and keeps
inventory of 45 days.
Outlook
The adhesive and sealants category could grow at 20% CAGR over the next five
years with Industrial and construction chemicals segment (Dr Fixit brand)
performing better given economy revival.
Currently PIDI does not intend to foray into any new category.
Valuation and View
While volume growth remains strong, current valuations at 39x FY15E and 32.1x
FY16E EPS are rich (3-year average P/E of 24.7x) and discount the positives
adequately, in our view. Maintain Neutral with a target price of INR325. Sharp
correction in VAM prices constitutes key upside risk.
Manish Poddar
+91 22 3027 8029
Manish.Poddar@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
PIDI IN
512.6
422/220
4/12/31
M.Cap. (INR b)/(USD b) 205.8 / 3.4
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
37.9
8.6
25.0
0.9
31.1
7.3
20.0
0.9
25.9
6.0
16.4
0.9
46.1
7.9
5.5
10.5
14.8
46.1
22.8
30.0
40.1
55.0
9.7
6.7
12.8
21.6
54.7
23.4
31.4
33.0
64.9
11.6
8.0
15.4
20.2
65.8
23.3
31.5
27.4
September 2014
57

|
10 Annual Global Investor Conference
th
Axis Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Loan growth is expected to be 1.3x of the industry with focus on Retail. Asset quality
outlook is improving however, guidance remains unchanged. Margins are expected to
be stable in the near term.
Green shoots visible; Retail to drive ~18% growth in balance sheet
Management expects to grow loans by ~18% in FY15, led by retail loans. Within
retail, apart from home loans the focus would be on LAP and higher yielding
products. On a higher base, home loan growth to moderate.
Large and mid-corporate segment growth is expected to be high single or low
double digits.
Over the past few years, AXSB has successfully diversified its loan book with
higher focus on housing, auto and retail agri loans. Going forward, the
management intends to reach a 45:55 mix between Retail: Corporate.
Asset quality guidance unchanged however, outlook is improving
The turnover and cash flows levels of its mid-corporate and SME clients have
improved over the past few quarters. Bank’s focus on lowering its exposure to
highly leveraged corporate and Government’s urgency in resolving infrastructure
bottlenecks augur well for the bank’s asset quality.
Asset quality guidance of gross stress addition of INR65b and credit cost of 75-
80bp for FY15 is maintained.
Largely stable NIMs; Contingency provision provides comfort
Management expects near term NIM to be stable. However, higher growth in
CASA and focus on higher yielding retail segments may provide upside.
Contingency provisions of INR7.8b to limit P&L impact of any unexpected stress.
Other highlights
Bank targets to open 250 branches in FY15. Large part of the branch expansion in
the last two to three years happened in unbanked centers. Thus, incremental
branch expansion is likely to take place in urban and semi urban areas.
AXSB believes it has significant room for cross-selling as it has ~15m retail
customers on the liability side, while 2.5m retail customers are on the asset side.
AXSB is comfortably placed on capital for next 2-3years with CET1 of 12.5%+
Valuation and view
Bank is geared to ride the next growth cycle, with strong capitalization (12.6% Tier
I), healthy RoA (1.7%) and expanding liability franchise (2,421 branches).
AXSB has prudently utilized the higher share on non-core income to create
contingency provisions of INR7.8b (34bp of loans). Further, high PCR of 77% and
70/60bp of credit cost factored in estimates over FY15E/17E would provide
cushion to earnings. We factor PAT CAGR of ~17% over FY14/17E.
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
AXSB IN
471.4
418/153
-1/29/94
M.Cap. (INR b)/(USD b) 192.7 / 3.2
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
Payout (%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
13.6
2.2
2.2
1.1
11.5
1.9
1.9
1.3
9.7
1.6
1.6
1.5
134.1 155.2 185.8
125.1 144.7 173.7
70.9
3.5
30.2
14.0
83.4
3.4
35.5
17.6
99.2
3.4
42.2
19.0
187.4 217.6 253.5
17.2
1.7
17.6
17.4
1.7
17.6
17.9
1.7
17.6
ABV/Sh. (INR) 184.2 213.8 249.6
September 2014
58

|
10 Annual Global Investor Conference
th
Bajaj Finance
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Growth expected to remain healthy at +25%; SME segment to be growth driver
The management continues to target +25% AUM growth with AUM to reach
INR330b by FY15. While 2-Wheeler is de-growing, digital products financing and
lifestyle financing are growing at +100%; both products are likely to become
standalone business line in next 2years. Digital market is 3x of consumer durable
market moreover the replacement cycle is very small (less than years); both the
businesses have promising future and can be the growth driver in the coming
years.
Loan against property which has been the fastest growing segment for industry as
well as for the BAF. Management believes the asset class is in for tough times;
due to excessive competition (to impact yields) and poor underwriting standards
(to impact asset quality) LAP as an assets may undergo pain in ensuring quarters.
Incrementally BAF is going cautious on the asset class and will reduce exposure.
The company’s rural foray has kicked off well with operations in Maharashtra,
Punjab & Gujarat. The target segment is rural affluent and products offered are
Gold loan, consumer durable loans and loans against free assets. BAF has
disbursed ~INR1b in rural segment.
Asset quality remains healthy; 95% of the assets provided for 90dpd
Asset quality of BAF continues to remain healthy with GNPA/NNPA (1.13/0.27%)
running at historic lows. Both the consumer and SME segments continue to hold
up well.
While the overall asset quality will remain the management remains cautious
about the asset quality in the commercial businesses such as infra and equipment
financing. The company has already stopped but asset quality remains a key
monitorable.
Other highlights
BAF is exploring opportunity in e-commerce space and is in talks with Flipcart and
snapdeal.
Incremental yields on LAP for the industry have come down by 50bp from 12.75%
to 12.25%.
Valuation and view
BAF continues to reap the benefits of healthy consumer demand and is among
the few companies doing well in this space. Superior margins, focused fee income
strategy, lower credit cost and control over cost ratio will keep core operating
profitability strong. BAF continues to increase its market share in consumer
business, however higher share of incremental growth will be driven by low
yielding mortgage business which will exert pressure on margins, however strong
AUM growth and lower credit cost will mitigate the impact. We expect RoA/RoE
of over 2.8%/19% over FY15-17E.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
BAF IN
50.1
121.6 / 2
2,503/976
5/29/97
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh(INR)
RoA on AUM)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
27.8
17.0
8.7
20.7
3.1
19.9
14.0
14.0
2.6
1.0
33.9
20.6
10.0
14.9
2.9
19.4
14.0
12.2
2.2
1.1
41.9
24.6
11.7
17.8
2.7
19.4
14.0
10.4
1.9
1.4
173.1 198.9 234.2
941 1,107 1,303
September 2014
59

|
10 Annual Global Investor Conference
th
Bank of India
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Loan growth is expected to remain healthy at 16-18% however, lower CET1 and
return ratios remain a concern. Asset quality stress is expected to continue in the near
term. Expected QIP and already raised AT1 capital of INR25b will help to take care of
the above industry growth in the near term.
Yet to witness major pickup in economic activity; loan growth to be ~16-18% in FY15
As per the management, although market sentiments have improved over the last
few months, the economic activity and investment demand would pick up but
only by 1HCY15.
Management has guided for 3-4% higher than system growth of 13-14% for FY15.
Capital constrained currently; AT1 & QIP to provide relief
Over the past few quarters, bank’s loan growth was constrained by lower capital
availability (T1 at 7.5%). However, it raised alternate Tier 1 capital of INR25b in
August 2014, providing headroom for future growth.
Management believes the proposed holding company structure for state-owned
banks would facilitate capital raising in future and is a positive step towards
meeting Basel III requirements by 2019.
Quarterly slippages trend to continue; asset quality under pressure
Management expects the current slippage run rate to continue over the next two
to three quarters. Uncertainty on account of the farm loan waiver scheme leading
to higher Agri slippages in Telangana and Andhra Pradesh.
Sale to ARCs of INR5.8b during 1QFY15 – sold one large hotel account a/c in which
the bank received 29% cash (proceeds received INR6.3b). O/S security receipts at
INR40b.
Restructured loans of INR250b – of which INR110b is in moratorium, while
INR140b is servicing well.
Other highlights
BOI has ~54,000 employees (incl. ex-employees) on the defined benefits pension
plan. Pension expenses are likely to reduce going forward as the average age has
declined significantly and new employees are on the defined contribution plan.
The bank is still following 1994-96 tables for pension expense calculations.
Valuation and view
Stress addition remains significantly higher and headline numbers are contained
by one-off sale to ARCs and higher write-offs, which does not provide comfort.
Further, aggressive loan growth, with lower CET 1 (6.8%) and at the cost of
profitability is concerning.
Return ratios are expected to remain weak at 0.5/0.6% for FY15E/16E/17E and
this coupled with low CET1 will necessitate frequent dilution.
We expect BOI to report an EPS of ~INR49/60/76 in FY15E/16E/17E. BV is
expected to be INR425/478/545 in FY15E/16E/17E. Maintain
Neutral.
60
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
BOI IN
642.3
357/132
0/31/57
M.Cap. (INR b)/(USD b) 185.6 / 3.1
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
ROE (%)
ROA (%)
BV/Sh. (INR)
ABV/Sh. (INR)
Div. Payout
(%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
118.0 142.4 169.0
90.0 108.6 128.6
31.4
2.1
48.9
15.3
12.1
0.5
326
14.5
5.9
0.7
0.9
2.1
38.7
2.2
60.1
22.9
13.3
0.5
380
14.5
4.8
0.6
0.8
2.6
48.8
2.2
76.0
26.4
14.8
0.6
453
14.5
3.8
0.5
0.6
3.3
425.2 478.3 544.9
September 2014

|
10 Annual Global Investor Conference
th
Canara Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Management’s focus is on moderate growth, NIMs and asset quality improvement.
CET1 of 7.1% as of FY14 is a concern however, CBK is actively looking at raising capital
through QIP.
Pipeline of slippages and restructuring narrowing down
Outlook on asset quality is improving with the sharp decline in incremental
slippages in 2Q and fall in restructuring pipeline to INR5-6b.
Management aims to reach 60%+ PCR (including technical write offs) by FY15.
Loan growth to remain moderate; focus on retail
Management expects loan growth to be 13/15% for FY15 which is adequate
considering its low CET1.
Retail to remain key for growth with the focus on mortgages.
CBK plans to expand its branch network to 6,000 and ATMs to 10,000 (currently
branch network at 5,010 and ATMs at 6,509).
Other highlights
CET1 at 7.1%; plans to raise INR30b through QIP.
Target NIM for FY15 at 2.5/2.6%, for FY16 at 3%.
Adopted the new mortality table for calculating pension costs.
Valuation and view
Over FY11-14, CBK’s profitability declined significantly (RoA of 0.5% in FY14 v/s
1.3% in FY11), led by 100bp compression in Risk-Adjusted Margins (RAM). With
improvement in growth and likelihood of reforms, pressure on asset quality and
earnings should ease. Further, CD ratio at 71% would help improve NIM.
Sensitivity of earnings to risk-adjusted NIM has increased significantly. With every
(1) 10bp NIM expansion, earnings could see an upgrade of ~15% and (2) 10bp
decline in credit cost, earnings could see an upside of ~10%.
CET1 at 7.1% is a concern. However, reforms in Infra space (Infra exposure at
~19%) and economic growth could ease fears of BV-dilutive capital raising.
Maintain
Buy
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
CBK IN
461.3
179.8 / 3
498/190
-7/44/46
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ROE (%)
ROA (%)
Payout (%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
6.2
0.7
0.9
3.2
4.8
0.6
0.7
4.2
3.6
0.6
0.6
5.5
103.8 123.5 151.7
74.3
29.0
2.1
62.8
18.8
92.0 117.1
37.4
2.2
29.3
49.4
2.2
32.0
81.2 107.2
564.0 626.3 708.5
11.6
0.5
23.2
13.6
0.6
23.2
16.1
0.7
23.2
ABV/Sh. (INR) 457.3 525.9 628.2
August 25 – 29, 2014
61

|
10 Annual Global Investor Conference
th
Federal Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Post the consolidation phase last year, loan growth is expected to pick up to ~20-22%
in FY15. Management expects the investments in back-end processes and risk
management systems to limit slippages, going forward. Profitability to improve in
FY15 led by ~25bp expansion in NIM and higher fee income growth.
Embarking on high growth phase post consolidation last year
In FY14, FB focused on de-bulking its balance sheet by reducing exposure to
higher ticket loans and shedding wholesale deposits (CDs down INR68b in FY14).
Management expects a steady pickup in growth over the next few quarters, with
a growth guidance of ~20-22% for FY15. Mortgages, gold loans and SME will be
the key drivers, going forward.
Asset quality improvement to continue; slippages have stabilized
Slippages in SME and retail segments to stabilize near INR1.5b on account of
improved back-end processes and risk management systems.
Corporate slippages have been volatile in the past. However, the expected
improvement in economic activity and consolidation in corporate loan book
reduce the risk of significant increase in slippages from this segment.
NIM to expand by ~25bp; fee income growth at 17-18%
NIM to expand by ~25bp on account of the de-bulking exercise: a) consolidation
in corporate book and growth in SME to push up yields and b) shedding wholesale
deposits to lower cost of funds.
Management expects to clock a fee income growth of ~17-18% in FY15. Lower
non-funded exposure -- peers limits FB’s ability to generate fee income.
Other highlights
Average employee age improved to ~38 years from ~51 years in 2011.
The bank would add ~100 branches during this year. Breakeven period for a
typical branch is ~2-2.5 years.
Valuation and view
Structural improvement in liability profile (reduction in bulk deposits – 1.5% of
deposits v/s 14.7% in FY13), traction in CASA and improvement in loan growth will
provide cushion to NIM/NII growth.
RoA is expected to remain healthy at 1.1%+. RoE is likely to improve to ~14%,
despite capitalization remaining strong at 11%+ by FY17.
The stock trades at 1.2x/1.1x FY16E/FY17E BV and 9.7x/7.9x FY16E/FY17E EPS.
Maintain
Buy
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
FB IN
855.3
136/44
-1/26/105
M.Cap. (INR b)/(USD b) 105.6 / 1.7
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ABV/Sh. (INR)
ROE (%)
ROA (%)
Payout (%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
11.4
1.4
1.4
1.7
9.7
1.2
1.3
2.1
7.9
1.1
1.2
2.5
24.1
16.3
9.3
3.2
10.8
10.4
89.6
87.3
12.7
1.1
23.2
28.4
19.4
10.9
3.2
12.7
17.4
34.3
24.0
13.4
3.2
15.7
23.6
99.3 111.4
96.0 107.6
13.5
1.1
23.2
14.9
1.2
23.2
August 25 – 29, 2014
62

|
10 Annual Global Investor Conference
th
HDFC
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
No impact of regulatory forbiddance given to banks on Housing bonds
The management believe that exemptions given by RBI to banks affordable
housing bonds is not likely to impact HDFC as a) Banks are not allowed to cross
hold these bonds which reduced the absorption capability b) These bonds are
unsecured so these bonds will have limited appetite from large investors like
pensions funds, insurance companies and mutual funds c) These bonds are
unsecured hence its likely to be priced at G-Sec +100-120bp; HDFC (due to its AAA
rating) raises money at very similar/lower rates.
Growth rates to pick up +20% led by uptick in corporate loans
The management is fairly confident of achieving 18-20% loan growth in the
current fiscal. Retail loan growth remains healthy and expects year to end at
~22%. While currently the growth is being mainly driven by tier II and tier III
centers, any correction in property prices will help boost further growth.
Corporate loans have started picking up; expect to see recovery in 2H; the pickup
in corporate loans has not got reflected in last quarter’s numbers because of large
repayments.
Spreads expected to remain steady; asset quality remains healthy
Spreads are expected to remain steady at 2.2-2.3% levels, In 2HFY15 management
expects to increase share of corporate loans thus, spreads will be managed. HDFC
has raised leading rates over last 2 quarters (35bp in retail and 85bp in non-retail
segment) which helped improvement in spreads.
Asset quality in the individual segment continues to remain healthy. While the
lumpy corporate NPL of INR4.6b recovered during the quarter; additional slippage
in corporate segment limited the fall to just INR6.4b from INR7.2b.
Valuation and view
Stock trades at 3.8x/3x FY14/15E Adj Price/ABV. We believe valuations are
reasonable, considering HDFC’s growth potential (FY13-15E EPS CAGR of ~20%),
sound business fundamentals, and substantially improved subsidiaries’
performance. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HDFC IN
1,566.9
1672.4 /
1150/687
-3/2/2
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
PAT
BV/Sh (INR)
RoAA (%)
Core RoE (%)
Payout (%)
Valuation
AP/E (x)
P/BV (x)
AP/ABV (x)
Div. Yield (%)
22.5
5.4
5.1
1.5
17.1
4.9
4.1
1.7
14.4
4.3
3.5
2.1
80.9
60.5
96.9
72.2
39.5
115.3
85.6
47.0
Adj. EPS (INR) 32.9
197.2 219.4 246.3
2.5
25.6
47.6
2.5
24.4
46.4
2.5
25.5
46.4
ABV /Sh (INR) 144.1 166.4 193.2
September 2014
63

|
10 Annual Global Investor Conference
th
HDFC Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Management expects growth to pick up with support from corporate segment on
improving macro environment. Margins to remain in the current range of ~4.4/4.5%.
Large part of the fees from retail business which is under pressure. C/I ratio will
continue to improve. Merger with HDFC is not on lucrative right now.
Above industry loan growth; retail growth to remain healthy; corporate to pick up
Loan growth for FY15 to be 4/6% above industry levels led by both retail and
corporate segments.
CV segment growth to be flattish (no signs of growth yet). However, management
believes growth will pick up in the next couple of quarters.
Growth from infrastructure segment to remain subdued over the next 9-12
months, post which the bank expects growth to resume from project finance
(mainly brownfield projects).
Cost efficiencies and fee income growth to boost profitability
Target cost to income ratio of 45-46% by FY16. As per management, opex growth
to be in line with revenue growth for FY15, while revenue growth is expected to
outpace opex growth in FY16.
~90% of the fee income is retail fee income, of which annual maintenance fees
forms ~30%, third party forms ~40%, transaction fee forms ~10%, processing fee
forms ~10% and credit card forms ~10%. Wholesale fees form 10% of total fees,
mainly debt syndication.
Management expects pressure on fee income in the near term however, in the
medium to long term it should grow inline with balance sheet growth
Other highlights
HDFC Bank and HDFC Ltd’s merger currently is not a lucrative option as per the
management.
NIM to remain stable at 4.4/4.5% in FY15.
Focus to continue on improving technological platform. Also, the bank believes
analytics is useful for marketing and sales.
Valuation and view
Attractive valuations for strong liability franchise: Over the last 12 years, HDFCB’s
market share has increased significantly in (1) retail loans, (2) low cost deposits
and (3) higher share in profitability, indicating the strength of its franchisee.
Strong fundamentals and near nil stress loans would enable the bank to gain
further market share. While FII restriction and reduction in weights in MSCI index
remains an overhang, we believe valuations are at an attractive level, with
FY16E/FY17E P/BV of 3.3x/2.8x. Comfort on earnings (+25% CAGR) remains high
and RoE is expected to be at decadal best of 22%+. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HDFCB IN
2,407.7
864/560
-1/1/3
M.Cap. (INR b)/(USD b) 2067 / 34.1
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
Payout (%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
19.5
4.0
4.1
1.0
15.5
3.3
3.4
1.3
12.4
2.8
2.8
1.6
223.7 274.9 347.2
180.8 223.8 282.6
105.8 132.6 166.1
4.6
44.1
24.7
4.5
55.3
25.3
4.6
69.2
25.3
215.1 257.5 310.6
22.3
2.0
23.4
23.4
2.0
23.4
24.4
2.0
23.4
ABV/Sh. (INR) 211.5 252.4 303.6
August 25 – 29, 2014
64

|
10 Annual Global Investor Conference
th
ICICI Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Management expects stress additions to decline in FY15. ICICIBC’s loan growth to be a
few percentage points higher than the industry growth. Cautious approach in lending
towards corporate and SME; retail segment to remain key driver of growth.
Loan growth ~2-4% higher than industry; strong retail growth
As per the management, bank’s FY15 loan growth would be 2-4% higher than the
industry average. ICICIBC is aggressively focusing on leveraging its distribution
network, technology platform and liability customer base to grow granular retail
business and improve fee income.
Loan growth to be driven by 20%+ growth in retail loans, especially mortgages,
personal loans, rural and credit cards. CV segment still not out of the woods.
Bank continues to adopt a cautious approach in corporate and SME segment.
Overseas loan growth would be opportunistic.
Stress additions to decline in FY15
As per the management, stress additions have peaked. FY15 stress additions to be
lower than ~INR110b in FY14. The pipeline for restructuring stood at INR15b,
though restructuring requests have declined significantly.
Bank has a small exposure towards Bhushan Steel Ltd. However, this account has
a strong asset backing and banks are working together to resolve the stress in this
account.
NIM to expand by ~15bp
Over the past few quarters, structural improvement in liability profile helped
ICICIBC to report a gradual improvement in margins.
As the contribution of domestic business continues to increase, management
expects NIM to expand by ~15bp in FY15.
Recent infrastructure bond issuance to improve margins slightly.
Valuation and view
ICICIBC is well placed for the next growth cycle, with Tier I of 12.6%+ and largest
branch network in the private financials.
Key catalysts are (a) improvement in growth environment and clarity on interest
rate and macro environment, (b) resolution of issues in key infrastructure sectors
and (c) value unlocking in the insurance business. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
ICICIBC IN
1,156.0
1839.1 /
1618/780
2/18/49
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr (%)
BV/Sh. INR*
RoE (%)
RoA (%)
Div. Payout
Valuations
AP/E (x)
AP/BV (x)
AP/ABV (x)
13.8
2.3
2.4
11.2
2.0
2.1
8.9
1.7
1.7
186.6 223.1 270.3
188.5 225.6 274.2
112.3 136.0 165.8
3.3
97
14.5
579
15.4
1.8
31.3
3.4
118
21.1
665
16.2
1.9
31.3
3.5
144
21.9
770
17.1
1.9
31.3
ABV/Sh. INR* 557.7 640.5 741.6
Div. Yield (%) 1.6
2.0
2.4
* BV adj for invt in susbdiaries,
Prices adj for sub value
August 25 – 29, 2014
65

|
10 Annual Global Investor Conference
th
IDFC
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
New bank will be listed from day one and IDFC will become a Holding company
The new bank is likely to be operational from October 2015 and will be a listed
entity from day one and IDFC will become a Holding company.
IDFC is still awaiting approval regarding treatment of Infra bonds, If the existing
loan book does not get forbiddance and then also ~30% of existing loans will get
exemption from CRR/SLR and PSL at the time of becoming a bank and over a
period of 24-36 months the entire book will become eligible.
Regulatory forbiddance has reduced the regulatory pain; expect 14% RoE in 2 years
Regulatory forbiddance given by RBI will reduce the translation pain significantly.
The management expects that IDFC will get minimum forbiddance on INR100b of
liabilities and this exemption can increase to INR350b if RBI allows treating the
transfer of assets from IDFC to IDFC bank as prospective.
Moreover with these exemption will help IDFC scale the book and management
expects the new bank to generate ~14% RoEs within two years of operations.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
IDFC IN
1,516.8
M.Cap. (INR b)/(USD b) 222.5 / 3.7
167/79
-8/16/33
Other Highlights
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
PPP
Cons. PAT
EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
RoAA (%)
Core RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
P/ABV (x)
11.7
1.4
1.2
10.7
1.2
1.1
9.4
1.1
1.0
2.3
27.7
32.9
19.1
12.6
6.1
29.8
34.9
20.7
13.7
8.4
33.4
39.1
23.7
15.6
14.1
IDFC will do a preferential allotment to bring down its FII holding; shareholding of
FII +FDI+ NRI has to be brought down below 50% which currently stands at ~53%
Outstanding restructured loans stood at INR26 (4.5% of loans); 74% of
restructured assets come from energy sector; half of which are gas based power
projects.
NOFHC will float a Infrastructure debt fund NBFC (IDF); IDFC will transfer all
eligible assets (~INR20b) from IDFC to IDF NBFC.
Valuation and View
108.6 118.7 130.3
2.5
12.7
25.6
2.5
12.5
25.6
2.5
13.0
25.6
ABV/Sh (INR) 98.8 109.0 120.6
Over a longer period, the universal banking platform will provide much-needed
stability to growth, earnings and asset quality. Regulatory forbiddance for
infrastructure and housing bonds will reduce the transition pain; moreover
management’s execution capabilities are well-tested in infrastructure financing
business, building a retail franchise will be a daunting task. Maintain
Neutral.
Div. Yield (%) 1.9
2.0
* Adj for value of subs
September 2014
66

|
10 Annual Global Investor Conference
th
Indiabulls Housing Finance
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
AUM growth expected to remain healthy at +25%
Management expects AUM growth to remain healthy at +25% growth will be
predominantly driven by healthy traction in the tier II and tier III centers.
Of the overall mortgage loan (74% of AUM), 48% is towards housing loan whereas
26% is LAP (mainly self-employed customers). Further within housing segment
70% of the loan is towards salaried customers, whereas 30% is to self-employed
customers.
Ratings upgrade to reduce cost of funds by 30-40bps; spreads to be maintained
Indiabulls Housing Finance’s (IHFL) long-term credit rating has been upgraded to
AAA by the rating agency CARE Ratings. CRISIL had earlier upgraded IHFL to AA+
with this IBHFL enjoys a AA+ rating from all four major Indian rating agencies and
joins a group of select few HFCs and NBFCs to be rated AA+ by CRISIL.
Management expects rating upgrade to AAA will reduce the cost of funds by 30-
40bp; this will make it more competitive and help protect spreads. Spread
guidance of 350bp for the current book and 300-320bp on incremental lending
Management indicated that they will continue with the policy of keeping 20%
cash balance at any given point of time it will maintain core liquidity of INR45b.
Although maintaining surplus liquidity has a negative carry but it very useful
during tight liquidity environments.
Asset quality remains healthy; no stress on developer loans
GNPA/NNPA stand at 0.84%/0.34% have remained stable since last six quarters;
with increased proportion of housing loans management expects credit cost to
decline further.
NPL on Home loan stood at 24bps, 28bps on LAP, however CV has seen increased
levels of delinquency with 90dpd stands at 258bps on CV. Provisioning coverage
ratio stands at comfortable +140%.
Developer portfolio continues to remain healthy and company does not see any
stress in this portfolio; 70% of developer portfolio is lease rent discounting, of
which almost 70% of the LRD is tenanted to AAA tenants
Other highlights
Dividend payout will remain at 60%; will translated to a dividend of INR31 for
FY15 (+8% dividend yield)
Group restructuring and revamp of board underway will management expects to
get AAA rating from other rating agencies in due course.
Valuation and View:
IHFL trades at 1.8x FY16E P/B and 6.3x FY16E P/E. Though the stock has got rerated
over the last few months, we believe a strong positioning in mortgage segment,
potential for market share gains, healthy margins and return ratios, good asset quality
and healthy dividend yield would drive further re-rating. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
IHFL IN
187.7
429/126
12/43/-
M.Cap. (INR b)/(USD b) 132.6 / 2.2
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Net Fin inc
PPP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoA on AUM
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
P/BV (x)
Div. Yield (%)
7.3
2.0
2.0
7.1
6.3
1.8
1.8
8.3
5.2
1.6
1.6
10.0
20.7
25.5
53.5
14.4
3.6
29.9
60.4
26.2
31.8
22.4
62.0
15.7
3.5
30.5
60.4
31.9
38.5
27.1
75.0
21.0
3.5
31.9
60.4
PAT - Post MI 18.6
194.2 219.9 249.5
September 2014
67

|
10 Annual Global Investor Conference
th
IndusInd Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Balance sheet is expected to grow by ~25% in FY15, led by a strong momentum in
corporate segment and some retail products (ex CV). Management expect revival in
the CV growth in 2HFY15. Portfolio to get the optimal mix of Retail: Corporate of
50:50 vs 43:57 (as of 1QFY15) will take atleast 4-5 quarters. NIM to improve, led by
pickup in retail book and softening of interest rate. Fee income growth is expected to
outpace the loan growth.
Continue to gain market share; Retail growth to pick up gradually
Management expects FY15 growth to be in the range of 23-25%, led by a strong
growth in corporate business and some retail products like gold loans, LAP, Car
and 2W loans.
CV portfolio which had witnessed a contraction over the last four to five quarters
is likely to bounce back in 2HFY15 as replacement demand picks up, infrastructure
construction improves and clarity on mining segment emerges.
NIM to improve going forward; Fees momentum continues
With an expected gradual pickup in a higher yielding retail portfolio, management
expects NIM to improve towards the end of this fiscal. With a 1% increase in the
proportion of retail portfolio, NIM/RoA to improve by 4bp/2.5bp respectively.
Also, IIB's asset-liability mix is poised in a such a way that in a falling interest rate
scenario, while cost of funds decline, higher proportion of fixed rate loans aids
NIM improvement.
As per the management, IIB’s core fee income per branch is higher than some of
its larger peers. Fee income is expected to grow by above loan growth in FY15 led
by strong foreign exchange and processing fees.
Asset quality remain manageable
Debt servicing matrices of the mid-corporate segment have improved
significantly.
A few accounts with consortium lending may get restructured. However,
restructured advances to remain below 40bp.
Credit cost is expected to be contained at ~60bp.
Valuation and view
Superior margins, focused fee income strategy and control over C/I ratio will keep
earnings momentum healthy (26%+ CAGR). Capitalization remains healthy, with
Tier I at 12.1%.
The stock trades at 2.7x/2.3x FY16E/17E BV of INR228/INR272.5 and 14.3x/ 11.4x
FY16E/17E EPS of INR42.9/INR53.9. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
IIB IN
526.2
623/344
5/21/18
M.Cap. (INR b)/(USD b) 322.8 / 5.3
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
Payout (%)
Valuations
P/E (X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
18.1
3.2
3.2
0.8
14.3
2.7
2.7
1.0
11.4
2.3
2.3
1.3
34.8
31.7
17.9
3.9
34.0
26.9
42.8
39.3
22.6
3.9
42.9
26.3
53.8
49.1
28.3
3.9
53.9
25.6
192.5 228.0 272.5
19.0
1.9
17.5
20.4
1.9
17.5
21.6
1.9
17.5
ABV/Sh. (INR) 190.1 224.7 268.6
September 2014
68

|
10 Annual Global Investor Conference
th
ING Vysya Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
ING Vysya Bank is likely to grow faster than industry growth with the focus on Self
employed, SME, LAP and International client group. Worst of the asset quality is
behind and do not see much stress ahead. For growth focus will continue on mid
corporate segment.
Worst case net stress loans may rise by 30-40bp
In SME and mid corporate space, Strong underwriting standards, expertise in self
employed segment, lower ticket size per account, hard collaterals, largely a sole
banker etc helped to maintain superior asset quality despite moderation in
economic growth.
Lumpy accounts from the large corporate segment slipped into NPA in 1QFY15.
Net stressed loans in 1QFY15 were at 2.3% and management believes that even in
the worst case scenario, net stress will not exceed 30-40bp from current level.
Focused branch expansion strategy; C/I ratio will continue to improve
Branch expansion has resumed and management is planning to add 40-50
branches in FY15. For incremental branches focus remains on cash rich northern
and western belt. Increasing the productivity from existing branches remains a
key focus area.
Cost to income ratio from ~65% in FY09 to 55% in 1QFY15 is expected to trend
down further with the focus on cost containment and increasing the share of core
revenues.
Other highlights
CASA ratio to reach 32% by FY15, with 16% CA and 16% SA. To improve SA
balances management is focusing on becoming primary bank for customers.
Focus has also increased on acquiring the salary accounts.
Valuation and view
Asset quality remains a critical factor for sustenance of RoA. While slippages
surprised negatively in 1QFY15, management remains confident of the better
trends, going forward.
Continued operating leverage will lead to better profitability, though unlikely to
be a significant cushion in case of higher asset quality stress.
RoA is expected to be 1.1/1.2% and RoE to be ~10/12% for FY16/17E. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
VYSB IN
189.7
120.3 / 2
723/411
-2/-13/5
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
Payout (%)
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
16.3
1.6
1.6
1.1
14.0
1.5
1.5
1.3
11.3
1.3
1.3
1.5
19.5
13.8
7.3
3.3
38.9
11.6
22.5
16.0
8.6
3.3
45.4
16.7
27.0
19.8
10.6
3.2
55.9
23.2
400.4 436.6 481.1
10.1
1.1
20.3
10.8
1.2
20.3
12.2
1.2
20.3
ABV/Sh. (INR) 391.0 430.0 472.9
August 25 – 29, 2014
69

|
10 Annual Global Investor Conference
th
Kotak Mahindra Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
KMB has maintained its loan growth guidance of ~15-20% for FY15, before embarking
on a 20%+ growth trajectory next year onwards. Corporate banking, SME and housing
loans will be the key drivers of growth. Aggressive branch expansion to continue.
Economy showing signs of pickup; loan growth at ~15-20%
Management believes the GDP growth will pick up going forward, green shoots
already visible in the manufacturing sector. The revival of investment cycle would
require speedy acquisition of land and faster environment clearances. The
Government also has intent on clearing the investment pipeline quickly.
During the last few quarters, KMB followed a conservative lending policy,
resulting in a slower loan book growth. However, the management is confident of
growing the book by ~15-20% during FY15. From the next year, the bank would
resume a faster growth trajectory of 20%+ balance sheet growth.
Management expects corporate banking, SME and housing loans to remain the
key drivers of future growth. Growth in the commercial vehicles segment, which
de-grew 30% YoY, would remain muted.
Branch expansion to drive growth in retail segment
KMB intends to continue with its branch expansion plan by adding ~150 branches
during the rest of this fiscal. The bank’s focus on top 10 cities will continue.
Urban branches would be liability focused, while the semi-urban/rural branches
would add to the asset growth. A semi-urban branch takes three to four years to
break even, against 1.5-2 years for an urban branch.
Branch expansion to aid growth in mortgages, car loans and agriculture. The
traction on CASA growth continues, led by differential SA interest rates; further
improvement expected from 4QFY15.
Other highlights
Stressed asset book is ~INR3b. The bank aims to recover ~60-70% over the next
three to four years.
Retail NBFC spreads under pressure on account of higher cost of funds and
pressure of yields. Kotak Mahindra Prime’s profits have remained flat on account
of lower DCM activity. Management has a cost-to-income ratio of 50-51%.
Valuation and view
As the economy is bottoming out, management is shifting its focus back to above
industry loan growth. With the healthy capitalization (CET1 – 18%), improved
liability profile, robust risk management system (net stress loans at 1.3%), strong
presence across loan products, KMB is well placed for the growth cycle.
While earnings CAGR over FY14-17E is expected to be ~20%, rich valuations of
3.3x/2.8x FY16E/FY17E consolidated BV and 22.5x/19.5x FY16E/FY17E
consolidated EPS limit the upside. Maintain
Neutral.
70
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
KMB IN
770.5
815.1 /
1067/591
8/28/26
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
41.4 50.5 62.5
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
27.8
17.3
4.7
38.5
16.6
33.7
21.3
4.7
47.0
22.0
15.8
1.8
2.9
22.5
3.3
3.4
0.1
41.9
26.4
4.7
57.3
22.0
16.5
1.9
2.9
18.5
2.8
2.9
0.1
Cons.BV. INR 273.7 319.3 374.9
Cons. RoE (%) 15.1
RoA (%)
Payout (%)
Valuations
P/E(X) (Cons.) 27.5
P/BV (X)
3.9
(
)(X)
P/ABV
3.9
(C
)
Div. Yield (%) 0.1
1.8
2.9
September 2014

|
10 Annual Global Investor Conference
th
LIC Housing
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Loan growth expected to remain healthy at +20%
LICHF management expects loan growth to remain healthy at +20%; Growth will
be predominantly driven by healthy traction in the tier II and tier III centers.
In current fiscal LICHF will increase focus on high yielding products like LAP and
developer loan; management is targeting to increase LAP from existing 3.4% of
loan book to 5% in FY15.
Margins decline (1Q) was led by increased proportion of high cost bank
borrowings; LICHF reduced bond issuance due to uncertainty over debenture
redemption reserve as a result Cost of funds increased 30bp QoQ. LICHF Has
resumed bond issuance and raised INR20b through bonds in July, this is expected
to reduce the cost of funds.
Fixed rate loan book forms 60% of retail loan book i.e. INR561b (Blended yield of
10.5% on fixed rate pool); Loan reprising of INR60b in FY15 and INR300b in FY16.
Margins to improve by 20bp to 2.4% in FY15; No significant competitive pressures
LICHF has guided 20bp expansion in margins to 2.4% in FY15. The margin
improvement will be led by focusing on high yields products (like LAP & developer
loans) and by reducing high cost bank borrowings to ~ 20% of overall borrowings.
Banks are already lending at base rates; so no significant competition in short run;
Management believe that concession offered to home loan borrowers will
significantly increase the interest and demand for sector
Asset quality remains healthy
Asset quality in the individual segment continues to remain healthy.
GNPAs in developer Loans segment include three major accounts and 3 minor
accounts amounting to INR2.5b; although the accounts are backed by adequate
collaterals, an action under SARFAESI Act has been initiated.
Provisioning linked to teaser worth INR 0.44b released during the quarter; O/S
provisions to be released stands at INR0.54b
Others
INR7.95b of Networth deducted for DTL impact
Raised INR6b from deposits during the quarter (highest in a single quarter)
Asset duration 7 years and Liability 6 years
Builder portfolio yield 14.5%
No immediate plan for capital raising
Valuation and view
Despite high interest rates and property prices, volume growth in the individual loan
segment remains fairly strong. Pick up in the project loan segment is a key from NIMs
and growth perspective. We largely maintain the earnings estimates and expect LICHF
to report loan CAGR of ~15%, spread improvement of 15bp in FY15 and further 10bp
in FY16. Earning CAGR is expected to be 15% over FY15-17E. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
LICHF IN
504.7
352/152
3/19/42
M.Cap. (INR b)/(USD b) 157.3 / 2.6
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
PPP
Adj. PAT
EPS Gr. (%)
BV/Sh (INR)
RoAA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
11.4
1.8
1.6
9.6
1.6
1.8
8.0
1.4
2.2
22.8
21.6
13.9
15.3
1.4
17.1
20.3
27.0
25.6
16.4
32.5
18.3
1.4
17.6
20.3
32.7
30.8
19.8
39.2
20.8
1.4
18.4
20.3
Adj. EPS (INR) 27.4
171.7 197.8 229.4
September 2014
71

|
10 Annual Global Investor Conference
th
Mahindra Finance
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Asset quality pressures to persists; focus on recovery
The asset quality pressures which began in 3QFY14 are likely to persist this
calendar year. Management does not expect any material improvement in GNPAs
until 4QFY15. Ground level things have not improved hence NPAs will not
improve materially.
Expect NPLs to drop below 6% by 1QFY16. NPLs are more concentrated in states
which have freebies culture (Like TN & Telangana).
MMFS is focusing to improve collection efficiencies and prepare for future
business growth.
Tie up with manufacturers bodes well for the future growth
Deeper rural penetration and diversified product portfolio coupled with
increasing tie ups with the OEMs like Hyundai, Toyata etc. bodes well for future
growth.
Cars, tractors & utility vehicles continue to remain major growth drivers for the
company. Management has maintaining stance of adopting a cautious approach
in commercial vehicle space and will continue to focus on LCV segment.
Margins & spreads ex of interest reversal are stable
While the reported yields and margins have contracted, the actual margins and
spreads have marginally improved; the decline is largely due to interest reversals.
The company does not see any pressure on spreads going ahead.
Valuation and view
Over last two quarters MMFS faced several challenges in terms of asset quality
which has led to GNPA and NNPA percentage rising to 6.2% and 3% respectively.
Further with weak monsoon and continued challenges in collection from south,
asset quality risk remains high.
The stock trades at 2.8x/2.4x FY15/16E BV of INR102/116 and PE of 17.8x/14.5x
FY15/16E EPS of INR15.7/19.4. Return on AUM is likely to be at ~2.6% and RoE of
~16%. Maintain
Neutral.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MMFS IN
568.8
356/230
10/-15/-40
M.Cap. (INR b)/(USD b) 158.9 / 2.6
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
NII
30.1 35.3 41.1
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
ABV/Sh (INR)
RoA on AUM
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
P/ABV (x)
Div. Yield (%)
17.7
2.7
3.1
1.4
14.4
2.4
2.7
1.7
12.3
2.1
2.3
1.9
20.5
8.9
15.7
0.0
24.2
10.9
19.4
23.1
28.2
12.8
22.6
16.8
101.7 115.7 132.0
90.6 104.0 119.8
2.6
16.4
28.1
2.7
17.8
28.1
2.7
18.3
28.1
September 2014
72

|
10 Annual Global Investor Conference
th
Punjab National Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Post the consolidation phase growth is likely to be marginally above industry growth.
Margins are likely to be stable and fee income growth to improve. Incremental trend
on net slippages and restructuring is positive and new stress addition is likely to be
lower than FY14. Targeting ROAs of ~1% by FY15/16.
Asset quality performance key; no lumpiness in pipeline
Outlook on slippages/restructured book positive as there are not many lumpy
accounts in the pipeline. Further, Improved responses from defaulters on the
notices issued and increasing OTS is encouraging. Even bigger corporate are
looking at de-leveraging actively.
Focused recovery/mapping of accounts – top 200 accounts by CMD and EDs on a
regular basis. SMA I and II accounts dealt with on a fortnightly basis to keep a
check on asset quality.
Management expects net slippages to come down gradually. Net slippage ratio
had improved to 2.6% in 1QFY15 v/s 3.1% in 4QFY14.
Cautious towards corporate lending with internal cap. Also, no lending to non-
investment grade companies.
Marginally above industry loan growth for FY15; CRE and Housing - key drivers
Management expects loan growth for FY15 to be 16/18%, with focus on agri and
housing segments.
Infrastructure segment is witnessing some pickup in activity, with some stalled
projects kick starting, which are positive signs. However, management remains
cautiously optimistic on this segment.
Capital at comfortable levels for FY15
With a growth target of 16/18% for FY15 and Tier 1 at 8.8%, management
remains fairly comfortable with the capital position.
Infusion of INR50/60b from the Government is expected.
Other highlights
Guidance for FY15: NIM at 3.4/3.5%, RoA near 1%.
If interest rate falls by 1%, management expects INR3/3.5b of MTM writeback.
Valuation and view
Loan portfolio is highly levered to resolution of policy bottlenecks and
improvement in economic growth. 57% of restructured loans belong to
Infrastructure and Iron and Steel, and a kickstart in these segments could allay
concerns.
Balance sheet consolidation helped PNB to structurally improve the liability
profile and maintain NIM, despite high asset quality strain – which is a positive.
With a focus on profitable growth, healthy core parameters, CET1 of ~8.8%, PNB
remains one of our top picks. Maintain
Buy.
73
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
PNB IN
362.1
351 / 5.8
1,068/402
-4/37/78
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ROE (%)
ROA (%)
Div. Payout
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
6.3
0.9
1.1
1.6
5.3
0.8
0.9
1.9
4.2
0.7
0.7
2.4
181
128
55
3.3
153
65.7
208
152
67
3.3
184
20.3
244
184
83
3.3
229
24.6
1,086 1,249 1,451
1,086 1,295
15.8
1.0
11.6
17.0
1.1
11.6
15.0
1.0
11.6
ABV/Sh. (INR) 901
September 2014

|
10 Annual Global Investor Conference
th
Reliance Capital
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Sale of Non-Investment to deleverage balance sheet
As part of strategy to exit all non- core investments management has decided to
sell down all non-core investments over next 12-24 months. The exit will make
the corporate structure leaner and will free up capital to fund future growth
requirements of core businesses of lending and insurance.
Improving agent productivity helping increase profitability in life insurance business
Improvement in profitability in life insurance business was led by shift in product
mix, shedding of inactive agents, incremental focus on Tier I locations not only led
to rapid increase in market share gains (6.6% in FY14 v/s 4.5% in FY13), and also
led to better profitability. Agent productivity has improved, average ticket size per
policy has gone up, moreover numbers of active agents have also increased.
Management expects WNRP to grow over 15% over next 3 years NBAP of 23.8%
reported in FY14 was high due to higher mix of traditional products under the old
regime. NBAP margin to decline to 15% over the next three years though will
remain better with industry.
RCAP has also stated intent to divest stake in life insurance business once the bill
is passed in parliament. Moreover RCAP is also looking to divest stake in general
insurance arm; RCAP hold 100% stake in general insurance arm.
Lending business to grow at +15%; RoE to inch upward to 18%
Given the rising challenges in Indian economy, RCF adopted a calibrated approach
across segments and overall loan book remained largely flat since FY12. This was
driven by run-down of unsecured portfolio and focus on quality rather than
growth by maintaining high margin of 5%+ and focus on asset quality (GNPA of
less than 2%).
However with revival in economic growth, strong presence over 37 locations and
growing customer base, the company expects growth momentum of 15%+ CAGR
for next three years.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
RCAPT IN
245.6
136 / 2.2
668/301
-10/51/28
September 2014
74

|
10 Annual Global Investor Conference
th
Shriram Transport
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Asset quality pains over; to gradually improve from hereon
The management indicated that the asset quality pain is almost over; on back on
improvement in collection efficiencies the management expects NPLs to stabilize
at these levels and show gradual improvement from 2HFY15.
On the provisioning front, the management expects the existing level of loan loss
provisioning of +2% to gradually decline going forward, moreover healthy PCR of
80% is an indication that the pain has been absorbed.
Growth guidance maintained at 15% for FY15
SHTF expects AUM growth of 15% for FY15, however while HCVs may take some
time to recover bulk of incremental growth will be driven by the non- CV
segment.
Management does not expect the monsoon be a dampener; while agriculture
related freight carriage may witness some moderation, its impact will be negated
by uptick in industrial activities.
Margins bottomed increase from hereon
Margins have been under pressure since few years and now stand at 6.5% lowest
in last 5 years. However with improving collection efficiencies and declining NPLs
will led the margins recovery; management expects margins to improve 8-10bp
every quarter from here on.
Valuation and view
Sharp decline in economic growth resultant impact on asset quality (cyclical high
credit cost and bottom margins) and regulatory changes led to risk adjustment
margins falling to five-year low and sharp decline in return ratios (RoE down to
16% from 30% in FY09).
Growth to remain moderate in near term and to be driven by non-CV segment.
While yields in passenger vehicle portfolio are near to CV segment, operating cost
is relatively high which will lead to some pressure on profitability in the near
term. While SHTF’s return ratios have moderated compared to its historical
trends, we expect ROA’s of ~2% and ROE of ~15% over FY14/16E.
SHTF trades at 2.2x/1.9x FY15/16E consolidated BV and 13.7x/10.6x FY15/16E
consolidated EPS. Maintain
Buy.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
SHTF IN
226.9
1021/491
2/35/43
M.Cap. (INR b)/(USD b) 217.7 / 3.6
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Inc.
PPP
PAT
Cons.PAT
EPS (INR)
EPS Gr. (%)
Cons. EPS
Cons. EPS Gr.
BV/Share
Cons. BV
RoA on AUM
RoE (%)
Payout (%)
Valuations
P/Cons. EPS
P/Cons. BV (x)
Div. Yield (%)
13.7
2.2
0.8
10.6
1.9
1.1
9.1
1.6
1.4
40.9
31.7
14.7
15.9
65.0
16.6
70.1
16.6
49.1
38.2
19.2
20.5
30.1
29.1
57.9
45.1
23.7
23.8
23.7
16.5
84.5 104.5
90.4 105.3
420.1 492.2 581.4
435.5 513.5 603.5
2.3
16.6
14.5
2.6
18.5
14.5
2.8
19.5
14.5
September 2014
75

|
10 Annual Global Investor Conference
th
State Bank of India
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Management’s focus is to improve efficiencies, cost control, early recognition/control
of stress and fee income growth. Growth is expected to remain moderate in the near
term and asset quality to improve in 2HFY15.
Asset quality to improve; restructured pipeline lower at INR35b
Slippages from agriculture segment to improve, going forward. Trend in overall
slippages to remain stable/decline QoQ; stress from mid-corporate segment still
remains an area of concern.
Agri segment witnessed stress during 1QFY15, with INR5.4b slippages, of which
INR1.8b was contributed by Andhra Pradesh and Telangana. SBIN is optimistic on
recoveries from these accounts. Pipeline of restructured book stands lower at
INR35b. Target credit cost of 0.7% by FY16.
Opex control and fee income growth to drive core profitability
Opex control has been the key focus area for the management, with pension
provisions not required during FY15. Employee expenses growth is likely to be a
single digit and overhead costs’ growth is expected to be less than 10%.
Target cost to income ratio to be below 50% (in line with the industry average of
47-48%) by FY15-17.
Fee income growth is a key focus area (10%+ growth since the new management
joined).
Other highlights
Merger with associate banks, a detailed plan is expected to be announced in
3QFY15.
Over the next decade, business originations from the digital platform is expected
to increase multifold, in turn transforming physical branches, especially in
urban/metro region, into document collection centers. The bank will be judicious
while adding staff to such retail focused branches in future. Most of the branches
are rented (operating leverage), so not a major concern.
Loan growth over the next couple years to be driven by retail segment, primarily
housing and opportunistic corporate lending.
Valuation and view
SBIN is highly levered to macro-economic conditions. An improvement in
investment climate and interest rate would assuage asset quality fears.
The bank remains our preferred pick to play a recovery in Indian economy with a)
least NSL of 6.2%, b) strong CET1 of 9.8% and c) improving return ratios. New
management at the helm of affairs has initiated a structural transformation
exercise and benefit of which will be realized in the coming quarters.
The stock trades at 1/0.9x FY16E/17E consolidated BV of INR2,368/INR2,733 and
7x/ 5.4x FY16E/17E consolidated EPS of INR341/INR447. Maintain
Buy.
76
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
SBIN IN
746.6
2834/1455
-3/33/23
M.Cap. (INR b)/(USD b) 1882.9 / 31
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV (INR)
ABV (INR)
RoE (%)
RoA (%)
Div. Payout
Valuations
Cons. P/E (x)
Cons. P/BV (x)
Cons P/ABV
Div. Yield (%)
9.6
1.2
1.4
1.6
7.1
1.0
1.2
2.1
5.4
0.9
1.0
2.8
553.9 656.9 800.8
376.3 463.2 589.2
148.7 201.0 260.5
3.1
32.6
3.2
35.6
3.3
30.9
251.8 341.4 446.8
2,089 2,368 2,733
1,706 2,012 2,473
12.6
0.8
18.4
15.3
0.9
18.3
17.5
1.0
18.3
September 2014

|
10 Annual Global Investor Conference
th
Union Bank of India
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Focus remains on moderate growth with RAM (Retail, Agri and MSME) to be the key
growth driver. Focus on core deposits, high yielding loans and improvement in asset
quality to drive margin improvement. Fees remain a key focus area. Stress addition is
expected to subside by end-FY15 or 1QFY16. UNBK has received approvals for raising
capital from RBI and shareholders through a QIP, which will help to improve CAR.
Retail, Agri and MSME to drive loan growth
Overall loan growth to remain muted (near industry average). However, strong
growth expected from retail, agri and MSME segment.
Consolidation of balance sheet to continue in the near term led by large
corporate loans.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
UNBK IN
630.3
260/100
4/71/58
M.Cap. (INR b)/(USD b) 136.3 / 2.2
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ABV/Sh. (INR)
RoE (%)
RoA (%)
Div. Payout
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
5.9
0.7
0.9
2.6
5.0
0.6
0.8
3.0
4.1
0.6
0.7
3.6
90.1 102.5 119.0
58.9
23.3
2.6
36.8
37.6
298
234
13.0
0.6
17.4
65.6
27.3
2.7
43.2
17.3
333
267
13.7
0.7
17.4
74.6
33.0
2.7
52.1
20.8
376
309
14.7
0.7
17.4
Slippages and restructuring to remain at current levels in near term
In the near term slippages and restructuring is expected to be remain stable at
1QFY15 levels however, expected subside by end-FY15 or by 1QFY16.
Management is confident of containing the GNPA at sub 4% by 4QFY15 and
~3.75% by 1QFY16 (from 4.26% in June 2014).
SMA II account pool stands at INR30b. UNBK to continue selling SMA II and NPA
assets to ARCs during the year. Bank books cash component as a part of the P&L.
Capital raising plans in place; QIP of INR13.9b
Received approvals from shareholders and RBI for a QIP of INR13.9b.
Management is not in favor to dilute below BV and would wait for comfortable
valuations. Management wants to maintain capital of 100-150bp above minimum
requirement of CAR.
Valuation and view
Over FY09-14, UNBK’s core performance weakened (earnings flat over last five
years but balance sheet size doubled) and asset quality deteriorated due to a
weak macro-economic environment, strong growth in SME, Agri segment (in a
bad economic environment) and higher exposure in consortium lending.
The new management’s key focus areas are a) to consolidate loan book (+10%
YoY), b) focus on profitability, c) focus on HR issues and d) conserve capital. Focus
remains on improving margins by reducing share of bulk business in the balance
sheet. Moderate balance sheet growth will also keep the CASA ratio in tact, which
in turn will cushion margins.
Key drivers: a) very strong presence in SME segment, especially west and central
regions of the country, b) low hanging fruits like operating leverage, fees
improvement and c) improvement in CA balances with strong SME business.
Maintain
Buy.
September 2014
77

|
10 Annual Global Investor Conference
th
Vijaya Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
Management’s focus is on de-bulking balance sheet, improve CASA ratio, containing
net slippages and improve PCR. Performance of SEBs is key for asset quality
performance as it constitutes 57% of OSRL.
Pipeline of restructuring at INR4b; target net slippage ratio at 1.5% for FY15
Currently, OSRL stands at INR53b (6.9% of loans), of which INR30b is constituted
of SEBs. Pipeline is lower at INR4b for FY15.
Trends in GNPA to improve with a) fresh additions to be ~INR12b (v/s INR21.7b in
FY14), b) cash recovery/up-gradation expected to be ~INR8b. Management
targets net slippage ratio to be at 1.5% for FY15.
Agri slippages in Andhra Pradesh, which is an area of concern, are expected to be
resolved by end-2QFY15. Focus on improving PCR from 64% in 1QFY15 to 70% by
end-FY15.
Loan growth expected to be ~17%; improve CD ratio to 68% by FY15
Retail forms 20% of the book, plan to grow its retail book with a focus on housing
and LAP. Targets loan growth of 17% in FY15.
To improve yields, bank would focus on investment grade traders and MSME.
Currently CD ratio stands at 63%, management’s focus is to reach 68% by end-
FY15.
Tier 1 at 8.1%; QIP approval of INR6b
Management plans a QIP of INR6b during the year and also to raise tier 2 bonds
worth INR5b by end-2QFY15 (government holding is currently at 74%).
Other highlights
Guidance for FY15: NIM ~2.25%; RoA ~0.75-0.80% and CASA ratio ~22-24%.
Bank aims to increase its base rate in the near term and reduce dependence on
bulk deposits (down to 9% in 1QFY15 v/s 14% in 1QFY14).
Mr Kannan current CMD of the bank will retire at the end of December 2014.
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
VJYBK IN
859.1
39.6 / 0.7
59/34
-11/1/-14
September 2014
78

|
10 Annual Global Investor Conference
th
Yes Bank
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key takeaways
With the improving economy and capital in place, management is comfortable
growing balance sheet by 20%+. Improving CASA, higher share of Retail business will
drive NIM improvement in medium term. Focus remain on best in class ROA (1.5%+)
and ROEs (20%+).
Market share gain to continue; retail growth to pick up gradually
Yes Bank to grow its loan book by 15-20% in FY15 and by 20-25% in FY16. Focus
on improving the share of retail deposits in overall deposits continue.
Traction in the SME segment is building up and growth is expected to accelerate
in this segment. This should also help the bank to build its PSL loans.
Home loans are expected to grow as the bank has attained critical size in terms of
branches. Further, it targets to grow home loans in the affordable segment in Tier
I and II cities. YES will raise affordable housing bonds to fund this segment.
Management would be opportunistic and risk return management would be the
key determinant for incremental loan growth.
NIM expansion to continue led by CASA improvement
Post savings account interest rate deregulation, YES’ CASA ratio improved from
10% in 2011 to 22% in 2014. Bank aims to increase the CASA ratio by 3-5% per
year. With a sustained improvement in the CASA ratio, bank’s management
believes the expansion in NIM will continue.
Asset quality continues to remain best in class
Asset quality continues to be healthy and corporate watch list has not changed
materially. YES has sufficient excess provisions, which should provide a cushion to
earnings, even if any asset quality hiccups emerge.
Other highlights
Average savings account balance is significantly higher than peers.
Cost to income ratio to decline to 42-43% over the next two years.
While fees from financial advisory income are likely to moderate sequentially,
healthy traction in retail and transaction banking fees would drive fee income.
Valuation and view
YES navigated well even during the toughest period of economic environment.
With economic indicators turning positive, the bank is well positioned to leverage
on the opportunity that the Indian economy presents with a) strong capitalization
(Tier I of 12.6%), b) rapid branch expansion (572 v/s 214 in FY11) and c) best-in-
class asset quality.
Fall in interest rate could further boost earnings as easing bulk deposit rate will be
significant positive from NIM and bond gains perspective (20%+ share of
corporate bonds in customer assets). Return ratios are expected to remain strong,
with RoA of 1.6%+ and RoE of 20%+ (post capital infusion). Maintain
Buy.
79
Sunesh Khanna
+91 22 3982 5521
Sunesh.Khanna@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
YES IN
414.7
630/224
8/57/98
M.Cap. (INR b)/(USD b) 252.6 / 4.2
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
Div. Payout
Valuations
P/E(X)
P/BV (X)
P/ABV (X)
Div. Yield (%)
13.0
2.2
2.2
1.3
10.3
1.9
1.9
1.7
8.0
1.6
1.6
2.2
33.5
30.6
19.5
3.1
46.9
4.7
41.4
38.1
24.4
3.1
58.9
25.5
52.5
49.8
31.4
3.1
75.8
28.7
280.8 327.7 388.1
20.7
1.6
20.3
19.4
1.7
20.3
21.2
1.7
20.3
ABV/Sh. (INR) 279.9 326.2 384.9
September 2014

|
10 Annual Global Investor Conference
th
Alembic Pharmaceuticals
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
Alembic Pharma is undergoing a phase of transformation. Specialty therapies in India
and the US generics segment are expected to drive growth and profitability for the
company over the next three years. This is likely to shift the margin profile upward
and add sustainability to profits. The current capex plan will amply prepare them for
this next phase of growth.
Spending for the future
Underlying momentum in the business remains robust across market segments.
This led the company to prepone its capex plans.
The current planned capex of INR2.5b will add new facility for Indian markets and
capacity expansion for APIs and international formulations. This will amply
prepare the company for next phase of growth.
Improving US pipeline
Given the improving quality of filings, the management is confident of introducing
certain products on “Day 1” of market formation.
Front-end in US
Alembic is working to create its own front-end in the US markets. This will aid in
realizing better gross margins in the US business, with limited increment in
operating costs.
Thus, the profitability from existing and new launches is expected to improve
significantly. Maintained guidance of six to eight launches in the US every year.
India business to outperform industry
Within India, the company is gradually moving towards specialty therapies. This
shift has been resulting in improving product mix which has superior profitability
than the legacy business.
Further, management expects their business to grow 3-4% faster than the
industry.
Current field force is 3,500 MRs.
APIs
APIs are incrementally being used for captive consumption. Hence, their
proportion to total sales is reducing.
Valuation and view
With improving business mix and strong growth momentum, Alembic is expected
to witness 30%+ earnings CAGR over the next three years. We continue to remain
bullish on ALPM business as we believe it is well positioned to capitalize on
opportunities in India and the US.
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
ALPM IN
188.5
71.8 / 1.2
419/131
7/3/134
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
NP
EPS (INR)
EPS Gro. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
24.7
8.4
17.5
3.5
18.2
6.1
12.8
2.8
14.6
4.6
10.1
2.3
21.8
4.4
3.1
16.2
30.0
48.0
38.7
42.0
27.0
5.9
4.2
22.1
36.2
65.4
39.0
43.4
32.5
7.3
5.2
27.5
24.5
87.1
36.1
41.5
September 2014
80

|
10 Annual Global Investor Conference
th
Cadila Healthcare
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
Cadila Healthcare (CDH) aims to achieve sales of INR100b by FY16. The US and India
will remain the key growth drivers; other businesses are also likely to deliver strong
growth. CDH remains confident of expanding EBITDA margin from 18% to 20%, aided
largely by growth in US sales. In the medium term, complex technology platforms like
transdermals are likely to play an important role in driving the US business while CDH
moves strongly into development of biosimilars and vaccines.
Aims at INR100b sales by FY16, investing in complex generics for growth beyond
FY16
CDH aims to achieve sales of INR100b in FY16. US and India will continue to be the
key growth drivers while other businesses should also deliver strong growth.
Growth drivers over the longer run will be biosimilars and vaccines, apart from
launch of complex generics in the US. CDH has a pipeline of 17 biosimilars and 10
vaccines under development. CDH expects critical technology platforms like
transdermals to play an important role in driving the US business over the next
few years.
US generics hold the key for operating margin revival
CDH expects the US to continue growing at 20-25% over the next few years. This
will be achieved through its own products and AG launches. The management
indicated that it would not discontinue the AG business in case the pace of CDH’s
own ANDA approval picks up. Besides, CDH has launched 6-7 products YTD
CY2014 and expects to launch 10-15 products during the next nine months,
subject to US FDA’s approval.
Nesher is also expected to launch one more product this year (4QFY15). The
company filed 26 ANDAs in 1Q. There are 249 ANDAs filed cumulatively till date of
which 91 are approved and 64 are being marketed actively.
The management is confident of expanding EBITDA margin from 18% to 20%,
aided by growth in US sales
Valuation and view
CDH has undergone a consolidation phase over the last three years. We believe
FY15 is likely to be a year of turnaround for the company.
CDH has made investments in the right areas and should unlock value from them
over the next few years. Investor interest will be particularly on the US business,
which is gaining momentum. With few big-ticket launches seen over the next two
years, the US business is likely to lead earnings growth momentum.
We see a strong 20% earnings CAGR over FY14-16, which does not adequately
reflect in current valuations.
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
CDH IN
204.7
1,285/635
4/-9/43
M.Cap. (INR b)/(USD b) 246.7 / 4.1
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Net Profit
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
24.1
5.9
17.1
1.0
20.5
4.8
12.8
1.4
17.6
3.9
10.7
1.6
85.3 101.5 116.6
15.5
10.2
49.9
24.5
26.9
21.7
29.2
20.2
12.0
58.8
17.7
30.5
26.3
29.3
24.1
14.0
68.3
16.2
28.3
27.8
29.3
203.0 251.5 306.8
September 2014
81

|
10 Annual Global Investor Conference
th
Dr Reddy’s Laboratories
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
Dr Reddy’s (DRRD) is undergoing a period of short term investment phase in R&D and
infrastructure for profitable growth in the longer run. For FY15, capex spend is seen at
INR10b, while R&D spend is seen at 10-11% of sales. The near term will be driven by
stronger execution in the US and new launches in Russia and India, while the long
term drivers include portfolio of complex products like biologics and proprietary
products to power growth beyond FY20.
Undergoing an investment phase in the short term for profitable growth
opportunities in the future
DRRD is undergoing a period of short term investment phase in R&D and
infrastructure for profitable growth in the longer run. For FY15, capex spend is
seen at INR10b, while R&D spend is seen at 10-11% of sales.
Focus is on filing complex injectables and topical in the US. Company is investing
in biologics (USD150m) and proprietary products (USD300m, developing 15+
products) to power growth beyond FY20.
It aims to create an reliable and flexible supply chain, capable of meeting demand
surges and ensuring on-the-shelf medicine availability always.
US generics delivered strong growth but few key products may see competition
soon
US generics reported a strong 42% growth to USD275m YoY in 1QFY15. Growth
was driven by increasing market share in gGeodon and gToprol XL. Competition
remains limited in the complex injections launched in FY14, although DRRD
cautioned of gradual price erosion as competition increases in FY15.
Although channel consolidation is impacting pricing and profitability, the US
market holds a promising future outlook. Management expects mid-teens growth
rate over the medium-to-long term.
Biosimilars - a long term opportunity, piggybacking on India experience
Biosimilars account for ~10% of DRRD India sales. The key product, Rituximab, is
gaining strong traction.
Tie-up with Merck Serono for biosimilars in the US and Europe. Growth driver
beyond 2016.
Biosimilars opportunity in regulated markets collectively pegged at USD20-30b.
Valuation and view
Traction in the US generics and sustained growth momentum in international
branded formulations segment will be key growth drivers for DRRD, going
forward.
We build core EPS growth of ~10% over FY14-16E, largely due to a weak pipeline
in the US in the near term and ongoing investment phase.
Delay in incremental competition for key limited competition products launched
in FY14 may lead to a positive surprise to our estimates.
82
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
DRRD IN
170.3
3007/2161
3/-20/-12
M.Cap. (INR b)/(USD b) 510.3 / 8.4
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Net Profit
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
22.3
4.6
14.5
0.7
20.2
3.9
12.9
0.7
17.4
3.3
10.9
0.9
146.1 163.7 184.7
35.1
22.9
8.1
20.8
18.6
17.6
38.8
25.3
10.4
19.2
18.0
17.6
44.7
29.3
15.9
18.7
18.2
17.6
Adj. EPS (INR) 134.5 148.5 172.2
647.3 772.2 918.3
September 2014

|
10 Annual Global Investor Conference
th
Glenmark Pharmaceuticals
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
Glenmark Pharma is about to realize the potential of its investments in the Latin
American as well as European markets. With increasing scale, these divisions are likely
to benefit from operating leverage. These markets, along with India, will drive growth
over the next 2-3 years. In the meantime, Glenmark is developing its portfolio of niche
products for the US market, which will drive growth in the longer run. Company
remains comfortable with its FY15 sales growth guidance of 16-18%; with core EBITDA
expected to be in the range of INR15-15.2b.
Latin America and Europe benefiting from operating leverage
Unlike its peers, the company entered the Latin American and European markets
with a strategy focusing on select therapies.
The front-ended investments made to establish a strong marketing presence have
so far impacted profitability in these segments.
However, with increasing scale, the management expects operating margins to
reach closer to consolidated level from close to breakeven level, currently.
India business will continue to outperform the industry
Glenmark is one of the least impacted companies by the price control
implemented in India. This is largely owing to its limited presence in
therapies/products that are considered essential.
As such, the company expects this division to grow 18-20% in FY15 and is likely to
grow ahead of the industry over the next few years.
Developing a niche portfolio for the US
Glenmark currently has ~72 ANDAs pending US FDA approval. It has already
launched 12-15 oral contraceptives (OCs) in the US over the last few years.
The company is developing complex injectables and targets to file 4-5 ANDAs in
this space in FY15. It is also working on immunosuppressant, dermatology,
oncology and oral contraceptives.
This niche portfolio is expected to drive growth from FY16 onwards.
NCE/NBE development
There are 3 NCEs and 3 NBEs currently under development. Important candidates
to monitor from news flow perspective are GRC17536, GBR830 and GBR500.
Valuation and view
FY15 is likely to be a slow year for Glenmark mainly due to mid-teen growth in US.
We do not expect any debt reduction in FY15, which could have been a potential
trigger for a re-rating of the stock.
With uptick in US business in FY16, Glenmark is slated to witness 20% earnings
CAGR over FY14-16. However, current valuations adequately reflect this growth
momentum, tempering our bullishness on the stock.
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
GNP IN
271.2
198 / 3.3
775/489
2/0/-2
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Net Profit
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
25.3
5.3
14.5
0.4
20.5
4.2
12.3
0.4
17.2
3.4
9.8
0.4
68.8
15.5
7.8
28.8
16.1
20.9
19.3
11.2
80.6
18.2
9.6
35.5
23.4
20.7
20.5
9.3
95.0
22.4
11.5
42.4
19.4
19.5
22.2
7.1
137.7 171.8 217.1
September 2014
83

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10 Annual Global Investor Conference
th
IPCA Laboratories
Covering analyst
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
IPCA Labs is heading for a subdued FY15 performance due to discontinuation of US
operations triggered by the recent USFDA inspection. However, the management is
confident of timely resolution of the issue. They are also planning to resume US
supplies aided by certain alternative manufacturing arrangements. Hence, the current
operational bottleneck is a temporary disruption in the long term growth story.
Confident of timely resolution
IPCA Labs remains confident of resolving the FDA issues by end-FY15, which is six
to eight months from the date of issuance of the observation on the Ratlam unit.
They have already started the remediation measures, as suspected by
consultants.
•
Confident of regaining lost ground
IPCA has filed a CBE-30 certificate with the USFDA, allowing it to shift its API
source for important products to third party manufacturers.
Supplies for these products will likely resume by November 2014 and will enable
the company to recoup majority of impacted sales in the US over a period of time.
Management believes that regaining the lost market share in the US would not be
difficult as the competitive intensity in these products is less and no player can
match IPCA’s scale.
Marginal reduction in FY15 guidance
Management marginally lowered its revenue guidance to 11% (12% guided
earlier) and EBITDA margin guidance to 23-23.5% (24% guided earlier).
Growth in FY15 will be driven by India (guided 16-17%) and branded export
formulations business (guided 25-30%).
They reiterated the long term revenue guidance of INR100b in the next five years.
No speed bumps so far in tender business
Business in the institutional tender segment is as per expectation. So far,
management has not seen any major financial impact for itself from the change in
procurement policy of the AMFM program.
Recent decline in raw material prices will also aid to absorb any potential decline
in contract prices.
IPCA will file for WHO pre-qualification of Artemether-Lumefantrine injectable
version in FY15 and expects it to be launched by 3QFY16. The product is expected
to generate USD50m in annual revenue for the company.
•
Valuation and view
IPCA has had a great execution track record. In our view, it is undergoing a
temporary disruption in its growth story. We believe the recent price correction
factors the worst, presenting a favorable risk-reward situation.
84
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
IPCA IN
126.2
96.5 / 1.6
907/643
-1/-40/-24
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
Net Profit
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
Div. Yield (%)
Sales
EBITDA
Div. Yield (%)
19.3
4.0
0.8
35.8
8.1
0.8
16.2
3.3
10.4
0.9
41.8
9.7
0.9
12.5
2.7
8.1
1.2
50.9
12.3
1.2
35.8
8.1
5.0
4.5
23.0
26.2
15.0
41.8
9.7
6.0
47.2
19.2
22.6
26.4
15.0
50.9
12.3
7.7
61.1
29.5
24.0
28.5
15.0
Adj. EPS (INR) 39.6
188.9 229.0 280.9
EV/EBITDA (x) 12.3
September 2014

|
10 Annual Global Investor Conference
th
Sun Pharmaceuticals
Covering Analyst(s):
Alok Dalal
+91 22 3982 5584
Alok.Dalal@MotilalOswal.com
Key takeaways
Sun Pharma’s (SUNP) performance in important geographies of the US and India
continues to remain strong. Price increases at Taro and limited competition launches
in US continue to drive growth momentum and margin expansion. SUNP remains
comfortable with its FY15 guidance. Focus will be on the closure of Ranbaxy
acquisition and synergy benefits of USD250m by the third year of closure.
SUNP maintains its FY15 sales growth guidance of 13-15% in constant currency
Company remains comfortable with its FY15 sales growth guidance of 13-15%; it
achieved a constant currency sales growth of 7% in 1QFY15.
SUNP maintained that some of the price increases for products at Taro will not be
sustainable.
Small M&As, like the acquisition of Pharmalucence made in July 2014, will
continue to be explored by the company.
US sales continue its growth momentum despite moderation in growth from Taro
US sales for 1QFY15 grew 14% YoY due to moderation in growth from Taro.
SUNP’s recent acquisitions like Dusa Pharma and URL Pharma are doing better
than expectations, while its own pipeline in the US is showing a meaningful
growth.
SUNP continues to maintain that some of the price increases at Taro may not be
sustainable in the future.
Overall, 140 ANDAs are pending approval. SUNP filed 14 ANDAs in 1QFY15.
Ranbaxy acquisition process on track, SUNP expects closure by Dec 2014
Ranbaxy’s acquisition process is on track. So far approvals from the NSE, BSE and
anti-competitive regulatory bodies of various countries, except the US and India,
have been received. The companies are now seeking approvals from their
respective shareholders, Competition Commission of India (CCI), Federal Trade
Commission (FTC) and Indian courts.
SUNP reiterated its confidence in achieving USD250m in synergies benefit at
EBITDA level, aided by both growth and operational efficiency.
Valuation and view
SUNP’s US sales in FY15 will continue to be driven by recent price increase in
Taro, limited competition products like gDoxil and mid-teens growth in its own
pipeline.
We however expect a slow FY15 for SUNP’s base business, which we believe is
expected to bounce back to mid-teens growth in FY16. But prospects of
consolidating Ranbaxy’s business and potential turnaround continue to remain
appealing. Maintain
Buy.
Hardick Bora
+91 22 3982 5423
Hardick.Bora@MotilalOswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
SUNP IN
2,071.2
877/500
6/12/21
M.Cap. (INR b)/(USD b) 1,788/29.5
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Rep. PAT
Rep.EPS (INR)
Adj. PAT
Core EPS
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
32.9
7.4
27.7
5.9
24.0
4.8
175.8 199.4 224.9
77.5
61.7
29.8
54.3
26.2
11.9
25.3
33.0
12.4
86.7
70.6
34.1
64.5
31.1
18.6
23.7
30.9
12.5
94.0
79.5
38.4
74.5
36.0
15.6
22.2
28.4
14.0
116.5 145.9 178.4
September 2014
85

|
10 Annual Global Investor Conference
th
DB Corp
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key takeaways
Ad growth to recover in 2H; volume uptick would be key
Ad environment for the upcoming festive season is looking optimistic. While the
entire 1QFY15 print ad growth was pricing led, volume growth is expected to return in
the festive season given positive economic sentiments. Newsprint cost per ton is
expected to decline over next 1-2 quarters, providing tailwind to margins.
Ad recovery in sight
While July month was impacted by uncertainties surrounded by union budget, ad
growth seems to be returning back to double digits.
Indications for upcoming festive season ad spends appear to be optimistic with
volume growth likely to return. This should drive a high single-digit ad growth
performance in 2QFY14 and double-digit growth in 2HFY14.
DB Corp had already taken a double digit ad rate hike for current fiscal and hence
volume recovery will be accompanied by strong operating leverage for the
company.
Subscription revenue growth to remain strong
Subscription revenue has been growing at 14-15% YoY during the last few
quarters
Subscription growth is likely to remain strong at current levels given the price
hikes undertaken
Newsprint prices – favorable base in 2HFY14
Newsprint prices had declined ~2% QoQ in 1QFY15 after increasing for four
consecutive quarters
Newsprint prices are expected to correct further by 2-3% in near-term, implying
YoY decline in 2HFY15 given high base.
Valuation and View
The stock trades at P/E of 17.4x FY15 and 14.7x FY16. Maintain
Buy.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
DBCL IN
183.6
61.1 / 1
345/211
-2/-16/-5
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
21.10 23.97 26.91
EBITDA
Adj. NP
Adj. EPS (INR)
Adj.EPSGr.(%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA
(x)
6.10
3.52
19.2
20.6
71.5
28.6
24.4
53.0
17.4
4.7
9.8
2.5
7.00
4.16
22.7
18.3
82.2
29.5
25.6
53.0
14.7
4.1
8.3
3.0
7.91
4.84
26.4
16.2
94.6
29.8
26.3
53.0
12.6
3.5
7.0
3.5
Div. Yield (%)
September 2014
86

|
10 Annual Global Investor Conference
th
PVR
Covering Analyst(s):
Niket Shah
+91 22 3982 5426
Niket.Shah@MotilalOswal.com
Key takeaways
PVR (PVRL) will maintain its leadership position in the film exhibition business, with
421 screens in 97 properties across 41 cities in India. It is among the top 10 multiplex
chains across the globe in terms of footfalls and expansion of screens in Tier 2 and 3
cities, which will drive footfall growth. We believe PVRL is a strong structural play in
India which is highly underpenetrated (8 screens/m population) and where movie
watching is the prime entertainment option. PVRL is expected to be the biggest
beneficiary of the shift from single screen to multiplexes in India.
Strong pipeline of films and robust expansion to drive growth
PVRL opened 23 screens during 1QFY15 and expects to open 65-70 screens in
FY15.
Management expects the content to be significantly strong for 3QFY15, compared
to 3QFY14, which will lead to strong revenue growth.
Mature screens (>2 years old) form 2/3rd of total number of screens, while 1/3
screens are less than 2 years of age. Refurbishment of a screen happens in 6.5-7
years and refurbishment capex amount to 1.5-2% of revenue annually.
GST is expected to be a major game changer for the industry. Currently, the
blended entertainment tax rate is 24-25%, which is expected to decline to 17-
18%, post the implementation of GST. Also, company will be able to take the
service tax credit to adjust with the entertainment tax as per the guidelines issued
under GST.
On Inox-Satyam deal, management commented that the deal was priced higher
(~INR60m/screen), compared to organic growth benchmark of INR25m/screen.
Also, management believes that most of Satyam screens are present in North
where Inox already has a presence and it did not make geographical sense to
expand in the same region.
Management believes that the expansion in East has slowed down due to the
political situation and weak retail infrastructure. However, it is open for organic
expansion in the Eastern region.
Key performance matrices look strong
Management expects ATP growth of 5-6% and advertisement growth of ~18-19%
for FY15.
PVRL has changed the look and feel of the “candy bar” and has done addition of
new offerings at better pricing in the menu bar. This will lead to SPH growth of
15%, going forward.
Management indicated that innovation in the mobile app also assisted in the
growth of SPH.
Atul Mehra
+91 22 3982 5417
Atul.Mehra@MotilalOswal.com
Sagar Shah
+91 22 3312 4958
Sagark@MotilalOswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
PVRL IN
41.2
28 / 0.5
735/380
5/4/29
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
NP
EPS (INR)
EPS Gr (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div Yield (%)
42.3
6.4
12.9
0.6
24.4
5.2
9.4
0.8
16.2
4.1
7.0
0.8
16.1
2.6
0.7
16.9
81.2
16.2
15.0
17.2
20.3
3.5
1.2
29.3
73.3
23.7
22.3
13.9
24.2
4.5
1.8
44.0
50.3
28.2
27.7
9.2
111.1 136.3 176.3
September 2014
87

|
10 Annual Global Investor Conference
th
SITI Cable Networks
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key takeaways
Expected delay in phase III/IV digitization to arrest digitization momentum
The government is likely to come up with a notification extending the deadline for
implementing Digital Addressable Systems (DAS) in phase III/IV to December 2015.
This would require MSOs like SITI Cable (SCNL) to realign their targets for digital
subscribers.
Delay in phase III/IV to arrest near-term momentum
The government is likely to extend the deadline for phase III/IV digitization from
September/December 2014 to December 2015.
This will arrest the digitization momentum, given that the new deadline is 16
months away and gives LCOs a window to continue in the current analog
structure, with low declaration levels.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
SCNL IN
614.2
15.9 / 0.3
30/15
-17/10/23
Financial Snapshot (INR Billion)
Y/E March
2012 2013 2014
Net Sales
3.4
4.7
7.0
EBITDA
EBITDA(ex-act
Adj. NP
Adj. EPS (INR)
Adj. EPS Gr.
(%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
EV/EBITDA
(EV/ recurring EBITDA
)*
EV/Sub (INR)*
( )*
* Based on attributable EBITDA
and subs post 17% minority stake
-14.4
23.8
84.5
2,688
-0.3
-0.3
-0.9
-2.0
-1.6
NA
-50.2
0.7
-0.5
-0.6
-1.4
NA
-1.2
NA
-1.1
1.1
0.3
-0.9
-1.8
NA
2.7
NA
-0.7
Focus on voluntary digitization
SCNL currently has a subscriber universe of 10m and digital subscriber base of
4.3m, of which 3.7m are in the phase I/II markets.
Given expected extension of the digitization deadline, focus is likely to shift to
voluntary digitization, which also entails lower subsidy outgo.
The company already has inventory of 800k boxes and is likely to continue with
the current run-rate of adding ~0.3m digital subscribers per quarter in the
absence of near-term digitization push.
Gross billing implemented in Delhi, Kolkata, and several phase II towns
Gross billing has been implemented in Delhi/Kolkata and also in some phase II
towns in Central India.
Most of SCNL’s phase II cities except Hyderabad are likely to come under gross
billing in FY15.
Almost 60% of the subscriber base is on entry-level pack, while the balance 20%
each are on mid and high packs.
September 2014
88

|
10 Annual Global Investor Conference
th
Zee Entertainment
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key takeaways
Ad environment improving; subscription lacks near-term triggers
The ad environment is exhibiting signs of optimism, with industry growth expected to
be 13-14% in current year. With phase I/II cable monetization already at ~85% and
expected delay in phase III/IV digitization, there are no near-term triggers for
domestic subscription. Sports loss guidance for FY15 remains unchanged at ~INR1b
while non-sports margins could be volatile based on new channel initiatives.
Ad environment getting better
TV ad revenue for the industry is likely to grow 13-14% in the current year. Zee
has been outperforming industry growth, led by 300bp increase in network
viewership share from ~12% to ~15% over the past 2.5 years.
The FMCG sector got crowded out in 1QFY15 due to election advertising, etc, and
could see better spends due to pent-up demand in the balance year.
Auto and e-commerce sectors have been exhibiting good growth. Sectors like BFSI
and durables are yet to pick up but are likely to perform better, going forward,
given expected economic recovery.
No near-term triggers in subscription revenue
Phase I/II cable base is now fairly well-monetized, with per subscriber yield
estimated at ~85% versus DTH.
Expected extension of phase III/IV digitization deadline will push digitization-led
monetization from these geographies to FY17.
International subscription is likely to remain largely stable, given high penetration
and market share for Zee.
Sports loss guidance of INR1b maintained
Sports EBITDA loss guidance maintained at INR1b despite an EBITDA profit
reported in 1QFY15. Key properties recently broadcasted include Commonwealth
Games and US Open.
Zee has renewed rights for UEFA and WWE, and has won rights for upcoming two
series from Pakistan Cricket Board.
Non-sports margin to be impacted by new channel launches
Original programming hours on flagship Zee TV currently stand at 30 hours.
Zee has couple of big channel launches in the pipeline, which might have a near-
term impact of 400-500bp on the non-sports margins.
We expect these launches to take place in FY16.
Valuation and view
The stock trades at 27.9x FY15E and 20.6x FY16E EPS. Maintain
Neutral.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Z IN
960.4
272 / 4.5
311/214
-8/-23/-22
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
47.2 56.8 66.7
Net Sales
EBITDA
Adj. NP
Adj. EPS (INR)
Adj.EPSGr.(%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
27.9
8.4
18.2
0.7
20.6
6.5
13.3
0.7
16.2
4.9
10.3
0.7
13.9
9.8
10.2
9.8
34.9
32.2
29.4
19.7
18.6
13.3
13.9
35.8
45.2
34.6
34.4
14.5
23.3
16.9
17.6
26.8
59.1
33.7
36.3
11.4
September 2014
89

|
10 Annual Global Investor Conference
th
Hindalco
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key takeaways
Hindalco (HNDL) is likely to benefit from strong production growth in primary metal,
alumina, increased share of value added product in India and higher share of high
margin auto volumes in Novelis’ product mix. Balance sheet is likely to get
deleveraged with growth in EBITDA (15% CAGR).
Primary metal and alumina production ramping up rapidly
Primary aluminum production is expected to ramp up with the help of Mahan and
Aditya smelter. 180pots (50%) at Mahan smelter and 30 pots (8%) at Aditya are
now up and running.
Mahan smelter is expected to produce 240kt and 320kt metal in FY15 and FY16
respectively. Aditya smelter is expected to produce 80kt and 240kt meta in FY15
and FY16 respectively. Hirakud too is now ramping up to 200kt rate.
Utkal alumina is expected to produce 1mt and 1.5mt alumina in FY15 and FY16
respectively
Product mix improvement will drive up margins
Share of value added products in the mix has increased from 40% to 47%. Rexam
and Can-pack have set up can manufacturing facilities in India. Hirakud FRP unit is
likely to leverage its recently relocated facilities from Rogerstone, UK. Hindalco
expects 5-6% demand growth in Indian packing industry.
Novelis’ margins are likely to driven by rapid volume growth in high margin auto
products. Volumes will increase 20%, share of auto segment in product mix will
grow from 9% in FY14 to 20% on larger base by FY17.
Balance sheet de-leverage ahead
Net debt to EBITDA ratio is expected to decline. There are no large debt
repayment commitments in near to medium term. Only 25% of total debt is due
for repayment in next 5 years.
Depreciation has reduced on implementation of Companies Act 2013 because the
expected life of assets has increased by 15years to 40years. Full interest and
depreciation will hit P&L in 1QFY16 as Mahan and Aditya smelters get fully
operational by that time.
EBITDA CAGR of 15% over FY14-17; Maintain BUY
We value the stock at INR212/share based on FY16 SOTP. We expect Novelis’
EBITDA to post a CAGR of 8% to USD1.12b over FY14-17E. HNDL has now placed
all of its projects (Mahan, Aditya and Utkal) in operations. The production ramp-
up and strong TcRc will drive earnings in India.
We expect consolidated EBITDA to post 15% CAGR over FY14-17E to INR127b. We
are expecting LME to average at USD2000/t. We are not factoring benefits from
Mahan coal blocks. Stock trades at FY16E EV/EBITDA of 7.1x. Maintain Buy.
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HNDL IN
2,064.6
199/97
-11/24/17
M.Cap. (INR b)/(USD b) 360.2 / 5.9
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
995.9 1,097.11,146.0
EBITDA
NP
EPS Gr(%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV
Div. Yield (%)
13.9
1.4
0.8
12.6
1.3
7.1
0.8
9.9
1.1
6.4
0.8
107.2 120.7 127.0
25.9
0.7
10.6
6.0
13.1
28.6
13.8
10.3
10.6
6.8
11.8
36.4
17.7
27.7
12.2
7.4
9.3
Adj. EPS (INR) 12.5
124.0 136.2 152.2
EV/EBITDA (x) 8.1
September 2014
90

|
10 Annual Global Investor Conference
th
Jindal Steel and Power
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key takeaways
JSPL remains well positioned to benefit from capacity expansion in both steel and
power. While Angul Phase 1A is largely complete, civil work for Phase 1B has
commenced taking its domestic steel capacity to 8.2mtpa. In power while all the units
are close to completion, profitability improvement will be driven by captive steel
capacity completion, better grid evacuation and improving economic activity.
Steel: Capacity optimization at Raigarh; Angul Phase 1A done, 1B commenced
Raigarh steel capacity is expanded to 3.2mtpa (vs. 3.0mtpa) through optimization
of old blast furnace. Increase in PCI rate (at 150-180kg/thm) drove fuel
consumption savings at Raigarh in terms of lower coke requirement
At Angul, 1.6mtpa DRI based steel-making capacity commenced under Phase 1A.
Coal gasification plant running at 40% utilization, producing gas at a cost of
US$13/mmbtu. Potential to improve output at DRI through hot DRI transfer to
SMS which would increase output to 2.0-2.5mtpa
Plate mill at Angul operating at a rate of 15kt/month (capacity 100kt/month).
Billet caster of 1mtpa is guided to be complete in the 3-4months. This could help
improve utilizations at Patratu to 90-95% (currently 60%).
With Angul Phase 1A largely done, civil activity for Phase 1B has commenced. This
would increase the steel making capacity at Angul to 5mtpa with the addition of
3.8mtpa BoF facility. Completion of Phase 1B is targeted in 18-24months.
Power: Improving grid evacuation; PPA availability likely to improve
st
Tamnar-2 1 unit is now generating at 480MW (vs. 150MW in 1QFY15) driven by
improvement in grid evacuation and use of imported coal. Imported coal fuel cost
at Rs1.75-2/unit sustainable.
Upside potential from recent increase in spot power rates - around Rs 5-6/unit
At Angul, 2 of the 6 units of 135MW CPP operational. Generation to improve with
completion of Phase 1B. Captive requirement to be met by 3 units.
Steel EBITDA margin guided 30%+/capex to remain high
Steel EBITDA margin guidance of more than 30% on back of fuel consumption
optimization and backward integration
Capex is guided to remain high at Rs60bn/Rs70bn in FY16E/FY17E on account of
Angul Phase 1B.
Capacity expansion to drive profitability; maintain BUY
We expect JSP’s consolidated EBITDA to grow at CAGR of 14% over FY14-17
driven primarily by capacity addition in both steel & Power. Iron ore availability in
Odisha, e-auction coal pricing, bottlenecks in power evacuation, availability of
coal for CPPs, coal gasification, and Tamnar-2 are key variables which need to be
monitored.
We value the stock at INR399/share based on FY16 SOTP. However, INR159/share
is at risk if coal blocks get de-allocated. Maintain Buy.
91
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
JSP IN
914.9
350/217
-16/-30/-38
M.Cap. (INR b)/(USD b) 219.5 / 3.6
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr(%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV
EV/EBITDA (x)
Div. Yield (%)
9.6
0.9
7.8
0.7
7.5
0.8
6.9
0.7
6.9
0.7
6.5
0.7
240.1 289.8 327.0
76.1
21.8
23.8
14.1
9.2
7.9
7.9
88.8
28.0
30.5
28.2
10.8
9.0
6.1
96.2
30.5
33.3
8.9
10.6
9.6
5.6
269.1 297.3 328.3
August 25 – 29, 2014

|
10 Annual Global Investor Conference
th
JSW Steel
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key takeaways
JSW Steel (JSTL) has been able to deliver volume growth and improve margins despite
challenges. Margins are likely to be driven by product mix improvement and
improvement in operating efficiencies. Low cost expansions will drive volume growth.
Volumes to increase 6% in FY15; capacity to increase 26% by FY16
JSTL is targeting crude steel production of 12.9mt and saleable steel production of
12.4mt in FY15. Despite challenges in iron ore supply, the sales volumes are
expected to increase 6%.
Steel capacity will increase from 14.3mt to 18mt at low specific capex by end of
FY16. This will give further flip to volumes over next 2-3 years.
Indian steel demand is expected to improve in 2HFY15.
Iron ore supply to improve in Karnataka
Iron ore production in Karnataka is still running at 19mtpa. JSTL has been able to
source nearly 10.5mt iron ore within state. Balance requirement is met through
imports and other states.
Higher cost of imports is unlikely to hit margins because of superior grade and
lower impurities.
Supreme Court (SC) may allow 2-3 mines to ramp up production so that total iron
ore production rate will rise to 25mtpa in Karnataka.
Lowest OpEx, CapEx, proximity to markets, ports, and raw material drive margins
JSTL has lowest conversion cost at USD115 because of technological advantage
and economy of scale.
Proximity to iron ore mines in Karnataka and ports in Dolvi, markets in south and
west of India drive its margins.
Cost of setting up project is lower due to in-house project team.
Product mix to improve
2.3mtpa PLTCM line & CAPL at Vijaynagar and expansion of downstream at Vasind
& Tarapore are helping to improve the product mix.
Share of value added products will increase to 50%. Value added products will
bring additional contribution of INR2000/t.
Well positioned with leadership position; Maintain BUY
We believe JSTL is well positioned with market leadership in flat products, timely
investment in value addition and operating efficiencies. It is the strongest
contender for closed “C” category iron ore mines in Karnataka whenever they
come for sale.
Stock trades at EV/EBITDA of 6.4x. We value the stock at INR1647 based on SOTP,
25% upside. Maintain Buy.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
JSTL IN
241.7
319 / 5.3
1,365/525
6/21/94
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
EPS Gr(%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV
EV/EBITDA (x)
Div. Yield (%)
9.4
1.3
6.6
0.8
9.6
1.1
6.4
0.8
8.2
1.0
5.7
0.9
570.9 602.4 644.4
111.4 112.4 122.6
33.8
306.4
14.4
11.8
9.1
33.3
-1.4
12.6
11.2
9.2
39.0
17.0
13.1
11.8
8.6
Adj. EPS (INR) 139.7 137.8 161.2
1,029 1,153 1,300
August 25 – 29, 2014
92

|
10 Annual Global Investor Conference
th
Sesa Sterlite
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key takeaways
While near term volume guidance in Iron ore, zinc and oil and gas remains muted,
long term outlook remains bullish. SSLT would a key beneficiary of improving policy
clarity over Iron ore mining in Goa, which we expect likely over the near term, and
Karnataka operations gaining momentum. Oil & gas, which contributed more than
50% of its FY14 EBITDA, is likely to see good volume expansion over the medium term
(7-10% volume over CAGR over FY14-17E).
Zinc-Lead-Silver:
Domestic mined metal production in FY15 is guided to be only marginally higher
than that in FY14 (880 kt)
Rampura Agucha (RA) and SK shaft mines development is progressing well with
RA transitioning from open pit to underground mining. Domestic Zinc production
capacity will increase to 1.2mtpa post completion of development
Iron Ore:
Karnataka iron ore production is excepted to ramp-up to 2.29mt annual capacity
by 2HFY15 (was 0.01mt in 1QFY15) as e-auction activity picks up
Goa iron ore production is likely to resume in 2HFY15 as the state government
formulates its mining policy and after it receives the necessary approvals
Copper:
Post the planned maintenance in 1Q, the smelter has resumed operations running
at 90% utilization. Spot Tc/Rc rate is expected to improve with the Indonesia
government resuming exports of copper concentrates.
Aluminum:
Production cost at Korba-1 is likely to remain high due to tapering coal linkage
and decline in e-auction coal volumes resulting in reliance on imports. Korba-2
remains on track for full ramp-up in FY15 while Jharsuguda-2 is likely to be
partially commissioned in FY15.
Power:
PLFs at Jharsuguda are likely to remain low amid coal availability and transmission
constraints. The plant was operating at less than 25% utilization in Aug 2014.
Three units at Talwandi Sabo (660MW each) are likely to be commissioned by
FY15 end with reliability runs of first 660MW completed in 2Q
Recovery in base metals prices remains key catalyst; maintain BUY
We believe that SSLT has the tailwind of strong price outlook for base metal
business (zinc, lead, aluminum and copper TcRc) over next few years. Power
business too is expected to start improving towards end-FY15 as the evacuation
facilities from oversupplied W3 regions get de-bottlenecked.
We value the stock at INR320/share based on SOTP. Maintain Buy.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
SSLT IN
2,964.7
823 / 13.6
318/168
-8/25/4
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr(%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV
EV/EBITDA (x)
Div. Yield (%)
basis
11.9
1.0
6.9
1.2
11.6
1.0
6.3
1.6
14.6
0.9
5.9
2.0
771.2 866.8 901.3
183.6 194.9 192.6
69.8
23.5
-7.6
9.2
11.3
17.4
71.4
24.1
56.9
19.2
40.2 -18.5
8.7
11.0
21.8
6.5
10.3
33.5
143.2 170.8 193.1
Note: Sesa-Sterlite merged entity
September 2014
93

|
10 Annual Global Investor Conference
th
BPCL
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key takeaways
BPCL is at its strongest position in the last decade led by (a) expected diesel de-
regulation, (b) comfortable balance sheet, (c) well-diversified capital employment and
(d) on-track core capex projects to boost profitability. To watchout for Mozambique
E&P project Final Investment Decision (FID).
Confident to compete in deregulated markets
Post the last deregulated era, BPCL now has 12,500 retail outlets, of which 3,500
are automated, and the management is confident about BPCL’s preparedness for
competition from private players in auto-fuel retail.
Current diesel marketing margins are ~INR1.5/ltr (margins after costs at INR0.7-
0.8/ltr) which were fixed long back in 2006.
Core capex to boost profitability
Kochi expansion expected to commission in May-2016. Management indicated
that BPCL is interested to expand into specialty petchem (and not commodity
petchem products).
Planned capex for FY15/16 stands at INR85-100b per year, Kochi expansion
accounting for the most.
Positive newflow from Mozambique continues
Mozambique's parliament authorized the government to create a special regime
for the Liquefied Natural Gas (LNG) processing chain in Rovuma Basin where
Anadarko and ENI are operating.
BPCL JV partners have drilled 31 wells at Mozambique of which 9 were discoveries
and 17 appraisal wells.
While, development of a 2 train 5mmtpa each LNG plant is under progress,
planning for LNG Park of 10 trains is on-going. Also, operators of Area-1 and Area-
4 are working towards agreement for co-ordinated development of common
reservoirs. First gas is expected in 2018-19.
BPCL’s 100% subsidiary BPRL’s acreage is diversified into 19 blocks across 6
countries. Of the total acreages of 24,700sqkm, 88% are offshore and 76% are
abroad. BPRL’s acreage consists of total 18 discoveries. Till date BPRL has invested
USD1.3b (USD261m in FY14 v/s USD345m in FY13), with 5-yr outlay of USD2.5b
(till 2015-16).
Valuation and view
Our positive stance is led by comfort from E&P value, net D/E of 0.8, RoE moving
up to 22% and strong earnings growth led by lower interest and potentially higher
marketing margin.
The stock trades at 14.5x FY16E EPS of INR48.3 and 1.1x FY16E BV (adjusted for
investments). BPCL is our top pick among OMCs for its E&P potential. Buy.
Nitish Rathi
+91 22 3982 5558
Nitish.Rathi@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
BPCL IN
723.1
508 / 8.4
722/265
16/55/110
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout* (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
16.1
2.4
10.9
2.0
14.5
2.2
9.8
2.0
12.3
1.9
8.6
2.3
2,653 2,761 2,701
68.7
31.5
43.5
-19.5
294
15.6
11.8
35.2
75.8
35.0
48.3
11.1
326
15.6
12.6
33.9
87.3
41.1
56.8
17.5
364
16.5
13.9
33.0
September 2014
94

|
10 Annual Global Investor Conference
th
Cairn India
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key takeaways
Cairn India is on track in its exploration and development program at Rajasthan and
other blocks. With 10bboe of in-place resource potential at Rajasthan, management
expects 7-10% production CAGR (incl. gas) in the next 3 years. Management expects
largely smooth Rajasthan PSC extension.
Rajasthan exploration on track
Of the planned gross capex of USD3b in FY15-17 period, Cairn will spend ~16%
purely on exploration in Rajasthan and other blocks.
Current exploration program targets 3bboe of un-risked resource prospects and
also it targets to achieve 3 year reserve replacement of 150% (subject to PSC
extension).
Of the 24 exploratory wells drilled in the current exploration phase, Cairn has
reported 8 discoveries in Rajasthan.
Rajasthan IOR/EOR by 4QFY15; Production ramp-up in the medium term
84% of the planned gross USD3b capex will be towards development and 81% of
it will be spent in FY15 and FY16.
MBA EOR polymer injection will commence in 4QFY15 (to drill ~100 EOR wells)
and despite likely flat production in FY15, Cairn expects to achieve 3 years
production CAGR of 7-10%.
To develop gas discoveries; potential of 3-4mmscmd plateau
Rajasthan field has 1-2tcf of in-place gas reserves and management indicated that
the recovery rate could be >50% and production could reach to 3-4mmscmd.
Company has sought approval to build the gas pipeline and based on the increase
in the recent gas realization we estimate that the Rajasthan gas price realization is
significantly higher.
Other key highlights
Cairn management does not expect major hindrances in the Rajasthan PSC
extension.
Royalties from DA1 field production stands at 40% in FY15 (v/s 40% in FY14), and
from DA2 at 30% in FY15 (v/s 20% in FY14). Production hasn’t yet started from
DA3 field.
Valuation and view
After Mar-14 exit of 200kbpd, Rajasthan production is down to ~183kbpd and
hence long-term guidance 7-10% CAGR now looks challenging. We model
FY15/FY16 Rajasthan gross production at 181/204 kbpd.
The stock trades at 6.6x FY16E EPS of INR50.6 and has dividend yield of ~3%. Our
SOTP based fair value stands at INR358, Maintain
Neutral.
Nitish Rathi
+91 22 3982 5558
Nitish.Rathi@motilaloswal.com
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
CAIR IN
1,874.2
625.9 /
10 3
385/304
1/-24/-39
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV / Sales (x)
183.7 184.4 179.3
134.4 123.9 111.3
105.8
56.4
17.4
18.2
5.9
1.0
3.0
2.2
94.8
50.6
13.9
14.6
6.6
0.9
2.9
2.0
74.0
39.5
10.0
12.5
8.4
0.8
2.8
1.7
-13.4 -10.4 -21.9
September 2014
95

|
10 Annual Global Investor Conference
th
GAIL (India)
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key takeaways
GAIL being a dominant gas transmission player expects to benefit from higher gas
volume availability in the long term. GAIL management remains optimistic about
rationalization/elimination of subsidy sharing for GAIL. Some regulated pipelines have
been operated at 10-15% utilization, as the gas supply remains a constraint.
Expects transmission volumes and tariffs to increase
GAIL expects increase in the gas transmission volume led by domestic (~10%) as
well as from increased LNG imports (5.8mmt tie-up in US from Cheniere &
Dominion facilities).
While, PNGRB has cut transmission tariffs (except Gujarat, which is due in coming
months) for GAIL’s pipelines, management expects the tariffs to improve as they
expect PNGRB to factor in the underutilization in new pipelines.
Await guidelines/policies for pipeline network expansion
Expect biddings for new pipelines to be announced soon. Government is currently
reviewing bidding/allocating mechanisms (so as to cover the pipelines that are
unviable). Management indicated that the possible mechanisms can be:
o
Viability gap funding:
in which even if the pipelines are perceived as unviable,
and GoI considers the project important, GoI will find a nominee and shall
provide subsidy, or
o
Capital subsidy schemes:
in which, GoI shall chose the lowest bids for capex
and opex subsidy.
Expects subsidy likely to rationalize / eliminate for GAIL
Increased PNG (piped gas) penetration should help in reducing LPG subsidy.
Likely domestic gas price increase will increase the input cost for GAIL and there
will be no rationale for subsidy sharing by GAIL.
Company expects rationalization on the subsidy for GAIL and hopes that
eventually GAIL will be exempted from subsidy sharing.
Other key highlights
Management indicated that there are execution challenges in the implementing
of gas pooling pricing.
Its LPG business will continue to receive APM gas, while there could be a cut in
APM gas availability for its petchem production.
GAIL’s share in Myanmar gas sales revenues in FY14 stood at INR1.7b and expects
to increase to INR3.5b in FY15.
Valuation and view
Key events to watch out for: 1) Impact of likely domestic gas price hike as and
when implemented; 2) Likelihood of transmission volume increase, and 3) Clarity
on subsidy sharing.
The stock trades at 11.5x FY16E EPS of INR32. Our SOTP based fair value stands at
INR410/sh, maintain
Neutral.
Nitish Rathi
+91 22 3982 5558
Nitish.Rathi@motilaloswal.com
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
GAIL IN
1,268.5
475/291
4/-3/11
M.Cap. (INR b)/(USD b) 588.9 / 9.7
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
13.1
1.6
9.9
2.0
11.5
1.5
8.2
2.2
10.3
1.3
7.3
2.4
593.7 662.6 737.4
61.5
35.8
28.2
-11.2
233
12.6
13.9
35.0
77.7
40.6
32.0
13.4
253
13.2
15.4
35.0
83.4
45.5
35.8
12.0
277
13.5
16.2
35.0
September 2014
96

|
10 Annual Global Investor Conference
th
Indraprastha Gas
Covering analyst(s)
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswa
l.com
Nitish Rathi
+91 22 3982 5558
Nitish.Rathi@MotilalOswal.com
Key takeaways
IGL management indicated that government has allocated 100% APM gas to City
Gas Distribution (CGD) companies. Impact of likely higher gas price is expected to
be passed on completely and management expects to maintain current margins.
Management expects government guidelines on CGD on highways within 1
month.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
IGL IN
140.0
55.7 / 0.9
406/239
-1/31/10
Growth strategy shift to inorganic route
With moderating volume growth in Delhi NCR, IGL management has shifted its
focus to acquire stakes in new high growth CGD networks.
It has recently acquired 50% stake in Kanpur based Central UP Gas and Pune
based Maharashtra Natural Gas Ltd (MNGL) and is also evaluating further
acquisitions.
IGL acquired 50% stake in MNGL for INR1.9b which has 30 CNG stations
(~0.3mmscmd CNG sales accounting for 75% share). As per management,
expected CAGR in CNG volumes in Pune is 20% and major competition in Pune is
from industrial LPG.
Bus addition critical for Delhi CNG volume growth
CNG volumes grew at 2% in FY14, and by 1% in 1QFY15. Expected growth rates for
FY15/FY16 are 2%/5%. Current private car conversion rate in NCR at
~3,000/month.
Currently, CNG prices are 35% cheaper to diesel and 50-60% cheaper to petrol.
Management expects CNG rates to increase by INR2.8/kg for every USD1/mmbtu
increase in domestic gas price.
Buses accounts for 30% of the CNG demand. Of the total 18,000 buses in NCR,
existing DTC fleet size is 4,500 (~3,800 operational) and funds for 1,800 additional
new buses have been allocated. Current rate of total bus additions is ~35-
40/month (v/s earlier target of >300/month).
rd
In FY15, total 12-15 gas stations have been added. Current growth in the 3 party
volumes is 15-20% (get 5% of selling price).
PNG business
Management expects overall PNG (incl. industrial) volumes at 11% in FY15.
Management finds current infrastructure sufficient, and plans to increase
utilizations. Expect to add 1 lakh connections/year.
Valuation and view
While the near term volume growth is a concern, we expect growth to revive in
the medium to long term led by (a) stable CNG price outlook for five years, post
the likely domestic gas price hike leading to higher private car conversions, and
(b) city buses additions. We model 3yr CNG volumes growth at 3.2%/4.5%/5%.
The stock trades at 11.2x FY16E EPS of INR35.2/share. Maintain Neutral.
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
Adj. PAT
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
12.1
2.6
1.8
11.2
2.2
5.6
1.8
10.9
1.9
5.0
2.0
37.3
8.4
4.6
26.7
150
23.7
30.6
21.4
42.4
9.0
4.9
35.2
7.5
178
21.5
28.2
19.9
45.1
9.4
5.1
36.3
3.2
204
19.0
25.4
22.0
Adj. EPS (INR) 32.7
EV/EBITDA (x) 6.4
September 2014
97

|
10 Annual Global Investor Conference
th
ONGC
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key takeaways
ONGC is upbeat on ongoing oil sector reforms and expects to retain USD60-65/bbl as
net oil price realization. ONGC expects decision on domestic gas price soon and
indicated that the new fields would have a breakeven gas price of atleast
USD6/mmbtu. Standalone ONGC production uptick is expected in 2HFY15.
Expects standalone production to increase
ONGC guides FY15 standalone production for oil at 23.5mmt (v/s 22.3 in FY14)
and for gas at 24bcm (v/s 23.3 in FY14). While including JV production it expects
FY15 oil production at 27.14mmt (v/s 25.99mmt in FY14) and gas production to
be flat at 25.3bcm.
It expects to add ~10mmscmd of new gas production in FY16-17, and with KG-
98/2 production in FY19, expects overall production to rise to ~100mmscmd.
Subsidy set to reduce and rationalize; expects net realization of USD60-65/bbl
Ongoing diesel reforms to cut gross under recoveries by ~50% and ONGC expects
its subsidy share to reduce meaningfully.<