Company name
October 2020
India Strategy
Back in the saddle!
Gautam Duggad – Research analyst
(Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
10 December 2010
1
 Motilal Oswal Financial Services
Contents
India Strategy – Back in the saddle!
............................................................................................
3-16
2QFY21 Highlights & Ready Reckoner
.......................................................................................
17-28
Sectors & Companies
................................................................................................................
29-198
Automobiles
...................................... 30-42
Amara Raja Batt. ............................................. 34
Ashok Leyland ................................................. 34
Bajaj Auto ..................................................... 35
Bharat Forge ................................................... 35
Bosch .............................................................. 36
CEAT ................................................................ 36
Eicher Motors ................................................. 37
Endurance Tech. ............................................. 37
Escorts ............................................................ 38
Exide Inds. ....................................................... 38
Hero Motocorp ............................................... 39
Mahindra & Mahindra .................................. 39
Mahindra CIE .................................................. 40
Maruti Suzuki .................................................. 40
Motherson Sumi ............................................. 41
Tata Motors .................................................. 41
TVS Motor ....................................................... 42
Capital Goods ......................................... 43-52
ABB ............................................................... 46
Bharat Electronics ........................................... 46
BHEL ............................................................. 47
Blue Star.......................................................... 47
CG Consumer Elect.......................................... 48
Cummins India .............................................. 48
Engineers India................................................ 49
Havells India .................................................... 49
K E C International .......................................... 50
Larsen & Toubro ........................................... 50
Siemens........................................................... 51
Thermax ....................................................... 51
Voltas .............................................................. 52
Cement ................................................... 53-62
ACC ............................................................... 57
Ambuja Cements ............................................. 57
Birla Corporation............................................. 58
Dalmia Bharat ................................................. 58
Grasim Industries ......................................... 59
India Cements ................................................. 59
J K Cements ..................................................... 60
JK Lakshmi Cem. .............................................. 60
Ramco Cements .............................................. 61
Shree Cement ................................................. 61
Ultratech Cement............................................ 62
Consumer ............................................... 63-75
Asian Paints ................................................. 67
Britannia ......................................................... 67
Colgate ............................................................ 68
Dabur .............................................................. 68
Emami ............................................................. 69
Godrej Consumer ............................................ 69
Hind. Unilever ................................................. 70
ITC ................................................................... 70
Jyothy Labs ...................................................... 71
Marico ............................................................. 71
Nestle .............................................................. 72
P&G Hygiene ................................................... 72
Page Industries................................................ 73
Pidilite Inds. .................................................... 73
Tata Consumer ................................................ 74
United Breweries ............................................ 74
United Spirits .................................................. 75
Financials ................................................ 76-95
AU Small Finance ............................................ 88
Axis Bank ......................................................... 88
Bandhan Bank ................................................. 89
DCB Bank ........................................................ 89
Equitas Holdings.............................................. 90
Federal Bank ................................................... 90
HDFC Bank .................................................... 91
ICICI Bank ..................................................... 91
IndusInd Bank ................................................. 92
Kotak Mahindra Bank...................................... 92
RBL Bank ......................................................... 93
Bank of Baroda ............................................. 94
State Bank .................................................... 94
HDFC Life Insur. ............................................... 95
ICICI Pru Life .................................................... 95
SBI Life Insurance............................................. 95
NBFC ..................................................... 96-106
Bajaj Finance ................................................. 100
Chola. Inv & Fin.............................................. 100
HDFC ........................................................... 101
ICICI Securities ............................................... 101
IIFL Wealth Mgt ............................................. 102
L&T Fin.Holdings ............................................ 102
LIC Housing Fin .............................................. 103
M & M Financial ............................................ 103
Manappuram Finance.................................... 104
MAS Financial ................................................ 104
Muthoot Finance ........................................... 105
PNB Housing .................................................. 105
Shriram City Union ........................................ 106
Shriram Transport Fin. ................................... 106
Healthcare ........................................... 107-120
Ajanta Pharma ............................................... 111
Alembic Pharma ............................................ 111
Alkem Lab ...................................................... 112
Aurobindo Pharma ........................................ 112
Biocon............................................................ 113
Cadila Health ................................................. 113
Cipla ........................................................... 114
Divis Labs ....................................................... 114
Dr Reddy’ s Labs ......................................... 115
Glenmark Pharma .......................................... 115
Granules India ............................................... 116
GSK Pharma ............................................... 116
IPCA Labs. ...................................................... 117
Jubilant Life ................................................... 117
Laurus Labs .................................................... 118
Lupin .............................................................. 118
Strides Pharma .............................................. 119
Sun Pharma ................................................... 119
Torrent Pharma ............................................. 120
Infrastructure ...................................... 121-124
Ashoka Buildcon ............................................ 123
IRB Infra ......................................................... 123
KNR Constructions ......................................... 124
Media.................................................. 125-129
PVR ................................................................ 128
Sun TV............................................................ 128
Zee Entertainment ......................................... 129
Metals ................................................. 130-137
Hindalco ...................................................... 134
Hindustan Zinc ............................................... 134
JSPL ................................................................ 135
JSW Steel ....................................................... 135
Nalco ............................................................. 136
NMDC ............................................................ 136
SAIL ................................................................ 137
Tata Steel ....................................................... 137
Oil & Gas ............................................. 138-151
Aegis Logistics ................................................ 144
BPCL ............................................................ 144
Castrol India................................................... 145
GAIL ............................................................ 145
Gujarat Gas .................................................... 146
Gujarat State Petronet .................................. 146
HPCL ........................................................... 147
Indraprastha Gas ........................................... 147
IOC ............................................................. 148
Mahanagar Gas ............................................. 148
MRPL ............................................................. 149
Oil India ......................................................... 149
ONGC ......................................................... 150
Petronet LNG ................................................. 150
Reliance Inds.................................................. 151
Retail - A ............................................. 152-158
Aditya Birla Fashion ....................................... 156
Avenue Supermarts ....................................... 156
Shoppers Stop ............................................... 157
Trent ............................................................. 157
V-Mart Retail ................................................. 158
Retail - B ..............................................159-162
Jubilant Foodworks ....................................... 162
Titan Company .............................................. 162
Technology ..........................................163-172
Coforge ......................................................... 167
Cyient ............................................................ 167
HCL Technologies .......................................... 168
Infosys ........................................................ 168
L&T Infotech .................................................. 169
Mindtree ....................................................... 169
MphasiS ........................................................ 170
Persistent Systems ........................................ 170
TCS ................................................................ 171
Tech Mahindra .............................................. 171
Wipro .......................................................... 172
Zensar Tech ................................................... 172
Telecom ...............................................173-178
Bharti Airtel ................................................... 177
Bharti Infratel ................................................ 177
Tata Comm .................................................... 178
Vodafone Idea ............................................... 178
Utilities ................................................179-188
CESC .............................................................. 184
Coal India ...................................................... 184
Indian Energy Exchange ................................ 185
JSW Energy .................................................... 185
NHPC ............................................................. 186
NTPC ............................................................. 186
Power Grid Corp. ........................................... 187
Tata Power ................................................ 187
Torrent Power ............................................... 188
Others..................................................187-198
Brigade Enterpr. ............................................ 187
BSE ................................................................ 187
Concor ........................................................... 188
Coromandel International ............................. 188
Essel Propack ................................................ 189
Godrej Agrovet .............................................. 189
Indiamart Inter. ............................................. 190
Indian Hotels ................................................. 190
Info Edge ....................................................... 191
Interglobe Aviation ....................................... 191
Kaveri Seed ................................................... 192
Lemon Tree Hotel.......................................... 192
MCX............................................................... 193
Oberoi Realty ................................................ 193
P I Industries ................................................. 194
Phoenix Mills ................................................. 194
Quess Corp .................................................... 195
S H Kelkar ...................................................... 195
SRF ................................................................ 196
Tata Chemicals .............................................. 196
Team Lease Serv............................................ 197
Trident .......................................................... 197
UPL ................................................................ 198
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
India Strategy
BSE Sensex: 40,183
Nifty 50: 11,835
Back in the saddle!
Macros and micros bounce off the lows; 5% earnings decline in Nifty
After an unparalleled 1QFY21, the road toward normalization has gathered
steam June’20 onwards. This has been possible with series of unlock measures
being unveiled by the central and state governments. India transitioned in the
quarter from localized lockdowns to widespread opening up with very few
sectors now under restriction ahead of the festive season. 2QFY21 has been
characterized by improving data points on multiple fronts. COVID infections
have started tapering off toward the end of the quarter and economic activity
has picked up. Pent-up demand and inventory filling ahead of the festive season
is helping the underlying recovery.
The CY20 southwest monsoons have been bountiful and widespread (9% above
LPA), creating a strong backdrop for rural economy. Coupled with that, other
macro indicators like electricity demand, GST collections, E-way bills, auto sales,
railway freight, merchandise trade and manufacturing PMI showcase the
healthy sequential pickup in underlying economy and demand. The government
passed the long awaited Agriculture and Labor Reforms Bill in Parliament in
Sep’20. Lastly, corporate commentary from our 16
th
Annual Global Investment
Conference in Aug’20 and 2
nd
Annual Ideation Conference in Sep’20 (200+
corporates across the two conferences) also suggest decent demand recovery as
well as supply metrics post unlocking of the economy. Sustenance of this
recovery – beyond the festive season – is critical for durable earnings recovery.
Another round of stimulus from the government could help strengthen this
incipient recovery, in our view.
Momentum of the markets has continued in 2QFY21, bolstered by the
aforementioned factors. The Nifty’s 1HFY21 performance was the best 1H
performance in the past decade. The Nifty’s absolute market-cap is now at a
new high even as the Nifty itself is 4% away from its all-time high levels. More
importantly, after two years of sustained polarization, markets have broad-
based a bit (both within and outside the Nifty), with Mid/Small cap indices
outperforming the Nifty YTD (discussed in detail in our latest
Eagle Eye
report).
Market direction, hereon, is contingent on the interplay of the Health crisis
(active Covid-19 cases have stayed below 10lacs for two weeks now) and
earnings delivery, in our view.
2QFY21 Nifty profits to decline 5% YoY:
We estimate MOFSL Universe’s 2QFY21
PBT/PAT to decline 6%/7% YoY. Healthcare, Technology, Private Banks, Metals &
Cement should post positive YoY profit growth. Autos, Capital Goods, Oil &Gas,
NBFCs, PSU Banks and Consumer sectors are expected to post double-digit YoY
PAT declines. Nifty sales/PBT/PAT should decline 5%/7%/5% YoY, while EBITDA
is expected to remain flattish YoY. Sequential demand recovery post the unlock
measures coupled with cost moderation initiatives should aid 90bp YoY
operating margin expansion for MOSL Universe Ex-OMCs and Financials.
5%/2% downward revision in FY21/FY22E Nifty EPS:
Our FY21/FY22E Nifty EPS
estimates have been revised downwards by 5%/2% to INR456/INR651 (prior
INR479/INR666). Hereon, we expect earnings to show gradual recovery in
October 2020
3
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
2HFY21, contingent on the progressive opening up of the economy and another
round of stimulus from the government. Corporate commentary in 2QFY21
earnings around sustenance of demand after the festive season would be an
important indicator to watch for 2HFY21 corporate earnings.
Key model portfolio changes:
Markets have seen sharp rebound with broad-
based participation. After two years, Mid/Small-caps are outperforming the
Nifty on YTD basis. The Nifty is now trading at a premium to long-period average
on P/E but is still at a discount to P/B. Our model portfolio changes broadly
reflect further addition in
rural-oriented
names. We have added marginal
positions in
Automobiles.
We maintain our
OW
stance in
IT, Healthcare, BFSI
&
Telecom.
We are
Neutral
in
Consumer
and
UW in Capital Goods, Infra, Cement,
Metals & Utilities
and
Energy.
We have added
Hero Motors, SBI Life, Muthoot
Finance, Divi’s Labs and IEX
in our model portfolio.
Top Picks
Large-Caps: Infosys, Hindustan Unilever, ICICI Bank, Muthoot Finance, Bharti
Airtel, Hero Motors, Titan, Divis Labs, HCL Tech, SBI Life.
Mid-Caps: AU Finance, IEX, IndiaMart, ICICI Securities, IPCA, MCX, Crompton
Consumer, PI Industries, Teamlease, Gujarat Gas.
Key sectoral trends/highlights
Auto
Universe’s PBT/PAT is expected to post a decline of 51.1%/60.4% YoY in
2QFY21. Excluding Tata Motors, Autos are expected to post PAT decline of 9.6%
YoY. From our coverage universe, CEAT, Escorts, Mahindra CIE, Maruti Suzuki,
Bosch, Hero Moto and Exide are expected to post profit growth YoY. While
Tractors (+30% YoY) and PVs (+18%) have seen strong growth on a YoY basis, 2W
(+2%) volumes have also been marginally higher. In contrast, the commercial
segments are weak, with LCVs (-18%) faring better than M&HCVs (-47%) and
3Ws (-51%). EBITDA for auto companies should decline 24% YoY in 2QFY21.
Technology
Universe's aggregate revenue (USD)/ revenue (INR)/ EBIT /Adj. PAT
should grow by 4%/3%/6%/7% QoQ. As the quarter progressed, companies saw
demand normalize as their deal pipelines largely returned to pre-COVID levels.
Accenture’s recent result and commentary noting traction in its Outsourcing
business (more relevant for Indian IT) corroborates an encouraging outlook for
Indian IT companies. On a sequential basis, Tier I revenue should move in the
range of 0–4% (CC) and 2.2–5.5% (USD), with HCLT/WPRO leading/lagging the
pack. Across Tier II, revenue should move in the range of -1–7% (QoQ, CC) and
0.7– 8% (QoQ USD), with NITEC/ZENT leading/lagging behind.
Healthcare
Universe’s earnings are expected to grow by 17.4% YoY whiles sales
should increase 6.4% YoY. From our coverage universe, 14 out of the 19
companies are expected to post double-digit growth in PAT YoY. Among the
large cap names, Dr. Reddy’s/Cipla/Divi’s/Aurobindo/Sun are expected to post
58.4%/30.2%/26.5%/17.8%/10.7% YoY profit growth, while Lupin should report
decline of 41.2% YoY. Laurus Labs’ is expected to do an encore and report 3.3x
profit jump in 2QFY21.
Consumer
Universe should post PBT/PAT decline of 0.6%/11.5% YoY. Consumer
companies are likely to post flat YoY sales and EBITDA growth. Britannia/Tata
Consumer should post double-digit profit growth of 27.7%/10.5% YoY. Godrej
Consumer/P&G/Marico/Hind Unilever should report profit growth of
October 2020
4
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Sources of exhibits in this
report include Bloomberg,
SEBI, NSE, Capitaline,
Companies, and MOFSL
database
7.7%/7.7%/6.3%/5.2% YoY. On the other hand, ITC/Asian Paints/Nestle are likely
to post profit decline of 19.6%/15.3%/8.5% YoY. United Breweries is expected to
post a loss while United Spirits should post a PAT decline of 71.5% YoY.
Private Banks’
Universe should report 16%/-7.1%/30.5% growth in
PPOP/PBT/PAT. With the moratorium period ending in Aug’20, collection
efficiency would be the key monitorable for banks. Asset quality concerns are
receding at the margin with improvement in collection efficiency but
uncertainty continues to linger. We expect HDFC Bank and ICICI Bank to post
PAT growth of 18%/329.5% YoY (aided by the low base for ICICI Bank) while Axis
Bank should post profit of INR13.7b v/s a loss last year. KMB’s PAT should
decline by 19.6% YoY.
NBFCs
under our coverage are likely to post PBT/PAT decline of 14%/21% YoY.
2QFY21 has been a quarter of steady normalization in collection and
disbursements against the disruption seen in 1QFY21. Bajaj Finance/ HDFC’s PAT
is likely to decline by 35%/9% YoY while that of Muthoot Finance should be
flattish. ICICI Securities is likely to post strong 49.8% YoY growth, driven by
robust retail brokerage volumes. LTFH, MMFS, SCFU and SHTF are expected to
post muted numbers with 62%, 27%, 39% and 44% YoY decline in profits.
PSU Banks
under our coverage are expected to deliver NII growth of 6.4% YoY
and PAT decline of ~12% YoY. We estimate weakness to continue in PSBs,
barring SBIN, impacted by sluggish loan growth, higher proportion of
MSME/SME loans, and delay in the resolution of stressed accounts.
Telecom
Universe should report losses for the 13
th
straight quarter. However,
losses for Telcos should decline YoY from INR62.8b to INR46.4b. Bharti Airtel is
likely to post a profit of INR2.6b v/s loss of INR11.2b in 2QFY20. Telecom sector
sales should are likely to grow 8.6% YoY while EBITDA should grow 16.4% YoY.
Metals’
Universe should post 38.8% YoY growth in EBITDA aided by volume and
price recovery as well as a low base. It is expected to post PAT growth of 121.2%
YoY for 2QFY21 (2QFY20 PAT declined 70%), but it will still be lower than
2QFY19 PAT. All companies under our coverage (except Hindalco) should post
YoY profit growth.
Oil and Gas
Universe should report decline in PBT/PAT of 24%/26% YoY,
dragged by PAT declines of 61.3%/34.4% YoY in heavyweights like ONGC/
Reliance. The OMCs are likely to post relatively better results with IOC/HPCL
expected to post PAT growth of 457.7%/28.5% YoY while BPCL’s PAT should
decline by 50.6% YoY.
Cement
Universe should report growth of 17%/42%/44% YoY in
EBITDA/PBT/PAT. Cement volumes are expected to improve 3% YoY. Pricing is
expected to stay flattish both YoY/QoQ. Cement sector EBITDA margins are
likely to increase from 18.9% YoY to 22.3% YoY. UltraTech/Ambuja /Shree
Cement/ACC should report growth of 104%/79.2%/42.3%/14.9% YoY.
Capital Goods’
Universe should report PAT decline of 38% YoY. Revenues for the
sector are likely to decline by 8% YoY. ABB/L&T/ Siemens are expected to report
PAT decline of 46.4%/42.7%/30.1 YoY. Voltas/Havell’s/Crompton should post
PAT decline of 48.3%/12.4%/10.6% YoY.
Utilities’
Universe should see PBT growth of 22% YoY and PAT decline of 5% YoY.
Power Grid is likely to post PAT growth of 8.4% YoY while Coal India/NTPC
should report PAT decline of 11.3%/5.1 YoY.
October 2020
5
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
2QFY21 PREVIEW
Metals, Cement,
Private Banks,
Healthcare and
Technology to post
YoY PAT growth
2QFY21: Earnings bounce from 1QFY21 lows
Unlock aids recovery; Demand normalization on the anvil
MOFSL Universe’s
revenue to decline
6% YoY while PAT
should decline by
7% YoY
Nifty sales should
decline by 5% YoY.
PAT to decline by 5
% YoY
Seven Nifty
companies have
seen FY21 earnings
upgrade >5% while
nine have seen
downgrades >5%
Corporate earnings are expected to recover from the sharp damage they
suffered in 1QFY21 on account of the lockdown. 2QFY21 has been characterized
by sequential recovery in demand/supply as unlocking measures took effect.
MOFSL Universe's PBT/PAT is expected to decline 6%/7% YoY in 2QFY21.
However, six sectors within our coverage universe are expected to post YoY
profit growth. Metals, Cement, Private Banks, Healthcare and Technology are
expected to post PAT growth of 121%, 44%, 31%, 17% & 4% YoY, respectively.
On the flipside, Telecom and Retail are expected to post losses. Automobiles/
Capital Goods/Oil &Gas/NBFC/PSU Banks /Consumer/Utilities should post PAT
decline of 60%/38%/26%/21%/12%/12%/5% YoY.
We expect MOFSL Universe's revenue to decline 6% YoY (on the base of 2% YoY
decline in 2QFY20). However, on a sequential basis, revenues should see 31.7%
QoQ growth.
MOFSL Universe’s
EBITDA is estimated to stay flattish YoY. The operating
margin ex-Financials and OMCs should expand 90bp YoY to 20% from 19.1% in
2QFY20. Approximately 59% of MOFSL Universe should post YoY decline in PAT,
while 26% should deliver >15% growth.
Nifty sales are estimated to decline 5% YoY, while EBITDA/PBT/PAT should
decline by 0.2%/7%/5% YoY in 2QFY21.
Nifty EPS cut of 5%/2% for FY21/FY22E:
Our FY21/FY22E Nifty EPS estimates
have been revised downwards by 4.9%/2.3% to INR456/INR651 (prior:
INR479/INR666). After 19%/31% YoY decline in Nifty earnings in
4QFY20/1QFY21, incrementally, we expect earnings decline to subside and
4QFY21 to see positive growth as a result of the lower base effect in 4QFY20 as
well as improvement in economic activity. Management commentary on
demand as we enter the festive season would be a key monitorable.
Seven out of 50 Nifty companies have seen upgrades of more than 5% while
nine out of 50 companies have seen downgrades of more than 5%.
Companies that have seen major downgrades in FY21 EPS estimates are
IndusInd Bank (-51%), ONGC (-39%), IOC (-24%), BPCL (-17%), Axis Bank (-17%),
Gail (-8%) and Bajaj Finance (-8%).
Companies that have seen upgrades in FY21 earnings estimates are JSW Steel
(36%), UltraTech Cement (18%), Maruti (14%), Shree Cement (10%), ICICI Bank
(7%) and Asian Paints (7%).
October 2020
6
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 1:
Healthcare, Private Banks, Metals, Cement and Technology expected to post YoY PAT growth
SECTOR
(NO OF COMPANIES)
PAT growth sectors
Metals (8)
Cement (11)
Banks-Private (11)
Life Insurance (3)
Healthcare (19)
Technology (12)
PAT de-growth sectors
Utilities (9)
Consumer (17)
Banks-PSU (2)
NBFC (14)
Oil & Gas (15)
Capital Goods (13)
Infrastructure (3)
Media (3)
Automobiles (17)
Others (23)
Retail (7)
Telecom (4)
MOFSL Universe (191)
Nifty (50)
Sensex (30)
EBITDA
PAT
SALES
EBITDA
NET PROFIT
PAT Delta Margins Margins
Var % Var %
Var % Var %
Var % Var % PAT Share Share Chg bp Chg bp
Sep-20 YoY QoQ Sep-20 YoY QoQ Sep-20 YoY QoQ Delta
%
%
YoY
YoY
4,012
8
19 1,089 18
17
541
24
40
105
51
-128
239
177
1,252 10
43
218 39 147
72
121
LP
40
7
-49
363
291
318
-1
35
71
17
32
34
44
51
11
3
-13
342
337
450
17
1
383 16
-2
154
31
13
36
15
-44
-20
362
304
18
61
12
17 -19
9
25
-18
2
1
-2
-5
15
508
6
7
118 18
3
68
17
3
10
6
-12
235
126
1,180
3
2
286
9
5
203
4
8
7
19
-8
116
3
8,463 -11 39 1,586 -10 20
513
-27
93 -187
49
228
26
-131
737
3
10
266
3
9
117
-5
18
-7
11
8
19
-138
520
1
21
130
1
35
92
-12
34
-12
9
15
9
-241
337
6
1
218
-7
-3
33
-12
-1
-5
3
6
-970
-207
184
4
3
148
5
2
75
-21
5
-19
7
24
81
-1261
3,843 -17 44
401 -21
4
184
-26
13
-66
17
81
-53
-62
575
-8
64
52
-19 320
25
-38
LP
-16
2
19
-116
-213
24
-23 15
7
-24 13
1
-56
74
-2
0
2
-66
-444
25
-35 30
8
-44 49
4
-59
46
-6
0
7
-443
-940
1,335 -11 100 131 -24 6,065 29
-60
LP
-45
3
55
-169
-276
326
-18 22
45
-22 61
1
-95
LP
-17
0
21
-65
-420
126
-21 85
6
-67 LP
-2
PL
Loss -10
0
12
-701
-641
433
9
2
174 16
0
-46
Loss
Loss 16
-4
-20
268
504
12,475 -6
32 2,674 0
19 1,053 -7
61
-82
100
100
120
-14
9,032 -5
30 2,116 0
13
844
-5
45
-45
117
1
5,263 -5
21 1,732 0
10
693
-5
30
-34
154
1
Source: MOFSL
Exhibit 2:
MOFSL Universe – PBT/PAT expected to decline 6%/7% YoY
SECTOR
(NO OF COMPANIES)
Automobiles (17)
Capital Goods (13)
Cement (11)
Consumer (17)
Financials (30)
Banks-Private (11)
Banks-PSU (2)
Life Insurance (3)
NBFC (14)
Healthcare (19)
Infrastructure (3)
Media (3)
Metals (8)
Oil & Gas (15)
Oil Ex OMCs (12)
Retail (7)
Technology (12)
Telecom (4)
Utilities (9)
Others (23)
MOFSL Universe (191)
Nifty (50)
Sensex (30)
Sep-19
98
58
33
125
398
220
62
8
109
71
5
12
40
322
281
11
255
-56
118
24
1,513
1,210
1,005
PBT (INR b)
June-20
-79
0
32
93
320
177
43
12
89
89
2
2
-29
191
98
-13
252
-39
113
-7
929
825
712
Sep-20
48
39
47
124
352
204
44
10
94
91
2
5
94
245
173
-3
265
-40
144
8
1,423
1,128
915
Var %
Var %
YoY
QoQ
-51.1
LP
-32.2 25,683.3
41.5
45.8
-0.6
33.8
-11.6
9.8
-7.1
15.2
-28.4
4.1
27.6
-16.5
-13.8
5.2
28.2
2.1
-61.7
-21.2
-54.7
137.3
136.3
LP
-23.7
28.5
-38.5
76.0
PL
Loss
4.0
5.3
Loss
Loss
21.6
27.1
-65.5
LP
-6.0
53.2
-6.8
36.6
-9.0
28.5
Sep-19
74
40
24
104
257
118
37
7
94
58
3
10
33
250
217
8
196
-63
123
18
1,135
890
727
PAT (INR b)
June-20
-95
-4
23
68
251
136
33
11
71
66
1
3
-37
162
94
-10
188
-50
99
-12
653
583
534
Sep-20
29
25
34
92
270
154
33
9
75
68
1
4
72
184
131
-2
203
-46
117
1
1,053
844
693
Var %
YoY
-60.4
-38.4
44.2
-11.5
5.3
30.5
-12.1
24.6
-20.7
17.4
-56.5
-58.8
121.2
-26.5
-39.8
PL
3.5
Loss
-5.4
-94.9
-7.2
-5.1
-4.6
Var %
QoQ
LP
LP
50.6
34.3
7.6
13.3
-0.9
-18.3
5.0
3.0
74.2
46.0
LP
13.5
38.7
Loss
7.6
Loss
18.1
LP
61.3
44.9
29.7
October 2020
7
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
MOFSL Universe sales/PBT/PAT to decline 6%/6%/7% YoY
Exhibit 3: Sales to decrease 6% YoY on a base of 2% YoY
decline
Exhibit 4: Sharp earnings recovery in 2QFY21 from the lows
of 1QFY21
3
Exhibit 5: EBITDA margin to expand 90bp to 20%
Average: 19.3%
Exhibit 6: MOFSL Universe’s PAT margin to dip 60bp to 8.1%
Average: 9.2%
Source: MOFSL, ex financials and ex OMC
Source: MOFSL, ex financials and ex OMC
Exhibit 7:
Key Assumptions
Macro
GDP Growth (%)
IIP Growth (%)
Inflation CPI-RU (%)
Currency: USD/INR
Repo Rate (%)
Interest Rate (%):
1Year CP Rate (Avg)
10Year G Sec (Avg)
Sectoral
Auto:
CV Volume growth (%)
Car Volume growth (%)
Banking: Loan Growth (%)
Cement: Volume growth (%)
Capital Goods: L&T order Intake (INRb)
Capital Goods: L&T order Intake (% YoY)
Metal:
Steel (USD/Tonne)
Aluminium (USD/Tonne)
Zinc (USD/Tonne)
Oil: Brent (US$/bbl)
Singapore GRM (USD/bbl)
Technology: USD Revenue growth (%)
1QFY21
-23.9
-35.4
6.6
75.9
4.00
5.90
5.98
1QFY21
-89.8
-81.0
6.1
-40.0
236
-39.0
485
1,493
1,968
31.4
-0.9
-6.1
2QFY21E
-7.1
-8.5
6.7
74.4
4.00
4.30
5.91
2QFY21E
-50.8
13.6
5.1
-15.0
356
-26.2
520
1,700
2,350
42.9
-0.1
6.0
3QFY21E
-0.2
1.1
5.4
73.7
4.00
4.25
5.86
3QFY21E
-5.4
4.3
4.7
-10.0
361
-13.1
550
1,750
2,450
45.0
5.0
1.9
4QFY21E
4.2
9.1
5.0
74.0
4.00
4.28
5.82
4QFY21E
99.2
24.6
4.3
5.0
610
5.6
540
1,750
2,450
45.0
5.0
2.5
FY20
4.2
-0.8
4.8
70.9
4.4
7.28
6.69
FY20
-35.0
-16.1
6.1
-3.0
1,864
9.1
537
1,750
2,407
60.9
3.2
6.9
FY21E
-6.5
-8.5
5.9
74.5
4.0
4.68
5.89
FY21E
-20.0
-10.7
4.3
-15.0
1,564
-16.1
525
1,675
2,300
41.1
2.3
-0.3
FY22E
7.8
9.5
4.9
75.3
4.0
4.95
5.95
FY22E
26.7
21.9
10.4
20.0
1,789
14.4
530
1,750
2,350
50.0
6.0
11.5
October 2020
8
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 8:
Three-fifth of the MOSL Universe is likely to report PAT decline, while 26% is expected to post >15% PAT growth
Earnings Growth
0
9
11 18
9
22
11
4
6
24
13
27 25 24 31 34 42
40
8
-3
12
9
17
7
-7
-9
-4
-3
-11
-13
-4
1
18
20
3
10
9
-21
8
4
11
22
6
6
2
-19 -11
-44
35 23 33 34
26 35
31 38 39
38 47 36 39 37 35 32 34 45 47 32 30
38 38 35 35
42 40 37 38 45 36
16
66 64 59
20 18 18
17 15
27
24 19
16 20 22
21 24 21
18 23
27 17 16
17
25
25 25
20
23
16 13
22 18
17 22 19 24 16 22
18 23
20 18
18
21
21 15
15
15 17
15 17 15
20
18 14
26 13 19 19 19 15
18
25 18 22 17 17 19 16
24
22
13
23 16 13
12
20
10 12
18
8
16
35 41 31 26 26 26 32 26
8 8
32 39 35
24 25 25 28 26 24 19 26 24 19 20 26 18 21 22 21 26 26 29 30 29 23 19 25 32
21 21
15 16 18
PAT Growth Ex OMCs (%)
>30%
>15-30%
>0-15%
<0%
Ex OMCs (%)
26% of the companies would grow at >15% YoY and 18% of the MOFSL Universe would report >30% PAT growth. 59% of the MOFSL
Universe would report PAT decline.
Exhibit 9:
Metals and Private Banks provided support while O&G, Autos and NBFCs dragged aggregate earnings
40
36
16
11
10
7
2
2
5
6
7
10
12
16
17
19
45
66
1,135
1,053
Source: MOFSL
Nifty expected to post PBT/PAT decline of 7%/5%
Nifty PBT is expected to decline by 7% YoY, while PAT is likely to decline by 5%
YoY. This is a sharp sequential recovery in earnings after a virtual washout in
4QFY20/1QFY21 when Nifty earnings declined 19%/31% YoY.
Nifty sales should decline 5% YoY – the fifth consecutive quarter of sales decline.
Nifty EBITDA is expected to stay flattish YoY.
Half of the Nifty companies should report YoY PAT growth.
Exhibit 10:
Nifty sectoral 2QFY21 PAT change YoY (%)
LP 166
Telecom, Metals,
Insurance support
earnings; Auto
expected to post
losses. Retail, Capital
Goods drag
50 38 36
26
5
3
3
-4
-5
-10 -21 -22
-27 -35 -43
-75
Source: MOFSL
October 2020
9
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 11:
Nifty Universe PBT and PAT change
Company
Bajaj Auto
Eicher Motors
Hero MotoCorp
Mahindra & Mahindra
Maruti Suzuki
Tata Motors
Axis Bank
HDFC Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank
State Bank
HDFC Life Insur.
SBI Life Insurance
Bajaj Finance
Bajaj Finserv
HDFC
Larsen & Toubro
Grasim Industries
Shree Cement
Ultratech Cement
Asian Paints
Britannia
Hind. Unilever
ITC
Nestle
Cipla
Divis Labs
Dr Reddy’ s Labs
Sun Pharma
Adani Ports
Hindalco
JSW Steel
Tata Steel
BPCL
GAIL
IOC
ONGC
Reliance Inds.
Titan Company
HCL Technologies
Infosys
TCS
Tech Mahindra
Wipro
Bharti Airtel
Coal India
NTPC
Power Grid Corp.
UPL
Nifty Universe
Sector
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Banks-Private
Banks-Private
Banks-Private
Banks-Private
Banks-Private
Banks-PSU
Life Insurance
Life Insurance
NBFC
NBFC
NBFC
Capital Goods
Cement
Cement
Cement
Consumer
Consumer
Consumer
Consumer
Consumer
Healthcare
Healthcare
Healthcare
Healthcare
Infrastructure
Metals
Metals
Metals
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Retail
Technology
Technology
Technology
Technology
Technology
Telecom
Utilities
Utilities
Utilities
Others
PBT (INR M)
PBT
Sep-19 June-20 Sep-20
YoY
QoQ
16,089
6,817
16,150
0.4
136.9
5,922
147
4,174
-29.5 2,733.9
10,979
795
13,717
24.9
1,625.6
17,582
488
15,532
-11.7 3,080.2
15,720
-3,457
20,047
27.5
LP
5,821
-61,870 -44,002
PL
Loss
24,332
14,280
18,362
-24.5
28.6
89,974
89,378 1,00,137
11.3
12.0
43,672
31,825
37,505
-14.1
17.8
18,857
6,689
7,107
-62.3
6.3
21,006
16,617
18,044
-14.1
8.6
50,598
55,598
42,344
-16.3
-23.8
3,268
4,512
3,679
12.6
-18.5
1,192
3,877
3,174
166.2
-18.1
20,224
13,097
13,348
-34.0
1.9
26,270
25,704
17,735
-32.5
-31.0
26,451
28,718
30,482
15.2
6.1
33,027
6,697
23,340
-29.3
248.5
6,510
-3,374
3,682
-43.4
LP
4,018
4,831
5,710
42.1
18.2
8,900
13,142
17,107
92.2
30.2
8,369
3,200
9,725
16.2
203.9
4,994
7,370
6,894
38.1
-6.5
23,550
25,290
26,304
11.7
4.0
48,077
31,284
43,709
-9.1
39.7
7,080
6,631
7,386
4.3
11.4
6,810
7,993
8,516
25.1
6.5
4,947
6,562
6,103
23.4
-7.0
2,835
8,789
9,016
218.0
2.6
14,249
13,703
14,570
2.3
6.3
8,863
9,429
10,870
22.6
15.3
15,116
3,300
12,991
-14.1
293.7
2,370
-5,900
14,814
525.1
LP
46
-34,110
8,896
19,322.9
LP
16,551
29,262
12,654
-23.5
-56.8
15,355
3,562
18,017
17.3
405.8
8,145
26,286
41,992
415.6
59.8
90,383
9,035
36,378
-59.8
302.6
1,50,010 82,200
93,917
-37.4
14.3
4,270
-3,570
2,542
-40.5
LP
34,950
38,647
39,416
12.8
2.0
54,960
57,920
60,948
10.9
5.2
1,05,290 95,040 1,04,107
-1.1
9.5
13,374
12,831
12,002
-10.3
-6.5
31,343
30,951
31,522
0.6
1.8
-6,230
3,720
5,925
LP
59.3
42,785
28,012
41,685
-2.6
48.8
11,065
37,003
36,365
228.6
-1.7
32,827
27,520
35,315
7.6
28.3
6,940
9,010
7,912
14.0
-12.2
12,09,736 8,25,482 11,27,864
-6.8
36.6
Adj. PAT (INR M)
Sep-19 June-20 Sep-20
14,024
5,280
12,415
5,727
-552
2,834
9,226
613
10,423
13,548
390
11,672
13,586 -2,494 15,937
-2,571 -84,420 -39,979
-1,121 11,122 13,735
63,450 66,586 75,457
6,550
25,992 28,129
14,010
5,103
5,316
17,245 12,445 13,868
30,117 41,893 31,546
3,087
4,511
3,546
1,298
3,909
3,033
15,063
9,623
9,858
12,037 12,151
7,453
29,805 25,373 27,029
23,085
714
13,238
5,265
-2,114
3,314
3,091
3,708
4,397
5,790
9,060
11,814
8,450
2,196
7,154
4,038
5,427
5,159
18,320 18,730 19,281
40,231 23,428 32,345
6,035
4,975
5,524
4,714
5,780
6,139
3,618
4,818
4,577
4,042
5,793
6,401
10,556 11,460 11,689
10,541
7,580
8,328
10,837
5,061
8,615
809
-5,610
9,988
-537
-44,320 10,965
17,084 20,762
8,436
10,643
2,555
13,482
5,634
19,108 31,423
62,631
4,960
24,264
1,13,520 83,799 74,480
3,143
-2,930
2,033
26,530 29,231 31,012
40,190 42,330 45,102
80,580 70,490 80,163
11,239
9,723
8,793
25,612 24,113 24,558
-11,229 -4,363
2,638
35,243 20,786 31,264
34,716 33,194 32,962
25,097 28,059 27,192
5,208
6,490
5,353
8,89,802 5,82,520 8,44,353
PAT
YoY
QoQ
-11.5 135.1
-50.5
LP
13.0 1,600.0
-13.9 2,892.7
17.3
LP
Loss
Loss
LP
23.5
18.9
13.3
329.5
8.2
-62.1
4.2
-19.6
11.4
5
-24.7
14.9
-21.4
133.6 -22.4
-34.6
2.4
-38.1
-38.7
-9.3
6.5
-42.7 1,754.9
-37.1
LP
42.3
18.6
104.0
30.4
-15.3 225.8
27.7
-4.9
5.2
2.9
-19.6
38.1
-8.5
11.1
30.2
6.2
26.5
-5.0
58.4
10.5
10.7
2.0
-21.0
9.9
-20.5
70.2
1,134.7
LP
LP
LP
-50.6
-59.4
26.7
427.7
457.7
64.4
-61.3 389.2
-34.4
-11.1
-35.3
LP
16.9
6.1
12.2
6.5
-0.5
13.7
-21.8
-9.6
-4.1
1.8
LP
LP
-11.3
50.4
-5.1
-0.7
8.4
-3.1
2.8
-17.5
-5.1
44.9
:
October 2020
10
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 12:
Nifty sales to decline 5% in 2QFY21, fifth consecutive quarter of YoY sales decline
Exhibit 13:
2QFY21 Nifty PAT to decline by 5% YoY
Exhibit 14:
Nifty EBITDA to stay flattish YoY
October 2020
11
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 15:
Nifty companies’ 2QFY21 performance (INR m)
Sales
Growth
EBIDTA
Growth
PBT
Growth
PAT
Growth
(INR M)
(%)
(INR M)
(%)
(INR M)
(%)
(INR M)
(%)
Sector
Sector
Sep-20
YoY
Sep-20
YoY
Sep-20
YoY
Sep-20
YoY
Bajaj Auto
Automobiles
72,467
-6.0
13,293
4.0
16,150
0.4
12,415
-11.5
Eicher Motors
Automobiles
20,441
-6.8
4,079
-24.7
4,174
-29.5
2,834
-50.5
Hero MotoCorp
Automobiles
94,750
25.2
14,017
27.3
13,717
24.9
10,423
13.0
Mahindra & Mahindra
Automobiles
1,10,079
0.7
16,132
4.7
15,532
-11.7
11,672
-13.9
Maruti Suzuki
Automobiles
1,88,469
11.0
20,687
28.8
20,047
27.5
15,937
17.3
Tata Motors
Automobiles
4,71,537
-27.9
23,998
-66.5
-44,002
PL
-39,979
Loss
Axis Bank
Banks-Private
71,488
17.2
63,446
6.6
18,362
-24.5
13,735
LP
HDFC Bank
Banks-Private
1,59,353
17.9
1,39,863
19.6
1,00,137
11.3
75,457
18.9
ICICI Bank
Banks-Private
95,065
18.0
85,044
23.7
37,505
-14.1
28,129
329.5
IndusInd Bank
Banks-Private
31,946
9.8
26,732
1.9
7,107
-62.3
5,316
-62.1
Kotak Mahindra Bank
Banks-Private
37,717
12.6
27,614
10.1
18,044
-14.1
13,868
-19.6
State Bank
Banks-PSU
2,68,935
9.3
1,69,063
-7.1
42,344
-16.3
31,546
5
HDFC Life Insur.
Life Insurance
98,895
32.7
2,873
34.9
3,679
12.6
3,546
14.9
SBI Life Insurance
Life Insurance
1,17,130
15.8
4,197
20.3
3,174
166.2
3,033
133.6
Bajaj Finance
NBFC
33,303
6.1
28,848
10.2
13,348
-34.0
9,858
-34.6
Bajaj Finserv
NBFC
1,42,635
0.3
1,42,630
0.3
17,735
-32.5
7,453
-38.1
HDFC
NBFC
34,513
17.0
33,732
16.3
30,482
15.2
27,029
-9.3
Larsen & Toubro
Capital Goods
3,33,402
-5.6
33,340
-11.6
23,340
-29.3
13,238
-42.7
Grasim Industries
Cement
38,098
-20.6
4,182
-36.6
3,682
-43.4
3,314
-37.1
Shree Cement
Cement
29,517
5.4
9,116
8.0
5,710
42.1
4,397
42.3
Ultratech Cement
Cement
99,562
3.5
25,507
33.0
17,107
92.2
11,814
104.0
Asian Paints
Consumer
52,022
3.0
11,220
17.5
9,725
16.2
7,154
-15.3
Britannia
Consumer
36,281
19.0
6,901
40.2
6,894
38.1
5,159
27.7
Hind. Unilever
Consumer
1,09,199
10.8
27,257
11.6
26,304
11.7
19,281
5.2
ITC
Consumer
1,09,866
-7.5
41,734
-8.5
43,709
-9.1
32,345
-19.6
Nestle
Consumer
34,409
7.0
8,327
9.6
7,386
4.3
5,524
-8.5
Cipla
Healthcare
47,108
7.2
10,976
20.7
8,516
25.1
6,139
30.2
Divis Labs
Healthcare
16,985
17.5
6,618
29.6
6,103
23.4
4,577
26.5
Dr Reddy’ s Labs
Healthcare
47,811
17.2
11,666
37.6
9,016
218.0
6,401
58.4
Sun Pharma
Healthcare
80,544
1.3
17,720
10.3
14,570
2.3
11,689
10.7
Adani Ports
Infrastructure
26,366
-6.5
17,177
31.0
10,870
22.6
8,328
-21.0
Hindalco
Metals
3,25,207
8.3
36,994
4.0
12,991
-14.1
8,615
-20.5
JSW Steel
Metals
1,88,978
10.5
34,339
51.6
14,814
525.1
9,988
1,134.7
Tata Steel
Metals
3,44,433
-0.4
48,187
26.2
8,896
19,322.9
10,965
LP
BPCL
Oil & Gas
5,97,086
-7.2
16,287
-41.0
12,654
-23.5
8,436
-50.6
GAIL
Oil & Gas
1,72,613
-4.3
20,450
30.9
18,017
17.3
13,482
26.7
IOC
Oil & Gas
9,93,513
-11.0
60,935
29.4
41,992
415.6
31,423
457.7
ONGC
Oil & Gas
1,66,430
-32.0
65,891
-50.4
36,378
-59.8
24,264
-61.3
Reliance Inds.
Oil & Gas
11,38,184
-23.8
1,82,635
-17.6
93,917
-37.4
74,480
-34.4
Titan Company
Retail
45,184
-3.1
3,597
-31.1
2,542
-40.5
2,033
-35.3
HCL Technologies
Technology
1,85,385
5.8
48,015
17.0
39,416
12.8
31,012
16.9
Infosys
Technology
2,42,838
7.3
63,881
13.3
60,948
10.9
45,102
12.2
TCS
Technology
3,94,384
1.2
1,06,341
4.0
1,04,107
-1.1
80,163
-0.5
Tech Mahindra
Technology
92,203
1.7
14,291
-4.8
12,002
-10.3
8,793
-21.8
Wipro
Technology
1,51,515
-0.2
33,572
6.6
31,522
0.6
24,558
-4.1
Bharti Airtel
Telecom
2,45,189
16.0
1,07,174
21.0
5,925
LP
2,638
LP
Coal India
Utilities
2,08,957
2.5
46,758
10.0
41,685
-2.6
31,264
-11.3
NTPC
Utilities
2,48,483
5.1
74,975
3.9
36,365
228.6
32,962
-5.1
Power Grid Corp.
Utilities
95,744
5.9
84,941
7.4
35,315
7.6
27,192
8.4
UPL
Others
85,936
9.9
18,562
14.7
7,912
14.0
5,353
2.8
Nifty Universe
90,32,156
-5.2
21,15,810
-0.2
11,27,864
-6.8
8,44,353
-5.1
Note: For Financials, Sales represents Net Interest Income, and EBITDA represents Operating Profit; Consensus estimates are used for Adani
Ports and Bajaj Finserv
October 2020
12
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 16:
Expect Nifty PAT CAGR of 20% over FY20-FY22E on a depressed base of previous five years
Sector
High PAT CAGR (>15%)
Auto (17)
Metals (8)
Others (24)
Healthcare (19)
Financials (31)
Banks-PVT (11)
Banks-PSU (2)
Insurance (3)
NBFC (15)
Oil & Gas (15)
Ex OMCs (12)
Medium PAT CAGR (0-15%)
Media (3)
Cement (11)
Retail (7)
Cap. Goods (13)
Technology (12)
Consumer (17)
Utilities (9)
Negative PAT CAGR
Infrastructure (3)
Telecom (4)
MOFSL (193)
Nifty (50)
Sensex (30)
Sales
CAGR (%)
(FY20-22)
5
8
6
5
11
12
14
10
12
8
1
5
7
4
5
9
6
8
8
5
7
0
7
5
6
7
EBIDTA
CAGR (%)
(FY20-22)
15
20
17
13
19
12
15
10
12
9
15
9
9
10
9
6
10
11
10
6
15
-2
16
13
13
12
EBIDTA
Margin (%)
FY21E
19.3
10.7
16.3
15.3
23.4
62.1
86.4
67.7
4.6
82.3
10.9
14.0
23.4
26.9
21.1
8.4
9.8
24.0
24.8
35.5
40.4
31.2
41.0
21.1
21.8
28.1
PAT (INR b)
FY20 FY21E FY22E FY20
2,699 2,681 4,239 -12
156 107
381 -51
182 196
355 -55
100
45
169 -16
218 283
334
13
1,112 1,220 1,668 38
552 645
876
24
203 210
334 643
38
42
48
1
319 323
410
8
932 831 1,332 -24
751 611 1,048 -17
2,002 1,921 2,382 7
25
16
32
-21
148 142
188
27
31
10
39
5
144 122
177 -11
787 816
946
3
377 369
451
16
490 445
550
9
-209 -175 -148 Loss
13
8
10
-12
-222 -183 -158 Loss
4,491 4,427 6,473 -6
3,620 3,604 5,185 -3
2,905 2,965 4,090 4
PAT Gr. / CAGR (%)
FY21E FY22E (FY20-22)
-1
58
25
-31
256
56
8
82
40
-55
274
30
30
18
24
10
37
22
17
36
26
3
59
28
11
13
12
1
27
13
-11
60
20
-19
72
18
-4
24
9
-34
94
13
-4
32
13
-69
294
11
-15
45
11
4
16
10
-2
22
9
-9
24
6
Loss Loss
-16
-37
20
-13
Loss Loss
Loss
-1
46
20
0
44
20
2
38
19
PAT Delta
Share (%)
(FY20-22)
78
11
9
3
6
28
16
7
0
5
20
15
19
0
2
0
2
8
4
3
3
0
3
100
NA
NA
Note: For Banks: Sales = Net Interest Income, EBIDTA = Operating Profits; Note: Sensex & Nifty Numbers are Free Float
Source: MOFSL
Exhibit 17:
Nifty 50 Companies’ Top upgrades/downgrades for FY21E
(INR)
EPS UPGRADE / DOWNGRADE (%)
FY21E
JSW Steel
36.2
Ultratech Cement
18.3
Maruti Suzuki
13.6
Shree Cement
10.4
ICICI Bank
7.1
Bharti Airtel
-7.1
Bajaj Finance
-8.3
GAIL
-8.5
Axis Bank
-16.7
BPCL
-17.0
IOC
-24.2
ONGC
-38.9
IndusInd Bank
-51.2
Source: MOFSL
October 2020
13
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 18:
Nifty stock’s absolute FY21E PAT change (INR b)
Exhibit 19:
Nifty stock’s absolute FY22E PAT change (INR b)
October 2020
14
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Exhibit 20:
Nifty performance – Expect FF PAT CAGR (FY20-22E) of 21%
Sales (INR b)
Company
High PAT Growth (20%+)
Tata Motors
Bharti Airtel
Axis Bank
Tata Steel
JSW Steel
Mahindra & Mahindra
ICICI Bank
Divis Labs
IOC
Cipla
State Bank
Ultratech Cement
Dr Reddy’ s Labs
Hind. Unilever
Reliance Inds.
Bajaj Finserv
Sun Pharma
Maruti Suzuki
Medium PAT Gr. (0-20%)
Hindalco
Shree Cement
HDFC Bank
HDFC
Adani Ports
Britannia
BPCL
HDFC Life Insur.
Hero MotoCorp
ONGC
Bajaj Finance
Titan Company
HCL Technologies
SBI Life Insurance
UPL
Infosys
Nestle
NTPC
Eicher Motors
Kotak Mahindra Bank
Asian Paints
TCS
Power Grid Corp.
Tech Mahindra
Wipro
IndusInd Bank
Coal India
Larsen & Toubro
ITC
Bajaj Auto
PAT de-growth (<0%)
Grasim Industries
GAIL
Nifty (PAT free float)
FY20
21,384
2,611
875
252
1,398
726
952
333
54
4,844
171
981
421
167
388
5,959
172
323
757
20,584
1,181
119
562
127
119
116
2,846
322
288
4,250
135
211
707
403
358
908
124
1,143
91
135
202
1,569
394
369
613
121
961
1,455
456
299
905
186
719
42,873
FY21E FY22E
20,182
2,501
993
288
1,307
693
1,018
386
68
3,784
188
1,096
409
196
439
5,636
172
331
677
18,977
1,289
118
645
142
121
137
2,086
360
316
3,013
139
182
753
469
380
983
133
1,111
85
152
196
1,604
413
377
613
132
891
1,419
442
277
748
154
594
39,907
24,785
3,018
1,114
326
1,451
901
1,134
444
82
4,711
208
1,229
467
221
507
7,541
207
369
853
22,307
1,456
137
737
159
146
149
2,525
421
376
3,909
169
245
847
553
414
1,117
149
1,276
104
168
236
1,837
445
421
654
140
1,052
1,631
493
338
930
194
736
48,022
Sales
EBIDTA Margin (%) EBITDA
CAGR %
CAGR %
FY20 FY21 FY22
20-22
20-22
8
18
21
22
19
8
9
9
13
29
13
42
44
46
19
14
93
88
90
12
2
12
12
16
14
11
15
18
22
35
9
13
14
15
15
16
84
96
86
17
23
34
40
40
33
-1
3
7
8
48
10
19
23
23
21
12
69
67
69
11
5
22
25
25
12
15
21
25
25
25
14
25
26
27
20
12
15
14
16
16
10
71
86
81
17
7
20
22
23
15
6
10
9
12
18
4
22
24
24
9
11
12
11
12
12
7
31
30
31
7
15
87
87
90
16
12
98
98
98
11
11
49
62
62
25
13
16
19
18
19
-6
4
7
6
23
14
3
3
4
32
14
14
14
15
19
-4
14
14
15
-3
12
83
87
87
15
8
12
9
12
10
10
24
26
25
13
17
5
4
4
9
8
21
22
23
11
11
25
26
26
14
10
23
24
24
11
6
32
33
33
7
7
24
22
25
10
12
74
73
73
10
8
21
21
21
9
8
27
27
27
9
6
88
89
89
7
7
16
15
17
12
3
21
22
23
8
8
89
85
85
5
5
23
17
23
6
6
11
11
12
8
4
39
37
39
4
6
17
18
18
9
1
12
12
14
9
2
12
9
12
1
1
12
12
14
11
6
20
22
22
13
PAT (INR b)
FY20 FY21E FY22E
1,021
-91
-41
16
10
22
18
79
13
94
16
198
38
20
67
431
34
39
57
2,481
39
16
263
96
37
14
50
13
31
168
53
15
111
14
27
166
20
137
18
86
28
324
111
40
97
44
167
89
153
54
118
44
74
1,912
1,129 2,054
-123
40
5
24
53
96
-7
56
27
71
34
44
115 175
18
23
102 159
23
26
208 310
46
60
27
31
81
104
383 645
36
50
48
58
52
81
2,400 3,017
37
55
16
22
302 362
118 132
41
51
20
19
59
67
15
17
32
41
112 224
41
69
9
20
126 143
16
18
29
34
178 205
21
24
146 162
14
22
82
101
26
33
321 380
120 129
37
46
99
108
22
48
110 177
69
93
133 157
48
56
75
114
26
44
49
70
1,953 2,791
PAT
Contbn to
CAGR %
Delta %
20-22
42
66
LP
8
LP
4
143
5
133
3
80
3
58
2
48
6
34
1
30
4
29
1
25
7
25
1
24
1
24
2
22
14
22
1
21
1
20
2
10
34
19
1
18
0
17
6
17
2
17
1
17
0
16
1
16
0
16
1
15
4
15
1
14
0
13
2
13
0
11
0
11
3
10
0
9
2
9
0
8
1
8
0
8
4
8
1
6
0
6
1
5
0
3
1
2
0
2
0
1
0
-2
0
0
0
-3
0
21
100
October 2020
15
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
MOFSL model
portfolio
SECTOR WEIGHT /
PORTFOLIO PICKS
Financials
Private
HDFC Bank
ICICI Bank
Axis Bank
AU Small Finance Bank
PSU
SBI
NBFCs
HDFC
Muthoot Finance
SBI Life
Technology
Infosys
TCS
Wipro
LT Infotech
Energy/Telecom
Reliance Inds
GAIL
Bharti Airtel
Consumption / Retail
HUL
Titan
Dabur
Auto
M&M
Hero Moto
Healthcare
Sun Pharma
Divis Labs
Lupin
Cap Goods, Infra & Cement
Larsen & Toubro
Ultratech
Metals / Utilities
Hindalco
Midcaps
Ipca Labs
Tata Consumer
PI Industries
IEX
CG Consumer Elect.
Cash
TOTAL
BSE 100
30.5
18.6
8.0
4.5
2.1
0.0
1.4
1.3
10.5
5.6
0.0
0.6
15.2
6.8
5.0
0.9
0.0
17.0
12.6
0.3
1.8
14.1
3.3
0.9
0.5
6.4
1.0
0.7
5.3
1.0
0.7
0.4
5.7
1.9
0.8
4.1
0.5
1.7
0.0
0.5
0.0
0.0
0.2
0.0
100.0
MOST
WEIGHT
33.0
19.0
8.0
6.0
3.0
2.0
3.0
3.0
11.0
7.0
2.0
2.0
17.0
7.0
6.0
2.0
2.0
15.0
8.0
2.0
5.0
11.0
5.0
4.0
2.0
7.0
4.0
3.0
6.0
2.0
2.0
2.0
4.0
2.0
2.0
2.0
2.0
5.0
1.0
1.0
1.0
1.0
1.0
0.0
100.0
WEIGHT RELATIVE EFFECTIVE
TO BSE100
SECTOR STANCE
2.5
Overweight
0.4
Neutral
0.0
Buy
1.5
Buy
0.9
Buy
2.0
Buy
1.6
Overweight
1.7
Buy
0.5
Neutral
1.4
Buy
2.0
Buy
1.4
Buy
1.8
Neutral
0.2
Buy
1.0
Neutral
1.1
Neutral
-2.0
-4.6
1.7
3.2
-3.1
1.7
3.1
1.5
0.6
3.0
2.3
0.7
1.0
1.3
1.6
-1.7
0.1
1.2
-2.1
1.5
3.3
1.0
0.5
1.0
1.0
0.8
0.00
Underweight
Buy
Buy
Buy
Underweight
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Underweight
Buy
Overweight
Buy
Buy
Buy
Buy
Buy
October 2020
16
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Sectors & Companies
BSE Sensex: 40,183
Nifty 50: 11,835
October 2020
MOFSL Universe:
2QFY21 Highlights
&
Ready Reckoner
Note:
In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the company’s quarterly and
annual results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 5 October 2020, unless otherwise stated.
October 2020
17
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
MOFSL Universe: 2QFY21 aggregate performance highlights
Exhibit 1:
Quarterly Performance - MOFSL Universe (INR b)
Sector
Automobiles (17)
Capital Goods (13)
Cement (11)
Consumer (17)
Financials (30)
Banks-Private (11)
Banks-PSU (2)
Life Insurance (3)
NBFC (14)
Healthcare (19)
Infrastructure (3)
Media (3)
Metals (8)
Oil & Gas (15)
Oil Ex OMCs (12)
Retail (7)
Technology (12)
Telecom (4)
Utilities (9)
Others (23)
MOFSL Universe (191)
MOFSL Ex OMCs (188)
Nifty (50)
Sensex (30)
Sep-20
1,335
575
318
520
1,274
450
337
304
184
508
24
25
1,252
3,843
1,689
126
1,180
433
737
326
12,475
10,320
9,032
5,263
Sales
Var
% YoY
-10.8
-8.1
-0.6
0.5
12.3
16.7
6.4
18.5
4.0
6.4
-22.8
-35.4
9.9
-16.9
-25.2
-21.1
3.3
8.6
2.9
-17.8
-5.6
-4.9
-5.2
-4.7
Var
% QoQ
99.9
63.5
35.5
20.6
11.3
1.5
0.6
61.0
3.0
6.6
15.3
30.0
43.2
44.0
32.0
84.9
2.5
1.9
9.6
22.0
31.7
27.7
29.6
21.0
Sep-20
131
52
71
130
762
383
218
12
148
118
7
8
218
401
301
6
286
174
266
45
2,674
2,574
2,116
1,732
EBIDTA
Var
% YoY
-23.8
-18.7
17.3
0.9
6.3
16.4
-7.4
17.0
5.0
18.3
-24.4
-43.6
38.8
-21.0
-26.3
-67.4
8.5
16.4
3.4
-21.5
0.0
-0.1
-0.2
0.0
Var
% QoQ
6,064.9
319.9
32.1
35.4
-1.7
-1.8
-2.7
-18.6
1.9
3.2
13.1
49.5
147.0
3.6
21.0
LP
5.1
0.3
8.6
60.6
18.8
21.8
13.3
9.8
Sep-20
29
25
34
92
270
154
33
9
75
68
1
4
72
184
131
-2
203
-46
117
1
1,053
1,000
844
693
PAT
Var
% YoY
-60.4
-38.4
44.2
-11.5
5.3
30.5
-12.1
24.6
-20.7
17.4
-56.5
-58.8
121.2
-26.5
-39.8
PL
3.5
Loss
-5.4
-94.9
-7.2
-9.3
-5.1
-4.6
Var
% QoQ
LP
LP
50.6
34.3
7.6
13.3
-0.9
-18.3
5.0
3.0
74.2
46.0
LP
13.5
38.7
Loss
7.6
Loss
18.1
LP
61.3
71.0
44.9
29.7
Exhibit 2:
Quarter-wise sales growth (% YoY)
-0.9
Exhibit 3:
Quarter-wise net profit growth (% YoY)
6.7
-4.9
-5.6
-7.2
-23.7
-30.7
June-20
-40.3
Sep-20E
Dec-19
Mar-20
June-20
Sep-20E
Dec-19
Mar-20
Exhibit 4:
Sectoral sales growth-quarter ended Sep-20 (%)
18 17
10 9
6
6
4
Exhibit 5:
Sectoral PAT growth-quarter ended Sep-20 (%)
121
44 31
25 17
4
3
3
1
-1
-6
-8 -11
-17
-5
-7
-12 -12 -21
-26
-21 -23
-35
-38
-56 -59 -60 PL
Loss
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits
For Life Insurance: Sales = Net Premium, EBITDA = Operating Profits
October 2020
18
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Annual performance - MOFSL universe (INR Billion)
Sales (INR b)
Chg. YoY (%)
EBIDTA (INR b)
Chg. YoY (%)
Sector
FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E
Auto (17)
6,591 6,369 7,619 -11.6 -3.4 19.6 712 680 1,027 -20.0 -4.6 51.1
Cap. Goods (13) 2,539 2,418 2,855 1.9 -4.8 18.1 261 237 315 -5.7 -9.2 32.7
Cement (11)
1,368 1,286 1,507 0.6 -6.0 17.2 270 271 321 12.7 0.5 18.4
Consumer (17)
2,019 2,057 2,366 3.2 1.9 15.0 504 510 612 6.1 1.2 20.1
Financials (31)
4,636 5,131 5,782 17.5 10.7 12.7 2,871 3,186 3,602 23.7 11.0 13.1
Banks-PVT (11) 1,595 1,827 2,069 20.9 14.5 13.3 1,350 1,577 1,774 24.0 16.8 12.5
Banks-PSU (2) 1,255 1,372 1,527 17.5 9.3 11.3 878 929 1,059 27.4 5.8 14.0
Insurance (3)
1,054 1,172 1,334 14.1 11.2 13.8 51
54
63 37.8 7.6 15.7
NBFC (15)
731 760 852 15.3 3.9 12.2 592 625 707 16.9 5.6 13.0
Healthcare (19) 1,897 2,064 2,317 10.6 8.8 12.2 390 484 553 12.3 24.1 14.3
Infrastructure (3) 130 108 129 3.0 -17.0 19.4 40
34
38
4.5 -16.4 14.2
Media (3)
149 114 161 1.8 -23.7 41.2 44
31
53 -22.2 -31.1 74.0
Metals (8)
4,680 4,670 5,296 -10.7 -0.2 13.4 719 763 980 -30.0 6.0 28.5
Oil & Gas (15)
22,622 18,081 23,153 -3.4 -20.1 28.0 2,039 1,964 2,687 -20.7 -3.7 36.8
Ex OMCs (12) 12,242 10,191 13,493 -1.3 -16.8 32.4 1,714 1,429 2,054 -11.9 -16.6 43.8
Retail (7)
672 571 797 13.7 -15.0 39.5 80
48
91 49.1 -40.2 88.7
Technology (12) 4,605 4,798 5,408 8.9 4.2 12.7 1,065 1,152 1,324 7.6 8.2 14.9
Telecom (4)
1,642 1,738 1,885 10.2 5.8 8.4 622 712 832 61.2 14.6 16.7
Utilities (9)
3,222 3,146 3,564 9.4 -2.3 13.3 1,165 1,116 1,301 24.4 -4.2 16.6
Others (24)
1,724 1,487 1,911 17.1 -13.7 28.5 290 228 371 7.4 -21.3 62.8
MOFSL (193)
58,495 54,040 64,751 -0.2 -7.6 19.8 11,072 11,414 14,107 1.8 3.1 23.6
Ex OMCs (190) 48,114 46,150 55,090 1.2 -4.1 19.4 10,747 10,879 13,474 4.8 1.2 23.9
For Banks: Sales = Net Interest Income, EBIDTA = Operating Profits.; *MOFSL Excl. OMCs (193)
PAT (INR b)
FY20 FY21E FY22E
156 107 381
144 122 177
148 142 188
377 369 451
1,112 1,220 1,668
552 645 876
203 210 334
38
42
48
319 323 410
218 283 334
13
8
10
25
16
32
182 196 355
932 831 1,332
751 611 1,048
31
10
39
787 816 946
-222 -183 -158
490 445 550
100 45 169
4,491 4,427 6,473
4,310 4,207 6,190
Chg. YoY (%)
FY20 FY21E FY22E
-50.8 -31.3 255.9
-10.6 -14.9 44.9
27.1 -4.1 32.1
16.0 -1.9 22.0
37.7 9.7
36.7
23.7 17.0 35.7
643.2 3.3
59.3
1.1 11.2 12.8
7.6
1.1
27.1
12.7 29.6 18.2
-11.7 -36.5 20.2
-21.3 -34.3 94.3
-55.4 7.8
81.5
-24.3 -10.8 60.3
-17.1 -18.6 71.5
5.4 -68.5 293.5
2.9
3.6
16.0
Loss Loss Loss
8.7
-9.1 23.6
-16.2 -54.9 274.3
-6.4 -1.4 46.2
-3.6 -2.4 47.1
Valuations - MOFSL universe
Sector
Auto (17)
Cap. Goods (13)
Cement (11)
Consumer (17)
Financials (31)
Banks-PVT (11)
Banks-PSU (2)
Insurance (3)
NBFC (15)
Healthcare (19)
Infrastructure (3)
Media (3)
Metals (8)
Oil & Gas (15)
Ex OMCs (12)
Retail (7)
Technology (12)
Telecom (4)
Utilities (9)
Others (24)
MOFSL (193)
Ex OMCs (190)
N.M.: Not Meaningful
FY20
48.0
24.0
24.6
44.1
22.5
24.6
9.2
68.6
21.8
35.5
7.4
17.7
17.1
19.7
22.2
98.0
26.8
-14.2
6.4
36.3
26.7
27.5
PE (x)
FY21E
69.9
28.2
25.7
44.9
20.5
21.0
8.9
61.7
21.6
27.4
11.7
27.0
15.8
22.0
27.2
311.2
25.9
-17.2
7.1
80.4
27.1
28.1
FY22E
19.6
19.5
19.4
36.8
15.0
15.5
5.6
54.7
17.0
23.2
9.8
13.9
8.7
13.7
15.9
79.1
22.3
-20.0
5.7
21.5
18.5
19.1
FY20
3.0
2.4
2.4
12.0
2.3
2.7
0.6
11.4
2.9
4.5
0.9
2.7
1.0
2.0
2.2
13.4
7.0
3.3
1.1
2.9
3.0
3.0
PB (x)
EV/EBIDTA (x)
FY21E FY22E FY20 FY21E FY22E
3.0
2.7 10.0 10.6
6.6
2.2
2.1 16.6 18.5 14.2
2.2
2.1 14.7 14.4 11.9
8.8
8.2 32.2 31.5 26.0
2.0
1.8 N.M N.M N.M
2.3
2.0 N.M N.M N.M
0.6
0.5 N.M N.M N.M
10.0
8.8 N.M N.M N.M
2.5
2.2 N.M N.M N.M
4.0
3.5 20.3 16.2 13.9
0.8
0.7
2.6
5.0
4.1
2.6
2.4 10.2 14.7
8.7
1.0
0.9
8.5
8.1
6.2
1.8
1.7 11.6 12.2
8.6
2.0
1.8 11.9 14.3
9.4
12.9 11.5 39.5 65.6 34.6
6.3
5.7 18.7 17.1 14.6
5.4
8.0
8.6
7.8
6.8
1.0
0.9
6.2
6.4
5.3
2.8
2.5 13.7 17.2 10.1
2.7
2.5
9.9
9.6
7.6
2.8
2.6
9.9
9.7
7.7
FY20
6.2
10.2
9.7
27.2
10.3
10.9
6.7
16.6
13.2
12.8
11.5
15.1
5.7
10.0
9.8
13.7
26.0
-23.3
16.5
8.1
11.1
11.1
ROE (%)
FY21E FY22E
4.2
13.6
7.7
10.7
8.7
10.6
19.5 22.4
10.0 12.3
10.8 13.1
6.6
9.8
16.2 16.1
11.5 13.1
14.7 15.3
6.9
7.7
9.7
17.1
6.1
10.4
8.4
12.2
7.4
11.6
4.1
14.5
24.4 25.3
-31.4 -40.1
14.0 15.9
3.5
11.9
10.1 13.5
10.0 13.4
Div Yld (%)
FY20
1.4
1.8
0.5
1.8
0.6
0.7
0.0
0.0
0.9
0.5
0.9
2.9
1.5
1.4
1.0
0.2
2.0
0.6
6.0
0.7
1.4
1.3
EARN. CAGR
(FY20-FY22)
56.4
11.1
12.6
9.4
22.5
26.0
28.3
12.0
13.4
23.8
-12.6
13.0
39.9
19.6
18.1
11.3
9.6
-15.7
6.0
30.0
20.1
19.8
October 2020
19
 Motilal Oswal Financial Services
India Strategy | Back in the saddle!
Ready reckoner: Quarterly performance
Sector
Amara Raja Batt.
Ashok Leyland
Bajaj Auto
Bharat Forge
Bosch
CEAT
Eicher Motors
Endurance Tech.
Escorts
Exide Inds.
Hero Motocorp
Mahindra & Mahindra
Mahindra CIE
Maruti Suzuki
Motherson Sumi
Tata Motors
TVS Motor
Automobiles
ABB
Bharat Electronics
BHEL
Blue Star
CG Consumer Elect.
Cummins India
Engineers India
Havells India
K E C International
Larsen & Toubro
Siemens
Thermax
Voltas
Capital Goods
ACC
Ambuja Cements
Birla Corporation
Dalmia Bharat
Grasim Industries
India Cements
J K Cements
JK Lakshmi Cem.
Ramco Cements
Shree Cement
Ultratech Cement
Cement
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Consumer
Hind. Unilever
ITC
Jyothy Labs
Marico
CMP
(INR)
752
75
2953
466
13391
1016
2210
1136
1236
166
3129
607
137
6817
116
134
473
870
96
30
628
281
459
65
669
344
897
1278
724
669
1420
221
639
753
751
116
1548
262
747
20135
4047
2027
3828
1451
520
351
753
2111
169
148
377
Reco
Neutral
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Sell
Neutral
Buy
Sell
Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Buy
Neutral