4QFY16 | June 2016
VOICES
VOICES
India Inc on Call
VOICES, a quarterly product from Motilal Oswal Research, provides a ready reference for all the post results earnings calls attended by
our research analysts during the quarter. Besides making available to readers our key takeaways from these interactions, it also
provides links to relevant research updates and to the transcripts of the respective conference calls.
This quarterly report contains
Key takeaways from the post results management commentary for 122 companies, with links to the full earnings call
transcripts
Links to our Results Updates on each of the companies included
Summary of our Earnings Review for the quarter
Research & Quant Team
(Gautam.Duggad@MotilalOswal.com); Tel: +91 22 3982 5404
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.
24 November 2015
1

Contents
Summary
........................................................................................................................................................................................
3
Sectors
....................................................................................................................................................................................
7-109
4QFY16 corporate sector performance
....................................................................................................................................
110
Automobiles
7-13
Ashok Leyland.............................. 7
Bajaj Auto .................................... 8
Bharat Forge ................................ 9
BOSCH………………………………………. 9
Eicher Motors ............................ 10
Hero MotoCorp ......................... 10
Mahindra & Mahindra ............... 11
Maruti Suzuki............................. 12
Tata Motors .............................. .13
TVS Motor.....…………………………. 13
14-21
Capital Goods
ABB ........................................... .14
Alstom T&D India....................... 15
BHEL .......................................... 15
Crompton Greaves .................... 16
Cummins .................................... 17
Havells India .............................. 18
KEC International ....................... 19
Siemens ..................................... 20
Solar Inds .................................. .20
Thermax..................................... 21
Cement
22-23
Grasim Inds ................................ 22
India Cements………………………… 23
Ultratech ................................... 23
Consumer
24-39
Asian Paints ............................... 24
Britannia Inds ............................ 26
Colgate....................................... 27
Dabur India ................................ 29
Emami........................................ 30
Godrej Consumer ...................... 31
GSK Consumer ........................... 33
Hindustan Unilever .................... 34
Companies
ABB
Alembic Pharma
Alkem Laboratories
Allcargo Logistics
Alstom T&D
Ashok Leyland
Asian Paints
Axis Bank
Bajaj Auto
Bajaj Finance
Bank of Baroda
Bank of India
Bharat Forge
Bharti Airtel
Bharti Infratel
BHEL
Biocon
Bosch
BPCL
Britannia Inds
Cadila Healthcare
Cairn India
Canara Bank
Castrol India
Cipla
Colgate
Container Corp
Coromandel Internat.
Crompton Greaves
Cummins
Cyient
Dabur India
Pg
14
64
65
100
15
7
24
43
8
58
44
45
9
98
98
15
65
9
78
26
66
78
45
100
67
27
101
101
16
17
88
29
Jyothy Labs ................................ 36
Marico ....................................... 36
Page Inds ………………………………..37
Pidilite Inds ……………………………..37
United Spirit............................... 39
Financials- Banks
42-56
Axis Bank ................................... 43
Bank of Baroda………… ... ………….44
Bank of India …………………………..45
Canara Bank ............................... 45
DCB Bank ................................... 46
Federal Bank ............................. .46
HDFC Bank ................................ .48
ICICI Bank ................................... 48
IDFC Bank.................................. .49
Indian Bank…………………… ………..50
IndusInd Bank… ......................... 51
Kotak Mahindra Bank ................ 52
Oriental Bank of Commerce . …..53
Punjab National Bank ................ 54
State Bank of India………… .......... 54
Union Bank ................................ 55
Yes Bank .................................... 56
Financials – NBFC
58-63
Bajaj Finance.............................. 58
Dewan Housing Finance ........... .60
IndiaBulls Housing Finance ........60
M&M Financial .......................... 61
Muthoot Finance ....................... 62
Shriram Transport Finance ........62
SKS Micro Finance ..................... 63
Healthcare
64-70
Alembic Pharma ........................ 64
Alkem Labs................................. 65
Biocon ........................................ 65
Companies
DCB Bank
Dewan Housing Fin.
Dish TV
DLF
Dr Reddy's Labs
Eicher Motors
Emami
Federal Bank
Gateway Distriparks
Glenmark Pharma
Godrej Consumer
Granules India
Grasim Inds
GSK Consumer
Havells India
HCL Tech
HDFC Bank
Hero MotoCorp
Hexaware Technologies
Hindalco Inds
Hindustan Unilever
HMVL
ICICI Bank
Idea Cellular
IDFC Bank
India Cements
IndiaBulls Housing Fin.
Indian Bank
Indian Oil Corp
Indo Count Inds
IndusInd Bank
Pg
46
60
71
81
67
10
30
46
102
68
31
69
22
33
18
89
48
10
90
74
34
72
48
99
49
23
60
50
79
104
51
Cadila Healthcare....................... 66
Cipla ........................................... 67
Dr Reddy’s Labs ......................... 67
Glenmark Pharma ...................... 68
Granules India............................ 69
Lupin .......................................... 69
Sun Pharmaceuticals ................. 70
Torrent Pharma ......................... 70
Media
71-73
Dish TV ....................................... 71
Hindustan Media Ventures ........72
Jagran Prakashan ....................... 72
Zee Entertainment ..................... 73
Metals
74-76
Hindalco Inds ............................. 74
JSW Steel ................................... 75
Tata Steel ................................... 75
Vedanta ..................................... 76
Oil & Gas
77-80
BPCL ........................................... 78
Cairn India ................................. 78
Indian Oil Corp ........................... 79
Petronet LNG ............................. 79
Reliance Inds.............................. 80
Real Estate
81-82
DLF ............................................. 81
Mahindra Lifespaces .................. 81
Oberoi Realty ............................. 82
Retail
83-85
Jubilant Foodworks.................... 83
Shoppers Stop ........................... 84
Titan........................................... 85
Technology
87-97
Cyient......................................... 88
HCL Tech .................................... 89
Hexaware Technologies .............90
Infosys........................................90
KPIT Technologies ......................91
Mindtree ....................................92
Mphasis .....................................92
NIIT Technologies ......................93
Persistent Systems .....................94
TCS .............................................94
Tata Elxsi ....................................95
Tech Mahindra...........................96
Wipro .........................................97
Telecom
98-99
Bharti Airtel ...............................98
Bharti Infratel ............................98
Idea Cellular ...............................99
Others
100-108
Allcargo Logistics .....................100
Castrol India .............................100
Container Corp ........................101
Coromandel International .......101
Gateway Distriparks.................102
Info Edge (India) ......................103
Indo Count Inds .......................104
Interglobe Aviation ..................105
Kaveri Seeds.............................105
Kitex Graments ........................106
PVR ..........................................106
P I Industries ............................107
SRF Ltd .....................................107
Symphony ................................108
UPL...........................................108
V-Guard Industries ...................109
Index (Alphabetical)
Companies
Pg Companies
Pg
Info Edge (India)
103 PVR
106
Infosys
90 Reliance Inds
80
Interglobe Aviation
105 Shoppers Stop
84
Jagran Prakashan
72 Shriram Transport Fin.
62
JSW Steel
75 Siemens
20
Jubilant Foodworks
83 SKS Microfinance
63
Jyothy Labs
36 Solar Inds
20
Kaveri Seeds
105 SRF
107
KEC International
19 State Bank of India
54
Kitex Garments
106 Sun Pharmaceuticals
70
Kotak Mahindra Bank
52 Symphony
108
KPIT Technologies
91 Tata Elxsi
95
Lupin
69 Tata Motors
13
M&M Financial
61 Tata Steel
75
Mahindra & Mahindra
11 TCS
94
Mahindra LifeSpaces
81 Tech Mahindra
96
Marico
36 Thermax
21
Maruti Suzuki
12 Titan
85
Mindtree
92 Torrent Pharma
70
Mphasis
92 TVS Motor
13
Muthoot Finance
62 Ultratech
23
NIIT Technologies
93 Union Bank
55
Oberoi Realty
82 United Spirits
39
Oriental Bank of Commerce
53 UPL
108
P I Industries
107 Vedanta
76
Page Inds
37 V-Guard Industries
109
Persistent Systems
94 Wipro
97
Petronet LNG
79 Yes Bank
56
Pidilite Inds
37 Zee Entertainment
73
Punjab National Bank
54
Note:
All stock prices and indices for companies as on
3rd June 2016, unless otherwise stated

4QFY16 | India Inc on Call
Voices | 4QFY16
Voices
BSE Sensex: 26,843
S&P CNX: 8,221
Demand pick-up evident in domestic cyclicals
Hardening of commodity costs should drive pricing in FY17
India Inc has seen strengthening of demand in few sectors, mostly domestic
cyclicals. This could gather steam, with (a) expectations of a bountiful
monsoon after two years of deficient rainfall, (b) likely monetary easing, and
(c) consumption stimulus from Pay Commission awards in 2HFY17.
Stability in global commodity prices has helped global cyclical sectors like
Metals.
Benefits from input cost correction are largely behind now. Given the recent
hardening in crude and commodity prices, India Inc should see return of
pricing power in FY17.
Autos
Demand environment across segments is picking up, with robust 2W and CV
(M&HCV and LCV) growth in 4QFY16. However, growth in the PV segment is driven
by new launches, especially in the UV space. Exports for 2Ws, 3Ws and PVs continue
to be under pressure due to currency issues in African countries. Declining
commodity price benefit has largely bottomed out in January 2016. Raw material
prices are hardening, with costs likely to go up in the coming quarters.
Capital Goods
Although execution of orders in hand remains on track, the industry maintains its
cautious outlook on the pace of recovery in industrial capex. Industrial capex activity
could be a few quarters away, as capacity utilization for most companies – a
function of demand improvement – remains weak. Key sectors witnessing demand
traction are Transmission, Renewables, Defense and Roads.
Cement
The Cement sector reported strong volume growth of 17% YoY/QoQ in 4QFY16, as
(a) recovery in the South joined the momentum of the North, and (b) benign base
helped further. Companies with expansions continued to lead, with 30-40% YoY
growth. Southern players posted 10-20% growth after a long period of de-growth.
On ground price recovery, and lagged volume growth in the North and AP market
led to an interim disruption in discipline. Consequently, average 4QFY16 realization
declined 5% QoQ (and 10% YoY), with greater impact on North-based players. The
sharp price recovery over March-April and sustenance thereafter translates into
spot cement prices being 5-6% higher than the 4Q average. It augurs for strong
bounce-back in profitability in 1QFY17. Costs continue to offer tailwinds, with (a)
sharp decline in prices of pet coke and packaging, and (b) positive operating
leverage.
Consumer
Volume growth remained tepid for most companies in the sector. The rural segment
continued to slow down further or did not show signs of sequential improvement
for most companies. The proportion of rural sales is lower than urban for all
companies, but this segment is crucial for incremental growth. Management
commentary indicates that while 1HFY17 demand is expected to be muted, demand
is likely to be stronger in 2HFY17, led by likelihood of a good monsoon and benefits
June 2016
3

Voices | 4QFY16
arising from government schemes to boost rural growth. Material costs remained
soft in 4QFY16, but are now hardening, particularly for companies needing
significant crude-related raw materials or packaging materials. Gross margins were
at multi-year highs for a few companies; some chose to use the headroom to spend
more on advertising. While gross margin improvements may have peaked,
hardening material costs, albeit off a low base, present the likelihood of realization
growth resuming. Some companies have already started taking price increases.
Excise benefits started going off from May 2015 and organic growth is likely to track
reported growth for a large part of FY17.
Financials
We expect fresh additions to be lower in FY17; however, net slippages are likely to
remain positive and credit costs are expected to remain elevated. Retail asset
quality position has remained impeccable. Strong growth trends in CV, CE and
unsecured loans have sustained, which should lead to higher share of retail loans.
Given the competitive landscape, system loan growth is likely to remain moderate,
with private banks continuing to gain market share. Margins are expected to remain
largely stable (negligible impact from MCLR).
Healthcare
In Pharmaceuticals, overall sector sales and EBITDA margin were in line with our
estimates. US growth was boosted by few important launches during the quarter.
India formulations sales growth also remained healthy for most companies under
our coverage. However, emerging markets growth for large caps continues to be hit
by currency crisis and political turmoil. We expect US sales to maintain momentum,
with increasing number of approvals for Indian companies. Emerging market growth
should stabilize with currency. Overall earnings should remain buoyant over the
next few quarters.
Media
Broadcasters
Ad performance for Broadcasters remains strong. Zee reported its 4th strong
quarter of ad growth (29% YoY). However, Sun TV’s ad performance continued
to be impacted by the Chennai floods overhang, as ad inventory consumption
took a beating.
With BARC recently increasing rural representation in television ratings, major
broadcasters with deep rural distribution networks are expected to monetize
the rural content consumption.
Subscription growth is expected to pick up in 2HFY17 post a 6-month delay in
DAS III digitization.
Watch out for developments on interconnect agreements between
broadcasters and distribution platforms, as these could determine how margins
play out across the media value chain.
Print companies
Jagran and HMVL continued their strong ad performance and grew 13% and
15%, respectively in 4Q. DB Corp reported flat ad growth, as the impact of ad
volume loss continued (ad volume loss in FY16 was 16.5% and DBCorp took an
ad rate hike of ~11% for FY16).
Ad growth is expected to gain steam in 2HFY17.
Circulation revenue growth is likely to remain steady.
June 2016
4

Voices | 4QFY16
Benign newsprint cost has aided margins in FY16; Print companies believe that
newsprint prices have bottomed out and there could be a 4-5% escalation in
prices in FY17.
Metals
While few companies benefited from higher realization and operating leverage
(primarily in steel) or lower cost (in aluminum), others like NMDC suffered due to
lower realization. EBITDA for our coverage universe declined 14% YoY to INR111b.
Adjusted PAT declined ~137% YoY to INR10b. We see better outlook for (a) steel on
price hikes and lower imports, and (b) aluminum on declining coal cost and higher
volumes.
Oil & Gas
In Oil & Gas, GRMs were subdued sequentially, reflecting lower benchmark GRMs.
Inventory movements across the three OMCs diverged: HPCL recorded modest
gains, BPCL modest losses and IOCL was impacted the most due to its higher
inventory day cycle (~40days; 2x of HPCL and BPCL). The government reversed the
OMCs’ 3QFY16 under-recoveries; 2QFY16 subsidy burden of upstream companies
was also partially reversed. GAIL’s management guided volume uptick in FY17,
driven by power-pooling volumes. RIL’s management reiterated its confidence in the
economics of its key projects. While launch date for JIO remains uncertain, the
management guided launch within a few weeks to months; trial customer base has
crossed the 0.5m mark and initial reviews are encouraging.
Real Estate
The sector witnessed some seasonal uptick amidst broader weakness. Sales
momentum remained muted. The NCR continued to hold the tag of weakest region,
barring some resilience of DLF phase V. Improvement was visible in Mumbai, with
successful launches of OBER (Borivali) and GPL (Vikhroli). Improved commercial
monetization was visible, with better leasing run-rate for DLF and PEPL. Demand
improvement is met with scarce supply, aiding rental growth headroom. The focus is
on completing existing projects, which leads to increased spending. This coupled
with higher outgo towards capex and purchasing stakes in mature assets (PEPL,
BRGD, PHNX) has resulted in negative FCFE and rise in gearing. Customer collections
moderated in line with declining presales and fewer launches.
Retail
The three Retail companies under our coverage – Titan, Jubilant Foodworks and
Shopper’s Stop – posted weak sales growth YoY for 4QFY16. Sales were 3-4% lower
than expectations for Jubilant Foodworks and Shopper’s Stop due to lower than
forecast SSSG in what remains a weak operating environment. For Titan, the
jewelers’ strike and implementation of the PAN card rule impacted jewelry segment
demand, but the decline in watch segment sales YoY was a negative surprise. While
the management of Titan reiterated the earlier stated sales targets for jewelry
segment for FY17, the near term outlook is dull from a revenue perspective for all
three companies. While Jubilant did better than expected on the margin front, Titan
and Shopper’s Stop posted weak margin performance as well. The management of
Shopper’s Stop guided for 8% SSSG in both its key formats – Shopper’s Stop and
Hypercity – and stated that the latter is likely to turn profitable by the end of FY17.
The management of Jubilant indicated that in FY17, price increases are likely to be
only around 3%; with new launches under the lower end Pizza Mania sub-segment,
the focus is more on volume growth in FY17.
June 2016
5

Voices | 4QFY16
Technology
Client budgets for FY16 are expected to be flat to positive. Pipeline and incremental
demand continue to be driven by digital/transformational projects. Customers have
been optimizing costs in run-the business activities, and are ploughing
savings/additional spend in Digital. Demand across verticals is likely to remain
sound, barring in Energy, which has been impacted by drop in oil prices. Continued
focus is expected on investing in augmenting the front end, capability building,
expansion of services portfolio and building digital practice. Simultaneously, efforts
to build on automation and enhance capabilities in artificial intelligence to improve
productivity remain.
Utilities
PGCIL’s performance was strong, backed by strong capitalization. NTPC continues to
suffer on lower other income and increasing investments in projects. Coal India
suffered on account of decline in ACQ realization and lower e-auction prices,
although partly offset by higher e-auction volumes. Outlook for PGCIL remains
strong on strong capitalization guidance. NTPC would benefit from increase in
capitalization from ~1.9GW in FY16 to 3.7GW in FY17. Coal India's recent price hike
is timely, but risk to volumes and e-auction realization is a concern.
June 2016
6

AUTOMOBILE | Voices
Key takeaways from management commentary
AUTOMOBILES
Demand environment across segments is picking up, with robust 2W and CV (M&HCV and LCV) growth in 4QFY16.
However, growth in the PV segment is driven by new launches, especially in the UV space. Exports for 2Ws, 3Ws and
PVs continue to be under pressure due to currency issues in African countries. Declining commodity price benefit
has largely bottomed out in January 2016. Raw material prices are hardening, with costs likely to go up in the coming
quarters.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Expect overall volume of 4.6m units, up 16%
Domestic volumes
~2.6m 2Ws
~300k 3Ws
Export volumes
~1.35m 2Ws exports
~250k 3Ws
Royal Enfield:
Production guidance of
~675k units(v/s earlier guidance of ~620k
units for CY16)
1HFY17 - Low single-digit growth
2HFY17 - High single-digit growth
Tractor industry growth of ~10% in
1QFY17
If monsoons normal as predicted, growth
to be higher than 10%
Export volumes to be flat in FY17; Baleno
exports to be ~50,000 units in FY17
JLR product lifecycle on track, with F-Pace
launched in April 2016, EX in US in May
2016, and XFL in China in 2HCY16
~20% in FY17
Margins
INR2.5b-3b in FY17
Capex Plans
Bajaj Auto
Eicher Motors
Hero MotoCorp
In the same range as FY16
Total capex: INR10b in FY17
Royal Enfield ~INR6b for FY17 for
investment in 3rd plant in Chennai,
technical centers at Chennai and UK
VECV: INR4b in FY17
INR11b-13b in FY17
Mahindra
& Mahindra
Maruti
INR40b in FY17, of which ~40% to be
spent on product development
JLR:
GBP3.75b-3.8b in FY17
Cherry JV:
FY17 capex to be funded from
internal accruals
Tata Motors
Ashok Leyland
Current Price INR 106
Target Price INR 124 | 17% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
FY17 M&HCV Industry growth of 15-20%,
driven by replacement demand, infra
demand. There could be capacity constraints for the industry (more so for
supply chain) in 4QFY17.
AL gained ~420bp market share to ~32.7% in FY16, 5th straight year of gain in
every single segment and region it operates in. It expects further market share
gain driven by a) new product launches in ICV segment (~17% market share
currently), and b) gaining market share in markets where it is currently weak.
Net debt:
~INR11.5b or 0.24x Net debt:Equity (v/s ~INR25.4b in FY15). Consol
Net debt at ~INR20.5 (ex Financing business).
Equity raising resolution is just an enabling resolution,
which it has been taking
since last 6-7 years. It has no plan to raise funds through equity in FY17 or in
medium term.
June 2016
7

AUTOMOBILE | Voices
Capex guidance for FY17
at ~INR5b (incl investments), as against ~INR2.2b in
FY16. Invest money rather on building capabilities rather than capacities.
Pantnagar plant enjoys fiscal incentives till FY20.
Price increase of 1-1.5% in 4QFY16/1QFY17.
Pricing strategy:
AL doesn't price products to gain market share. It focuses on
gaining market share through differentiated and better products. AL has 11
businesses internally. All these businesses are measured on profitability, on
which compensation of each businesses is dependent.
Defence: It expects contribution from 11 orders won by AL, from FY17 with
potential revenues from defence on full ramp-up of these orders at ~INR20b p.a
(v/s defence revenues at ~INR5b currently).
Road vs Rail: 80% by road. Rail is largely for bulk materials for processing. The
management doesn't see threat to its business from rail.
Bajaj Auto
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 2,635
Target Price INR 2,905 | 10% Upside
Buy
FY17 Volume growth guidance: 4.6m units, a growth of ~16%
Domestic 2 wheelers:
~2.6m units, driven by additional volumes from V15,
full year benefit of Avenger and Industry growth (9-10% growth).
Domestic 3 wheeler
volumes at ~300k units, driven by diesel and cargo
segment (introduced in 4QFY16). The management expects growth in
noncargo/ diesel to be at~8% YoY.
Exports:
~1.6m units (incl ~250k 3Ws). The Company is likely to add 8-9
countries (~16 countries added in FY16). New markets are expected to add
15-20k units a month over the next 1-2 years.
Re60 (Qute):
The management guided ~10,000 units in exports in FY17.
Exports Pricing:
USD availability issue continues to impact Egypt, Nigeria and
Venezuela. However, Bajaj has maintained its pricing in exports.
Nigeria:
Normal volumes in Nigeria are ~40-45k units /month; however
currently demand at 20-25k units/month. Agreement of Nigerian Central Bank
with China Central bank for direct remittance of Yuan would help Chinese
exports.
RM cost:
Material costs have increased from Apr-16 as steel prices have gone
up. BJAUT has partly passed on the increase.
Price increase:
Customer level – 3W INR1,500/unit (IR900 at co. level) and 2W
INR500 (INR300 at co. level) in Apr-16.
Product pipeline:
Pulsar upgrade in 2HFY17, Pulsar 400cc in 2-3 months. All new
Platina in next few days
Capex:
Management has guided a capex of ~INR2.5-3b in FY17.
Impact of IND AS:
The MTM gain/loss which keeps fluctuating every quarter and
impact P&L A/c will flow through other comprehensive income. Besides change
in FMP income recognition to accrual basis from cash will result in addition to
other income of INR1.5-2b
Emission and Safety norms:
CBS/ABS safety norms from April1 2017 for new
models and existing products from April1 2018. BS IV cost to be more than
INR500/vehicle.
June 2016
8

AUTOMOBILE | Voices
Bharat Forge
Current Price INR 751
Target Price INR 903 | 20% Upside
Buy
Click below for
Results Update
Commodity price deflation
would have impact of ~INR6,000/ton on FY16
realizations.
Transmission component for CVs:
It has developed 4 new products for CV
transmission, and expects orders in FY17.
PV Export revenues of USD100m by FY18,
as against ~USD30m in FY16 (~100%
growth in FY16).
Oil & Gas contribution continues to fall,
with ~5% for 4QFY16 as against ~9%
for FY16 (v/s ~15% for FY15).
USD100m revenue target for new segments:
For newer segments like
Aerospace, Rail etc, it is targeting revenues of USD100m by FY20. While Rail’s
revenues currently at USD5-10m and Aerospace is under USD5m, it expects
strong ramp-up in Rail in FY17 and in Aerospace in FY18 onwards based on new
programs they have on hand.
Capex:
It invested ~INR5.5b in FY16, and plans to invest INR2-2.5b in FY17 (v/s
~INR1b guidance in 3QFY16). Consol: Rs1000cr (incl JVs) in FY16.
Increase in working capital due to weak demand: Consolidated inventories (by 6
days YoY) and receivables (~14 days YoY) have increased due to lower demand
from US CV and Oil & Gas due to inventory de-stocking at customers end. This is
largely reflected in trading subsidiary BF International.
BF Aluminiumtechnik EUR250m order
is to be executed over platform life of 7-8
years, with full ramp-up by CY18 and annualized revenues of EUR30-35m.
Alstom JV
(BHFC’s share) reported revenues of ~INR8.86b (+51%) and PBIT of
~INR837m (+310%) for FY16. With plant fully operational, it expects to shift
atleast 2 turbines in FY17, subject to preparedness of its customers.
Impact of IndAS:
Bill discounting liability will now reflect as short term debt
under IndAS. Under current standards it was an off balance sheet liability.
Bosch
Click below for
Results Update
Current Price INR 22,257
Target Price INR 24,659 | 11% Upside
Buy
BOS’ Gasoline and Diesel business grew in the double-digits. A decline in the
share of diesel PV was more than offset by a robust growth in the CV and tractor
segments
In the non-auto business, security systems witnessed a double-digit growth,
while revenue from starters & generators remained flat. The growth in Thermo
technology was primarily due to one-time export orders
Management provided a capex guidance of INR7.7b for FY17 towards a new
office building in Bangalore and capacity expansion at the Nashik and Bidadi
plants
The implementation of BS VI for 2 wheelers presents a long-term opportunity
for BOS
The localization for BSIV CRDi is relatively higher.
June 2016
9

AUTOMOBILE | Voices
Eicher Motors
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 18,782
Target Price INR 20,376 | 8% Upside
Buy
Royal Enfield
RE order book at ~3 months for highest selling model (v/s 3-4 months in
4QFY16).
It is witnessing Same Store Growth of ~15% in Metros.
Adding over 100 dealers in FY17, of which more than half in tier-3/4 cities.
Production guidance of ~675k for FY17 (v/s earlier guidance of ~620k for CY16)
and exit production of over 60,000 units. For FY19, it maintained target of 900k,
driven by 3rd plant commissioning operations in FY19.
Himalayan has received very good response, with majority of orders from new
customers.
In 5QFY16, it has entered two very large 2W markets viz Indonesia and Thailand
– with set-up of showrooms in Jakarta (Jan-16) and Bangkok (Feb-16).
Capex of ~INR6b for FY17 for investments in 3rd plant in Chennai, technical
centers at Chennai and UK.
VECV
VECV’s is witnessing traction for Pro series in HD, as recovering demand is
enabling fleet operators to try new trucks.
MDEP engine volumes at ~6000 units (+55% YoY, +27% QoQ).
Targets capex of ~INR4b in FY17.
Polaris JV:
Sold ~650 units since launch in Aug-15. Currently sold through 33 dealers
in 7 states, but plans to expand to all markets including BSIV states by end CY16.
Hero MotoCorp
Current Price INR 3,147
Target Price INR 3,325 | 6% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Outlook positive for 2HFY17:
Assuming normal monsoon, expect good growth
in 2HFY17 (high single digit growth v/s low single digit for 1HFY17) for both
industry and HMCL. Apr-16 witnessed strong demand due to timing difference
in regional festivals and marriage season.
Price increase
in the range of INR 200-675 to be taken from 6 May 2016 on all
the models.
HMCL’s dealer inventory
stood at 5-5.5 weeks in April as compared to 6 weeks
in 3QFY16
Spare sales
grew by 16% in FY16. It expects 14-17 % growth in spares over next
2-3 years.
Commodity costs:
According to management, commodity prices have started
rising. HMCL is likely to see an impact in 2QFY17. Steel price increase to have
~50bp impact from 2QFY17 onwards.
LEAP Cost Cutting Program
has delivered savings of ~90bp (~INR2.78b) in FY16
and is expected to result in an incremental saving of ~90bp in FY17.
Royalty:
Royalty on new products to reduce substantially over next 2 years from
30bp in FY16, as models bearing royalty are phased out.
R&D spend
to increase from 1% in FY16 (~0.4% in FY15) to 1.2-1.3% in FY17,
with long term target of 1-1.5% of sales.
Ad spends
to moderate from FY16 levels by 20-25bp in FY17
10
June 2016

AUTOMOBILE | Voices
Haridwar plant
volume contribution to reduce from ~38% to <30% by FY19, as
contribution from new plant increase. It expects impact of ~100bp on margins in
FY19 on exhaustion of excise benefit.
Scooters capacity
currently stands at ~100k/month or 1.2m pa (ex Gujarat).
Management has indicated scooter production increased to ~125k/month from
May 2016.
Gujarat plant
enjoys VAT incentive for sale in Gujarat state. Gujarat plant will
start capacity of 0.75m in 2QFY17 (v/s earlier target of 1.2m) and will be further
expanded to 1.8m units in phases.
Andhra Pradesh plant,
for which it has signed MoU with the state government,
would start operations by end FY18.
Exports:
Reviewing exports target of ~10% of volumes by FY20, as headwinds
are very strong in key target markets. Ongoing currency turmoil in countries like
Nigeria, Argentina, Mexico etc has delayed HMCL’s export plans. Its plans to
enter Brazil likely to get delayed. It has appointed distributor in Nigeria and has
started dispatch.
Capex:
It is planning for capex of ~INR11-13b in FY17.
Hero FinCorp
(financing arm where it has ~48.5% stake) is the largest financier
of HMCL 2Ws at ~50k/month. It financed ~470,000 units in FY16 and has
targeted to finance 650,000-700,000 units in FY17. Hero FinCorp already has
presence at 650 dealership of HMCL (at ~1,500 touch points).
Mahindra & Mahindra
Current Price INR 1,353
Click below for
Results Update
Target Price INR 1,472 | 9% Upside
Neutral
Farm Equipment Segment:
Tractor industry declined ~10% in FY16, whereas M&M's domestic tractor
volumes declined ~8% resulting in ~100bp market share gain to ~41%.
It launched 6 new products (incl. variants) in FY16 and 1 (Yuvo) in Apr-16.
Recently launched Yuvo has 5 variants across 32-42HP category, which is ~70%
of the industry volumes.
Global farm machinery industry (excl. tractors) is estimated at USD94b and is
~2/3rd of total farm equipment industry. Its recent M&A in FES (Mitsubishi Agri
and Sampo) in FY16 were of strategic importance done with objective of
strengthening its position in farm machinery business. It is focused on solutions
for a) Rice value chain (Mitsubishi Agri), and b) combine harvesters (Sampo).
Applitrac business (farm machinery) revenues declined by ~11% in FY16 to
~INR2.37b (<2% of FES segment revenues).
While it has guided for the industry growth in 1QFY17 at ~10%, if monsoon are
as normal (both timing and coverage wise) as predicted, then industry could
stronger growth than 10%.
Auto Segment:
It had 14 new launches (including major refreshes) in Auto segment in FY16
(6UVs, 1 van, 3 SCVs, 3 Trucks and 1 Bus).
KUV1OO has got very good response, with over ~40,000 bookings since Jan-16
launch and majority of the orders are for 6 seater variant.
In Auto segment, rural contributes ~40% to volumes (+2pp increase in FY16).
The company doubled its exclusive rural touch points to over 2,000 in FY16,
11
June 2016

AUTOMOBILE | Voices
having presence in 2800 Tehsils in rural markets. It has reach of over 300k
villages (of 650k villages in India).
While it doesn't plan to launch any new platform in FY17, M&M would be
focusing on leveraging on all key launches of FY16.
Shared mobility (eg Uber) is expected to have some impact on growth for the PV
industry. However, managements sees impact on mid-size segment where
product positioning is relatively weaker. While consumer might leverage
onshare mobility for daily drive, for aspirational and weekend use he might
chooseobject of desire/lifestyle product, which augurs well for SUVs.
Maruti Suzuki
Click below for
Results Update
Current Price INR 4,220
Target Price INR 4,525 | 7% Upside
Buy
MSIL’s rural sales grew 9% in FY16 vis a vis a 22% growth in FY15. Implied Urban
growth is ~13%. Rural contributes ~35% to MSIL’s domestic volumes (stable over
FY15).
Export volumes are expected to be flat in FY17. Baleno exports (targeted at
50,000 units in FY17) would dilute weakness in key Sri Lankan market due to
increase in import duties.
Royalty on Vitarra Brezza to be INR based with lower rates than 5% due to
contribution of Indian R&D unit.
INR80m paid to initial S-Cross buyers to compensate for price cuts.
It expects marketing spend to remain at higher level.
It doesn’t see meaningful scope to increase localisation in medium term.
Tax rate for FY17 at 25-26% due to IndAS implementation as it would result in
accrual accounting of tax-free FMP income (from cash accounting currently).
Gujarat plant commissioning in Jan-17.As per the management, 6 months
required to ramp up the plant. No announcement on phase 2 of Gujarat plant.
Capex: It invested ~INR24b in FY16 on product development, marketing
infrastructure, R&D and annual maintenance, of which INR 6-7b on annual
maintenance capex. Marketing infrastructure spend has been deferred to FY17,
reflecting in lower capex v/s initial guidance of ~INR 40b for FY16. It expects
FY17 capex at INR44b, out of which ~40% would be on product development.
Indian Accounting Standard (IndAS): It expects limited impact of IndAS adoption
from FY17. While there would be changes in income recognition on extended
warranty schemes and other income, it doesn’t expect any material impact of
change in accounting of embedded leases.
June 2016
12

AUTOMOBILE | Voices
Tata Motors
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 454
Target Price INR 524 | 15% Upside
Buy
FY17 capex at GBP3.75-3.8b.This could lead to negative FCF(doesn't include
capex of JV)
Provisions for airbag related recall at GBP67.4m, which would be utilized over 1-
4 years.
Tianjin port blast related reversal of provisioning at GBP56m, including
insurance claims and car available for sale.
JLR’s product lifecycle on track with F-Pace launch starting Apr-16, XE in US in
May-16 and XFL in China in 2HCY16.
Chery JV FY17 capex would be funded from internal cash flows. JV has debt:
equity of ~1x.
Tax rate lower in FY16 due to deferred tax credit for future reduction in UK tax
rate.
By 2020, only small portion of JLR volumes would be from EV/hybrid, but
contribution from EV/Hybrid to pick-up substantially post 2020.
TVS Motor
Current Price INR 297
Click below for
Results Update
Target Price INR 339 | 14% Upside
Buy
New launches:
Victor launched in 4QFY16 with volumes of ~13000 units in Mar-
16. Company to make it available Pan India next month. Dispatch of Apache
200R to rest of the country will start from next month.
Targeting exit market share of 15.5-16%
of domestic 2W Industry by FY17 and
~18% by FY18
Capex:
FY16 capex was at INR4.5b; the management has guided ~INR 4b in
FY17.
BMW alliance:
Project is on track, with its first product (G310R) to be launched
in H2FY17.
It maintains EBITDA margin target of ~10% by FY18 (without BMW alliance)
It invested ~INR1.7b in FY16 in subsidiary and associate (~INR700m in
Indonesian subsidiary and ~INR1b in NBFC arm through preference shares) and
plans further investments of upto ~INR1.5b for FY17
Indonesian subsidiary had EBITDA loss of ~USD6.4m (v/s USD8m in FY16) and h)
Capex for FY16 at ~INR4.5b and target of ~INR4b for FY17.
Inventory at dealers stands at 28-31 days.
Tax rate to be ~27-28% range in FY17.
TVS Motor’s financing arm, TVS Motor Services had a loan book of ~INR40b, of
which ~50% is for 2Ws (exclusively for TVS Motor).
June 2016
13

CAPITAL GOODS | Voices
CAPITAL GOODS
Although execution of orders in hand remains on track, the industry maintains its cautious outlook on the pace of
recovery in industrial capex. Industrial capex activity could be a few quarters away, as capacity utilization for most
companies – a function of demand improvement – remains weak. Key sectors witnessing demand traction are
Transmission, Renewables, Defense and Roads.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Order book/inflow
Operating Margins
BHEL
L1 in 12GW of projects; expects 7GW to
be finalized by FY17
Expects ordering in FY17 to be at levels
similar to FY16
Cummins
Expect domestic revenue to grow 8-12%
in FY17
Expect zero to negative export revenue
growth in FY17
Operating margin to remain stable in
FY17
Order intake guidance: 15% growth
Revenue guidance: 12-15% growth
Margin improvement of 50bp
Larsen and
Toubro
Order inflow for FY16
robust at INR437b, up
41%
Order backlog at
INR1,107b provides
strong revenue visibility
for next four years
Order inflow for FY16
stood robust at INR437b
up 41% YoY
Order backlog at
INR1,107b provides
strong revenue visibility
for next four years
Consolidated order book
at INR2,500b, up 7%
Order inflow for FY16 at
INR1,368b, down 12%
Operating margin for FY16 at -7.6% as
compared to 7% in FY15; margin
deterioration led by execution of JDU
projects
16.1% in FY16 as compared to 16.7% in
FY15
EBITDA margin for FY16 at 12% as against
12.3% in FY15
ABB
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 1,213
Target Price INR 1,220 | 1% Downside
Neutral
Management remained cautious on the pace of industrial capex recovery, given
the continued poor capacity utilization levels, and any pick up depends on
demand improvement.
Positive on sectors such as Railways, Renewable, Urban Mobility, Smart Cities
and Water & Waste Water projects.
Prefers cash over sales and will not push sales to customers in case of possible
issue regarding payment recovery.
Exports contributed 13-15% of revenue and grew in double digits, aided by sales
to African and South East Asian countries.
Renewable to contribute 16-17% of sales, led by strong execution of solar
related orders and growth expected to remain robust.
Gross margin expansion being driven by better operational efficiencies, lower
raw material prices, increased localization, fall in EUR and good execution.
Management expects gross margin to remain in the 35% range.
Localization efforts continue, especially in the areas of drives, motors, switch
gear and instrumentation. Higher localization is also aiding margin
improvement.
June 2016
14

CAPITAL GOODS | Voices
Alstom T&D India
Current Price INR 341
Target Price INR 430 | 26% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Execution
Sales impacted by realignment of milestones, where refocussed to "Output
trigger"event for customer and book sales near to project completion, customer
push back as land, clearances were not available
Earlier sales booked on sending the equipment but now done only post erecti
on/comissioning
FY17 could remain challenging
Backlog is not lost - sales were lower vs estimate. Rs8000cr of order book with 2
year of execution so not worried.
Sales could become more lumps as relaigned with the cash payments from
thecustomer and in fewer packages than eaerlier done
CK2(Rs1450cr) - FY18 is target date and work started from FY15 when
orderawarded, design done and work at site has commmenced, major amount
of CK2 will happen in FY18
Good amount of mfg and delivery will happen in FY17 and FY18 as well
Margins improved on selective bidding and so gross margins are better
competition has remained high and there is no fall in this.
Working Capital
Remains stretched and may not improve much as SEBs and private sector
remainstretched
PGCIL payment terms are good
T&D market
UDAY impact not yet seen by them as no states have started ordering yet
SEBs and PGCIl continue to increase transmission capex
Overall market remains sluggsh and has declined for 4th year in a row
PGCIL orders will continue, Will see more projects on TBCB
Orders for static compensators and SVC continue to be delayed from PGCIL but
some states could look at ordering
Not pariticpaed in the 1000MW Pugular Trichur order on strategic reason
Impact of GE
Exports not being focused in a big way
Can offer more in Solar, Wind as combined entity than GE alone
BHEL
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 118
Target Price INR 110 | 7% Downside
Neutral
Growth in Solar
Had orders worth Rs620cr(+76% YoY) coming in solar for them
Commissioned 15059MW of which 13061MW in utility, 650MW in Industrial
and 125MW in Industrial
Staff cost to be flat YoY in FY17
Did orders worth 9782MW in FY16 and will do a similar no. in FY17 as well
12GW of orders they are well placed and 7GW will come through this year for
them, 7GW is equivalent to Rs20,000cr and 12GW is equal to Rs28000-30,000cr
execution
50% of order book is stressed and 3 key projects not moving
15
June 2016

CAPITAL GOODS | Voices
Yedadri (4GW) - still waiting for the EC of this project, TOR approved by EAC,
BHEL doing engineering and bought out components but waiting for the final EC
Manuguru (4*270MW) - not got EC for this
Ennore - work stopped post SC hearing - will get final judgment soon
Rs 7400 Cr of orders taken out from the order book - includes DB Power
Singraulli, Avantha Phase 2, Jindal Power 1800cr, Iraq and Senegal
Target is to bring down the material costs
66% of order book is on EPC basis and 34% on BTG
Pricing has stabilized and should get better from here on
Orders
UP Jawaharpur, Obra, Patratu, UMPP(2-3) to come up in FY17
Cheyur - clearances down and waiting for SBD
Bedabahal - EC awaited
Banka, Bihar - no major issue in this
Deogarh - have the coal block - waiting for the SBD
FGD at 0.5cr/MW and SCR at 0.8cr/MW
Slow moving order book - Rs50,000cr of such orders are there
Apart from Bhusawal expect most of the rest to be booked during FY17
Receivables from these stressed assets are at Rs2139cr and provided for
Rs1089cr
FY17 market to be 12GW same as in FY16 but higher than 8 GW in FY15
Crompton Greaves
Current Price INR 72
Target Price INR 70 | 2% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Q416 is a good quarter and they have maintained the traciton
Discontinued operations are for intertnational divestment and also peripheral
business of systems which is being shutdown
Continuing
operations are CG India, ZIV(Automation), Emotron -
Sweden(Drives), Rotating machines (Hungary)
Shifted to IND AS already from I GAAP
Writedown of Rs1414cr pertains to business sold and peripheral business being
shut down
Growth will be higher than the GDP growth
FY17 tax rate seen at 20-22% as they get good R&D benefit as well
Industrials
Have seen good traction since Q116 and a strong Q4 as well
FY16 low voltage motors +13% YoY vs in dustry down 3% YoY
Rail - degrwon in FY16 on dealys in rail orders as the order process is being
changed,Q3-Q4 was weak but expect a large order from rail which is coming to
them
Key supplies to irrigation projects while HT motors are more for replacement -
new capex is not happening, also global contracts to Lafarge
Drives + motors are sold together, motors supplied across industries incl. steel,
cement, power, O&G, 35% share in motors
Power
Has improved execution considerably
Expect sales grwoth in FY17 as well
16
June 2016

CAPITAL GOODS | Voices
Engineered Products division - this is the power systems business in India which
is being shut down
5-6 states taking the lead in UDAY and gaining traction, significant movement in
Rajasthan; earlier only supplying switch gear but now also transformers
Difference in SA and Consol power on account of sales from marketing office
abroad to systems business for product sales
Nashik can do GIS upto 245kv and will tie up with a partner to do the higher
voltage as well
Exports in SA - Rs175cr of export, Power is Rs153crs, Order book at Rs700cr
SA automation is for the ZIV business in India
No plans to sell any land at Kanjurmarg at the moment - have a plant there
which may be moved and a plant got there
Sale to First Reserve
9 May - Share purchase agreement has been done and look for closure by 31st
October
Intent is to divest ZIV as well by FY17 end
ZIV - performance is getting better. Spain is +ve and France too
Looking to sell by year end
Can do Rs6500cr of sales, Rs450cr of EBITDA and Rs325cr of PAT in FY17
Cummins India
Current Price INR 798
Target Price INR 900 | 13% Upside
Neutral
Click below for
Detailed Concall Transcript &
Results Update
Power Gen market has registered flat growth for last 2 years; however Cummins
power gen segment has grown at 18% CAGR indicating market share gain
Shutting the Pirangut plant and shifting to Daman will add INR100m to the
bottom line on yearly basis
Exports decline 30% YoY to INR3.2b led by depressed demand for LHP/HHP
gensets from key markets like LATAM, Africa, Middle East, China, and Europe.
On the back of weak end markets, it has scaled down its exports guidance to flat
to negative from its earlier guidance of 0-5% growth in FY17.
Exports (36% of sales) are still very uncertain and see no cause for optimism at
this point in time. This is primarily due to the fall in oil and commodity prices
which have impacted the demand from Africa, M. East, LATAM.
Cummins Inc is moving production from Seymour (US) to Phaltan plant and this
would be part of CTIL(unlisted entity and not part of listed Cummins India). This
is for the K19 engines which are also made by Cummins India in Kothrud and
sold in the domestic market. The domestic market would continue to be served
by Cummins India while the export market would be served by CTIL.
June 2016
17

CAPITAL GOODS | Voices
Havells India
Current Price INR 361
Target Price INR 380 | 5% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
"Q4 has been a positive quarter, both in terms of revenues and margins. The
growth has been across segments, as has been the margin improvement"
No guidance being given for FY17; domestic up 9% in 2H16 and green shoots are
showing up in Q3-Q4; looking at a much better year than before - double digit
growth being targeted in FY17
Subsidiary performance is Brazil, Thailand and Promtec – EUR 20 Mn in sales
from Brazil and Thailand and aim is to maintain financial stability and transfer
them to Felio; maintain profitability in the business
"South had been a little bit slow during the last 1.5 years or so, but for the last
six months, it has started picking up"
"Switchgear segment is a lot related to the building activity, the construction
activity in the country. And I think though it is a little bit better in the second
half, but still we don't see a complete revival in this segment and it will take
some more time"
Participating more in streetlights than in the plain LED bulb business
Want to maintain the margins in FY17 as well at 14% and royalty benefit will be
additional of 60-70 bps; ex royalty looking at 13.5-14% margins
Div payout to be maintained between 45-50% - also capex for building capacity
in next few years – Rs 260-280 Cr of capex being planned by them
Capex to be done on the switchgear and ECD segment
"Fans continue to be doing well. Last year if we see we have slowed down
growth in the domestic appliances category. And for our own internal reasons
wanted new launches in the product segment. Now looking at good growth in
appliances and fans/water heater as well"
Overall price discipline definitely increases the gross margins, and I think this has
happened
"Home automation is still a nascent industry, you know, wherein basically it is a
replacement of the switching control and the lighting control in a house, and the
whole idea is how we can make it more affordable to"
Target Rs 100 Cr of sales in the next 4 years from the home automation business
Margin decline in lighting is not because of EESL order but due the CFL prices
constantly declining; large Rs 70 Cr streetlight orders from EESL to be executed
in next 2 quarters
Balance 20% in Sylvania will be held for next 3-4 years and not sold right away
Promptec was Rs30cr when acquired in Q1-16; Q4-16 is at Rs 52 Cr and will grow
to Rs 200 Cr in the next 2-3 years. 7% PBT margins
"Standard - this brand is getting very good acceptance. The fan segment has
started doing extremely well. We have been looking at a very fast growth in this
year. And I think the aspirations are very high from this brand, it"
375 galaxy stores are already there with Havells. Setting up a factory in
Karnataka for wires/cables and switchgear and also for switches in N East
June 2016
18

CAPITAL GOODS | Voices
KEC International
Current Price INR 136
Target Price INR 150 | 11% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Rs 10, 500 Cr as of Apr, EPC 12-18 months, Cables
Rs 7,000-7,500 Cr of opening order book in FY17 will do sales and balance will
come from new orders in FY17
L1 in Rs3000cr of orders which will come in the next quarter
Working Capital, Debt and Interest costs
Receivable increased in March and received money in April so that has gone
down as well
Debt has been replaced with cheaper debt and reduced interest costs YoY -
expect interest costs to remain flat in FY17 despite a 10% growth in sales
Clients have been trying to bringing down the execution timeline from SEB and
PGCIL as well ; 12-15 months for execution of the order book
Railways too wants to bring down to 12 months which was never there earlier
Middle East
Seeing some slow down in Saudi but mostly related to the change in the the
ministerirs - expect a pick up in F17. Now Power and Oil ministeries have been
merged which will help
Oma, Abu Dhabi continue to do quite well
T&D - overall India looks very good
PGCIL orders will not grow up substantially but will increase market share in this
and have shifted to LSTK which drives aways smaller players. Includes tower,
conductor, insulator and could be becoz of new MD
Payment linked to execution than just supplies so competition lower
Large TBCB of Rs20-25k which will put out and EPC will be out
New lines for solar parrks and substation tenders also coming out
SAARC, SE Asia will drive increase in orders in FY17 as overseas likely to see a
slow down
Don’t see any increase in receivables on account of SEB's
SEB ordering has picked up in states of Karanataka, T Nadu, AP, Telengana,
Rajasthan and they monitor WC carefully
SEB's give EPC orders unlike PGCIL who splits up the orders and include tower
supply - SEBs ordering 765kv GIS as well
Coastal Transmission line be made under groung in AP so a new opportunity
PGCIL is ordering on LSTK basis vs splitting up the order earlier
Commodity prices/ Cables
Copper down from Rs7000/kg to Rs4500/kg and this hurt volumes in cable
business but now with copper at Rs5000/kg will see atleast 10-15% value
growth in FY17 as well
Tower prices earlier at Rs80,000/tower and down to Rs50,000/tower which has
hurt value growth in transmission business
Expect to do sale of Rs1200cr in FY17 in cables vs. Rs1000cr as value growth +
volume growth
Margins: benefit in overseas with fall in prices and now very cautious with rise in
commodity prices
Trn: 10%, Cable - 5%, Solar -10%
June 2016
19

CAPITAL GOODS | Voices
Railways
Expect to take order book to Rs1500cr from Rs600cr so Rs900cr of incremental
orders; order sizes have improved to Rs500cr per contract so smaller playes are
out and seeing competiton come down
Margins are similar to tranmission in this
Electifiation - competition is the same and limited to 3-5 players
Solar
Want to take the orders up by Rs400-500cr and do an equa amount of sale in
this as well
Margins are similar to tranmission.
SAE Towers
PBT breakeven in FY16 and profitable in FY17. Did 5.5-6% margin in this business
in FY16
Brazil going through bad times but have 2 yers of orderbook, Brazillian real
down toINR4 from INR2,8 so hit sales Mexico back on track with 9 months of
order book
Have order book of 1.5 years with them
Siemens
Click below for
Results Update
Current Price INR 1,214
Target Price INR 1,050 | 14% Downside
Neutral
Public sector capex remains robust in sectors like T&D, renewables and
Railways.
Private sector capex continues to remain muted led by weak capacity utilization
and static demand.
Exports continue to remain muted due to shrinking global trade. Expect exports
share to come down to 15-20% from the current 35% of sales.
Expect strong ordering from Railways segment as government has planned
capex of INR8.5t for upgrade of railway network and rolling stock, capex on
DFCC, high speed rail and metro infrastructure.
Solar Inds
Current Price INR 3,124
Click below for
Results Update
Target Price INR 3,600 | 15% Upside
Buy
Cartridge Revenue improved by 25% YoY despite decline in realization by 1%
YoY. Volume growth stood robust at 26% YoY led by strong demand from the
infrastructure segment.
Defence revenue for FY16 stood at INR77m and management has provided
guidance for revenue of INR800m for FY17
Capex plan for FY17 stand at INR2b of which INR1b would be spent on
explosives segment, INR500m on the overseas business and INR500m on the
defence segment.
June 2016
20

CAPITAL GOODS | Voices
SOIL has an order backlog in defence segment of INR800m (INR150m for HMX
and INR550m for propellant and pyro products) which it expects to execute in
FY17.
Forex exposure stands at $38.3m of which $30m is hedged.
Thermax
Current Price INR 757
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 826 | 9% Upside
Neutral
Base orders continue to remain stable for the company and the standard
product order intake in FY16 has been better than in FY15.
Carry forward orders available for the project businesses like EPC as well as B&H
business has come down to almost all time low
TBW has repaid the entire debt of INR4.4b and Thermax has become debt free
company at the group level. Repayment of debt would help TBW to bring down
the breakeven point and is expected to be EBIDTA positive in FY17.
Loss in TBW has been brought down from INR1.24b in FY15 to INR700m in FY16.
TBW was able to book revenue of INR3b in FY16.
TBW is aggressively pursuing orders in global market
Thermax has completed its supply for the Reliance refinery order, construction
work is currently on and commissioning is expected within next 4 months.
On the Subsidiaries front except for the Chinese subsidiaries all other
subsidiaries has made profit at the net level for FY16. Chinese Subsidiary is
EBIDTA positive.
Sectors like FMCG, automobile and light engineering has started to show some
improvement.
Construction work for the Indonesian factory has started and expects the Phase-
1 to be completed in FY17 with total capex of INR1.5b
Dahej facility (resin manufacturing facility) construction is going on in full swing
and commercial production is expected to start in 4QFY17.
June 2016
21

CEMENT | Voices
CEMENT
The Cement sector reported strong volume growth of 17% YoY/QoQ in 4QFY16, as (a) recovery in the South joined
the momentum of the North, and (b) benign base helped further. Companies with expansions continued to lead,
with 30-40% YoY growth. Southern players posted 10-20% growth after a long period of de-growth. On ground price
recovery, and lagged volume growth in the North and AP market led to an interim disruption in discipline.
Consequently, average 4QFY16 realization declined 5% QoQ (and 10% YoY), with greater impact on North-based
players. The sharp price recovery over March-April and sustenance thereafter translates into spot cement prices
being 5-6% higher than the 4Q average. It augurs for strong bounce-back in profitability in 1QFY17. Costs continue to
offer tailwinds, with (a) sharp decline in prices of pet coke and packaging, and (b) positive operating leverage.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
India Cement
Ultratech
Demand growth in the South has moderated following the spike in 4QFY16 and management expects a growth of 5-
6% ahead
Use of pet coke to increase to 50-60% in FY17, though scope for further increase to be limited by vintage issue
Management expects demand to grow 7-8% in FY17
Benefits of sharp decline in pet coke prices (on energy cost) and new grinding
units (on lead distance) are expected to continue in 1HFY17
However, with recent trend reversal in pet coke prices, management expects
gradual reduction in cost tailwinds. WHRS mix is likely to increase further
Expansion phase is largely over with ~INR15b of capex targeted for FY17
towards maintenance, de-bottlenecking and some regulatory adherence (SoX, NoX, etc)
Grasim Inds
Current Price INR 4,309
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 4,768 | 11% Upside
Buy
Price outlook:
Global VSF prices have shown an upward trend with Chinese
market opening after new year’s and would continue to be influenced by (a)
Chinese dynamics, (b) competing fibers and (c) downstream industries. Global
cotton production is expected to be lower than consumption (unlike past 2
years), which is incrementally positive despite high stock in China. China
inventory currently at 12mt to be reduced to 10mt by auction. Closure of plants
in China due to environmental and credit issue have kept VSF price strong till
date.
Brand development:
Will remain key focus area with gradual expansion in
domestic reach and market mix. Working closely with brands, designers and
retailers has shown rising acceptance of Brand Liva causing better demand
growth for VSF products. Specialty fiber mix (30-35% of Vilayat) still has scope of
improvement aiding strength to realizations.
Demand outlook:
Domestic demand to improve in both VSF and Chemical. It
will continue to focus on expanding market through product development
activities, working closely with brands, designers and retailers. Lower polyester
price (led by lower crude) may pose to immediate substitution risk, albeit rising
proportion of non-price sensitive and quality conscious customer segment
would continue to bolster VSF demand. Also with less capacity addition in China
operating level to increase.
Capex plan, future growth drivers:
Management plans debottlenecking of
chemical capacity by FY17 and brownfield expansion of chemical plant at Vilayat
by FY18 and. Vilayat plant also has flexibility of another line for speciality fibre
production which can be used depending on the demand. Key focus areas over
medium-term are viz. 1) more premium product mix, (2) expanding domestic
reach, and (3) additional capex in organic and inorganic route in right juncture,
and (4) improve cost efficiencies.
22
June 2016

CEMENT | Voices
India Cements
Current Price INR 96
Click below for
Results Update
Target Price INR 93 | 3% Downside
Neutral
Demand growth in the South has moderated following the spike in 4QFY16 and
management expect a growth of 5-6% ahead. Visibility on government orders
still remains unclear.
AP, Karnataka and Telengana were the key contributors to the growth.
Realization,however, declined by 4% QoQ (-5.5% YoY).
Use of pet coke to increase to 50-60% in FY17, though scope for further increase
to be limited by vintage issue.
Management has announced a dividend of INR1/share (as compared to none in
FY14/15)
Ultratech Cement
Current Price INR 3,189
Click below for
Detailed Concall Transcript &
Results Update
Growth: Green shoots getting brighter
Strong growth acceleration in 4QFY16 with industry growing by ~11%. While
North and East remain key contributors, early sign of revival was visible in AP
and Teleng ana. Management expects demand to grow 7-8% in FY17.
While investment in road and hydel power augur positively, the key risk remains
in (a) delay in housing recovery, and (b) weak monsoon.
Cost tailwinds may see partial reversal
Benefits of sharp decline in pet coke prices (on energy cost) and new grinding
units (on lead distance) are expected to continue benefits in 1HFY17.
However with recent trend reversal in pet coke prices, management expects
gradual reduction in cost tailwinds. WHRS mix is likely to increase further.
Expansion phase is largely over with ~IRN15b of capex targeted for FY17
towards maintenance, de-bottlenecking and some regulatory adherence (SoX,
NoX etc).
Net debt stood at INR12.7b (0.06x) and likely to reach break-even by FY17.
Target Price INR 3,851 | 21% Upside
Buy
June 2016
23

CONSUMER | Voices
CONSUMER
Volume growth remained tepid for most companies in the sector. The rural segment continued to slow down further
or did not show signs of sequential improvement for most companies. The proportion of rural sales is lower than
urban for all companies, but this segment is crucial for incremental growth. Management commentary indicates that
while 1HFY17 demand is expected to be muted, demand is likely to be stronger in 2HFY17, led by likelihood of a
good monsoon and benefits arising from government schemes to boost rural growth. Material costs remained soft in
4QFY16, but are now hardening, particularly for companies needing significant crude-related raw materials or
packaging materials. Gross margins were at multi-year highs for a few companies; some chose to use the headroom
to spend more on advertising. While gross margin improvements may have peaked, hardening material costs, albeit
off a low base, present the likelihood of realization growth resuming. Some companies have already started taking
price increases. Excise benefits started going off from May 2015 and organic growth is likely to track reported
growth for a large part of FY17.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Britannia
FY17 - expect downside in volumes
but equal upside in pricing
There could be 2-3%
downside on volumes
Volumes
Price action/Offers
Emami
15-16% organic revenue growth in
FY17 to be led by double-digit
volume growth
The company is likely
to be back in double-
digit volume growth in
FY17
Volume-led growth
will be the main
strategy for HUL
Price increase
for large packs
and promotion
cut on price
packs
Price hikes to be
around 4%
Cautious outlook for FY17, with
incremental rural slowdown
HUL
Page Industries
Demand pick-up seen across
regions; FY17 should be better than
FY16
Better monsoon to provide boost in
FY17
Did not give volume
growth targets, but
aspiration remains to
grow revenues around
mid-teens
For HUL,
commodity
prices have been
bottoming out;
so, pricing
element will be
higher in FY17
5% price hike
taken by
company in FY16
will also reflect
in FY17
Expect 5% inflation in
input cost; margin
expansion unlikely to be
as steep as it has been in
the past
A&P to sales of 20.3% in
FY16 is expected to
increase by 100-150bp in
FY17; part of this is likely
to be offset by gross
margin expansion
Excise impact largely in
the base, commodity
costs hardening, price-led
growth will affect margins
in FY17
Margins
Pidilite
Current margins not
sustainable and are a
reflection of
low crude prices
Asian Paints
Click below for
Results Update
Current Price INR 1,026
Target Price INR 860 | 16% Downside
Neutral
4QFY16 as well as FY16 witnessed double digit volume growth in decorative
paints. This was led by both low base in 4QFY15 but also by recovery in demand
in 2HFY16. The management would want to wait for a couple more quarters
before calling out a recovery in the sector
There was a price deflation of 2% taken in Feb 2016. Management reckoned
that prices of RMs have definitely bottomed out. On the other hand, rupee has
also been stable in last few months
Rural still growing faster than urban. Rural is around half of total sales.
Geographically South is a little slower. Rural is growing faster mainly as
24
June 2016

CONSUMER | Voices
conversion to permanent dwelling is stronger in the hinterland, thus resulting in
paint demand
Implementation of Pay Commission and OROP will lead to healthy demand
Post-earthquake redevelopment work in Nepal is an opportunity
There could however be currency shortage issues in a couple of African
countries in FY17
New regulations banning lead in paints above 90 ppm may affect unorganized
sector but implementation will be difficult
Financial highlights Annual
International PAT over INR 2 b over 50% growth
Asian PPG Sales were up 12% to INR 3.22 b with PBIT of INR 71 m
Sleek revenues INR 1.35 b and loss of INR 190 m at PBIT level
Ess Ess revenues were INR 1.06 b but PBIT loss was INR 300m
Financial Highlights quarter
Increase in employee costs due to incentives due to great volume growth,
performance pay for senior managers
Other expenses high due to rebates by competition which the company
followed
Diminution in value of investments in 3QFY16 of INR 653m was on the Sleek
business as revenues have not scaled up to expectations and vis-à-vis the price
paid for the business
Segments and products
60-70% cost of painting is labour costs so customers are preferring better
quality paints due to lower salience in overall costs
New construction growth is still slow. Repainting is 80% of paint sales
Repainting is done for 3 reasons (a) maintenance (b) occasion led (c) décor led.
For the latter 2 quality does not make a difference
Now have over 300 ‘Colour Idea’ stores. Will add 50-75 stores every year
Colour idea store 300-1000 sq ft
Customer involvement is increasing and thus Colour Ideas is succeeding. Did not
disclose percentage
'Loctite' in retail market is a co-branding tie up with Henkel. in industrial market
Henkel distributes themselves. What is in it for them? Distribution synergies at
40,000 outlets. Better products than existing products. For eg Sino acrylic less
sticky and slower in drying. Henkel is not comfortable entering adhesives retail
market. Products will be sold along with outlets selling paints
Smart Care waterproofing is doing well
Waterproofing was earlier available in top 3000 of the 40000 paint outlets now
15000-20000 dealers. Diagnosing is the problem and its employees are trained
for identification
Sleek growth was weaker than paints growth as modular kitchen components
mainly go to new construction or large revamp. Paints more frequent and
mainly to repainting, which is 80% of paints demand
In most areas of Home improvement APNT will not get into manufacturing
In their AP Homes business (one stop shop that they have for al building
materials, currently just 1 store in Coimbatore) the furnishing partners are
D"Décor, Furniture partners are Pepper Fry, and Philips for lighting
Planning more AP Homes in the current year
June 2016
25

CONSUMER | Voices
AP homes current one is over 7000 sq feet. Will be happy with 50-100 AP Homes
in the near term. Franchise led. Need to provide value to consumer and the
retailer to succeed
Digital platform is incurred by APNT. Part of marketing expenditure
Plants, Capex, investment
FY16- invested INR 1.43bn in APIL Mauritius
Expanded capacity at Rohtak plant from 200,000 kl to 400,000 kl in FY16
Ankleshwar and Kasna modernization completed in FY16
AP plant being set up at a capex of INR 17.5 bn, Mysore plant being set up at a
cost of INR 23 b
Setting up greenfield plant in Indonesia
FY17 Consol Capex INR 3.5 b in FY17 and starting FY18 INR b
Britannia Inds
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 2,763
Target Price INR 3,325| 20% Upside
Buy
Macro-outperformed industry in sluggish demand scenario
Growing in high double digits with 8000+ distributors – growing at ~30%. Yet to
focus on small villages.
BRIT rural growth was 30% - primarily distribution led. Urban growth for BRIT
was in single digit.
Sluggish demand scenario is a challenge.
Demand situation not going to change in next six months. Revenue growth
could be high single digits.
Industry demand growth is at a multi-quarter low.
Will not spend extra money to get that extra 2-3% of growth – macros are
challenging so throwing extra money may not generate proportionate demand.
Would focus on execution on distribution to get volumes rather than
overspending. Volume growth remains the key focus area.
Premium products showing lot more resilience vs. Value. BRIT seeing growth
even in Value products but for the category Value products is showing –ve to
flattish growth.
Got INR 1.2bn from cost efficiency program in FY16.
Volumes – First time ever it has achieved 4 consecutive quarters of double digit
volume growth
4th consecutive quarter of double digit volume growth.
Only year when all the four quarters had double digit volume growth. Number
of packs sold would have grown 12-13% - because of smaller pack.
Annual volume growth: FY14-2%, FY15-8% and FY16-11%
For FY17 – there could be 2-3% downside on volumes but equal upside on
pricing.
Price hikes have begun
Passed on the benefits of benign RM to consumers – Revenue growth < Volume
growth for 4Q.
For FY17 - Price increase for large packs and promotion cut on price packs.
Already implemented several pricing changes. It has taken the lead on price
increases as it is the market leader. Expect others to follow. In
June 2016
26

CONSUMER | Voices
certainsubsegment others are leaders where those players have taken hikes and
BRIT will follow.
Margins- Direction up, quantum to slow
Material costs started moving up – Flour, Sugar, Vegetable oil, Crude.
Expect 5% inflation in input cost – manageable. Do not expect inflation to be out
of whack.
Milk prices up from low base – have seen high single digit growth rates. Draught
in Maharashtra has played part.
Have done detailed scenario planning and demand supply forecasts in RM.
Expect RM prices to come down by 3Q/4Q.
Have certain covers on RM.
Margin expansion gradient will not be as steep as it has been in the past.
Distribution to be the big volume growth driver
60k outlets added in Q4 and now direct reach at 1.3 MM outlets. Total universe
=> 7.6MM outlets.
Total reach for BRIT = 4.6mn outlets. Parle at 5.8mn outlets.
Narrowed the gap with nearest competitor by 0.4 MM outlets since 2013. Gap
with Parle down from 1.6mn outlets to now 1.2mn outlets.
Split route strategy – building depth in urban outlets = now extended to 100
towns. Not looking to expand this aggressively – will consolidate these towns
first.
No. of salesmen with handhelds – up 50%.
Hindi Belt- Biggest delta for demand/ volumes
Good progress in these states – e.g. Gujarat has grown 26% [plant was put up 2
years back], MP growing at 15%, Rajasthan 19%. UP will be the focus now –
currently growing in single digits.
Grown market shares in the Hindi belt.
Disappointed with UP growth rates – will further break this state into smaller
parts and bring sharper focus.
Competition/ adspends
Patanjali: Not brushing them aside- trying to understand their model. Do not
want to let them become as big as they have become in other categories.
Patanjali, at this point, has not made inroads into any Biscuits sub-segment. But
relatively, they are doing well in Marie segment.
BRIT has several stronger rights to win vs. Patanjali: 1] Brand 2] Distribution.
Ad-spends were higher: endorsed T20 Cricket tournament and Filmfare awards.
Will maintain the ad-spends/sales ratio.
Product relaunches
50:50 relaunch was done in 4Q16.
Good Day re-launch has been one of the biggest successes. Was re-
launchedwith new recipe. Milk Bikis was also relaunched – important brand in
Southern Indian.
“Good Day re-launch working like a dream”.
Tiger and 50:50 also relaunched – trends looking good on these brands. Tiger
Creams showing good growth post re-launch – it’s part of value portfolio but
stillhas reasonable margins.
June 2016
27

CONSUMER | Voices
Deuce
[Chocolate based product] is still in test market phase in Bangalore.
Targeting to do national launch by Sep-Oct’16. Current summer temperatures
do not allow major expansion.
Market share 150 bps gain in value share in FY16
Gained 150bps market share in value terms, as per AC Nielson. Distribution and
focus on weak states are driving market share gains.
Delta vs. category – 2x as far as volume growth is concerned.
Subsidiary business
Dairy: Firming up plans. Should be ready in 3-4 months.
International: Seen robust growth. Targeting geographies with Indian diaspora.
Miscellaneous
Commercialized two factories – Bidadi (K’taka) and Perundurai (TN)
Cost efficiencies achieved on trade loads, stock write off and stock returns.
Capex plans: In view of sluggish industry demand situation, pushing back capex
spending – do not want to create too much capacity in current environment.
INR 4bn capex guidance for FY17. For FY16 it did INR 2.1bn. So total INR 6.1bn in
two years – had earlier talked about INR 9b capex over FY16 and FY17 put
together. This does not include Dairy capex – it is yet to be finalized.
Colgate
Click below for
Results Update
Current Price INR 866
Target Price INR 942 | 9% Upside
Neutral
Market share and volumes
April market shares have stabilized for toothpastes. March market shares were
lower than 55.7% but April is back to those levels so month on month pressure
has abated
There has also been some recovery off a low base in toothpaste segment
growth in March 2016 quarter compared to December 2015 quarter
Jan to April 2016 saw 3% volume growth toothpaste and 5% volume growth
toothbrush
Zig Zag black already 4% market share
Latest Nielsen nos capture all market share
Premium segment was 19.4% of toothpaste industry sales in FY16 and growing
faster
Naturals is growing at higher double digit, all other categories barring low price
packs are growing
Organic growth healthy excluding Baddi, augurs well going into FY17
Net sales for quarter were up 7% (13% adjusted for Baddi effect which wont be
there YoY beyond May 2016), gross margins 30 bps up reported and 160 bps up
excluding Baddi impact, similarly EBITDA margins excluding Baddi would have
been up 50 bps despite steep advertising increase YoY off a low base instead of
reported decline of 210 bps YoY in EBITDA margins. PAT would have grown 14%
instead of declining 11%
Corresponding numbers for full year FY16 were 4% and 10% for sales, gross
margins 200 bps higher instead of 90 bps higher, EBITDA margins would have
expanded 400 bps instead of 170 bps YoY and PAT growth would have been 32%
instead of 3% growth in FY16.
June 2016
28

CONSUMER | Voices
Growth ahead
Per capita consumption half of China, Premiumisation half of China so 4x
potential even if India reaches China’s levels in the next few years
More innovation going forward
35% of sales from rural
Less than 20% Indians in urban areas brush twice a day
As macro economy recovers so will toothpaste volumes in the long term double
digit growth is a possibility
Will continue to focus in niche categories of personal care. If opportunity is
exciting in modern trade to be either No 1 on No 2 then will enter that category,
non oral categories are now 3% of sales slight improvement over the past 2
years
Herbal space
Active Salt Neem 1.1% market share within a year of launch
Pain out Gel launched a few months ago is also Ayurvedic
Also launched Colgate sensitive with Clove a few months ago
Launches will be high not just in Ayurvedic but also across segments. Herbal is
less than 20% of the toothpaste market
Guidance on financial metrics
Payout will be over 60%
FY17 tax rate guidance 34%
Capex INR 3.5 bn for FY17
Dabur
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 305
Target Price INR 290| 5% Downside
Neutral
Guidance and view
Consumption and demand situation started worsening in Q2FY16 and was even
weaker in Q3FY16 and remained at those levels in Q4FY16
Guided for high single digits volumes in FY17 with low double digits in H2FY17
Price increases unlikely in H1FY17. 2-3% full year likely price increase. Margins
likely to be largely flat YoY in FY17. Gross margin gains likely to be invested in
brands. Second half scope for improvement in margins if and when the demand
recovers.
Quarterly Performance and segmental view
Skin care affected by 20% growth YoY in base quarter
Skin care was weaker in recent quarters due to lower demand for bleach, low
appetite for discretionary products and weak winter
Ongoing Regulatory changes on cough syrup will benefit Dabur’s brands like
Honitus
Launch of Almond shampoo, gradual reduction of P&G and herbal positioning
will all aid shampoo segment
Patanjali not affecting Amla hair oil as Kesh Kanti of Patanjali is at a high
premium being in the therapeutic segment.
Health Care need to get more into the value segment. Expect a lot of launches in
honey and Chyavanprash segment.
Food margins affected by Nepal issue will recover
Honey some overlap in terms of suppliers compared to Patanjali but no
hardening of prices
29
June 2016

CONSUMER | Voices
12-15% growth for juices likely on steady state and a bump up in 3QFY17 due to
favourable base
Namaste margins were in mid-single digits in FY16, and high single digits in FY17
likely. Currently revenues are USD 90 mn and if it gets to USD 110 mn then
margins will be in double digits.
Emami
Current Price INR 1,038
Target Price INR 1,275 | 23% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Guidance
Looking at 15-16% topline growth in FY17. Price increase and new launches
around 4% (Price increase 200 to 250 bps and new launches accounting for the
rest)
Top 5 brands are 75% of sales. Will need to grow in double digits to sustain 16-
17% overall sales growth in the next 4-5 years. Face wash, Pancharisht, Honey
are new categories that could be much larger
Mostly focusing on brand extensions in the key brands. Will re-launch most of
the portfolio in FY17.
In fact as of now Navratna Cool oil has already been relaunched with better
packaging, formula and advertising. Fair & Handsome, Zandu Balm and Kesh
King portfolio have also been re launched early in FY17
A&P to sales was 20.3% in FY16. Will increase by 100 to 150 bps in FY17. Part of
it will be offset by likely gross margin increase of 50-60 bps
‘7 in 1’ oil 15 cr of sales up ~70% could be Rs 25 cr next year
Target 25-30% growth in the healthcare segment in FY17
Kesh King
Kesh King INR750m per quarter targeted in FY17. Will do what is required
strategically for revenue growth.
Gross margins impact on an overall basis in FY16 because of Kesh King was 80-
90 bps.
Inventory days on Kesh King now down to 17 days.
Performance in 4Q and full year FY16
6.5% was the organic volume growth for the quarter
Domestic volume growth 18% for 4QFY16, FY16 domestic vol growth was 14%
(both including Kesh King)
No change in rural and urban growth during the quarter over the preceding
quarter. Signs of revival both rural and urban. Summer season has got off to a
good start
Zandu Honey is pure quality and at a premium. Good response to launch in FY16
Direct distribution 650,000 now. End of FY17 target is 750,000. Navratna
reaches 4 mn outlets adding indirect reach as well
Navratna cooling oil only 17-18% penetration. Have launched Almond cool oil
Modern trade is 4% gradually moving up due to face wash and deodoran
Brandwise details
Boro plus antiseptic cream grew 41% growth in 4QFY16 due to extended winter
Navratna Cool oil grew only 4%, Navratna Cool talc flat again due to extended
winter
Navratna 1 Re sachet is 37% of sales for Navratna
June 2016
30

CONSUMER | Voices
In case of ‘She’ they have earmarked one state, will monitor performance and
then roll out nationally based on performance. Feminine hygiene is a different
business from their usual brands so will take time to scale up.
Patanjali don’t directly compete barring few products. Seeing good traction in
Ayurvedic business in recent quarters
Menthoplus is 25% of balms rest is Zandu Balm
Boro plus talc and Navratna talc are around 7%
Other accounting clarifications and guidance
Amortisation is higher because of some goodwill amortization on Kesh King.
Going forward Rs 600 mn per quarter
one off write offs of moulds
Tax rate lower in 4QFY16 because of higher dividend income on investments
Tax rate will be around 20% for next 2 years
Rs 5.5 bn net debt at the end of FY16. Interest costs will be 8.25-8.5% on these.
Targeting to pay off all debt by FY18.
20% international business growth targeted in FY17. FY16 saw 15% growth.
Challenges last year were in Russia. Markets where they operate are politically
sensitive
Long term loans and advances up because advances new paid on Guwahati
plant
Capex INR1.5 to INR1.7bn in FY17
Godrej Consumer
Current Price INR 1,568
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 1,325 | 15% Downside
Neutral
India business
Operating environment remained subdued similar to 3QFY16
Urban and rural sales growth similar pace. In 3QFY16 rural had grown slightly
faster YoY compared to urban. Rural growth challenges Maharashtra, Andhra
Pradesh and UP, areas which are also affected recently by drought.
Household Insecticides attained with highest ever market share. March and
April however have shown weak HI sales due to hotter than usual summer
130 bps impact on standalone gross margins due to consumer offers mainly in
soaps. Some A&P was diverted towards promotions. No impact of Patanjali on
category or category promotion in case of soaps
In Hair colour Godrej Expert Rich Crème continues to gain market share to 9% of
the overall Hair Colour market. Only 14% penetration in this category. However
Powder sales growth has been affected by rural slowdown. Have not lost market
share in the past 12 months in Hair Colour category.
New launches in 4QFY15 were towards the beginning of that quarter whereas
4QFY16 witnessed launches towards the end resulting in relatively lower A&P
YoY
Aer room freshener is now the No 1 brand in the Home Spray Category
B Blunt premium hair care brand has been launched in modern trade
Robust pipeline of innovation going forward as well
Focusing on strengthening rural penetration with strategies like split lines
In soaps price decrease are more tactical in nature. The attempt is to gain
market share as covered costs are lower than replacement rates. Cinthol has
June 2016
31

CONSUMER | Voices
grown over 15% in the past 2 years. Regaining some lost share in Godrej No 1 in
the past 12 months
Employee costs increased due to higher proportion of variable pay in this
quarter
For the full year volume growth in India was 11% with offers and 9% without
offers
4QFY16 saw further slowdown in soaps and detergents categories compared to
3QFY16
Non soaps price increases were 2-3% in FY16
Expect benefit of crude fall on gross margins for couple more quarters. For palm
oil they have 3-4 months cover
International business
Hit and Stella did well in Indonesia. Did well in Indonesia aided by low base but
also due to improved distribution and advertising. Going forward innovation will
also pick up leading to continuing growth. Reach 110,000 outlets directly while
other large players reach 250,000 and so potential to grow is high. FMCG sector
actually declined by 6% in Indonesia last year. Margins may be a challenge in
this geography but management is hoping to maintain margins through cost
savings and healthy sales growth
Africa sales growth led by Darling business
LatAm hair colour brands gain market share
Hopeful of maintaining strong Indonesia performance going forward
Entering into large markets like Nigeria and Tanzania in Household Insecticides
segment
SoN initial manufacture in Nigeria and Tanzania before moving to Ghana and
subsequently to South Africa
Among the smaller markets, Bangladesh has been struggling as there has been
rising competition in coils
Others
Hopeful of recovery in demand in H2FY17 due to healthy expected monsoons
and government schemes yielding fruit. Urban is sustaining reasonably but rural
growth has been declining
1HFY17 will see some more gross margin increase for full year still hopeful for
over FY16 due to cost savings and SoN integration where margins are higher at
around 22%
Increase in receivables in FY16 will be addressed in FY17. Lower creditors were
because of lower commodity prices
Project Pie: Cost savings of INR750-800m on full year basis; launched in
Indonesia as well. Project Iceberg – Savings of INR100-120m on full year basis
June 2016
32

CONSUMER | Voices
GSK Consumer
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 5,728
Target Price INR 6,800 | 19% Upside
Buy
4QFY16 and FY16 Performance
FY16 gross sales growth was 4% (underlying 5% growth). Net sales (including
operating income) was however flat for the year due to excise benefits coming
off.
4QFY16 witnessed 550bps excise impact as well as 560bps impact of one offs in
base quarter on accounting adjustments (reversal of sales return provision for
new launches and Nepal).
For the quarter, HFD volumes are broadly flat. Pressure on volumes was due to
rural and FMCG sector slowdown.
Wholesale destocking was by modern trade but was a small factor behind
moderate growth. Excise impact and rural slowdown were bigger factors Rural is
33-35% of sales for GSK Consumer.
HFD sales growth was 4.5% for the quarter. It is the foods business that has
declined and HFD sachets saw a price correction. For the full year HFD volumes
were flat.
Decline in foods sales component wise? Biscuits competition increasing and has
lost momentum, Foodles has shrunk, however oats gaining market share.
Exports sales were affected by slowdown in Sri Lanka and Bangladesh and the
impact of earthquake in Nepal.
Brand-wise performance
Horlicks full year volumes flat and Boost declined marginally.
Since October volume revival in Horlicks has been witnessed.
Boost is lagging behind because of slowdown particularly in South India (the key
market) and specifically the state of Tamil Nadu. New campaign and relaunch of
Boost and small sachet sales are measures that the company has taken.
Innovation and campaigns
Innovation- South and East twice a day consumption encouraged through food
science campaign, Boost witnessed new campaign during Holi, the company
launched Horlicks Immunity (2x more immuno-nutrients at the same price),
premium product ‘Horlicks growth plus’ launched in May 2016 for kids between
3-9 years. Growth plus is protein based to help kids who have been slower on
growth without putting on weight. More of a need based product than a
replacement for the base Horlicks.
Growth plus will be supported by doctor recommendation and mass and digital
platform advertising. Initially focusing on the pharmacy channel for the product
Launched INR10 sachet in March 2016.
Growth outlook
HFD penetration is only 40% so lower price points are critical for growth,
premium segment launches like Horlicks Growth plus.
Distribution reach 4.3mn in FY16 compared to 4mn in FY15. Reached 20,000
villages. As for the North and West business traditionally weaker areas.
Chocolate Horlicks has gained 60bp market share in West and 100bp market
share YoY in the North. Taste was an issue earlier; now addressed. Market share
leadership in fact in Delhi (NCR) and Uttar Pradesh.
Traditional trade is 85%, CSD ~10%, modern trade is around 5%. Nielsen data
does not capture CSD data.
33
June 2016

CONSUMER | Voices
Margins and financials
Believe that they can not only sustain but also grow gross margins despite
increasing material costs and greater sachetisation.
Innovation and premiumisation will help gross margin as will better value
proposition.
A&P will be ~17% of sales every year. Nevertheless will optimize media spends
without compromising on Share of Voice.
Dividend payout is higher than their usual average but at 43% is still low.
Management believes that they need the cash for capex and acquisition.
Are discussing distribution commission for Novartis OTC products. Should
complete by June as these commissions will start from July.
Next 2-3 years substantial amount of cash will be used for Capex.
FY17 likely capex of INR1-1.5b. Next 3 years total INR6-7 bn. Old assets due for
replacement and new assets with greater automation.
Hindustan Unilever
Current Price INR 885
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 840 | 5% Downside
Neutral
Summary
Environment is challenging. Outlook on rural is weak and growth here has been
deteriorating over 4 quarters
Industry Volume growth compared to March 2015 were half in March 2016,
mainly due to rural
Maharashtra under severe stress, AP and Karnataka due to drought. Central
doing well. WIMI strategy therefore helping HUL
Market growth improvement largely dependent on Rural
However Commodity prices may have bottomed out so pricing element will be
higher in FY17
Some one-offs like channel adjustments, excise duty expiry impact and input
credit received in FY16 are behind them. These affected Net sales growth in
FY16
Price increases? Will be agile in pricing. Will decide what brand and how much
to take price increase depending on commodity cost movement
Volume led growth will be the main strategy for HUL
Environment and Outlook
Challenging environment, rural is particularly challenging
Competitive environment is also intense
Vegetable oil now at same levels YoY, Brent crude starting to increase. Soft
commodity costs may thus be behind them
Excise impact largely in the base, commodity costs hardening , price led growth
may be higher
Market slowdown and channel correction were the reasons for lower than
expected volumes in the last quarter
Tax rates guidance largely similar at around 30% in FY17 as well. Tax rates may
have peaked out
June 2016
34

CONSUMER | Voices
4QFY16 data points
Underlying volume (UVG) growth also 4%. Excl one offs: 5%
UVG 4% in 4QFY16 partly due to realignment of channels started in 3QFY16,
now complete, impacted PP in particular
PP 7% intrinsic growth, phase out of excise, input credit and channel
realignment led to 2% reported growth
Profit recognized hitherto, on sale of Modern business INR500m in current
quarter. There will be more of the same in subsequent quarters
FY16 data points
S&D intrinsic sales growth 2%, volume growth for FY16; PP intrinsic sales growth
10%, volume growth 6% for FY16; Beverages 7% and 4% respectively; Packaged
foods 12% and 8% respectively
Combined intrinsic sales growth was at 5% versus reported sales growth of
3.8%. Underlying volume growth for full year overall was 6%
UVG thus did not come just from commodity led categories but was broad
based
Increased A&P by INR6.5 b in FY16, a high proportion
Pepsodent has been a disappointment; now relaunched (have changed the
formulation)
Recovering ground in deodorants in FY16 through Axe Signature; Deos overall
category growth has come off. Axe aerosol still work to do for HUL. Rexona
doing well
Did they pass on commodity costs in the premium segments in S&D? Yes, have
taken price cuts to drive premiumisation and make them more accessible, eg
detergent bars, Comfort, body wash etc
Accessible, affordable, low end water purifier now in portfolio
Gaining market share in Modern trade and online
Grown far ahead of market in hair care
Gained market share overall. Detergents premiumisation led to share gains. Oral
care weaker
Interest, dividend and gain on sale of non-trade current investments INR750 m
in MQ’16 (MQ’15:INR970m). This led to lower other income YoY
Naturals focus in oral care? Have a clove variant. All brands have a role to play.
The whole country is not switching to herbal
Urban general trade no discernable trend
IND-AS will have a positive impact on booking of other income
CSD was the reason for higher debtor days and holidays impacted collection
June 2016
35

CONSUMER | Voices
Jyothy Labs
Current Price INR 292
Click below for
Results Update
Target Price INR 350 |20% Upside
Buy
Raghunandan will look at strategy, big ticket planning and acquisitions. His
replacement as chief of operations, Rajnikant Sabnavis had been HUL in laundry
care and hair care for 20 years
1220 employees were handpicked by Raghu including 400 in sales and
marketing
All products are now at 25% plus gross margins, Ujala has over 75% gross
margins
Targeting INR 5 bn revenues by 2020
14-15% EBITDA to be maintained by 2020 with 12-14% A&P
Power brands grew 13.6% in 4QFY16 with 15.3% volume growth. For the full
year power brands grew 10.3% with 9.5% volume growth
4QFY16 growth Ujala 6%, Exo 9.4%, Maxo 17.9%, Henko 37%, Margo flat, Pril
19%
Fabric care grew 12.6% in 4QFY16 and 6.4% for the full year. The corresponding
numbers for Dishwashing was 11.6% and 11.8% and Mosquito repellent 17.9%
and 15.5%
60% of sales Non South compared to 40% in FY15
The latest module of ERP, SAP S4 Hana will be implemented by April 2017
Maxo is the fastest growing brand in Household Insecticides
Fast card is an INR 3 b market already, Maxo is 4th player in the market
4months sales already INR 100 mn
42000 rural outlets were added in FY16
Exo over the years 200,000 outlets to 900,000 outlets
Patanjali only competes in dishwash
MAT for 2 years after merger approval
Marico
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 253
Target Price INR 240 | 5% Downside
Neutral
Segmental Performance, strategy and guidance
4-5% Parachute volume growth expected. 5-7% can also be achieved. VAHO
guidance double digit volume growth.
Initial response to deodorant relaunch very good. Youth business could grow
20% in FY17 if things pan out as desired even without Livon not completely
recovering. Deo improved product as well as packaging. Gel and deo support
each other on advertising. Livon H2FY17 targeted to grow well. These categories
will also get tailwinds from possible economic recovery in H2FY17 and beyond.
International business double digit constant currency growth likely. Synergies in
India on media and cost sharing will drive growth. VAHO is likely to grow well in
Bangladesh. Expect double digit volume growth in Bangladesh in FY17. Men’s
grooming is a huge opportunity. 15-20% organic sales in MENA region possible
Parachute Ayurvedic gold 30% share in hairfall market in South. Looking to
replicate strategy in other parts of India as well. Intend to participate
aggressively in the Ayurvedic segment. Consumer is looking for value
proposition and differentiated products in Ayurveda as well.
June 2016
36

CONSUMER | Voices
Overall Guidance
Price cuts in Q1FY17 as well to maintain ~8-10% volume growth. Value growth
will be affected in H1FY17 due to price cuts being taken in the current year. 6%
decrease in Parachute price to take care of the weak environment
A&P will be around 12-12.5%. Spend will be more efficient. Unlikely to be
bumped up due to innovations lined up.
17-18% EBITDA margin steady state targeted. Near term could be higher than
that range. PAT is likely to grow in double digits
In 2HFY17 will take price increases in Parachute if they do well in H1FY17. Copra
prices likely to have bottomed out
Page Inds
Current Price INR 14,099
Target Price INR 15,000 |6% Upside
Buy
Click below for
Results Update
Demand environment: Company has seen demand pick up compared to FY16.
The pick-up is visible across the regions and not restricted to any particular
geography. FY17 revenue growth will be better vs. FY16.
4Q16 volume growth: Overall volume growth stood at 7.5% for 4Q16 and 9.8%
for FY16. A] Men’s innerwear had a very high base to contend with (38% growth
in base) due to heavy promotion schemes in base. Consequently, Men’s
innerwear volumes were flattish for the quarter. B] Leisure Wear: Leisure wear
volumes were up 23% with good growth in both Sports (up 19.5%) and Socks (up
~30%). C] Women’s Innerwear: Volumes were up ~14%. D] Speedo: In Speedo
(swimwear) it has seen sharp pick up. Volumes were up ~13x for the quarter.
For the year, volumes were up 76%.
Raw Material: Yarn prices are up 7 Rs/kg and are now hovering around INR
210/kg. Company has taken ~5% price hike and it should be sufficient to pass on
impact of RM increase and any potential wage inflation.
Employee costs: For the quarter employee costs were up 27% due to employee
addition in factories. As % of sales it went up 180bps YoY to 19.2%.
Other expenses: Other expenses were up only 8% and as percentage of sales it
stood at 15.8%, down 90bps YoY. Reason for this decline is lower ad-spends
during the quarter. On an annual basis it will continue to spend ~5% of sales.
Towel foray: The initial 2.5 lakh pieces that it had taken from Trident had been
liquidated sooner than expected. It has now placed a fresh order. It is a trading
arrangement – company buys from Trident and sells it after a mark-up.
Pidilite Inds
Current Price INR 711
Target Price INR 750 |5% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Outlook and key highlights
Monsoon will provide boost to demand
Volume growth was greater than value growth for the quarter. Did some dealer
rebates in early part of 3Q16.
Though 2HFY16 was better vs. 1HFY16, demand conditions remain subdued
overall.
Domestic acquisitions – all on track and doing well.
Pricing will be stable – current margins not sustainable and are a reflection of
low crude prices.
37
June 2016

CONSUMER | Voices
VAM prices: In the range of US$ 900-1000, will rise with lag, following crude.
Significant portion of RM + Packaging cost is a function of crude prices.
Consolidated sales were higher than standalone sales in 4QFY16 as Nina water
systems was not in base and overseas businesses did better
Did not give volume growth targets but aspiration remains to grow revenues
around mid-teens going forward as well
Organised proportion of the industry to total is increasing. Unorganised portion
did not grow even during current low RM cycle
Other financial aspects and clarifications
Exceptional items: Provision for diminution in the investment in Brazil subsidiary
INR 270 mn. Demand conditions in Brazil remain tough. Currency also
depreciating. Thus the diminution provision despite return to operating
profitability of late
AS&P: Base had World Cup. Ad-spends to trend in 3.5-4%.
Tax rate: Over the next 3-4 years should reach full marginal rate.
Short term provision has come down due to interim dividend being already paid
in FY16 vs. being provisioned in FY15.
Capex: ~2.5-3% of sales – will remain in this range.
Segmental details
Adhesives and Sealants: Grown because of premiumization, innovation and new
product introductions.
Premiumiation in adhesives and sealants is sharp contributing to high sales
growth
Industrials: Focused on profitability of business.
Industrial production volumes havegrown for full year but value flat due to price
reduction
How have margins in industrial segments gone up. Have passed on a lot as it is
B2B but not fully
Slowdown has seen impact on construction category and hence construction
and paint chemicals slower also discontinued lower end products.
Acquisitions and JVs
JV with ICA, Italy for wood finish will be exclusive partner in India and SAARC.
Will stick to Pidilite core strategy of taking a category and growing it
Pidilite already had a wood finish brand at the low end called Woodfin. ICA is
premium end brand. Will target both B2B and consumers in India
Wood adhesives is largest segment and thus wood finish is a natural extension
and Pidilite also has distribution synergies
Annual revenue of Nina INR 1.6-1.7 bn
Wood finish JV INR 600 mn outgo Nina another INR 600 mn
Nina ~15% EBITDA margins has not significantly improved yet. 14-15%
revenuegrowth in FY16
Blue coat integrated with Pidilite business and scaled up since acquisition.
Numbers not shared
Wood coatings annual sales INR 1bn
International operations
Brazil: Not right time to divest as economic scenario is difficult.
US art and stationery business done well (adult craft)
June 2016
38

CONSUMER | Voices
Bangladesh consistently growing for last 4-5 years, same with Thailand in recent
years and the USA business. International business has now enetered more
consistent phase of
Acquired white glue player in SL. Better product mix now but the business is still
small
SL annual net sales INR 150-200 mn current margins 10-12% will scale up
Competition
Is APNT now a big threat? Enough room and will drive category growth, Not
taking competition lightly
APNT prices are lower in the construction business
Henkel has been in India for decades and BASF for many years so no significant
change in competitive scenario
Other points
Promoter shareholding reduced marginally as a family member has sold due to
personal reasons
Dahej conversion to adhesive plant won’t involve much capex mainly plant and
machinery
Direct and indirect distribution reach ~3 mn outlets
United Spirits
Current Price INR 2,494
Target Price INR 3,200 |28% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Summary
Management reiterated its guidance for mid-teens margins in medium term. Several
changes/initiatives underway on many fronts e.g. route to market, stocking, working
capital, talent recruitment etc. thus we think quarterly margin volatility will not
recede, not at-least in FY17. Company has received price hikes in big market like
K’taka which constitutes ~25% of its volumes and is hopeful of receiving hikes in
other markets. This will positively impact pricing/realization in FY17. Company also
expects to see benefits from more re-launches of brands in FY17 and also from the
relaunches already done in FY16 i.e. McDowell No.1, Signature etc. Overall a sense
of maintaining the focus on identified priorities even as it faces many interim
challenges/headwinds.
Strategy/Guidance
Five point strategy: 1] To invest in power brand and innovations 2] Transform route
to consumer – build perfect stores, create demand and drive off-take 3] Challenge
every cost item in P&L so that it can be reinvested in brands 4] Do business the right
way to transform the reputation of industry and UNSP 5] Keep the organization as
effective and efficient as it can.
Committed to mid-teens margins in the medium term.
Invested in talent – upped the caliber of talent which also entailed higher costs.
Prohibition: Bihar is sub-2% of portfolio. Because of taxation changes, Prestige+
portfolio collapsed in Bihar. It is primarily a popular brand market.
Quarterly One-offs
There will be some one-offs but progressively the quantum of one-offs will be
sharply lower.
EBITDA was impacted during 4Q16 due to one offs by 220bps – one off
provisions pertaining to various parties, reflected in other expenses.
June 2016
39

CONSUMER | Voices
Previous quarter items also impacted reported EBITDA by 160bps in 4Q16 but
no impact of these items on PBT.
Accounting reclassification: Earlier the write-backs pertaining to certain parties
was reflected as credit in other expenses in 9MFY16 has now shifted to
exceptional – impacting EBITDA. Thus other expenses for 4QFY16 have gone up.
Diageo portfolio
Full integration of Diageo brand portfolio happened during FY16. Delivered INR
6.37b of sales for the year from Diageo portfolio.
Excluding Diageo - UNSP portfolio grew by 5% with Prestige+ growing by 8%.
Diageo portfolio impacted gross margins positively by 100bps at gross margins ;
UNSP portfolio was flat.
Volumes
Undertaken some de-stocking in markets – couple of days of stocks which also
impacted volumes for the quarter.
FY17 will have benefit of more re-launches. FY16 benefitted only from Royal
Challenge relaunch.
Hopeful of double digit volume growth in Prestige+
Focus on doing the business in right way has also impacted the business in some
states.
Some of the tail brands have lost volumes even in Prestige+ portfolio. But head
is growing much faster than the pace at which tail is disappearing.
Pricing
Received price hikes in K’taka w.e.f. 1st July – K’taka is about a quarter of
volumes.
Technically, K’taka has free pricing but one still needs to take approval. Risk of
pricing is if one jumps the slab while taking prices, even if one takes price hikes
of 1-2%, end consumer price hike can be 10%. This time, government has
changed slabs.
Hopeful of price hikes coming from Rajasthan, Orissa, Andhra Pradesh and
Telangana.
Sales
For FY16 - Net sales of Popular brands were up 2% despite volume declined 7% -
priority states have grown in double digits and gained shares.
For 4Q16 – Excluding Diageo – growth was 3%. P&A grew 7%. Took some
correction in inventory in market.
Salience of Popular brands is typically up 300bps in 4Q16 vs. 9MFY16.
State level challenges
No sales for 9 months in Uttarakhand and Subdued sales in Chattisgarh. Had
temporary pricing setback in K’taka on Haywards brands.
All these three factors are now behind and doing good business in U’khand,
C’garh and Haywards is back in K’taka.
State Mix
If a state where net revenue/case of a brand is lower than average grows faster
(basically state-brand mix) it impacts reported volume and value growth of a
particular brand e.g. Royal Challenge volumes were up 61% but value was up
50%.
June 2016
40

CONSUMER | Voices
Margins
Overall RM environment is benign but some hardening is seen in last two
months.
Invested in quality of RM – enhanced the quantum of grain spirits – now all
prestige brands are 100% grain spirits.
Improved the quality of bottling, labels. With McDowell No. 1 re-launch reduced
the quantum of recycling.
All these investments impacted gross margins by 100bps vs. 9MFY16 gross
margins.
Brand investment
Enhanced investments in strategic brands.
Investments behind UNSP portfolio is up 10% vs. prior year. Overall investments
up 39% including Diageo portfolio.
Marketing spend of 10.6% to net sales vs. 8.6% in FY15 (after excluding related
party transactions). Will maintain this level of spends in FY17 – will try to push it
up if P&L allows it.
Nature of transformation in McDowell No 1 is not as radical as Royal Challenger.
MC N0. 1 is growing well and gaining share.
McDowell no. 1 ~25% of volumes.
Debt/Working Capital/Receivables
Other current liabilities – gone up due to advance taxes.
Capex – INR 4-5bn for FY17.
Receivables gone up because of Diageo portfolio as well – INR 2b of current
assets came through Diageo.
WC gone up because of state-mix change.
There are firm plans in place to drive WC efficiencies – Cash committee
constituted to drive cash conversion. Also monitoring inventory positions. With
better demand forecasting and planning processes, should be able to eke out
some efficiencies.
Non-core divestments
Real estate: Expect to fetch ~INR 5-7bn from property divestments.
Looking for IN 10-20b of debt reduction over next two years.
June 2016
41

FINANCIALS/BANKS | Voices
FINANCIALS/BANKS
We expect fresh additions to be lower in FY17; however, net slippages are likely to remain positive and credit costs
are expected to remain elevated. Retail asset quality position has remained impeccable. Strong growth trends in CV,
CE and unsecured loans have sustained, which should lead to higher share of retail loans. Given the competitive
landscape, system loan growth is likely to remain moderate, with private banks continuing to gain market share.
Margins are expected to remain largely stable (negligible impact from MCLR).
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Asset quality
Net interest margins
Axis Bank
Credit costs 125-150bp; high teens
PPoP growth
Below 40% cost to
income ratio for FY17
Plan to open 350-400 new branches
Bank of Baroda
HDFC Bank
ICICI Bank
Punjab
National Bank
Management has highlighted
incremental areas of stress
amounting to INR269b for FY17
(restructured book INR137b plus
SMA-2 INR132b); expects ~INR150b
of slippages in FY17
Expects overall GNPA for FY17 to be
contained at INR430b-500b; base
case net additions: INR50b, bull case:
INR30b and bear case: INR100b
Expects 3% domestic NIM and 1.25%
overseas NIM in FY17
NIM to remain in 4-4.4% range
Branch expansion to remain at 250-
300 per year
Credit growth to remain 1.3x+ GDP
growth
Domestic loan growth of 18%, led by
retail loans (25% growth), domestic
corporate loans (7-8% growth), SME
loans (15% growth); international
loans to decline further
Management has indicated that large
proportion of stress has been dealt
with; however, fresh additions will
remain elevated in FY17 (watch list -
SMA2 at ~INR110b; OSRL at
~INR201b).
Asset quality outlook challenging;
management has identified INR226b
of corporate lending stress watch list
(6.7% of loans, ~14% of corporate
loans). Expects ~60% of the watch list
accounts to flow into NPA over the
next 8 quarters (slightly higher
proportion in 1HFY17)
Slippages remained elevated at
INR59.3b (5.5% of loans, annualized),
led by INR10b of AQR related
slippages and INR8b of LC
devolvement of stress loans
Net stressed loans (ex SEB/AI) now
stand at 7.7% v/s 8.8%, led by 20%
QoQ decline in OSRL
Management expects NIM
to remain 3.6%+ in FY17 (no
meaningful impact of MCLR)
Weak NII growth (-16% YoY,
adjusting for interest on IT
refund); adjusted NIM
below expectation
Stable asset quality position; slippages
for the quarter were INR17b (1.5%
slippage ratio)
NIM stable QoQ (-10bp YoY)
in 4QFY16
State Bank of
India
Slippage ratio of 2.7% v/s ~5% for
FY16
Credit cost to be below 1.8% v/s ~2%
for FY16; management expects to
improve
coverage ratio
Credit growth guidance of 12-14%
Asset quality challenges persist; bank
disclosed a watch-list of
below investment grade exposures in
key stressed sectors amounting to
INR440b (4.8% of exposure)
Gross slippages increased sharply to
INR235.5b (slippage ratio of ~25%,
annualized) of which ~25% driven by
RBI AQR. Relapse from RL at INR101b
(~45% of the quarterly slippages). Iron
and steel, power and chemicals
accounted for ~70% of overall
slippages.
Watch list accounts of INR313.5b
(share of credit portfolio is 2.08%). Of
the watch list accounts, INR116.6b
belongs to RL and INR25.8b belongs to
SDR and 5:25. Management expects
70% slippages from this list.
Slippages from RL during the quarter
at INR77b
Management expects NIM
to decline 20-25bp in FY17
v/s 4QFY16
NIM declined ~93bp QoQ to
1.8%, led by interest on
reversals on account of
sharp deterioration in asset
quality
4QFY16 includes interest on
IT refund of INR16b; overall
margins were stable QoQ;
expect some improvement
in FY17, led by lower net
slippages
June 2016
42

FINANCIALS/BANKS | Voices
Axis Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 543
Target Price INR 525 | 3% Upside
Buy
Guidance
(a) 3.6%+ NIM for FY17 (no meaningful impact of MCLR), (b) Below 40% cost to
income ratio for FY17, (c) Plan to open 350-400 new branches v/s 315 in FY16, (d)
Credit growth 18-20% with mid-20s retail loan growth, (e) CASA ratio 40%, (f) High
teens PPoP growth, (g) credit costs 125-150bp, (h) provision coverage at similar
levels, (i) Plan to take share of unsecured loans to 15% of retail loans over next 2-3
years, (j) Fee growth to remain sluggish in the near term
Asset quality related
Asset quality position has not improved on the ground
Economic activity slower than earlier expectation
No slippage on second round impact of AQR in 4QFY16
Bank sold INR3.49b to ARC for sales consideration of INR1.1b (INR250m cash
and balance in security receipts)
Fresh restructuring: In 4QFY16, INR9.26b (one account led by shift in DCCO); for
FY16 INR22.7b of which INR19.5b were on account of shift in DCCO
Relapse from restructured loans were INR3.96b
Watch list INR226.3b outstanding (47% is towards power and iron and steel
sector); this based on existing fund based exposure
Slippages: SME INR1.61b and Retail INR2.4b
Recoveries/Upgrade: SME INR450m and Retail INR1.6b
Provisions: INR6.06b NPA, INR2.57b of standard asset and un-hedged exposure,
INR220m SDR provision, INR3b of contingency provisions; standard asset
provisions include INR1.05b related to Punjab food corp.
Security receipts outstanding: Gross book value INR8.85b and net book value
INR7.71b (depreciation pre-FY15 sale)
60% of Iron and Steel exposure to A and above
Outstanding SDR INR5.75b and 5:25 refinancing INR37.4b; these are all standard
exposures
P&L related
Incremental employee addition largely in business development / customer
acquisition team
Overall NIM was 3.95%; Domestic NIM 4.24%
Lower slippages during 4QFY16 led to lower interest income reversals thereby
supporting margins
Other income: dividend from subsidiaries INR770m, exchange gains INR1.69b
(v/s INR1.56b in 4QFY15) and INR830m cash recoveries
Other highlights
79% of new sanctions are to companies rated A and above
Fourth largest credit card issuer in India
97% of credit cards to existing customers
80% of unsecured loans to existing customers
40% YoY growth in credit card spends
Axis AMC saw +42% YoY in average AUM; 0.6m customer addition
Tier 1 ratio at 12.51%
June 2016
43

FINANCIALS/BANKS | Voices
Bank of Baroda
Current Price INR 140
Click below for
Results Update
Target Price INR 194 | 38% Upside
Buy
Asset Quality Related
Seven sectors constitute ~45% of funded GNPA – Iron and steel, power, roads,
gems and jewellery, construction, commodities and trading and textile sector
Management has highlighted incremental areas of stress amounting to INR269b
for FY17 (restructured book INR137b plus SMA-2 INR132b); Expects ~INR150b of
slippages in FY17
Management expects overall GNPA for FY17 to be contained at INR430-500b;
base case net additions is expected at INR50b, bull case INR30b and bear case of
INR100b
Management expects INR70b+ of NPA provision requirement in FY17 – intends
to maintain 60%+ provision coverage ratio
Credit limits of borrowers are now based on overall exposure and RWA
exposure
Domestic slippages in 4QFY16 were INR49.5b and overseas slippages were
INR9.8b
During the quarter, AQR related slippages were ~INR10b (three accounts each
from cement, road and engineering sector); further, INR8-9b slippages were on
account of LC devolvement of existing NPAs
Relapse from restructured loans in 4QFY16 was ~INR20b
There was no SDR or sale to ARC during the quarter; however, three accounts
were refinanced under 5:25 amounting to INR9.7b
~44% of BOB's corporate credit portfolio is rated BBB or below
Discom loan reduction from OSRL was ~INR12b
SEB debt outstanding: 25% of SEB debt not converted under 'UDAY' amounting
to INR12.6b and other SEB debt INR8b
Bank has ~INR6-10b of exposure to top leveraged groups (each); very limited
exposure to holding companies
Expect INR100b of upgrade and recoveries in FY17; have deployed 1100 people
Bank intends to sell certain exposures in road sector
P&L Related
Management expects INR95b of operating profit in FY17 and additional INR15b
of income from sale of non-core assets
Expects 3% domestic NIM and 1.25% overseas NIM in FY17
During 4Q, bank made additional provisions amounting to INR15.6b related to
shifting on new LIC mortality table
Bank settled overseas tax liability for ~INR4b v/s initial demand of INR15b
Discount rate assumed for pension and gratuity liabilities remains unchanged at
8%
BOB has seen ~INR10b interest reversal in FY16
Interest income in 4QFY16 includes one off interest from IT refund amounting to
INR6.7b
Other highlights
CET-1 improved to 10.3% in Q4 on account of relaxation given by RBI towards
revaluation reserves and DTA.
Standalone CET1 ratio stands at 10.3%; consolidated CET1 ratio stands at 10.8%
Bank has valued its non-core assets at ~INR70b
Management intends to sell stake in UTI, NSE, CIBIL amongst others in FY17;
BOB capital markets has already started the stake sale process
Balance outstanding in FCTR was INR22b
44
June 2016

FINANCIALS/BANKS | Voices
Bank of India
Click below for
Results Update
Current Price INR 84
Target Price INR 85 | 1% Downside
Neutral
Guidance for FY17
(a) Recovery and upgradation target of INR175b, (b) Domestic CASA Ratio 38%,
(c) Share of Retail, Agri and MSME (RAM) loans to increase to 55% of loans
Asset quality related
Have fully implemented AQR direction in 4QFY16
SMA 2 is down 33% QoQ
Have refinanced 10 accounts under 5:25 scheme amounting to INR21.65b
(further two accounts under pipeline)
SDR was invoked in 7 accounts amounting to INR9.67b
AQR related provision during the quarter was INR18.7b (cumulative INR40.7b in
FY16)
During the quarter, one large infra account slipped in the overseas book
Security receipts outstanding are INR28b
During 4QFY16, bank marked down security receipts by ~INR2b
Stock of written off accounts stands at INR74.2b
Other highlights
Bank saw net INR60b benefit from RBI relaxation on capital (INR19.2b from DTA,
INR27b from revaluation reserve and INR13.8b from FCTR)
Will require around INR25b additional CET1 capital in FY17
No suggestion / directive received from government or any other organisation
on merger
Plan to monetise non core assets and strategic investments worth INR10b in
FY17
Average age of staff at 40 years
Interest reversal during the quarter was INR3b
Interest on IT refund during 4QFY16 was INR4.21b
Canara Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 193
Target Price INR 190 | 1% Downside
Neutral
Asset Quality
AQR related slippages during the quarter was INR29.9b (INR60b+ in FY16)
AQR related provisions made in FY16 was INR25.7b (INR18b in 4Q); Bank has
also made AQR related provisions on restructured loans
Sector-wise slippages during the quarter: construction INR12b, vehicle and
vehicle parts INR3.25b and balance relates to iron and steel sector
Relapse from RL was INR21b
SRs outstanding are INR17b; bank has INR4b of provisions outstanding
SEB exposure part of standard RL is INR40b
SMA2 stands at approx. INR55b
Have made 15% provision on Punjab food corporation exposure (INR3.35b)
Stock of loans refinanced under 5:25 scheme was INR60.1b (twelve accounts all
standard); SDR invoked amounts to INR49.93b (all standard restructured)
During the quarter, bank refinanced six accounts under 5:25; SDR was invoked in
one account amounting to INR11.94b
Restructured SEB debt was INR120b of which INR80b was converted in 4QFY16
(INR47b outstanding loans and bonds INR23b balance loan)
Standard SEB exposure stands at INR118.8b
45
June 2016

FINANCIALS/BANKS | Voices
Segmental NPA: INR18.45b Aviation, INR92.43b Iron and Steel, INR12.13b
construction and INR32.95b infrastructure (of which INR9.95b is power)
Interest reversal during 4QFY16 was INR2.78b
Have made INR4b provision against SEB exposure not expected to get converted
under ‘UDAY’ and INR1.3b related to diminution in fair value of loans
Targeting for INR80-100b of recoveries / upgrade in FY17
Other highlights
Bank has utilized capital relaxation benefit amounting to 60bp accretion to tier1
Any interest on IT refund during the quarter was INR1.66b
DCB Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 93
Target Price INR 110 | 18% Upside
Buy
Strategy related
By October 2017 total branches are expected to be 300. If the new branches
arenot delivering as per expectation then there is a possibility of roll back on the
plan. Average branch opening cost is ~INR6mn/branch.
Management likes to open branches in bulk due to benefit on the
administrative, HR and operational point of view
DCBB is amongst the ten banks which is UPI enabled. Don’t see payment bank as
a big challenge.
Profitability related
During the quarter DCBB recognized DTA provisions against standard assets and
floating provisions. Thereby, fall in tax rate. FY17 expectation for tax rate is
~34%
Fee income will be based on transactions. Clear focus on forex transactions,
Trade related fees etc.
Near term NIMs will remain in the range of 3.7-4%. Long term NIMs are likely to
be 3.6-3.75%
Others
Excluding corporate loans grew 36% YoY in FY16. In next 3 years expect balance
sheet to double and share of loan mix to remain largely same
Adjusted for sale of loans to ARCIL (mix of mortgages, AIB and SME totaling to
37 accounts), GNPA % and NNPA% would have been 1.92% and 1.01%
respectively.
Federal Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 51
Target Price INR 48| 6% Downside
Neutral
Guidance
Overall loan growth 18-22%, (b) Expect 10% growth in gold loan, (c) NIM 3.1-
3.15%, (d) C/I less than 50% in next 5-6 quarters, (e) Other operating expense
expected to grow in high single digit early double digits, (f) Fee income growth
18-20%
Asset Quality
Provision made against food credit exposure to Punjab government was
INR270m (similar quantum expected in 1QFY17)
AQR related provision (shift in bucket) were INR1.92b; there was no fresh
slippage related to AQR
‘UDAY’ related provisions INR270m – provisions against Discom exposure which
does not get converted (25%, which would be Discom bonds/loans)
46
June 2016

FINANCIALS/BANKS | Voices
Bank has classified INR290m loans to U.P. and INR1.52b loans to Rajasthan as
non-performing during 4QFY16
Overall exposure to Rajasthan SEB is INR7b+ and INR600-700m to U.P.
Standard restructured provisions against SEBs converted into state loans/bonds
has not been written back
Standard restructured loans (ex. SEB) ~INR15b
No 5:25 refinancing and SDR done till date
Relapse from restructured loans was INR1.42b in 4QFY16
Upgradation/recoveries INR1.7b, write-offs INR3.14b and sale to ARC was
INR1.31b
Sale to ARC was INR1.31b (one standard asset amounting to INR400m and
balance two NPA accounts); outstanding security receipts were INR6.4b
Unamortized losses against sale to ARC in FY17 would be INR500m
Restructured loans coming out of moratorium in 2QFY17 is INR1b – one Iron and
Steel account
SME slippages elevated led by NR and rubber account; next few quarter run-rate
should be INR1.3b+
Slippages in retail segment has been rising led by Kerala based customers; there
was one account INR100m in 4QFY16 – LAP related; steady state quarterly
runrate for Kerala book ~INR150m
Normalized quarterly credit costs expected around INR700m
Most of the infra, iron and steel loans were originated in 2009-10
Balance Sheet Related
Overall Kerala Retail portfolio is INR80b of which home loan is INR50b
Strong credit growth in Network II markets led by SME and retail
Credit book mix: 60% outside Kerala and 40% Kerala; directionally looking at
70:30% over next few years
Corporate credit growth would be driven by well rated corporate exposures
(large / mid)
Less than 20% of loan book at fixed rate
Daily average CA growth at 15% YoY
NR remittances market share ~18-20% of which 30-35% goes into savings
FCNR deposits ~INR3b
P&L Related
In 4QFY16, one-off from income tax reversal was INR400m
Management doesn’t expect any material impact from MCLR
Operating expenses include INR500m provisions made against shortfall in
gratuity pool.
June 2016
47

FINANCIALS/BANKS | Voices
HDFC Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 1,172
Target Price INR 1,400 | 19% Upside
Buy
No one-off in fee income; strong growth in fees was driven by TPP distribution
(driven by Insurance and MF), retail assets and wholesale side. MF volumes
were +50% YoY. Life insurance volumes grew 20% YoY in FY16.
Bank has utilized floating provisions to make contingency provision on one state
government exposure. On this exposure, RBI has asked banks to make 15%
provision equally divided in two quarter). HDFC Bank has INR 20b exposure to
this account.
Movement of floating provisions = Opening INR 15.2b, addition of INR 1.15b and
reduction of INR 3b hence closing provision of INR 13.4b
Strong growth in corporate loans is coming from emerging corporate followed
by large corporate and other niche segment
Slippages for the quarter were INR 17b (1.5% slippage ratio)
RWA as of March 2016 is INR 5.3Tr
1/3rd of the loan book is floating in nature
NIMs will remain in the range of 4-4.4%
More than 18-20% of the incremental origination in personal loan is happening
via digital channels (grew by 50% YoY)
Average investment growth at 48% YoY for FY16 v/s period end number of 8%
YoY. Yield on investment declined by ~40bp YoY
Branch expansion will remain in the range of 250-300 a year
US$ 3.4b will mature in Oct-November 2016 for the deposits raised under FCNR
window
Till FY15 HDFC Bank was taking 55% of the home loan origination whereas, from
FY16 onwards started taking full 70% of the origination
Corporate started doing longer tenure products. Mix of the book remains the
same at 70:30 WC: Term loans
Monthly run rate of origination at INR 14b+. Total buy back of INR 128b during
the year and of which INR 58b taken during the quarter
LAP is for internal customers is 50% and rest is new to bank customers
ICICI Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 244
Guidance for FY17
a) Domestic loan growth 18% led by retail loans at 25%, domestic corporate
loans at 7-8%, SME at 15% and international loans will decline further, b)
Average daily CASA ratio of 38-40%, c) NIMs to decline 20-25bp in FY17 v/s
4QFY16, d) Double digit fee growth, e) Opex growth 15%+, f) provisions to be
elevated and g) CET1 11%+ till FY18
Comments by MD&CEO
Three fold focus of the top management a) enhance franchise value by focusing
on granular retail and SEM business, increase business via digital channels,
improve funding profile, focus on cost efficiency and capital conservation b)
maintain and enhance strength of balance sheet, c) focus on reducing the
exposure to stress sectors and recoveries
Target Price INR 300 | 23% Upside
Buy
June 2016
48

FINANCIALS/BANKS | Voices
Credit quality: a) Gradual domestic recovery c) Weak global macros and sharp
downturn in commodity cycle impacting Iron and Steel, Power, Cement, Mining
and Rigs and c) high leverage impacting asset quality.
The bank has fully complied with RBI AQR and watch-list will be closely
monitored
The bank is working with borrowers for reduction and resolution of exposure
through asset sales and deleveraging. Further, bank has strong capitalization
and lot of value in subsidiaries to take care of any stress on balance sheet
To enhance portfolio quality bank is focusing on a) proactively monitor loan
portfolio across industries, b) focus on improving credit mix (retail and top rated
corporate), c) reduce the concentration risk, d) resolution of stress loans (asset
sale, change in management, etc.)
Senior management (general manager and above) will not receive performance
bonus
Asset quality
During the quarter SDR amounted to INR12b (overall stock INR29.3b which is
either NPA or RL); SDR pipeline INR5b
5:25 refinancing during the quarter was INR6.8b; overall stock INR42.4b;
pipeline INR7.5b
Relapse from restructured loans and NPA additions will remain elevated in FY17
Contingency provisions is a just time action as of now
AQR related slippages were INR40-42b
Bulk of origination of the stressed sectors would have taken place in FY11/12 –
and now impacted by commodity price decline and global economic outlook
75-80% of slippages in FY16 was from corporate segment
Other highlights
Bank has taken full benefit from DTA, revaluation reserve adjustment (90bps
accretion to Tier 1)
International margins impacted by bond issuance expense and excess liquidity
In FY16, retail fees grew 13% YoY and its share is 65%
In mortgages seeing strong growth in Tier II and Tier III cities
Capital repatriation from Canadian subsidiary was US$87.1m
International portfolio declined by 6% in US$ terms
IDFC Bank
Click below for
Results Update
Current Price INR 47
Target Price INR 65 | 37% Upside
Buy
P&L Related
Entire trading gains for the quarter related to debt market and not for equity
market
Bank has rolled out CWG offering in 8 cities; offers all fund based and non-fund
based business. In the first quarter non-fund based contributed 5% of total
exposure
Expect to achieve 50-60 branches over next couple of quarter. Bulk of the
branch opening in the rural areas.
Internet banking is live and mobile banking will go live in April 2016
Major investments related to technology has been incurred
Bharat Banking business offering out of 16 branches in 4 districts in M.P
Total personal and business banking customers at 1530 largely internal
employee
49
June 2016

FINANCIALS/BANKS | Voices
Balance Sheet Related
Requirement of PSL INR150b assuming base will be 31st December 2015
If the credit risk is acceptable, bank will be open to grow through credit
substitutes as well. In the last quarter it grew by INR10b
Will continue to grow in infrastructure if the opportunity arises
On the MFI business A) Buying out of portfolio B) Partnering with MFI and C)
MFI does not get SFB license then can get access to IDFC bank platform
Improvement in rating during the quarter largely driven by new acquisition
Asset Quality
Have not received anything from RBI regarding 150 accounts to be recognized
INR88b of stress guidance remains unchanged. Interest accounting on stress
loan portfolio is on the cash basis. Impact of that could be ~INR800m (not
clearly quantified) for the quarter
No Significant development in Infrastructure segment. Beyond Thermal power,
seeing revival in renewal energy. Developments have taken place in road sector.
Some activity on the spectrum side in telecom segment
Other highlights
Not much merit on the RBS portfolio acquisition
As long as IDFCB remains a sub of IDFC ltd there will not be double dividend
taxation
Indian Bank
Click below for
Results Update
Current Price INR 92
Target Price INR 120 | 30% Upside
Buy
Management tenor and strategy going forward
MD & CEO, Mr. Jain, was appointed in Nov'15. Prior to this (two-half years) he
was with the bank as Executive Director and later on handling the additional
charge of MD&CEO. Both EDs have tenor of two years+. Hence the entire top
management will be with the bank for at least two years ensuring continuity in
the strategy. Board is being strengthened with induction of additional members
Management has identified Retail and Mid-Market as the key sectors to grow.
Within retail housing loans, retail liabilities and CASA remains a key focus area.
Management is setting up verticals for mortgage (individual loans / LAP), MSME
and other segments. It is planning to undertake organization re-engineering and
HR process transformation
FY15-16 was a period of balance sheet consolidation during which key Initiatives
taken were a) focus at enhancing retail liability franchise, (CASA grew 14% YoY;
CASA ratio up 200bps+; retail deposits at 83%) b) retail assets (more granular
ticket size at Rs5cr and below) saw strong growth v/s de-growth in corporate
credit c) strengthen IT platform and it has spent INR3b over FY13-16 and d)
reduced exposure to stressed sectors to 16% of total (v/s 20% for FY14).
Asset Quality
Stress levels is at 25% of total stressed assets in all the stressed sectors
Management is extremely comfortable on asset quality now with aggressive
recognition in FY16 – more than prescribed by RBI in AQR.
Of the remaining RL, significant portion belongs to SEBs and accounts expected
to be upgraded due to satisfactory performance. Relapse from RL is expected to
be limited
Slippages of INR5b is expected from restructure portfolio while Up gradation is
likely to be INR8-10b
50
June 2016

FINANCIALS/BANKS | Voices
Total AQR related amount at INR28bn (~45% of the slippages in FY16)
Entire stress from Steel, Power (except for couple of accounts) and textile have
been recognized
Expects upgrades and recoveries to outpace slippages in FY17
Slippages in 4QFY16 included two lumpy steel accounts worth INR16b (45% of
the slippages)
Entire SDR stands at INR10b and is already part of NPA
Loans refinanced under 5:25 scheme amount to INR24b of which 75% is already
recognized as NPA
In case of road and port sector some accounts are under discussion, but
management remains comfortable on the same
INR800m AQR related provisioning is left for FY17 for enhanced provisioning on
restructured loans.
Other highlights
CAR remains amongst the best to PSU peers with overall CAR at 13.2% and tier-I
cap at 12.1%. CET stood at 11.7%.
INR3.5b of interest reversed for FY16; adjusted NIM stood at 2.67% (v/s
reported NIM of 2.5%)
NIM guided to be 20-25bp higher over next two years to 2.7%
Targeting 25% growth in retail / MSME segment (i.e. 65% of portfolio);
Corporate portfolio too continue seeing de-growth
IndusInd Bank
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 1,124
Balance Sheet Related
Loan growth will remain in the range of 25-30%. Retail growth is expected to be
robust led by pick up in Vehicle loans and continued growth in new products.
Opportunity remains large in corporate business and in case the growth is
higher than 30%, management will continue to sell down loans
MFI business is the new growth engine. Book size has reached to INR25b (~3%
of loans). IIB is working with 11 partners for this business
Gems and jewelry business:
Portfolio remains healthy. Current quarter growth
is driven by seasonal pick up. Risk appetite limited right now due to moderate
growth outlook. Opportunity remains large hence, growth will not be an issue
with the pick in activities. Outstanding loans are 55% of the approval limits
Real estate business:
IIB has dominant market share in lease rental discounting;
Developers are pre-approved and growth is coming from last mile financing; IIB
is focused on Mumbai, Delhi, Bangalore and Chennai. 60% of the portfolio is
commercial (led by LRD business) and rest is retail.
Vehicle business:
Total disbursement growth for FY16 of 20-25% to INR200b.
Half of the disbursements came from CV business predominately from MHCV
business. Old CV is 20% of the overall CV portfolio
Digital:
Focus either on generating income or reducing cost; 20% of personal
sold online (next year 40%); auto loans is done in 4hrs; NPCI is changing the ball
game. Focus is on collaboration with partners
SA deposit rate:
Up to INR0.1mn is 4%, INR0.1-1mn is 5% and INR1mn+ is 6%
P&L Related
Negligible impact of MCLR
Target Price INR 1,200 | 7% Upside
Buy
June 2016
51

FINANCIALS/BANKS | Voices
Management is not worried on retail segment; market is growing, hence, pricing
is very rational
Fee income will get a boost due to tie up with Tata AIA Life. Overall fees will
continue to exceed loan growth
Twenty three deals contributed for IB fees in the quarter
Targeting to increase PCR to 70%
Credit cost will come down next year
Targeting to rebuild floating provisions
Kotak Mahindra Bank
Current Price INR 769
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 863 | 12% Upside
Buy
Guidance
Loan growth of 20% for FY17. Growth will be broad based and not biased any
particular segment. Focus remains on the risk adjusted returns
Credit cost guidance of 45-50bp; SMA2 outstanding stands at 0.13%. Bulk of the
credit cost during FY16 was driven eIVBL loans.
Focusing on reducing Cost to Income ratio below 50% in FY17
For KMPL (NBFC arm) loan growth is expected to be 15% on back of 7-8% auto
industry volume growth
CASA traction remains very strong and focus is to increase CASA ratio to 40%+
from 38% reported as of FY16
Merger related cost is expected to be INR250m in FY17 (INR950m in FY16)
Comments on integration
Entire integration process will get over by 30th June 2016
Focus was on the 4 key Dimensions: a) People (increased span of supervisory
staff, higher feet on street employees especially on eIVBL branches), b) Process
(close to 5,000 process have been realigned), c) Technology (core banking
integration is slated to end by May 2016 – This will help to generate higher
revenues and reduce cost), d) Synergy (leveraging branch network on eIVBL for
asset growth and adding liability customers)
Average SA growth at eIVBL at 34% vs KMB branches at 43%
Cross sale of assets products is seeing strong traction in eIVBL branches
Strong initial response to digital initiatives
Key initiatives: a) Minimal paper work on opening savings account b) offering
instant loan approval for products like Unsecured PL c) Bharat banking app :
India’s first multilingual internet free app launched
Of the total Savings account and personal loan acquisition ~7% and ~15% are via
digital channels respectively.
Kotak has 133 customer acquired through digital sales per 1000 active
customers.
KMB has 4.7% and 4.3% mobile transaction market share via Value and Volume
respectively
UPI will be launched shortly
Digital will make transaction space extremely competitive.
Loans: Targeting 20% growth in FY17
Post-merger some of the large lumpy accounts have been allowed to run down
(considering the increasing concentration on balance sheet and relatively less
risk appetite on some loans written by eIVBL) which led to moderate loan
52
June 2016

FINANCIALS/BANKS | Voices
growth. Further management focus was on addressing issues in the stress loans
of eIVBL (6% of eIVBL book).
90% of the home loan is pure housing loans. Growth is largely driven by markets
in western and southern India. Some part of the portfolio is related to takeover
some other banks/FIs.
LAP: 10% of home loan Portfolio. Trends are very stable but watching the
portfolio very carefully
CV: Demand is driven by largely replacement. Better connectivity and opening
up of mining sector to drive demand for new vehicles
Other
Fee income growth is impacted by lower wealth management fees. Combined
(KMB+eIVBL) MF distribution fees are half of kotak standalone income as
compared to last year
Close to half of the fees is related to balance sheet (assets and liabilities)
0.11-0.12m customers are getting added every month
Bank is sitting on significant MTM benefit
TD below INR10m at INR350b
Oriental Bank of Commerce
Current Price INR 81
Target Price INR 95 | 18% Upside
Neutral
Click below for
Results Update
Outlook for FY17
NIM 2.65 – 2.70%, (b) Credit growth 10-12%
Asset quality
During the quarter slippages from iron and steel sector were INR23b and ship
building INR3.73b; top three accounts were INR21b
AQR related slippages during the quarter was INR1.66b (one account)
NPA outstanding: Infrastructure INR10.47b and Iron and steel INR52.95b
There was no freh restructuring during the quarter
Relapse from restructured loans was INR11.81b (FY16 INR47.26b)
One account was refinanced under 5:25 scheme amounting to INR1.8b;
outstanding 5:25 refinanced loans stood at INR21.51b of which INR12.42b are
already NPA and INR3.4b was fresh sanctions to these account
SDR took place in one account amounting to INR560m; outstanding SDR stock is
INR30.8b of which INR16.15b is NPA
INR39b of SEB loans were converted into state bonds under ‘UDAY’ scheme
(yielding 8.20-8.7%)
Bank has not made any incremental provisions against ‘UDAY’ Discom exposure
nor have the restructured provisions been revered
Bank has made INR750m provisions against Punjab food corp. exposure; similar
quantum of provision would be taken in 1QFY16
INR10b+ discom exposure standard exposure not restructured
Sale to ARC during the quarter was INR1.9b (GNPA); outstanding SRs
outstanding INR3.32b
Stock of technical written-off account was INR56.36b
Restructured book where no repayment has been received was INR45.74b
Outstanding AQR related provisions on restructured loans for FY17 was INR3b
P&L Related
Other income includes INR900m on account of income tax refund
Interest reversal during the quarter was INR2.33b (last quarter was higher)
53
June 2016

FINANCIALS/BANKS | Voices
Employee expenses include INR1.07b pension provisions
Added 1,000 employees during the quarter
Bank is assuming 8.5% discount rate for pension liability assumption
Other highlights
Total impact from revaluation reserve adjustment was ~40bp on tier1 ratio
(INR6.8b – 45% of revaluation reserve); Incremental appreciation in FY16 was
INR9b+ (previous revaluation was done 6-7 years ago)
CET1 computation includes capital infusion of INR4.78b received from GOI and
LIC; there was no DTA benefit available
Duration of AFS book was 3.61
Looking to raise INR20b of capital in FY17
INR850m tier1 bonds running down in FY17
Punjab National Bank
Current Price INR 76
Click below for
Results Update
Target Price INR 84 | 10% Upside
Neutral
Employee expenses included ~INR4b reversal on account of AS-15. Adjusted
employee expenses declined ~7% YoY (v/s -2% YoY in 3QFY16).
CASA deposits grew 12% YoY (+4% QoQ) led by strong in CA deposit growth
(+13% YoY). SA deposits grew (+8% YoY, -1% QoQ). Domestic CASA ratio stood at
41.6% (v/s 40.6% in 4QFY15).
Retail advances grew 19% YoY (+6% QoQ) led by strong growth in housing (+7%
QoQ and +25% YoY) and vehicles (+4% QoQ, +17% YoY).
During the quarter, bank has taken benefit of RBI relaxation on capital
(revaluation reserve, FCTR and DTA); however, impacted by large loss, CET1
ratio declined QoQ to 7.9%.
We await further details on 5:25 and SDR pipeline, quantum of additional
provisioning on RL in FY17 amongst other things.
State Bank of India
Current Price INR 197
Click below for
Results Update
Target Price INR 245 | 25% Upside
Buy
Guidance for FY17
Slippage ratio of 2.7% v/s ~5% for FY16
Credit cost to be below 1.8% v/s ~2% for FY16; Management expects to improve
coverage ratio
Watch list account of INR313.5b (share of credit portfolio is 2.08%). Of the
watch list accounts INR116.6b belongs to RL and INR25.8b belongs to SDR and
5:25. Watch list is determined post detailed exercise in CAG and MCG division
Credit growth guidance of 12-14%
Merger – Synergy
Reduction in C/I ratio; Expect operating cost on the combined basis to come
down by INR10b
Treasury synergy is likely to generate additional revenue of INR13b (assumption
of 60bp improvement in yield for ABs)
Reduction in cost of deposits to generate additional INR12b
Total benefit of INR35b and cost of merger is expected to be INR30b (due to
employee expenses)
Capitalization benefit: Three ABs are yet to revalue premises – On a
conservative basis this will release capital benefit of INR7.5b and additional
INR10b likely to come from Bharatiya Mahila Bank
54
June 2016

FINANCIALS/BANKS | Voices
Asset quality
Of the slippage a) SME, Agri and Retail slippages contributed INR10.4b b) AQR
related slippages were INR92b and c) rest were mostly driven by proactive
decision by management considering the AQR of other banks
Of the slippages in corporate segment, CAG contributed INR125b, MCG division
contributed INR117.26b and slippages in international division stood at
INR50.5b. Steel and EPC were the major sectors which contributed to slippages
in the quarter
Slippages from RL during the quarter stood at INR77b
Other highlights
4QFY16 includes Interest on IT refund of INR16b
In FY16, there was INR20b of one off actuarial expenses
Of the INR20.3b repatriation of foreign currency translation gain INR12b is the
one time gain under AS 11
INR11b (INR23b at consolidated level) of loss on amortization of ARC is yet to be
provided
SBIN did the exercise of revaluing the fixed assets in FY11 and at that time value
was INR220-240b; Expect value to be materially higher than at this time.
Conservatively revaluation will add INR100b to T1 capital
34 people joined in analytics team and it is being headed by a person who has
joined from private sector bank
In the power sector INR400-500b are the projects under implementation
Union Bank of India
Current Price INR 113
Click below for
Results Update
Target Price INR 140 | 24% Upside
Buy
Guidance for next 3 years
a) CASA ratio of 35-40%, b) Business of INR10 trillion, c) Retail, Agri and SME
share of 20% each
Credit cost will go down by 50bps
Asset quality details
Overall slippages for 4Q were INR61.7b of which four steel accounts contributed
to INR29b (~47% of slippages) and one Infra account contributed INR3b (~5% of
slippages). Balance slippages were largely from chemicals and G&J
RBI AQR related slippages during the quarter were INR7.96b (~13% of slippages)
Slippages during FY16 were INR129.52b of which RBI AQR related slippages are
INR41.73b (~32% of FY16 slippages)
Management expects quarterly run rate of slippages of INR16-18b in FY17
Relapse from restructured loans amounted to INR20.2b of which INR9.76b was
on account of RBI AQR
Overall eleven accounts were refinanced under 5:25 till date amounting to
INR25.2b of which four accounts related to power sector (INR9.26b), three
related to Iron and steel sector (INR5.84b)
Total exposure (including working capital finance) to three steel accounts which
are refinanced under 5:25 is INR20.1b
SDR is implemented in eight accounts (total exposure INR18.35b); of which
power, iron and steel and textile contribute two accounts each.
Only two SDR accounts are under RL category (INR5.6b) and rest all are standard
55
June 2016

FINANCIALS/BANKS | Voices
Provisions on account of fraud were INR9.07b in FY16; in addition INR3.52b is
yet to be provided via P&L, however already debited to reserves
Total security receipts outstanding is INR 6.7b; INR1.5b unamortized losses yet
to be provided
Movement of Restructured loans: Opening INR136.58b of which slippage
INR49.21b (RBI AQR INR32.2b) and closing balance stands at INR85.7b
Bank did a write-off of INR31.4b from restructured loans during 4QFY16
NPA from Infra, Iron and steel and Textiles stands at INR58.6b/INR25.14b and
INR12.57b respectively
Total restructured loans from Infra and Iron and steel stands at INR38b and
INR5b respectively. Of the power INR13b is related to SEBs
Total Steel exposure of the bank stands at INR105.34b of which INR45.26b is
OSRL, INR25.14b is NPA and INR5.84b is refinanced hence 75%+ is already
recognized as stress loan
During the quarter full Rajasthan discom exposure of INR32b is converted, half
(INR12.5b) of UP exposure (INR25b) is converted
Bank made the provision of INR92m for the total exposure of INR 1.22b to
Punjab food corporation
Outstanding SMA2 accounts stands at INR169b and SMA1 accounts are
INR140b. This has not seen much change over the last one year despite
aggressive recognition
Others
Total CAR/T1/CET1 stood at 10.56%/8.14%/7.95%. Bank revalued the properties
(from INR14.b to INR25.81b) during the quarter leading to 40bp leg up in CET1
capital. INR5b of AT1 coming up for repayment in FY17
67% of the customer facing transactions is digital. 50 of the processes are
digitalized. Under project “Utraksah” bank is seeing strong improvement in
CASA (42% increase in productivity, Retail assets (28% increase in retail loans
sanctioned per month and 45% increase in loans processed by SARAL) and SME
TAT (50% reduction in TAT) across 7 regions contributing 27% of business
Yes Bank
Click below for
Detailed Concall Transcript &
Results Update
Guidance
(a) Credit cost 50-70bp for FY17, (b) 10-15bp NIM expansion in FY17; 50-60bp
NIM expansion over next four years, (c) Planning to add 20% branches each
year, (d) Retail and Branch Banking share expected to increase to 45% over next
three years
Asset Quality Related
Have complied with all recommendation made by RBI in AQR
During the quarter bank sold a standard restructured account to ARC; Net book
value INR400-500m and gross book value was INR700-800m
No 5:25 refinancing and SDR during FY16
Slippages during the quarter were INR3.3b; this does not include asset sold to
ARC
SMA2 number vary between low to mid-single digit
Balance Sheet Related
Credit substitutes book was stable QoQ at ~INR100b
Daily average CASA ratio was 26% v/s 20-21% in FY15
56
Current Price INR 1,049
Target Price INR 1,275 | 22% Upside
Buy
June 2016

FINANCIALS/BANKS | Voices
Average SA cost was 6.5%; currently offering 6% to < 10m balance and 7.5% for
INR10m+
80-90% of SA is individual retail and balance government/institutional customer
Average SA balance was INR0.13-0.14m; 50000-60000 accounts added per
month; total customer base now stands at ~1.6m
SA customer mix: on value: Salary: Non-salary base was 20%:80%, on volume:
Salary: Non-salary base was 40%:60%
Mature branch SA would be ~INR1b; typical branch would have three
relationship managers, five acquisition managers and three service managers
Income generating assets (CV, CE and LAP) are likely to be core focus area for
building retail assets in the next 18 months. For other areas (HL and
consumption loans (PL, GL etc.) focus is building infrastructure, process, and
relationship. Earning assets are currently at 60% of the retail assets.
P&L Related
Have drawn down 6-7bp of contingency provisions during the quarter (v/s
INR200-300m last quarter); now have ~30bp excess
Third party fees on YoY basis impacted by MF income amortization impact
Provision break-up: General provisions 550-600m and balance NPA and other
provisions
Other Highlights
Share of retail deposits now stands at 54.5%
Full launch of credit cards in 1QFY17
Average loan book tenure would be 24 months
June 2016
57

FINANCIALS/NBFC | Voices
FINANCIALS/NBFC
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Asset quality
Margins
Bajaj Finance
LIC Housing
Expect +25% AUM growth for FY17.
2W and 3W business growing on
back of growth in Bajaj Auto
business. In LAP and home loans,
targeting only existing customers
Entered life care financing (for
dental and eye surgery) and urban
gold loans
Expects overall loan book to grow at
15-18% in FY17; Individual home
loan segment to grow at 15%;
Developer segment at 20-25%.
Real estate prices are likely to
remain in range
Expect 10-12% AUM growth for
FY17, in line with the growth of
OEMs
While the company is not chasing
growth, if the monsoon is good,
growth can exceed 15%
Additional provisions of INR 440m
during the quarter for the infra
account in steel and power space
(currently standard account); Infra
book now at <0.5% of the total
book
Overall asset quality trends remain
very healthy
Asset quality trends to remain
healthy
97% of the loan book is retail;
mitigates any asset quality shock
Margins to sustain at current levels
Mahindra
Finance
Muthoot
Finance
Expect 10-12% AUM growth for FY17
Improvement in rural economy and
sustaining gold prices can further
drive growth
AUM growth to remain +50% for
FY17
Capital raising of INR5b-7.5b in FY17
Improvement led by (a) best ever
collection efficiencies at 107% - led
by intense recovery efforts, (b)
good performance of bigger states
like AP, MP, Maharashtra and Tamil
Nadu, and (c) Technical correction
– last quarter, NPLs had worsened
as large crops were not liquidated
Further asset quality improvement
will depend on timely arrival as well
as fair distribution of monsoon
Marginal increase in asset quality is
technical in nature
Not witnessing any asset quality
issues
Asset quality trends to remain
healthy
Not witnessing any signs of stress in
any geography
Higher growth seen in high yield
segment; Developer 33% YoY in
4Q; LAP also grew at faster pace to
help improve yields
Benign wholesale rates and
replacement of bank borrowings
via banks to reduce CoF
Not reduced lending rates; margins
to improve, with reducing cost of
funds
Improvement in asset quality could
also give boost to margins
SKS
Microfinance
Raised lending rates in March and
would be increasing rates again;
this will help improve margins
Cost of funds also coming down; to
aid margins
Have already reduced lending rates
by 480bps I last 18 months. SKS is
already lowest cost lender won’t
reduce rates further
Marginal cost of borrowings are
now 9.2% v/s 13.6% two years
back; should decline further,
boosting margins
Bajaj Finance
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 7,902
Target Price INR 8,450 | 7% Upside
Buy
Growth guidance
Growth guidance of 25% loan book growth
Expect INR900-1000cr disbursement via direct mortgage book every quarter
from 2QFY17
Businesses
2W and 3W business growing on back of growth in Bajaj Auto business growth.
Life care business: Entered Life care financing (for dental and eye surgery).
Tenure of 9-10 months. Doing stem cell financing for the last 2 years around
1000 cases per year stem cell. This has evolved into life care financing in newer
areas.
June 2016
58

FINANCIALS/NBFC | Voices
Lifecare business expected split 3-5 years down the line: 25% from dental, 25-
30% from hair treatment and others from rest.
Started Urban gold loans, targets to spread the business in 300 cities
EMI Card:
Card in force is 5.5m; cards approved but not issued at 6.5m. Retail
EMI market size at 150,000cr. Would expand to 15 cities by July and 25 cities in
FY17. 5000 touch points.
Mortgage business:
A few LRD accounts to HNI clients (10-12% of mortgage
business) is via distributor, rest of the business would now be direct to
customers.
Mortgage is in hyper-competitive state;
70% of the NPA comes from northern
market (Delhi and surrounding). North India would now form 15-17% of the
total mortgage book down from ~25%.
LAP:
Currently 40% of the book outstanding is sourced via direct channel. Rest is
via distributor.
Introduced pre-payment penalty for LAP from this quarter in order to prevent
customers from switching.
Business loans:
Roadmap is to target own customers (Currently 45% are own
customers). As DSA charges 3% sourcing fees and company is able to charge
only 2% from the customers.
Provisioning
Additional provisions of INR440m during the quarter for the infra account in
steel and power space (currently standard account). (Infra book now at <0.5% of
the total book). Pool of accelerated provision: FY15: 75cr; FY16: 150cr. (infra and
mortgage acc provisions). At 90dpd GNPA 1.43% and NNPA at 40bps
Borrowing:
Public fixed deposits now form 6% of total borrowing
Fixed deposit and corporate liabilities to form 22-25% of total borrowing in 3-5
years.
Interest cost: 9.45% for FY16. On FDs 9-9.1% plus SLR costs
Others:
Analytics: Not working with consultants. In-house team to build business cases
and run the analytics. Software development is outsourced.
CIBIL rated customers are 100m in the system. BAF has currently only has 8.5m
as of now.
Cost to income ratio: on yearly basis the cost has declined. More of an yearly
direction and less quarterly. Target ~40% by FY18.
June 2016
59

FINANCIALS/NBFC | Voices
Dewan Housing
Current Price INR 197
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 289 | 47% Upside
Buy
Company received INR1.25b as first tranche of warrant money (DEWA had
issued convertible warrants of INR5b to promoter group)
Other expenses were higher due to higher advertisement expenses and CSR
expenses.
DEWA received INR2b from building from developer.
Capital adequacy stands at 16.4%, with tier 1 of 12.6%; CAR stood at 17.03%
IndiaBulls Housing Finance
Current Price INR 752
Target Price INR 907 | 21% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
Macro Highlights
On back of 100% tax exemptions for affordable housing, profits for developer in
affordable segment to be at 30% (vs <20% earlier) and is in-line (could be
higher) than luxury housing projects (~25%)
Several developers have shown interest to operate in this segment; will help
keep RE prices in check and should drive volume growth.
Avg. rental yields in urban India at 3.1% v/s effective interest rate at 4% (post
tax-exemption s to individuals). IHFL expects effective interest rate to fall below
rental yield in 12-18 months and thus expect good growth in terms of new home
sales (last time the same happened was in 2003-2005 when RE saw a bull run)
IHFLs incremental mortgage market share stands at ~7% (including banks)
Growth
Continue to maintain ~25% Loan book and profit growth.
This pace of growth coupled with increasing sell down (Looking to fund 25-30%
incremental funding requirement from sell-down ) would elongate the next
capital raising cycle to 7-10 years.
Increase branch presence by 10% every year by FY18.
Loan Book and Spreads
Disbursed INR263.6b in FY16 (HL-INR135.4b, LAP-INR64.3b and Commercial
Credit -INR63.8b). Home loan disbursements to salaried segment is 70% and to
SE is 30%- Would continue to maintain the proportion.
52% of the loan book now comprise of pure HL. Looking to increase the same to
60%. LAP now stands at 25%.
Incremental tkt size at ~INR4m in Metros, in NCR at ~INR3m, and in smaller
cities at INR 2m, helping the company to maintain avg tkt size at ~INR2.5m
Yields in HL is at 10.4% (incremental <10%), LAP is at 14.2% and other loans are
at 15.2%; CoF at 9.34%, incremental at 8.84%
NII does not include fee and other charges; NII growth higher than loan book
growth as NIM improved.
60
June 2016

FINANCIALS/NBFC | Voices
C/I Ratio
Looking to increase Fee income by exploring cross-sell opportunity and thus
reduce C/I ratio(tied with HDFC Life during the quarter).
Working to reduce C/I ratio by ~70bp in FY17 and another 60-70bp by FY18
Sell down of INR39.7b during FY16. 70% of HL and 40% LAP qualify for PSL.
Looking to fund 25-30% incremental funding requirement from sell-down.
Sell down apart from lowering the capital requirement also works out to be
cheaper ~50-60bps lower than the bond costs
Credit Cost guidance
Credit cost guidance at 70-90bps
RoE
Looking to achieve ROE at 28-29% by FY19
LAP
LAP book currently at 25% of the total loan book, IHFL focuses on LAP in the
INR2-4m segment.
Incremental LAP loans priced at 12-14%.
All incremental LAP loans are rated by the agencies, at present nearly 60% of the
total LAP book is rated.
Approx. number of LAP borrowers would be at ~4,5000.
M&M Financial Services
Current Price INR 329
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 331 | 1% Upside
Buy
Asset quality:
Macro environment remains challenging; on ground things have
not changed materially. Asset quality improvement was largely led to very
intense focus on recovery efforts coupled with some bigger states which have
been exerting pressure have performed well.
Commentary on key states
a) Maharashtra good cash crops (grapes) but
marthwada remains a key risk b) AP infra activities are good- tractors are doing
well c)Assam- coal transportation was very good- which helped vehicle
operators. d) Tamil Nadu- paddy was good and got sold faster than normal e)
Kerala- recovery efforts were led by several successes in legal settlements. f)
CVs doing very well in Gujarat and Rajasthan.
Data Points on asset quality:
Repossessed 24k vehicles in FY16 of which 12k
was in 4Q, with average vehicle value of INR0.25m c) On 150dpd GNPLs are
~8.6%; hereas NPLs at 90dpd will increase by ~200bps to 10%. d) No of NPL
account 109k on 20dpd this stood 145k on 135dpd e) Write-offs for the quarter
stood at INE3.14b and for full year it was INR5.1b.
Growth
While company is not chasing growth however its market share is intact; OEMs
are guiding 10-12% growth in FY17 and management is confident of maintaining
market share that should result in similar growth for MMFS. However if
monsoon plays out well then growth could exceed 15%.
Market improvement and new OEMs to lead to +20% growth; Strategy is to go
deeper; currently company has presence in 0.24m villages and the plan is to add
another 0.1m village.
CVs showing signs of improvement and company is planning to become
aggressive in use CV market
61
June 2016

FINANCIALS/NBFC | Voices
MMFS is gradually building up its SME book- largely focusing on automobile
value chain and over next 5 years this could have AUM of INR 100b.
Others
Discounts are not due to inventory level but due to intense product level
competition between OEMs
Marginal surge in opex is due to INR110m provisions for change in bonus act
NIMs reflects some effect of cost of funds however major improvement came
from asset quality primarily due to income write-back.
Muthoot Finance
Current Price INR 254
Target Price INR 266 | 5% Upside
Buy
Muthoot opened 14 new branches during the quarter.
CI ratio during the quarter was at 31.8% v/s 48.7% in the last quarter
Gold holding per branch decreased to 142tn v/s 145tn in the last quarter.
Eported RoE was at 15.1% v/s 14% in the last quarter
Increased stake in Bellstar MFI; would further increasing stake to 57% with an
investment of INR540m
Invested INR440m in housing finance business
Increased holding in Asia asset finance from 51% to 58%
MUTH will foray in mutual fund business, awaiting approval from SEBI.
Click below for
Results Update
Shriram Transport Finance
Current Price INR 1,171
Target Price INR 1,162
Buy
Click below for
Detailed Concall Transcript &
Results Update
Industry scenario and outlook:
Macros largely remain unchanged; however some uptick in roads and mining
segment. Higher disbursements in 4Q were largely due to sharp uptick in higher
tonnage vehicles- for which the average ticket size is 3-4x to old vehicle.
Rabi crop in Punjab and Haryana is good and has created some additional
demand for vehicles.
Vehicle demand: Demand for M&HCV remain strong due to demand in coal
mining and some pickup in road projects. Demand for LCV increased 11% QoQ;
and management expects this trend to continue.
Outlook: Expect macros to improve over the next 2 quarters, but largely
depends on monsoon and pick up in infra activity on back of government
efforts. NPLs trends to remain at current levels, improvement only seen from
3QFY17.
AUM growth: If monsoon is good will deliver AUM to grow by +15% in FY17
Asset quality:
Intense recovery efforts led to better than expected asset quality performance
on like to like basis.
Any material improvement in asset quality will only be from 3Q- depending on
monsoon and sustained pick-up in infra activities.
62
June 2016

FINANCIALS/NBFC | Voices
Recoveries from equipment book likely to sustain at INR1b per month and
expect to recover money by end of FY17.
SKS Microfinance
Current Price INR 678
Click below
Results Update
Target Price INR 712 | 5% Upside
Buy
FY17 AUM growth at 45% and PAT growth at 50%
Potential in MFI industry still very large with unmet credit demand of INR1.5-
3tn.
Management highlighted that AUM growth is likely to remain at +40%; coming
from new client additions as well as increase in ticket size.
SKSM intends to grow to faster pace primarily because it wants to acquire more
clients before SFBs start operations.
Further, threats from SHGs have largely subsided for SKSM as nearly 60% of
SHGs are operational in AP and TN, areas where SKS has very minimal
operations (some operations in AP and none in TN)
SKSM is taking utmost care in ensuring that MFI borrowers are not
overleveraged and is strictly following the JLG principles and performing credit
bureau checks.
Further, as a prudent measure, it provides long term loans, which are loans
above INR30,000 for upto two year tenure, only to customers who have
completed two loan cycles with the company.
With interest rates below 20%, political risks likely mitigated
SKS reduced its interest rates to 19.75% in Dec-15. With this it has become the
most efficient MFI in the world with sub 20% interest rate.
The company is of the opinion that political risks associated with MFIs are
largely mitigated by lending below 20%; as their exists many products such as
personal loans by banks which charges more than 20%
Management guided of no further rate reduction for next 2-3 quarters.
Marginal cost of borrowings now stands at 9.2% in 4Q v/s 11.9% in FY15.
Notably post grant of SFB license, SKS is the only sizable player amongst MFIs,
this resulted in bargaining power and SKS is able to sell down portfolio at 8%.
Operating efficiency to kick in with optimal utilization of existing infrastructure
Operating leverage is likely to kick in FY17, as the company has now touched
5.6mn customers v/s 5.2mn before the crisis. It is only now that the company’s
existing infrastructure would be optimally utilized and thus cost efficiencies
would kick in.
Management guided to cost to income ratio of 40% over medium term
Asset Quality to remain stable
Asset quality likely to remain stable. The company being an NBFC is not required
to make floating provisions, thus have not made any
Capital raising
The board has passed enabling resolution to raise fresh equity capital upto
NR7.5b. While capital position is comfortable with CAR at +23%; the
management wants the CAR to remain at +5% of regulatory requirement of
15%.
June 2016
63

HEALTHCARE | Voices
HEALTHCARE
In Pharmaceuticals, overall sector sales and EBITDA margin were in line with our estimates. US growth was boosted
by few important launches during the quarter. India formulations sales growth also remained healthy for most
companies under our coverage. However, emerging markets growth for large caps continues to be hit by currency
crisis and political turmoil. We expect US sales to maintain momentum, with increasing number of approvals for
Indian companies. Emerging market growth should stabilize with currency. Overall earnings should remain buoyant
over the next few quarters.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
US Filings
Cipla
Guided for 20% revenue growth in FY17
R&D expenses to stay at 8% of sales
Guided for muted year on the back of three warning letters
Still expect 15-17 ANDA approvals in US
Guided for strong FY17
R&D expenses could be as high as 15% of sales in FY17
Guided 8-10% revenue growth in FY17
R&D expenses to stay at 9% of sales
Tax to be lower at 14-15% of PBT
Pending ANDAs stand at 78
Dr Reddy's Lab
Lupin
Sun Pharma
Pending ANDAs at 82 (52 para IV and 18 FTFs)
Pending ANDAs stand at 163, of which 44 are FTF
opportunities
Pending ANDAs stand at 159
Alembic Pharma
Current Price INR 555
Target Price INR 640 | 15% Upside
Neutral
Click below for
Detailed Concall Transcript &
Results Update
India formulations (44% of sales): Domestic business reported 12%YoY growth
(12%miss), led by 13% growth in specialty and 7% growth in acute segment. In
acute space, Anti-infective and Cough & cold segments grew 2% and 8%
respectively. Among specialty therapies, Cardiology, Anti-diabetic, Gynecology
grew 36%, 34%, and 32% respectively (in 4Q), outperforming the overall market
growth in respective therapies. The company has achieved significant share in
key new launches like Telzy, Rekool, Gestofit, Ovigyn D, Resave and Richar. We
model 12% CAGR growth over FY15-18E for domestic business.
International Generics (30% of sales): Sales grew 21% YoY to INR 1.9b, led by the
US business. gAbilify sales were much lower than expectations which led to
substantial miss in international generics numbers. Till date, it has filed 76
products (2 in 4Q), received 47 approvals (2 in 4Q) and launched 29 products in
the market. Remaining 27 ANDA filings are primarily para IVs and attractive
opportunities for the company. The company has also launched 11 products
through its own front end in the US. Going ahead, most of the products are
likely to be launched through its front end. Overall, we project 40%+ YoY CAGR
growth in International generics business over FY15-18E, led by sustained
launches (7-8 every year).
June 2016
64

HEALTHCARE | Voices
Alkem Labs
Click below for
Results Update
Current Price INR 1,360
Target Price INR 1,700 | 25% Upside
Buy
Other income in FY17 is expected to be in line with the FY16 level (INR1.6b)
Tax rate for FY17 and FY18E is expected to be ~14% and ~19-20%, respectively
Capex for FY17 is expected to be INR5b
R&D to amount to ~5% of sales in FY17.
Revenue R&D expenses for the quarter were at INR870m (7.6% of sales). For
year full year, R&D expenses stood at INR2.1b (4.3% of sales) in 4Q.
Formulation facilities at Baddi (India) and St. Louis (US), as well API facility at
California (US) went thr ough successful inspection from the USFDA. Moreover,
API facility at Mandva also received USFDA approval, making it our sixth USFDA
approved facility for Alkem.
Biocon
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 703
Target Price INR 490 | 30% Downside
Sell
Malaysia facility is in validation phase and expected to get commercialized by
2HFY17, once it receives approval from emerging markets. The company will
also stop capitalizing cost (including interest) for Malaysia facility from 2HFY17.
Overall capital expenditure incurred is estimated to be at INR12b for this plant.
ANDA filings: The company filed 7-8 ANDAs till date and expected to file 5-6
ANDAs every year going ahead.
New facility: Biocon has also started construction of potent solids facility in
Bangalore and expected to spend INR1.5b for its capex.
Partnered products: Biocon will be filing Glargine through 505(b)2 route while
all other biosimilars will be file through 351(k) route. Biocon is on track to file
four monoclonal products in various markets by FY17. It is confident on the
prospects of MAb portfolio and expects biosimilars product to become
predictable growth driver for the company.
Capex: On standalone basis, Biocon is likely to expend INR2-2.5b capex in FY17,
most of it will be used in the construction of oral and formulation facility.
June 2016
65

HEALTHCARE | Voices
Cadila Healthcare
Current Price INR 320
Target Price INR 380 | 19% Upside
Buy
Click below for
Detailed Concall Transcript &
Results Update
US (45% of sales):
US declined 2% YoY to INR9.6b in 4Q, affected by increased
competition in HCQ and pricing pressure in existing business. CDH is now 9
th
largest company in the US market (by Rx share). The company has launched
three products in FY16 and filed 30 ANDAs (Total 269). It has also received 10
product approvals in FY16 (1 TA); overall company has 103 ANDA approvals in
the US market. There was also first product approval coming from both SEZ site
and from Nesher site in FY16. After receiving warning letter for Moraiya in
Dec’15, CDH has site transferred 12 products till date (5 in 4Q). Regarding Asacol
HD, CDH is still evaluating options to launch it as AG in July or will be waiting for
successful site transfer to another facility. Going forward, we expect US sales to
grow atleast 18% YoY over FY15-18E on account of rich ANDA pipeline and key
product launches like gAsacol HS, gPrevaid ODT, Toprol XL and few transdermals
post resolution/site transfer.
India (32% of sales):
Domestic branded business has reported double digit
growth for 3rd consecutive quarter, recording INR 7.7b sales in 4Q. It has
launched 40 new products in FY16 (11 first to market products). Impact due to
regulatory changes would not be more than 2% in FY17 and next year growth is
expected to be better than FY16. CDH has also received approval for 2 vaccines
and 5 more vaccines are in clinical trials. Overall, we project 12% CAGR over
FY16-18E for India business.
Latam (2% of sales):
In 4Q, LatAm sales remained flat at INR553m due to sharp
currency depreciation. Constant currency growth was at 24%YoY in 4Q. In Brazil,
CDH launched 2 products and filed 5 dossiers in 4Q. In Mexico, it launched 2
products taking total marketed products to 16. CDH has also filed 1 dossier in
Mexico, resulting in total dossiers filings of 43 till date ( approvals at 36).
Europe (3% of sales):
In 4Q, Europe sales also declined 5% YoY to INR706m. CDH
is rationalizing product portfolio in Europe to improve the profitability of the
business. In 4Q, CDH launched 2 products in France and 4 products in Spain. The
company has also done 5 new filings in Europe taking total filings to 205. It has
also received 11 approvals in Europe taking total approvals in Europe to 164 till
date. Management expects to grow EU revenues in line with respective market
growth in the coming years (4-6%). We have modeled 4% growth over FY15-18E.
R&D:
R&D spends was at 7.6% of sales in 4Q and management expects R&D to
remain at 7-8% of sales with increased filings in complex products in the US.
About 75% of the R&D costs are spent towards generic business and 25% in
Novel molecules (vaccines, biosimilars, etc).
Other takeaways
Effective tax rate expects to come down to 20% levels in FY17E, due to R&D
benefits.
Capex: Management has guided for higher capex in FY17 with construction of
few Greenfield and brownfield facilities. In FY16, capex stood at INR9.5b –
mostly spent on acquisition of new brands.
June 2016
66

HEALTHCARE | Voices
Cipla
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 465
Target Price INR 540 | 16% Upside
Neutral
Cipla’s 4QFY16 numbers included 40 days of Invagen sales
R&D as % of sales is expected to be ~8% in FY17, as against ~6.5% in FY16
Invagen acquisition to be completed by 4QFY16
Expected 5-7 ANDA approvals from Invagen and 8-10 from Cipla
20-25 ANDA fillings expected in FY17
Nexium sales remained flat QoQ
FY17 capex guidance at ~8% of sales (in line with FY16)
Impact of DPCO and FDC ban on domestic market expected to be ~2- 3% for
FY17
Cipla’s own annual DTM sales run rate stands at ~USD50m
The company has replied to all queries from the UK regulator regarding Advair
launch
Pending ANDAs in the US stands at 78 (including Invagen portfolio).
Dr Reddy’s Lab
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 3,159
Regulatory update- DRRD provided 1st and 2
nd
update to US FDA on 28th Jan
and 30th Mar. The company intends to finish the remediation procedure by 1Q
FY17 end.
Price erosion in US base business was in high single digits in FY16. DRRD stated
that volume increase helped largely offset this impact.
DRRD expects approval rate in US to improve from 2H FY17.
DRRD took write of INR4.3b related to translation losses in Venezuela (~85% as
part of finance expense and 15% above EBITDA line).
Russia business to see revival in 2HFY16.
SG&A cost includes consultant cost (related to remediation) of USD20m in 4Q.
This should substantially come down from 2Q FY17 onwards (as remediation will
be over).
Capex for FY17 & FY18 expected to be ~INR12b and should come down
thereafter.
Target Price INR 3,200 | 1% Upside
Neutral
June 2016
67

HEALTHCARE | Voices
Glenmark Pharma
Current Price INR 810
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 900 | 11% Upside
Neutral
India (23% of sales)
India sales grew 22.5% YoY to INR5.4b driven by ramp up in therapies like CVS,
Respiratory, Diabetes and Derma. Ramp up in Tenaligliptin has been as per
expectations. GNP has also incurred INR650m additional cost in 4Q related to
Sitagliptin litigation. At present, GNP is ranked 17th in India market and has 9
brands in top 300. Expect to report muted 1QFY17 due to regulatory issues.
However, full year growth is likely to normalize at 15% in FY17. We expect India
business to grow at 18%CAGR over FY15-18E.
US (28% of sales)
US business grew 22%YoY to INR6.5b driven by new launches and ramp up in
existing products. In 4Q, The Company has filed 6 products (12 in FY16). GNP
plans to file additional 7 ANDAs in 1QFY17. Overall GNP has received 24
approvals in FY16 – includes 19 final approvals and 5 tentative approvals. Till
date, the company is marketing 112 generic products in the US market while 59
ANDAs pending with the US FDA (23 para IVs). US growth (excluding Zetia) is
expected to be at 15%YoY+. The company is witnessing significant pricing
pressure in US business, which is eroing the base business. (Including Derma).
Management has guided for over 20 filings in FY17 and 10-12 product approvals
in FY17. Going ahead, we project 28% CAGR growth over FY15-18E.
LatAm (10% of sales)
Latam sales were at INR2.4b (up 34% YoY), driven by Brazil and Mexico. Brazil
business grew 25% in constant currency and Mexico grew 60% in 4Q. The
company continues to sell inventory in Venezuela market. Shipment has
stopped since Nov’15. In 4Q, GNP launched 8 products in the Latam region (ex-
Venezuela) and has also witnessed strong growth in Argentina, Mexico as well.
The management has guided for 15-20% growth in Latam markets (Ex-
Venezuela).
Europe (12% of sales)
Business grew 11%YoY to INR2.7b, helped by UK and Germany market growth.
In 4Q, GNP launched 3 products in European region (mostly in-licensed
products). GNP launched 2 products in UK and one product in Germany. In FY16,
GNP has launched 24 products in European region (16 in-licensed). CEE business
has grown in double digit. The company has also completed licensing deal with
Celon for Seretide accuhaler. (Seretide is USD700-800m market in Europe). GNP
has also filed for this product in 7 countries (mainly Nordic region).
Other highlights
R&D expenses stood at 9.6% of sales in FY16. Generic business spends were at
INR4b in FY16. R&D expenses to stay below 11% going ahead.
Forex translation loss was at INR940m in 4Q. (~INR800m due to Venezuela). For
full year, P&L forex losses were at INR1.35b in FY16 (~INR800m due to
Venezuela and Balance sheet losses at INR3b in FY16 (INR1.115b due to
Venezuela)
In 4Q, there was also one off cost of INR650m related to litigation of Sitagliptin
included in other expenses.
For full year, Capex stood at INR4.7b on fixed assets while Intangibles grew
INR2.95b. The company has spent INR600m on IT related activities.
68
June 2016

HEALTHCARE | Voices
Receivable days were at 120 in FY16 v/s 141 in FY15. Inventory days were at 75.
Overall Net working capital was at 99days in FY16 v/s 95 days in FY15.
Venezuela PAT INR750m and Sales at INR3b. Venezuela still has USD45m cash
on books.
The company clarified that it has no exposure to Semeler; bulk of bio studies are
done internally only.
Granules India
Current Price INR 139
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 160| 15% Upside
Buy
Finished dosage segment grew 38-40%YoY to ~INR1.4b, driven by scale up in Rx
business (Ibuprofen in US).
PFI segment grew 5-6%YoY to ~INR1b and API segment declined 17-18%YoY to
~INR1.3b.
The company has been witnessing pricing pressure in Paracetamol molecule
that has resulted in API decline. Molecule-wise, Paracetamol contributed 38%,
Metformin 28% and Ibuprofen 17% to overall sales.
Geography-wise, North America contributed 47% of total sales in 4Q.
EBITDA margin at 21% (up 721bp YoY) was boosted by higher contribution from
finished dosages segment during this quarter.
Moreover, The company is also working on improving manufacturing efficiency
that resulted in better yield for some of the key products.
Lupin
Current Price INR 1,449
Target Price INR 2,000 | 38% Upside
Buy
Click below for
Results Update
FY18 revenue aspiration brought down to USD3.5b (USD2.1b in FY16) from
USD5b. Net profit margin for FY18 to be 20%.
In US, Price erosion of 14-15% witnessed in CY15 due to channel consolidation in
US.
Fortamet and Glumetza should continue to drive growth in FY17 as company
does not expect more than 1-2 more players over next 1 year.
ANDA approval Guidance- 25-30 launches expected in FY17 - 15 are from Gavis
and 15 from Lupin. LPC expects two FTFs in FY17. One is already launched
through Gavis (intermezzo).
Guidance for Gavis stays (USD350m by FY19). Expect Gavis to be EPS accretive
even after assuming higher D&A expenses.
The company expects branded business sales to revive back. Expects branded
business revenue to reach USD100m primarily on the back of Methergine ramp
up (Gavis product).
At present, 30 pending fillings are from Goa (The plant which received repeat
483 observations).
In Inhalers - 3 programs are under clinical development. Advair filling is
expected to happen in FY18 and approval should come by early 2018.
69
June 2016

HEALTHCARE | Voices
R&D as % of sales to be between 12-15% in FY17. Biosimilars expense would be
~12-14% of total R&D cost. 1/6th of expense would go on NCE portfolio.
Currently, 24% of portfolio is under NLEM (price control) and the company has
taken a price decline of ~2.7% on this portfolio (in line with WPI deflation)
Depreciation & Amortization cost to almost double in FY17 due to Gavis and
Temmler acquisition.
Tax rate guidance- should be between 28-30%.
Working Capital- Increase in WC at 4Q FY16 end has gone up due to Glumetza
launch and expects to come down going forward.
Sun Pharma
Current Price INR 738
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 925| 25% Upside
Buy
Guidance for top line growth of 8-10% in FY17
R&D expenses of 9% of sales in FY17
Halol remediation to be completed in 1QFY17 and re-inspection is expected in
the near-term
Tax rate guidance of 14-15% provided for FY17
SUNP is on track to achieve USD300m from Ranbaxy synergies by FY18E
(significant amount expected in FY17 as well)
Plans to re-certify one of Ranbaxy’s facilities in FY17.
Torrent Pharma
Current Price INR 1,379
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 1,800| 31% Upside
Buy
R&D expense expected to be ~8% as % of sales in FY17 vs 4% in FY16 .
3 products launched in US from Dahej since April-16. Management expects to
launch 10 products in FY17.
Capex guidance- INR15b of capex in 3 years.
~10 new ANDA approvals and 15-20 fillings expected in FY17.
Base business (ex Abilify) grew in FY16. 6) 1-1.2% impact of new DPCO list.
Tax rate guidance of 23% in FY17.
Dahej has received EIR after recent US FDA inspection. Indrad, however, has
gone through one m ore inspection post two ANDA filings from that facility. This
is pre-product approval inspection and has not resulted in major 483
observations for the company.
Management has increased the guidance for R&D spends from 4% in FY16 to 8
% in FY17.
Capex is expected to remain in the range of INR12.5-15b in FY17.
June 2016
70

MEDIA | Voices
MEDIA
Broadcasters
Ad performance for Broadcasters remains strong. Zee reported its 4th strong quarter of ad growth (29% YoY).
However, Sun TV’s ad performance continued to be impacted by the Chennai floods overhang, as ad inventory
consumption took a beating.
With BARC recently increasing rural representation in television ratings, major broadcasters with deep rural
distribution networks are expected to monetize the rural content consumption.
Subscription growth is expected to pick up in 2HFY17 post a 6-month delay in DAS III digitization.
Watch out for developments on interconnect agreements between broadcasters and distribution platforms, as
these could determine how margins play out across the media value chain.
Print companies
Jagran and HMVL continued their strong ad performance and grew 13% and 15%, respectively in 4Q. DB Corp
reported flat ad growth, as the impact of ad volume loss continued (ad volume loss in FY16 was 16.5% and
DBCorp took an ad rate hike of ~11% for FY16).
Ad growth is expected to gain steam in 2HFY17.
Circulation revenue growth is likely to remain steady.
Benign newsprint cost has aided margins in FY16; Print companies believe that newsprint prices have bottomed
out and there could be a 4-5% escalation in prices in FY17.
Dish TV
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 87
Target Price INR 120 | 39% Upside
Buy
Subscriber additions: DITV added 2.7m gross subscribers/1.5m net subscribers
in FY16 and is confident of adding another 1.5m net sub adds in FY17.
ARPU and content cost guidance: Management expects a 3-4% ARPU growth
YoY in FY17 in spite of the strong off-take of lower ARPU products like Zing and
Dish99. ARPU growth is expected to be a function of increased HD off-take,
pricehikes and packaging.
Debt repayment schedule: ~INR3.25b/INR6.5-7b are expected to come up for
repayment in FY17/FY18 respectively.
Dish99: Dish99 was launched in 4Q and has seen good traction DAS III/IV
markets. Along with Regional Offering Zing, Dish 99 contributed ~40% of the
incremental gross adds month-on-month.
HD Offerings: HD accounts for 10% of total net subscriber base (1.4m HD
subscribers) and contributes to ~20-22% of incremental gross adds. Dish enjoys
~21% market share in HD offerings. Most of DITV’s HD subscribers are from top
41 cities.
Capex Guidance: DITV did a capex of INR8b in FY16 and is expected to step this
up in FY17 primarily on account of increased seeding of HD boxes.
June 2016
71

MEDIA | Voices
Hindustan Media Ventures
Current Price INR 269
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 365 | 35% Upside
Buy
80% of the 15% YoY ad growth was primarily volume led. UP performance
continues to be strong; grew ~20% YoY primarily driven by volumes.
With the exception of Education and real estate all categories performed well.
MCG, Govt, IT, Telecom, BFSI, E-commerce).
The 5% circulation revenue growth was a function of both – higher circulation
and higher net realization per copy.
HMVL has managed to reduce the discount in terms of ad yields vs the market
leader from 50% two years back to 65-70%.
Jagran Prakashan
Current Price INR 170
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 195 | 14% Upside
Buy
Print ad growth in 4Q was a function 1. yield improvement 2) better inventory
utilization 3) More ad space sold. The effect of which took JAGP’s ad market
share to 7.5% in FY16 (from 7.1% in FY15).
Key performing categories in 2Q were auto, white goods and retail.
Management expects Print ad growth of ~11-12% in FY17 and radio to grow at
15% YoY.
All new radio stations are expected to operationalize by December 2015.
Digital ad revenue grew 61% YoY to ~INR215m in FY16.
June 2016
72

MEDIA | Voices
Zee Entertainment
Current Price INR 456
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 500 | 10% Upside
Buy
Advertisement growth: Ex-&TV ad growth for Zee outpaces industry which is
growing at 15%+. Ad growth visibility is strong for the next 2-3 quarters.
Key performing categories: FMCG and E-Commerce continue to perform well.
FMCG spends which account for 50%+ of TV ad spends is expected to remain
stable for the next 6 months. Management expects Telecom and Auto step up
ad spends in the next couple of quarters.
Domestic subscription growth: 12% YoY growth in domestic subscription also
included some catch up revenues. For FY17, domestic subscription expected to
grow in mid tees.
Zee Anmol: Zee Anmol continues to perform well. Management intends to
improve monetization from this channel going forward.
Content Strategy: Fresh programming hours has dipped in 4QFY16 to 26 hours
from 34hours in 3QFY16 for the flagship Zee TV. &TV’s Original Programming
hours (OPH) remain stable at ~21.5 hours/week. Management is targeting to
improve Zee TV OPH to ~33-34 hours and &TV to ~26 hours by FY17-end.
Margin Guidance: No explicit margin guidance given for FY17. However,
management expects to outdo FY16 margin of 25.8%
June 2016
73

METALS | Voices
METALS
While few companies benefited from higher realization and operating leverage (primarily in steel) or lower cost (in
aluminum), others like NMDC suffered due to lower realization. EBITDA for our coverage universe declined 14% YoY
to INR111b. Adjusted PAT declined ~137% YoY to INR10b. We see better outlook for (a) steel on price hikes and
lower imports, and (b) aluminum on declining coal cost and higher volumes.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Volumes
Hindalco
Coal prices to continue to support lower costs
Crude derivative costs can fluctuate, as crude oil prices move
Domestic aluminum demand to continue to grow in double-digits
India domestic steel demand to increase by ~6% YoY
Anti-dumping/safeguard measures likely post MIP removal
Price hike of 1,000/ton each in April and May would sustain
Import substitution and domestic demand growth of 6% YoY to
support volumes
Domestic realization to increase by ~INR3,000/ton in 1QFY17
Anti-dumping/safeguard measures likely post MIP removal
Ramp-up in new smelters, as raw material availability improves
and regulatory hurdles are cleared
Zinc output to be sluggish in 1H, but recover in 2H as per mine
plan
Power business to improve, as new capacities commissioned
based on capacity charge rather than PLF-based recovery
Iron ore business to improve, as Goa achieves full capacity; cuts in
royalties and taxes have brought down costs
JSW Steel
~3m tons YoY to 15m tons
~3m tons YoY to 15m tons
SAIL
~1m tons YoY to 12m tons
Tata Steel
Vedanta
Hindalco Inds
Current Price INR 105
Click below for
Results Update
Target Price INR 126 | 20% Upside
Buy
Cost of production declined on lower input cost. Cost of coal declined on
improved availability. Crude derivatives (fuel oil, CPC and Pitch) declined on
lower crude oil prices.
India project debt is refinanced and the tenure elongated. There are no
significant repayment obligations in the medium term.
Increase in aluminum import duty from 5% to 7.5% is offset by the increase in
coal cess from INR200/t to INR400/t.
Of the four captive coal blocks won in the recent auction, the two Gare Palma
blocks are started production and would ramp-up in FY17. Kathautia coal block
is also expected to start soon.
Copper production in 1QFY17 is expected to be lower on maintenance
shutdown at one of the smelter at Dahej. Tc/Rcs have also come-off marginally.
Capex guidance for standalone business for FY17 is lower than INR10b.
June 2016
74

METALS | Voices
JSW Steel
Current Price INR 1,370
Click below for
Results Update
Target Price INR 1,434 | 5% Upside
Buy
Volume guidance of 15mt,
increase of 24% YoY, led by all-India domestic
product demand growth. Import substitution (~6mt), domestic consumption
growth (~6% YoY) and product positioning to drive sales increase.
De-stocking
during the quarter drove higher sales volume in 4Q. Inventory was
~829kt as compared to 966kt at the end of last year.
Decline in raw material cost was led by lower coking coal prices
(more than
USD5/t QoQ benefit) offset partly by price increase in iron ore announced by
NMDC (~INR150/t).
Capex guidance for FY17E is INR43b
– INR30b carry-forward on account of
projects commissioned in FY16 and INR13b maintenance. For FY18E the
guidance is INR27b. JSTL is also adding 3MT coke-oven plant at Dolvi, at its 40%
owned associate company. The capex for the plant would be INR20b.
Karnataka iron ore mine auction
is expected to be done in June 2016.
Management expects 6-18months for the mines to be developed. It has
allocated ~INR4b for iron ore mining projects.
Domestic steel prices have increased
by ~15% in 4Q from their lows in January
2016. In April and May there has been a further hike of ~10%. The price
increases however have been on particular products and are not across the
board. We expect realization increase of ~INR2,600/t in 1Q.
The management expects the government to remain supportive of the domestic
steel industry and protect against uneconomically cheap imports. Anti-dumping
duty on HRC and CRC products has already been filed and provisional duties
could be expected soon.
Tata Steel
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 339
Target Price INR 307 | 9% Downside
Neutral
Kalinganagar 3mtpa plant has started commercial operations. The management
is guiding for ~1mt volume from the plant in FY17. It expects full utilization to be
achieved within 24 months.
Domestic steel prices have increased by ~INR 6,000/t since the MIP. ~INR
3,000/t benefit was seen in the quarter while the remaining is expected to flow
into 1QFY17. The management is positive on domestic steel demand
ongovernment’s spending in roads and railways and better monsoon driving
rural demand.
Capex guidance is INR55b for KPO in FY17E.
Although steel prices are higher in EU (along with spreads), the benefit would be
visible only in 2QFY17 due to the nature of long-term contracts with the
customer.
Capex guidance for Netherland’s operations is INR 35b, primarily to improve
auto product capabilities at the plant.
Greybull sale transaction
A few conditions were to be fulfilled for closing the deal. It is expected to be
done over the next couple of months.
The transaction is at nominal value and also includes business relatedworking
capital which is transferred at nil value.
75
June 2016

METALS | Voices
Sale of other UK assets
Remaining UK asset sale process is more structured and would be expedited.
Bids have been received and are being evaluated.
Pension would typically be a part of the transaction. However, if the bidder does
not agree to take the pension liability there would be some regulatory processes
to carve it out. UK government has agreed to provide assistance in managing the
pension issue, the management mentioned.
As per IAS19 the UK pension scheme had a surplus of ~£1b as at the end of
March 2016. As per the last actuarial valuation done in March 2014 it was a
deficit of ~£90m.
Vedanta
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 105
Target Price INR 122 | 17% Upside
Buy
Group simplification remains a strategic priority, remains committed to the
Cairn-Vedanta merger.
Significant near-term growth is expected to come from wholly-owned
subsidiaries so cash flows will be fully fungible
Achieved savings of INR 25 Bn from higher volumes, cost savings and marketing
initiatives
Capex guidance for FY17 is USD 1 Bn, comprising of USD200m on Gamsberg
project
Expect first production from Gamsberg mine from CY2018. Ramp-up time of the
project is reduced to about 9 months to 12 months to achieve nameplate
capacity.
First line of new Jharsuguda smelter is expected to ramp-up by end of 2Q,
followed by 2nd and 3rd line. Cost of production guidance for aluminum is USD
1,400/t. CoP at Jharsuguda is guided to be USD 1,250/t
Alumina production at Lanjigarh would increase to 1.4mt in FY17. Laterite mines
in Odisha are expected to start from 3QFY17.
From TSPL margin of INR1/kWh is expected.
Iron ore production cost at Goa is lower than the cost profile of even the BIG4s,
but is offset by lower iron-ore grade at Goa.
Goa production to reach 5.5mt. Lobbying government to increase the mining
cap.
Target to reduce cost in aluminum business to USD 1,300/t
June 2016
76

OIL & GAS | Voices
OIL & GAS
In Oil & Gas, GRMs were subdued sequentially, reflecting lower benchmark GRMs. Inventory movements across the
three OMCs diverged: HPCL recorded modest gains, BPCL modest losses and IOCL was impacted the most due to its
higher inventory day cycle (~40days; 2x of HPCL and BPCL). The government reversed the OMCs’ 3QFY16 under-
recoveries; 2QFY16 subsidy burden of upstream companies was also partially reversed. GAIL’s management guided
volume uptick in FY17, driven by power-pooling volumes. RIL’s management reiterated its confidence in the
economics of its key projects. While launch date for JIO remains uncertain, the management guided launch within a
few weeks to months; trial customer base has crossed the 0.5m mark and initial reviews are encouraging.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
GRMs
Others
GAIL
OMCs
OMCs
(IOC/BPCL/
(IOC/BPCL/
HPCL)
HPCL)
Much awaited key pipeline tariff hike
(following KG basin tariffs hike) would
improve transmission earnings
Expect petrochemicals to post profits,
driven by lower gas costs
Expect OMCs to benefit from
improvements in petrol and diesel
marketing margins to INR1.9/liter (v/s
regulated ~INR1.4/liter)
Inventory losses are largely behind;
expect OMCs to benefit from inventory
gains with a resurgence in crude oil
prices
With auto-fuels deregulation, and DBTL
in LPG, expect nil under-recoveries in
FY17; kerosene subsidies to be shared by
government and upstream companies
ONGC and OINL's earnings are
contingent on crude oil prices; expect
earnings to be subdued driven by
subdued crude oil prices at USD45/bbl in
FY17 (v/s 47.5 in FY16) and gas prices at
USD3.6/mmbtu (v/s USD4.7/mmbtu in
FY16)
Expect subsidy sharing to decline, driven
by auto-fuels deregulation and transfer
of LPG to DBTL. Model kerosene subsidy
sharing by government up to INR12/liter
and incremental prices only to be borne
by upstream companies
With Ras-Gas renegotiation, we expect
transmission volumes to increase to
99mmscmd (v/s 93mmscmd in FY16),
though volume uptick could be delayed
by competitiveness of liquid fuels
RIL's stock price has entered a critical
juncture and would be impacted by
telecom disclosures (expect full
commercial launch)
IOCs GRMs will benefit from
Paradip refinery rampup. Expect
GRMs at USD5.2/5.8/bbl in
FY17/FY18 vs USD5.1/bbl in FY16
HPCL:
GRMs to moderate in line
with benchmarks to USD5.2/5.3/bbl
in FY17/FY18 from (6.7 in FY16)
BPCL:
GRMs to moderate to
USD5.9/6.1/bbl in FY17/FY18 from
USD6.6/bbl in FY16
ONGC and OINL
IOC's throughputs will
largely increase driven by
Paradip rampup driven
to 69.2mmt in FY17/FY18
(vs 66.2mmt in FY16)
HPCL:
Expect
throughputs to be flat
going ahead
BPCL:
Throughputs to
increase to
25.3/28.6mmt in
FY17/FY18 driven by
Kochi refinery expansion
(v/s 24.1mmt in FY16)
ONGC:
Expect
production to increase to
59.7/62mmtoe in
FY17/FY18 (v/s 57.1 in
FY16)
OINL:
Expect production
to increase to
6.26/6.33mmt in
FY17/FY18 (v/s 6.09mmt
in FY16)
To watch out for any
potential liability on the
US gas imports, given the
discrepancy between
India delivered price and
lower spot LNG prices
Reliance
Industries
GRMs are set to improve from
USD10.8/bbl to USD11.4/11.9/bbl
in FY17/FY18, driven by
commencement of petcoke
gasification
June 2016
77

OIL & GAS | Voices
BPCL
Click below for
Results Update
Current Price INR 1,013
Target Price INR 1,215| 20% Upside
Buy
BPCL’s FY17 capex stands at INR125-130b: (includes INR50b for Kochi refining
and INR10b for Kochi Petchem; INR12.5b for Mumbai refinery, INR10b for E&P -
excludes Mozambique project which is contingent of FDP approval; Balance
amount would be spent on maintenance and marketing).
Beyond FY17, annual capex guidance stands at INR100-150b.
BPCL expects 8% volume growth in petrol, 4-5% growth in diesel leading to a 5%
growth in total volumes.
Upstream assets have been tested for impairment and due to the low price at
which the assets were required, there was no requirement of recognizing
impairments
Cairn India
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 142
Neutral
Impairment equivalent to 75% of goodwill on balance sheet: Cairn took an
impairment of INR INR117b impairment due to lower crude price, higher
discount on Rajasthan realization and long-term negative impact of revised
advalorem cess. Company indicated that its “projects including Bhagyam and
Aishwariya EOR, Aishwariya Barmer Hill as well as the RDG project remain viable
at the price assumptions taken for impairment”.
Rajasthan royalty share in 4QFY16 stood at INR2.1b (v/s INR4.6b in 4QFY15 and
INR2.8b in 3QFY16). Profit petroleum stood at INR2.0b (v/s 4.0b in 4QFY15 and
INR3.5b in 3QFY16).
Depreciation stood at INR4.7b (+85% YoY and -47% QoQ). The QoQ decline was
due to increase in proved and developed reserves.
Other income stood at INR6.5b (v/s INR3.6b 4QFY15 and INR1.4b in 3QFY16).
Other income was higher QoQ due to gains from investments were recognized
in the income statement.
Foreign exchange gain stood at INR1b (v/s loss of INR1.7b in 3QFY16 and gain of
INR488m in 3QFY16) primarily due to lower INR/USD rates.
Net capex for FY16 stood at USD248m against the guidance of USD300m. 78% of
the capex was allocated to development.
Cash and cash equivalent stood at INR195b (USD2.9b).
FY17 guidance: Production in Rajasthan will be maintained broadly in line with
FY16. Planned capex for FY17 is USD100m, with 80% to be invested in
development primarily in the development of RDG gas and Mangala EOR
completion. Remaining 20% would be invested in exploration.
June 2016
78

OIL & GAS | Voices
Indian Oil
Current Price INR 423
Click below for
Results Update
Target Price INR 624 | 47% Upside
Buy
Given that its refineries are inland, IOCL has a Large pipeline network and
inventory days are 2x of HPCL and BPCL(~40 days). Hence, it incurred crude
inventory losses of USD3/bbl in 4QFY16.
Will spend INR153.1b in FY17 as capex: Refining ~INR40b; pipelines -INR15b;
marketing - INR51.2b; E&P - ecking refineries in next five years (INR110b for
BSVI compliances)
Earnings now largely predictable and earnings quality post diesel de-regulations
and volatility due to under-recoveries largely behind
IOCL has an internal target to upgrade its refineries for Euro VI compliance by
Sept 2019
Petronet LNG
Current Price INR 270
Target Price INR 280 |4% Upside
Neutral
Click below for
Results Update
Dahej expansion on track: Dahej terminal’s utilisation averaged~118% in 4QFY16
and management expects that there is no further headroom for increase in
utilization. The capacity expansion at the terminal to 15mmt is on track for
completion by Nov-16. Dahej take-or-pay is not applicable during the ramp-up
phase (should be short).
Budgeted cost for Dahej terminal expansion was INR24b. However, the actual
cost could be lower at ~INR23b due to budgeting of interest costs for the project
(vs. no debt being taken). Petronet has already incurred INR15b by FY16 for the
project and plans to spend INR6b in FY17 and balance in FY18.
Off-takes back to normal: Post Ras-Gas contract renegotiation, off-take volumes
have normalized. As a result, est. INR0.8b of idle ship costs incurred in 3QFY16
weren’t incurred during 4QFY16.
Kochi pipeline connectivity continues to impact Kochi utilization levels.
Long term Ras-Gas prices stood at USD5/mmbtu during 4QFY16 on a FOB basis
vs USD4.8/mmbtu in 3QFY16.
With surplus cash position at 4QFY16, company guides atleast INR3-4b debt
repayment.
Long-term growth plans: Apart from growth through capacity expansion,
management guided that further growth could come from setting up terminals
in Bangladesh and Sri Lanka. The second avenue of growth is developing usage
of LNG (before regasification) as a transportation fuel in India.
Ras Gas contract
Ras Gas off-takes have recovered to 100% of the contracted volume (including
volumes from the new 1mmtpa contract).
Background: Ras Gas has a long term contract (7.5mmt) with the Indian
offtakers (Gail, BPCL and IOCL), the price of which is linked to the JCC (Japanese
crude cocktail) crude and the price stood at USD12/mmbtu. Ras Gas contract
price was very high compared to spot LNG price of USD8/mmbtu and hence the
customers had shifted to spot LNG. The situation had left off-takers in a
precarious position and Ras Gas contract allowed only 10% leeway in reducing
the volumes.
Hence, now off-takers had been trying to renegotiate (defer) the volumes with
Ras Gas. The contract was renegotiated in Dec-15 and contract prices were
79
June 2016

OIL & GAS | Voices
aligned (instead of past 60 months average, prices were realigned to past 3
months average). Additionally, to make up for lower utilization, off-takers
agreed to off-take additional 1mmtpa of volumes.
Reliance Industries
Current Price INR 958
Target Price INR 1,043| 9% Upside
Neutral
Click below for
Results Update
Telecom Business: Capex to increase from INR 1.2t in FY16 to INR 1.5t by FY17
Uncertainty in Jio launch continues and management expects commercial
launch in next few weeks to months. The delay in launch is driven by Jio’s
attempt to give 100% top quality experience to consumers from day 1.
RIL indicated that the telecom ecosystem is almost ready. Total trial user base
composed of RIL’s employees and associates has crossed 0.5m users. The early
feedback and usage is very encouraging.
Jio will cover 70% population when launched and with capex increase from
INR1.2t to INR1.5t, will cover 90% population.
Or the INR 1,200b cumulative capex, RIL has invested INR 450b through equity,
INR 330b through debt, 150b spectrum payables and remaining is supplier’s
credit.
Petroleum Marketing: RIL has reopened its 950 outlets (v/s 762 in 3QFY16) by
end-FY16 versus earlier guidance of 1,400. Average pump throughput stood at
~240KLPM (v/s 160-190 for PSU’s) in March 2016.
New Projects Update: Some delays, capex and capacity increase
RIL’s total core project cost has increased to USD 18.5b (USD 17.5b earlier) and
it has already spent USD 15.5b on its four key projects (petcoke gasification,
polyester expansion, off-gas cracker and ethane sourcing).
The management indicated that petcoke gasification project might get delayed
by a two quarters to 3QFY17, however guided for 100% ramp-up by 4QFY17.
Ethane sourcing is on track for ship testing in 3QFY17.
ROGC (refinery off gases cracker) is on track for 3QFY17 start, but due to gasifier
delay, initially it will have to use LNG impacting economics for few months.
RIL reiterated its confidence on the good project economics in all the three core
projects – petcoke gasification, off-gases cracker and ethane sourcing.
Shale Gas: Production will drop by 11-12% in FY17 and might drop even more
steeply if US gas / oil prices do not recover. Rig count shale assets stands at nil
now.
Domestic E&P: Recent government policy of higher gas price for HPHT (high
pressure high temperature) discoveries is contingent on withdrawal of any
arbitration. RIL is yet to take a call on the same and is currently studying the
viability of development under new gas price policy.
Others: FY17 capex likely at USD9b, net debt to increase in the interim
FY16 consolidated capex stands at INR 1,130b vs INR 1,000b in FY15. This
includes INR 540b in Refining/petchem, INR 500b in JIO and INR 40b in shale.
FY17 capex is likely to be ~USD 9b.
4QFY16 capex stood at INR 320b, which includes INR 130b for petchem/refining,
INR150b for Jio and INR20b for shale gas.
RIL expects its consolidated net debt to rise from INR 950b in FY16 to INR 1,100b
in FY17.
June 2016
80

REAL ESTATE | Voices
REAL ESTATE
The sector witnessed some seasonal uptick amidst broader weakness. Sales momentum remained muted. The NCR
continued to hold the tag of weakest region, barring some resilience of DLF phase V. Improvement was visible in
Mumbai, with successful launches of OBER (Borivali) and GPL (Vikhroli). Improved commercial monetization was
visible, with better leasing run-rate for DLF and PEPL. Demand improvement is met with scarce supply, aiding rental
growth headroom. The focus is on completing existing projects, which leads to increased spending. This coupled with
higher outgo towards capex and purchasing stakes in mature assets (PEPL, BRGD, PHNX) has resulted in negative
FCFE and rise in gearing. Customer collections moderated in line with declining presales and fewer launches.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
DLF
Godrej
Properties
Prestige
Annual presales guidance: INR35b (flattish YoY); signs of pick-up in new Gurgaon market
DAL transaction to be concluded by 3QFY17
Near-term launches may get impacted at industry level till clarity on regulator
FY17 guidance comprises 15-25% growth in presales, 10% growth in collections, 30-35% growth in rentals
on the back of new completions, and gearing at elevated level of 1-1.25x, as capex cycle would continue
Entered into Ahmadabad and Pune market, and warehousing segment
DLF
Click below for
Results Update
Current Price INR 132
Target Price INR 148 | 12% Upside
Buy
DAL Transaction: Likely conclusion 3QFY17, followed by infusion of the proceeds
(by promoter) into the company (as committed) and QIP (to bring down
promoters stake)
DCCDL CCPS transaction doesn’t get stuck in SEBI verdict in current format as
Hons Supreme court order has been in favor.
Presales contribution from long-hibernated new Gurgaon assets to gradually
improve in FY17.
Mahindra Lifespaces
Current Price INR 437
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 510 | 17% Upside
Neutral
Weak demand continued in 4QFY16 with Chennai and NCR being the worst
markets. Management is focused on releasing unsold inventory.
At least 3-4 new launches targeted in FY17 including next phase of Vivante
(Andheri) and Windchime (Bangalore); Sakinaka and Palghar project. Kandivali
launch in FY18. Management Awaits clarity on whether Palgarh project will be
under 80IB exemption.
40 acre (@3cr/acre) land in Chennai to get released on receiving government
approvals
Awaiting government approval for 400 acre of DTA land in Jaipur to come in
over next 2 quarters north Chennai to be launched by 4QFY17 they are working
on design and engineering, EIA paper submitted to government.
Received project mix approvals, awaiting multiproduct approvals for release of
SEZ portion of Jaipur
June 2016
81

REAL ESTATE | Voices
Oberoi Realty
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 274
Target Price INR 338 | 23% Upside
Buy
The management was positive about marketing 360 degree west (Worli) soon.
The Mulund and Borivali launches have been successful in FY16. The Mulund
project to hit revenue recognition by FY17 and Esquire to be completed by FY18.
The Borivali project has garnered better response as compared to Mulund
project due to lack of competition.
The cost of construction of worli project would be around INR4,800-5,000/sf
and Commerz INR4,000/sf.
Gross debt has been reduced due to prepayment of NCD due in April and also
interim dividend paid.
June 2016
82

RETAIL | Voices
RETAIL
The three Retail companies under our coverage – Titan, Jubilant Foodworks and Shopper’s Stop – posted weak sales
growth YoY for 4QFY16. Sales were 3-4% lower than expectations for Jubilant Foodworks and Shopper’s Stop due to
lower than forecast SSSG in what remains a weak operating environment. For Titan, the jewelers’ strike and
implementation of the PAN card rule impacted jewelry segment demand, but the decline in watch segment sales
YoY was a negative surprise. While the management of Titan reiterated the earlier stated sales targets for jewelry
segment for FY17, the near term outlook is dull from a revenue perspective for all three companies. While Jubilant
did better than expected on the margin front, Titan and Shopper’s Stop posted weak margin performance as well.
The management of Shopper’s Stop guided for 8% SSSG in both its key formats – Shopper’s Stop and Hypercity – and
stated that the latter is likely to turn profitable by the end of FY17. The management of Jubilant indicated that in
FY17, price increases are likely to be only around 3%; with new launches under the lower end Pizza Mania sub-
segment, the focus is more on volume growth in FY17.
Jubilant Foodworks
Current Price INR 1,000
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 1,430 | 43% Upside
Buy
Investing and cost savings in the business
Continue to invest in the business.
Also strengthening the backend with state of the art commissary in Greater
Noida
Also investing in internal systems and processes
Implementing SAP ERP across the organization
Working with Wipro for energy savings at the restaurant level
Cost reduction measures. Sig Sigma across the company, only QSR to do so. Also
evaluating consultants for further cost reduction. Do not want to share sensitive
data for little incremental cost reduction
Potassium and promoters’ stake issues
Neither they nor their suppliers do not use potassium bromate or iodate. Tested
by FSSAI approved labs
Promoters stake reduction no change in strategy; have stated in the past as well
that they will remain over 40% in the business. Currently mid 40s levels
Sentiment remains muted
On ground situation not changed in terms of consumer sentiment.
By and large moderate sentiment across Tier 1 and lower Tier cities
No decline in size of orders. Number of transactions have gone down given that
there was 7-8% price increase
FY17 endeavour will be to take 1 price increase of ~3%. Greater focus on Pizza
mania, more variety being launched in this lower end product
Same store basis margins intact. New restaurants and Dunkin Donuts affected
margins
Growth
Cater to 135 stations on the train delivery initiative. Still small as proportion of
overall business
About half of the restaurants will open going forward in the top 10 cities. No
saturation. Will open where service of 30 minutes cannot be opened or new
catchment areas open up
Had stepped back a bit over the last 2 years
83
June 2016

RETAIL | Voices
No investment if payback less than 3 years
Delivery business continues to grow faster than dine in for Jubilant despite
competition from food aggregators.
Dunkin Donuts
Dunkin Donuts Delivery started across India; still very small. Confidence on
Dunkin business model remains high.
Dominos no closures in the last 10 years. But Dunkin Donuts is at an early stage
of development. Full year Dunkin impact on overall margins was ~200 bps
Dunkin will achieve EBITDA breakeven in the next 2-3 years
Accounting
Investment allowance benefits for 2 years in tax rate in FY15, only 1 year in FY16
and hence higher tax rate.
FY17 tax rate 31-32%. Capex INR 10 mn per restaurant. Greater Noida
commissary this year capex will be FY17 Rs 2.5bn. Noida Super commissary will
be operational by March 2017
Ind- AS impact not yet. Going forward there will be discounting of security
deposits. On the positive side lease rental straight lining need not be done.
Marginal impact overall of IND- AS going forward
Long term Loans & Advances increased by 20% YoY due to advance deposits for
commissaries and stores.
Shoppers Stop
Current Price INR 354
Click below for
Detailed Concall Transcript &
Results Update
Target Price INR 395 | 12% Upside
Neutral
Shoppers Stop standalone business
Preponement of sales to 3QFY16 and odd even implementation in Delhi led to
lower 6% SSG growth in 4QFY16. SSS growth was 8% in FY16 mainly driven by
volume. Menswear demand was affected in 4QFY16 due to the above 2 factors
but expected to recover.
4 out of 6 key brands revamp plans ie 1 in each quarter leading to higher private
label sales in FY17.
Exclusive brands usually take 24-30 months to be launched in all stores.
Currently in 20 stores only.
Shoppers Stop- 6 openings targeted in FY17 of which 3 already opened.
8% plus growth SSS growth targeted in FY17 (maintained at earlier guidance
level), with 50% volume and 50% value growth the latter led by excise price
increases.
Good monsoon is very good news for retailers due to likely moderate inflation
and better sentiment. Pay commission recommendation would also lead to
healthy growth.
Discounting will decline in physical retail and online retail discounting should
reduce because of new B2C regulations.
6.4% EBITDA targeted at SSL level in FY17, levers being higher private label and
exclusive brand sales from 17% in FY16 to 20% in FY17 and cost saving efforts.
Store addition of 6 stores is also lower compared to earlier years. For FY18, 8%
EBITDA target maintained for Shoppers Stop.
Targeting Free Cash Flows in Shoppers Stop in FY17.
Omni channel will get completed by June- September next year. Clear traction
will start being visible from 1QFY17 onwards. 0.15 mn downloads already since
84
June 2016

RETAIL | Voices
March launch. IOS and android apps targeting 2 mn downloads by end of the
year, launched in March 2016. Completely omni channel by 1HFY17 end.
Hypercity business
3 big changes in the Hypercity (a) Management changes including new CEO
Ramesh Menon, New HR and Marketing Head, (b) repositioning the brand
entirely to dissuade the discounting image in the last few quarters, and (c)
infusion of funds will pare down debt in the business.
8% like to like growth targeted for Hypercity in FY17.
Targeting positive store level and overall EBITDA margin in Hypercity to be
achieved by 4QFY17.
The company is also developing an app for Hypercity to facilitate home delivery
starting with Metros like Mumbai.
Titan
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 354
Target Price INR 330 | 7% Downside
Neutral
Summary: 4QFY16
is marked by sharp disappointment on Watches division – both
revenues and margins. While the management attributed the decline of Watches
revenue to mismatch in activation periods and some strategy changes pertaining to
the formats of those activations, the trajectory of Watch segment seems difficult
even if one were to take one-offs into account. On Jewelry, management sounded
upbeat for FY17 Jewelry revenue growth. Company has taken several steps –
beefing up online presence, continued expansion plans, several innovations and
ramp up of GHS. GHS guidance of INR 14b for FY17. Company has kept the jewelry
growth guidance of 15-20% intact.
Jewellery Business
Grammage growth (YoY): 15% for the quarter and 4% for the year.
Carat Lane: Acquired majority stake [online jeweler] -
March sales were impacted badly due to strike. Strike had very minimal impact
in April.
Gold on lease: 55%, Spot purchase 45%.
Adjusted for strike 17% growth in jewelry. Could have done 20% growth if not
for PAN impact.
Hedging gains: INR 310mn vs. INR 540mn n 4QFY15. In the base quarter
contribution of spot gold purchase was higher.
Unanticipated roll forward loss: 4Q16 sales were lower due to strike hence
inventory was higher. This inventory being valued at lower rate as gold rate was
lower than hedged rate – hence this hit of INR 200m but it will be written back
as and when sales happen.
GHS: INR 3.5b for 4Q16
Network expansion: ~100k sqft – 25 stores. Opened a large format store of 9-
10k sqft in Vashi, Mumbai.
Watches
Shifting of activation [advanced to 3Q16] hurt revenues. Also promotion was
changed from “flat activation” to “graded activation” e.g. it has changed from
the earlier flat 10-15-120% offers to now the scheme being offers on slow
moving products/sku’s.
Why shifted to graded activation in Watches? Even fast sellers/new
introductions were getting discounted at flat rates. Inventory level was more
85
June 2016

RETAIL | Voices
than desires so it wanted to get rid of slow moving stocks. This was more about
cleaning up inventory even though it knew this activation will not help the
revenues.
Premiumization progressing well with 28% growth in Watches with price above
INR 10k.
Smart Watch JUXT is doing well though not yet big in terms of contribution.
EBIT declined 91%: Some one-offs – VRS in Watches sub, provisions related to
LFS channel [wanted to rationalize to drive profitability – closed several stores]
Vacated 1500-2000 Rs price point on Titan – so lost lot of sales on those price
points.
Outlook/Guidance
Looking forward to 1Q in a positive way – especially for Jewelry business.
Tax rates were lower: due to higher revenues from tax free zones. Tax rates for
FY17/18 will be significantly higher – e.g. 25-28% as there will be no tax benefits
anymore.
Golden Harvest Scheme guidance: INR 14b for FY17
VRS announced recently: Made a generous offer to those employees.
Impact of PAN Card regulation: will be in better position to say post few
quarters.
Employee costs: ~6% -6.5% of sales.
Jewelry revenue growth guidance given in the annual analyst day is intact: In
Mar’16 at its annual investor day it has given 20% growth guidance for Jewelry –
budgeting was done in Jan’16 and had not anticipated strike in March. Thus the
reported growth in FY17 for Jewelry could be slightly higher due to base impact
of 4Q16 quarter.
June 2016
86

TECHNOLOGY | Voices
TECHNOLOGY
Client budgets for FY16 are expected to be flat to positive. Pipeline and incremental demand continue to be driven
by digital/transformational projects. Customers have been optimizing costs in run-the business activities, and are
ploughing savings/additional spend in Digital. Demand across verticals is likely to remain sound, barring in Energy,
which has been impacted by drop in oil prices. Continued focus is expected on investing in augmenting the front end,
capability building, expansion of services portfolio and building digital practice. Simultaneously, efforts to build on
automation and enhance capabilities in artificial intelligence to improve productivity remain.
KEY HIGHLIGHTS FROM CONFERENCE CALL
Outlook for FY17
Digital / New services
Margins
HCL
Technologies
Infosys
Announced 7 large deals with a
TCV of ~USD2b in 3QFY16;
taking the 9M figure to 25 deals
with more than USD4b of TCV
Application services bogged
down by weakness in package
implementation; robust order
book in Cloud and SaaS hasn’t
been enough to refill the
volume leak
Expect industry-leading growth
in Engineering Services to
continue, although not
consistent on a sequential basis
FY17 YoY CC revenue growth
guidance of 11.5-13.5%
Client budgets are flattish; focus
on cost optimization, and
ploughing of savings into newer
areas
Significant investments made in
'BEYONDigital', 'IoT WoRKS' and
DryICE
DryICE has 30+ automation
components; top 25 customers
have significant components
implemented
Will focus on opportunities in the
marketplace than diverting attention to
maintaining margins within a band
Doing away with guidance on margins,
compared to 21-22% earlier
100% of projects covered by
Zero Distance
IIP used in 220 client
engagements
IAP used in 125 engagements
TCS
Much better placed compared
to the same time last year
LatAm turned the corner in
3QFY16; Insurance and Energy
turning around as of 4QFY16
Relatively optimistic about
growth in Telecom compared to
earlier
Enterprise likely to continue
growing faster than industry
TECH Mahindra
15.5% of 4Q revenue; 13.8% of
FY16 revenue, 52.2% YoY
growth
Within Digital, mobility
solutions crossed USD1m in
FY16
52% of TCS' clients engaged on
Digital services
Seven cloud platforms grew by
57% YoY, reaching revenue of
USD175m
Trained over 120,000
employees in 400 technologies
TECHM’s footprint in the BFSI
vertical is smaller compared to
its peers. However, it has
focused on investing in Digital
and in specific product
implementation capabilities.
This has given it differentiated
offerings and is helping entry
into larger deals.
Headwind of wage hikes and visa
expenses in 1Q; 6-12% for offshore and
1.5-2% for onsite
Levers of utilization and offshoring in
the near-term
Levers of automation, higher-value
addition by employees and newer
services in the mid-long term
Journey to 30% operating margins
would be followed by revenue growth
Maintain 26-28% EBIT margin band
Hoping for better margins in FY17
compared to FY16
The levers TECHM has for margin
expansion are [1] Utilization – which has
been used over the last four quarters,
[2] Campus intakes have risen and the
mix of employees is hence improving,
[3] There is an increased focus on
automation frameworks over the last
two quarters, and [4] Dedicated
initiatives have been undertaken to
improve margins in low-margin
businesses.
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June 2016

TECHNOLOGY | Voices
Wipro
1QFY17 guidance of 1-3% QoQ
CC
Guidance includes full-
integration of HPS, and not
Viteos
7 deals won in Digital in 4QFY16
10,000 employees trained in
Digital in FY16; 20,000 to be
trained in FY17
HOLMES adopted across 18
projects
Working on POCs across 42
clients on driving hyper-
automation; 4,500 people
released in FY16
Couple of headwinds for margins in
1QFY17, including full-integration of
HPS
Wage hike impact to be more than
usual in 1QFY17 as the company intends
to reward high-performers better
Cyient
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 481
Target Price INR 550 | 14% Upside
Buy
Outlook for core business:
CYL is much better placed this year, with the absence
of client-specific issues. This gives the company confidence of achieving double
digit growth in the core business next year, compared to the 1% decline seen in
FY16. Growth is expected to be well spread-out during the year with each
quarter clocking 3-4% QoQ growth.
Aerospace:
FY17 looks good as civil airline deliveries have been strong. 40% of
the work CYL is involved in is around manufacturing, repair engineering and
overhaul. This bodes well given current trends. Moreover, the outlook for the
largest client remains robust, cementing confidence going ahead.
Industrial, Energy and Natural Resources:
The market has challenges in the
verticals of Oil & Gas and mining. The business unit is expected to be muted in
FY17 largely due to macroeconomic challenges.
Rail transportation:
Growth is being driven by new infrastructure projects and
refurbishment of signaling. Growth in large customers, and the opening of the
delivery centre in Prague are expected to bode well in the coming year.
Medical technology and healthcare:
Although it’s a nascent vertical, CYL sees
great opportunity in the vertical, and has already started working with some of
the top OEMs in the space.
Semiconductor:
FY16 was subdued on account of challenges faced in IBM,
which got acquired by GlobalFoundaries. Although the decline has been
arrested, the global semiconductor market is expected to grow at a modest
pace, leading to muted expectations for CYL.
Utilities and Geospatial:
Strong order pipeline, and the bounce-back of revenue
growth from the North American Utilities client are expected to drive strong
growth double-digit growth in the next year.
Communications:
The Australian customer in communications has scaled up to
become CYL’s third largest customer, and there is more room for growth given
the broadband penetration spend of Australia.
Design-Led Manufacturing:
Expecting strong growth in DLM – to the tune of
>50% in FY17. There is ample visibility in this area given an existing order
backlog of USD39m and committed revenue of USD15m.
Focus on margin improvement:
Hiring is expected to not be in tandem to
revenue growth expectations in FY17. Although the revenue growth guidance is
of double-digits, net additions are expected to be ~700. Most of the revenue
growth is expected to be driven by improvement in utilization and productivity.
June 2016
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TECHNOLOGY | Voices
HCL Tech
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 722
Target Price INR 900 | 25% Upside
Buy
Large deals:
HCLT announced 7 large deals with a TCV of USD2b in 3Q. This
excludes the inorganic portion of the Volvo deal. Over 9MFY16, it has
announced signing 25 transformational deals with more than USD4b of TCV.
Confident of revival in Financial Services:
HCLT saw a decline of 1.3% QoQ CC in
revenue from Financial Services. It has seen growth in this vertical for the last
eight quarters, and considers the 3QFY16 decline to be a blip, which occurred
because of the completion of a few large deals. On account of good momentum
across its client base, and opportunities arising out of vendor consolidation, it
feels confident of a revival going ahead.
Quarterly aberrations may continue in Engineering Services:
Engineering
Services has been seeing lumpy growth over the last quarters. This is however,
largely a function of the timing of large transformational deals. 6-8 of the large
deals signed a few quarters are now entering steady state, causing moderation
in revenue growth. However, growth is expected to continue to be industry
leading; although not consistent on a sequential basis.
Softness in Application Services:
Growth has been sluggish in Application
Services (0.5% QoQ CC) in 3QFY16, and has been around that rate for the last
few quarters. Application support and maintenance has been seeing slow
growth. While the area is well-penetrated, there is potential for churn, and a
likely entry into new customers. However, majority of the weakness has been
stemming from Package Implementation. The order book has been robust in the
areas of Cloud and SaaS. However, it hasn’t been enough to refill the volume
leak in Package Implementation. The three areas that are driving growth in this
are: [1] Application modernization, [2] Digitalization and [3] Data science and
analytics.
Volvo deal progressing well:
HCLT’s deal with Volvo has been progressing well.
Significant work has gone into the deal and financial integration is expected in
the next quarter.
Avoiding margin guidance:
The management refrained from giving a margin
guidance going ahead, as it would give the company flexibility in investing for
growth; either in new geographies or new services. While there are headwinds
ahead with the integration of Volvo next quarter, and Geometric later in the
calendar year; the margin trajectory through the year on a sequential basis
remains unclear.
June 2016
89

TECHNOLOGY | Voices
Hexaware Technologies
Current Price INR 214
Target Price INR 230 | 7% Upside
Neutral
Click below for
Detailed Concall Transcript &
Results Update
Revenue Miss: Revenue came in weaker than expected due to couple of
unexpected revenue drops in two accounts. This compounded slower ramp ups
in newer deals, which was a function of seasonality. More material was impact
from the two customers. One of them was larger client (top-5) who was having
budget challenges. This client has re-based to a lower normal effective January
1st and should return to sequential growth in 2Q, though YoY trend may still
continue to show a decline.. Another was a permanent outside top-10 and is a
permanent loss.
Guidance for CY16: HEXW earlier cited expectation of bettering NASSCOM
growth in CY16; it now expects lower growth than first thought. Growth in 2Q
and 3QCY16 should be robust. However, despite 1Q EBITDA margin of 15.5%
(ex-ESOP), it held on to its full year EBITDA outlook of 17%. Utilization will be the
key lever to plough better margins. ESOP charges in the remainder of the year
should be similar to 1Q.
Net new deals TCV remains sanguine: New deal wins recorded USD36m TCV of
net new deals during the quarter, on the back of USD120m in CY15. This largely
came from three deals, and within them from one 5-year deal in Automation.
Launches Raise IT: RAISE IT leverages cutting edge Artificial Intelligence,
Cognitive Analytical Engine, Big data platform for IT Operations coupled with
Robotic Incident Management to disrupt the current state of IT Services
delivery. Raise IT has 5 components: [1] Monitoring applications and Infra, [2]
Service management system, [3] Big data system (between service management
and monitoring), [4] Artificial Intelligence and [5] Development platform.
Infosys
Click below for
Detailed Concall Transcript &
Results Update
Current Price INR 1,266
Target Price INR 1,350 | 7% Upside
Buy
Macro environment:
There’s not much concern around prevailing
macroeconomic conditions. Although the ecosystem would get impacted by
deterioration in macroeconomic conditions, INFO’s ability to grow within clients
is good. Given the mandate of spend on Digital technologies, and in
transforming existing businesses, INFO is confident of continued momentum.
Client budgets flattish:
Overall budgets for the year seem to be flattish. Client
continue to focus on cost optimization wherever possible, and plough savings
into newer areas of tech spend.
Vertical-wise demand outlook:
The momentum in BFS has been strong, as the
vertical grew by 15.6% YoY CC in FY16. Insurance however has shown some
weakness in the quarter. However, given some of the recent deal wins in
Insurance, the management is confident of growth being better in this vertical
going ahead. Apart from this, Energy, certain parts of Retail and Telecom
continue to be under stress
Zero distance/zero bench:
INFO has managed to bring its zero distance initiative
to 100% of the projects. A third of these initiatives have stemmed from the
bench, which the company is utilizing in driving value to the organization under
its zero bench programme. 70% of the bench is currently engaged in delivering
such projects.
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June 2016

TECHNOLOGY | Voices
Margin headwinds in 1QFY17:
Going into FY17, INFO is expected to face the
pressure of wage hikes and visa expenses in 1Q. The company has decided upon
6-12% hike for offshore employees (higher end for juniors and lower end for
seniors) and 1.5-2% for onsite employees, depending on trends in the respective
geographies.
RSU option plan for employees:
INFO introduced a RSU option plan for
employees. This would commence with employees at a managerial level.
However, the company intends to extend the plan to all employees – as was the
case earlier.
Various margin levers at disposal:
In the near-term margins are expected to be
supported by various operational parameters, more room for improvement in
utilization and increased offshoring. In the mid-long term however, margins are
expected to be aided by increased automation, and higher value driven by
freed-up employees and newer services.
Lower yields and higher taxes expected in FY17:
On the back of lowering
interest rates in India, the yield on cash and investments is expected to decline
to 7.5% in FY17. Moreover, the effective tax rate is expected to be higher (29-
30%) in FY17 as some of the SEZ units are expected to move from 100% tax
exemption to 50%.
KPIT Technologies
Current Price INR 176
Target Price INR 180 | 3% Upside
Neutral
Click below for
Detailed Concall Transcript &
Results Update
4 goals for FY17:
Growth through a combination of hunting and mining. Asia,
US, Utilities, PES should be high. Further investments needed. 1H should be flat.
2H should bring industry equivalent growth.
Productivity and profitability – See potential through Automation.
Even in ITS, growth should be back-ended.
ETR should be 25-26%.
Top-account:
Slowdown not a matter of worry. Growth should come from
multiple. Lot of customers have benefited from only a single offering. The idea is
to bring a full suite of offerings for them. There is a decline in only 1 of the 2-5
customers.
SAP & IES:
Looking @ growth by verticals rather than SBUs. Energy declined
through the year in FY16. Utilities has grown substantially last year. Automotives
and Industrial have increased. So income will be driven more by verticals than
SBUs.
Account managers:
In the process of doubling account managers in the market.
Build framework for assessing and addressing client needs – solutions and
industry & customer needs. Our differentiation is a good strength in
Engineering.
Margins:
Should remain in the current range of 15-16%. That includes
aggressive investments in sales capabilities and products.
SBU margins:
SAP was loss making last year. Turned that around. Improved
every quarter throughout the year. Engineering margins are a shade better than
the others.
Capex:
Should be 75080Cr of normal capex. New facility in Hinjewadi will cost
another 100-120Cr in FY17. 3 quarters this year to set up the facility. Then it
should come on depreciation from 4th quarter.
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June 2016